LALITA,NEW DELHI vs. DCIT CENTRAL CIRCLE-3, NEW DELHI
What did the Tribunal hold?
The Tribunal held that the Assessing Officer should have referred the property valuation to the Valuation Officer as the assessee disputed the circle rate. Regarding the cash advance, since it was accepted in the husband's assessment, no separate addition was warranted in the assessee's case.
What were the facts?
The assessee purchased a property for Rs. 60,00,000, but the circle rate was Rs. 1,05,20,000. Additionally, an advance of Rs. 7,00,000 in cash was paid for another property. The Assessing Officer made additions based on the difference in property value and the unexplained cash advance.
What were the issues?
Whether the addition on account of difference between sale consideration and circle rate of a property is valid without referring to the Valuation Officer, and whether a cash advance accepted in the husband's assessment can be added in the assessee's case.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI AMIT SHUKLA
per the circle rate at Rs.1,05,20,000 and since the assessee was half shareholder, therefore, he added 50% of additional value of Rs.45,20,000 which worked out to Rs.1,05,20,000. in the case of Late Sudesh Kumar, husband of the assessee which relates to purchase of property No.2/30, Roop Nagar, Delhi jointly by Shri Arvind Manchand and Shri Sudesh Kumar, in the ratio of 60% and 40%. As per the said document, this property was agreed to be sold at a sale consideration of Rs.70,00,000 to the assessee and amount of Rs.9,00,000 was paid as an advance for this property as per receipt dated 30.08.2013 and out of which Rs.7,00,000 was paid in cash. This property was sold to Rs.28,25,000 during the financial year 2013-14. Learned Assessing Officer held that the payment of Rs.7,00,000 made by the assessee is unexplained investment and and accordingly he taxed under Section 115BBE of the Act. The said addition has been confirmed by the learned Commissioner of Income- Tax(Appeals).
Before us, the learned counsel for the assessee submitted that the assessee along with her late husband, Shri Sudesh Kumar were residing on the Ist Floor of the property situated at 248 Gujarawala Town as a tenant and paying a rental income of Rs.7,000 per month to Shri T.S. Sekho, who could not find any purchaser and, therefore, he was further submitted that, had the property been vacated or unoccupied, then perhaps the fair market value could have been Rs.1,05,20,000. He further submitted that, once the assessee has challenged the fair market value as per the stamp duty valuation, then the matter should have been referred to the Valuation Officer of the Department in view of the 3rd proviso to section 56(2) of the Act. He requested that in the interest of justice the matter should be restored back to the file of the Assessing Officer for making reference to the valuation officer to ascertain the correct fair market value of the property as it was a tenanted property.
Regarding the addition of Rs.7,00,000, he submitted that it was clear from the record that the said payment was paid by her husband, late Shri Sudesh Kumar and in his case assessment order has already been passed under Section 143(3) of the Act and same has been accepted. Thus, once this payment was made to the purchaser has been accepted in the case of the husband, then, no addition is warranted in the case of the assessee. order of the Assessing Officer and learned Commissioner of Income- Tax(Appeals).
We have heard the rival submissions and perused the relevant findings given in the impugned order. In so far as addition of Rs.22,60,000 after invoking the deeming provisions of section 56(2)(vii)(b)(ii) of the Act, the assessee’s case has been that the said property in question was occupied by her husband late, Shri Sudesh Kumar who was a police officer along with her and family members for the last several years on a monthly rental income of Rs.7,000 per month. Since the owner of the said property Shri T.S. Sekho was not able to find a suitable purchaser, therefore, he was forced to sale to the assessee at a total sale consideration of Rs.60,00,000. Once the assessee has disputed the value, then, the Assessing Officer should have referred the valuation of such property to the valuation officer in view of 3rd proviso which reads as under: “Provided that where the stamp duty value of immovable property as referred to in sub-clause(b) is disputed by the assessee on grounds mentioned in sub-section(2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub- ./2019 section(15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub- clause (b) as they apply for valuation of capital asset under those sections”.
Accordingly, this issue is restored back to the file of the Assessing Officer and shall refer the dispute for valuation of the property as on the date of sale to the Valuation officer and proper opportunity of hearing should be given to the assessee. Accordingly, ground nos. 1 to 4 are restored back to the file of the assessee and accordingly the grounds are allowed for statistical purposes.
Ground no.5 relating to challenging the addition within the scope of section 153A of the Act in the absence of any incriminating material has not been argued, therefore, the same is dismissed as not pressed.
In so far as the addition of Rs.7,00,000 is concerned, on the ground that the assessee has made cash payment to Smt. Shally Vashisth for purchase of property, we find that it is a matter of fact that this property was purchased jointly by Shri Arvind Manchanda and Shri Sudesh Kumar, husband of the assessee in ratio of 60% and 40% and the agreement for this property was of Rs.70,00,000 and an amount of Rs.9,00,000 was paid in advance out of which Rs.7,00,000 was paid in cash by the assessee. It has been brought on record that this amount of Rs.7,00,000 was actually paid by her husband and this matter has already been considered in the assessment order of late Shri Sudesh Kumar vide order dated 30.12.2018 passed under Section 153A/143(3) of the Act wherein the same has been accepted. Once the payment of cash of Rs.7,00,000 has been accepted in the case of her husband, then, no separate addition can be made in the case of the assessee, therefore, the same is directed to be deleted.
In the result, the appeal is partly allowed for statistical purposes.
Order pronounced in the open court on 26th July, 2023.
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