AJAY KUMAR,NALANDA vs. ITO, WARD-2(3), BIHARSHARIF

O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

, the sole issue involved in this appeal of assessee is against the action of the ld. CIT(A) in confirming the addition of Rs.11,47,400/- made u/s. 56(2)(vii)(b) of the Act, being the difference between actual purchase consideration and the value determined by the Department Valuation Officer (DVO).

5. Briefly stated, facts are that the assessee is an individual and deriving income from tyre shop and supply of construction material. He filed his return of income for AY 2014-15 on 28.03.2015 reporting total income at Rs.6,51,120/-. During the course of scrutiny proceedings, ld. AO found from the AIR information that the assessee has invested in the land property registered with Sub-registrar, Chandauli, Uttar Pradesh. Accordingly, ld. AO issued notice u/s. 133(6) of the Act to the Sub-registrar, Chandauli relating to the registered sale deed of this property. Assessee was also asked vide notice u/s. 142(1) of the Act to furnish details of all the investment made by him in the immovable property. Subsequently, ld. AO received the required registered sale deed of land from both, i.e. from the office of Sub-registrar and the assessee. On perusal of the same, ld. AO found that the assessee had paid Rs.30,00,000/- towards the land situated at Village Alinagar, Pargana Dhut, Dist. Chandauli, U.P. measuring an area 1675.71 square meter which was found registered by the assessee on 30.10.2013 i.e. relevant to the assessment year under appeal i.e. AY 2014-15. According to the ld. AO, the value of land for the purpose of stamp duty as Assessment Year: 2014-15 Ajay Kumar, Nalanda recorded in the registered sale deed was Rs.75,41,000/-. Notices u/s. 142(1) dated 22.08.2016 along with the show cause letter was issued by the ld. AO to the assessee to explain the source of Rs.30,00,000/- being the amount paid towards the above stated land along with the relevant evidences. Further, ld. AO noted that there being a difference of Rs.45,41,000/- between the actual sale consideration of Rs.30,00,000/- and the value of the property for the purpose of stamp duty of Rs.75,41,000/-, the said difference of Rs.45,41,000/- (Rs.75,41,000- Rs.30,00,000) is liable to be added in the assessee’s total income u/s. 56(2)(vii)(b) of the Act as income from other sources.

6. According to ld. AO, the assessee has objected to valuation for the purpose of stamp duty citing the reason that it is on an extremely higher side. On his objection, the case was referred by the ld. AO to the Asstt. Valuation Officer of the Department at Allahabad, for the purpose of valuation of the impugned land. The Asst. Valuation Officer, Allahabad estimated the value of the said land at Rs.41,47,400/- against the actual transacted value of the property at Rs.30,00,000/-. Accordingly, the assessee was show caused as to why not the difference of Rs.11,47,400/- (Rs.41,47,400- Rs.30,00,000) be taken as the income of the assessee from other sources considering the provisions of section 56(2)(vii)(b) of the Act. Considering the reply of the assessee, the ld. AO made an addition of Rs.11,47,400/- being the difference of the value of the land estimated by the ld. DVO and the actual cost of the land by treating this difference as the income of the assessee from other sources. Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A), who confirmed the action of ld. AO.

8.1 He further submitted that section 142A of the Act also contemplates that in case the assessee does not co-operate or comply to the directions of the valuation officer, then, the valuation officer can make estimate of the value to the best of his judgment. In the instant case, according to the ld. Counsel, there is no charge of non-cooperation on the assessee by the valuation officer.

8.2 According to him, section 142A(4) of the Act provides that the valuation officer shall estimate the value after taking into account such evidences as the assessee made produce and any other evidence in his possession gathered by the valuation officer by giving an opportunity of being heard to the assessee. In this context, we refer to the notice dated 20.12.2016 issued by the valuation officer requiring the assessee to submit his objections on the estimation proposed by the valuation officer at Rs.41,47,400/-, fixing the date on 26.12.2016. It was brought to the notice of the Bench that the notice was received by the assessee on 24/122016, which was complied by the assessee by furnishing the comparable sale instance of the same seller in respect of the Assessment Year: 2014-15 Ajay Kumar, Nalanda adjacent land sold in the year 2015-16. The scanned copy of the notice is reproduced for the ease of reference:-

Assessment Year: 2014-15 Ajay Kumar, Nalanda 8.3 Ld. Counsel for the assessee pointed out that in the present case, the assessee has brought on record the comparable sale instance by the same seller, of the adjacent land sold in the year 2015-16 to support the actual purchase cost of Rs.30,00,000/- paid by the assessee. According to him, the valuation has to be ascertained by considering the sale of similar property in the same neighborhood.

Assessment Year: 2014-15 Ajay Kumar, Nalanda 8.4 From the report of the valuation officer dated 26.12.2016, it is noted that the valuation officer has mentioned that he has considered the evidence produced by the assessee and had taken into account all the relevant materials gathered by him and arrived at the estimate of the FMV at Rs.41,47,400/- as on 30.10.2013. From the proceedings before the Valuation Officer and the report issued by him thereon, it is not discernible as to what material was gathered and how the evidence produced by the assessee was considered in arriving at the estimate of FMV of Rs.41,47,400/-.