2015 (7) TMI 563 - AT - Income Tax

Tribunal allows new evidence in property valuation dispute under Income Tax Act.

M/s. Janakiram & Others, Hyderabad Versus Asstt. Commissioner of Income-tax Circle 9 (1), Hyderabad

The Tribunal dismissed challenges to the applicability of Section 50C of the Income Tax Act but admitted additional evidence from the assessee. The matter ... Addition on account of long term capital gain - AO adopting the stamp duty valuation as sale consideration - CIT(A) adopting the sale consideration of ₹ 11,34,93,000 in place of ₹ 9,06,00,000 shown by the assessee by invoking the provisions of S.50C - assessee in the present case is a partnership firm - Held that:- As relying on the decision of the Hon'ble Bombay High Court in the case of Bhatia Nagar Premises Co-operative Society Ltd. V/s. Union of India and Others (2010 (3) TMI 813 - Bombay High Court) and K.R.Palaniswamy & Ors. V/s. Union of India and others (2008 (8) TMI 27 - High Court of Madras ), we do not find merit in the preliminary issue raised by the assessee in this appeal, contending that the Assessing Officer, for invoking the provisions of S.50C, has to bring something on record to show that the consideration has been understated by the assessee, and that the assessee has actually received more than what is declared by him. The additional grounds raised by the assessee are accordingly dismissed. As already noted, the assessee in the original grounds raised in this appeal has challenged the valuation of its property as determined by the DVO in his valuation report. In this regard, it is observed that the additional evidence in the form of letter dated 20.1.2012 issued by the General Manager, A.P. Industrial Infrastructure Corporation was filed by the assessee before the learned CIT(A), wherein it was stated that the land rate in industrial Estate, Sanath Nagar fixed by the Price Fixation Committee during February, 2006 was ₹ 3,750 per sq. metre. The said additional evidence, however, was not admitted by the learned CIT(A) mainly on the ground that the assessee had not furnished any reason whatsoever as to why the said evidence was not filed before the Assessing Officer. As submitted by the learned counsel for the assessee in this regard, the said evidence in the form of letter dated 20.1.2012 was obtained by the assessee only after the completion of assessment by the Assessing Officer on 30.12.2011 and since the same was not available at the relevant time, it could not be filed before the Assessing Officer. Keeping in this submission made by the learned counsel for the assessee, we are of the view that the learned CIT(A) should have admitted the additional evidence filed by the assessee in the form of letter dated 20.1.2012 issued by the General manger, A.P. Infrastructure Corporation Ltd. Keeping in view our decision rendered above admitting the letter dated 1.4.2009 filed by the assessee before us as additional evidence as well as the letter dated 21.2.2012 filed by the assessee before the learned CIT(A) as additional evidence, we consider it just and proper to restore the matter to the file of the Assessing Officer for deciding afresh the issue relating to the valuation of the assessee’s property, as done by the DVO in the light of this additional evidence. The impugned order of the learned CIT(A) on this issue is accordingly set aside and the matter is restored to the file of the Assessing Officer for deciding the same afresh - Decided partly in favour of assessee for statistical purposes. Issues Involved:1. Addition of long-term capital gain by adopting the sale consideration as per Stamp Valuation Authority.2. Legality and applicability of Section 50C of the Income Tax Act, 1961.3. Admission of additional evidence by the assessee.4. Determination of property valuation by the Departmental Valuation Officer (DVO).Issue-wise Detailed Analysis:1. Addition of Long-term Capital Gain by Adopting Sale Consideration as per Stamp Valuation Authority:The Assessing Officer (AO) added to the total income of the assessee by adopting the sale consideration of Rs. 11,34,93,000 instead of Rs. 9,06,00,000 shown by the assessee, invoking the provisions of Section 50C of the Income Tax Act, 1961. The assessee argued that the value adopted by the Stamp Valuation Authority was excessive and requested a reference to the Departmental Valuation Officer (DVO). The DVO valued the property at Rs. 15,99,81,400, which the assessee contested, but the AO adopted the Stamp Valuation Authority's value for computing long-term capital gains.2. Legality and Applicability of Section 50C of the Income Tax Act, 1961:The assessee contended that Section 50C should not apply to bona fide, genuine transactions where there is no evidence of receiving more than the declared sale consideration. The assessee relied on the Supreme Court decision in K.P. Varghese v. ITO, arguing that the Revenue must show evidence of understatement of consideration. The Tribunal, however, held that Section 50C does not require the Revenue to prove under-valuation or receipt of additional consideration. The Tribunal emphasized that Section 50C's provisions are plain and clear, and the value adopted by the Stamp Valuation Authority is deemed to be the full value of consideration for computing capital gains.3. Admission of Additional Evidence by the Assessee:The assessee sought to admit additional evidence, including a letter from the Andhra Pradesh Industrial Infrastructure Corporation Ltd., stating the land rate in the Industrial Estate, Sanathnagar, and a letter from the Executive Director, APIIC, clarifying the restrictive use of the land for industrial purposes. The CIT(A) initially refused to admit the additional evidence, but the Tribunal found that the evidence was obtained after the completion of the assessment and should have been admitted. The Tribunal decided to admit the additional evidence for a fair determination of the property's value.4. Determination of Property Valuation by the Departmental Valuation Officer (DVO):The Tribunal noted that the DVO's valuation was contested by the assessee on grounds of restrictive use of the property and other factors not considered by the DVO. Given the additional evidence admitted, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh consideration of the property's valuation in light of the new evidence.Conclusion:The Tribunal dismissed the additional grounds challenging the applicability of Section 50C but admitted the additional evidence provided by the assessee. The matter regarding the valuation of the property was remitted back to the AO for fresh adjudication. The appeal was treated as partly allowed for statistical purposes.