2020 (2) TMI 28 - AT - Income Tax

Tribunal overturns tax assessment, rules in favor of assessee.

The Tribunal concluded that the Assessing Officer lacked sufficient evidence to support the addition under section 50C of the Income Tax Act. It was found ... Reference of the matter to the DVO for valuation - difference in value adopted for registration before the Sub-Registrar (stamp value) and the value received by the assessee for sale of the immovable property - A.O. brought the same as unexplained investment and treated as capital gain u/s 50C - HELD THAT:- The present case, the A.O. has applied the provisions of section 50C for the computation of additional capital gain on the basis of the value adopted for registration of the said property. Apart from the stamp duty valuation, there is nothing on record to suggest that the assessee has received extra sale consideration over and above the sale consideration reflected in the sale deed. It was held by the Hon’ble Allahabad High Court in the case of Dinesh Kumar Mittal v. ITO [1991 (3) TMI 78 - ALLAHABAD HIGH COURT] that there is no law to the effect that the value determined for the purposes of stamp duty is the actual consideration passed between the parties to the sale and it is the burden of the Department to show that the assessee received extra consideration passed between the parties concerned. As in the case of Anand Banwarilal Adhukia v. Deputy Commissioner of Income-tax [2016 (11) TMI 294 - GUJARAT HIGH COURT] wherein held that where the Assessing Officer has no cogent material available not to satisfy himself about the requirement of section 69 of the I.T.Act, and therefore, in the absence of it the reference could not have been made u/s 142A Applying those ratio,in the present case, there is no need to refer the matter to the DVO for valuation, as there is no material in the hands of the Assessing Officer to consider the additional consideration passed between the parties, as such the addition cannot be made in this case. Appeal filed by the assessee is allowed. Issues Involved:1. Legality of the addition made under section 50C of the Income Tax Act.2. Discretionary power of the Assessing Officer (AO) to refer valuation to the District Valuation Officer (DVO).3. Consideration of the assessee's submissions and precedents by the CIT(A).4. Burden of proof regarding actual sale consideration.Issue-wise Detailed Analysis:1. Legality of the Addition under Section 50C:The assessee contested the addition of Rs. 10,72,000 made under section 50C of the Income Tax Act, arguing that the guidance value fixed by the State Government was higher than the market value of the property. The property was sold for Rs. 50,00,000, whereas the guidance value was Rs. 60,72,000. The Assessing Officer (AO) treated the difference as capital gain and added it to the assessee's income. The Tribunal noted that there was no sufficient material on record to prove that the additional consideration was passed between the parties. The Tribunal emphasized that the burden of proof lies on the Revenue to show that the assessee received extra sale consideration. Citing the case of Dinesh Kumar Mittal v. ITO, the Tribunal held that the value determined for stamp duty purposes is not necessarily the actual consideration passed between the parties.2. Discretionary Power of the AO to Refer to DVO:The assessee argued that the AO should have referred the matter to the DVO when the assessee objected to the valuation. The AO and the Departmental Representative contended that the reference to the DVO is discretionary, as indicated by the use of the word 'may' in section 50C(2). The Tribunal agreed with the Departmental Representative, stating that the legislature's intention was not to mandate a reference to the DVO in every case, as it would waste time and resources. The Tribunal cited the case of Anand Banwarilal Adhukia v. Deputy Commissioner of Income-tax, which held that without cogent material, a reference to the DVO is not permissible.3. Consideration of Submissions and Precedents by CIT(A):The assessee claimed that the CIT(A) failed to address the submissions and precedents presented. The Tribunal reviewed the case and found that the CIT(A) upheld the AO's decision without adequately considering the assessee's arguments and the surrounding circumstances that led to a lower sale price. The Tribunal emphasized the need for the CIT(A) to consider all relevant facts and precedents before making a decision.4. Burden of Proof Regarding Actual Sale Consideration:The Tribunal reiterated that the burden of proof is on the Revenue to demonstrate that the assessee received extra sale consideration over and above what was reflected in the sale deed. The Tribunal found that apart from the stamp duty valuation, there was no evidence to suggest that the assessee received additional consideration. The Tribunal cited several judgments, including Kamal Kishore Chandak v. ITO and ACIT v. Swami Constructions Pvt. Ltd., to support the view that the value determined for stamp duty purposes does not necessarily reflect the actual consideration passed between the parties.Conclusion:The Tribunal concluded that the AO had no material evidence to justify the addition under section 50C and that the CIT(A) erred in upholding the AO's decision. The Tribunal deleted the addition of Rs. 10,72,000 and allowed the appeal filed by the assessee.Order Pronounced:The appeal filed by the assessee is allowed. Order pronounced on January 30, 2020.