2021 (11) TMI 95 - AT - Income Tax

ITAT directs reassessment of tax additions: discrepancies in TDS income & property valuation

Govind Ganpatlal Thakkar Versus A.C.I.T (OSD), Circle-10, Ahmedabad.

Govind Ganpatlal Thakkar Versus A.C.I.T (OSD), Circle-10, Ahmedabad. - TMI Issues Involved:1. Addition of Rs. 11,87,796/- due to mismatch between TDS and income shown.2. Addition of Rs. 39,68,928/- under section 50C of the Income Tax Act.Issue-Wise Detailed Analysis:1. Addition of Rs. 11,87,796/- due to mismatch between TDS and income shown:The first issue concerns the confirmation by the CIT(A) of an addition of Rs. 11,87,796/- made by the AO due to a discrepancy between the gross income shown in the assessee's books and the income reported in Form 26AS issued by the Revenue. The assessee, engaged in the trading of PVC raw materials, had different heads of income such as interest, contractual receipts, and commission. The AO found discrepancies in these amounts, notably under sections 194A, 194C, and 194H of the Act.The assessee explained that the differences arose due to various reasons, including the inclusion of service tax in the income on which TDS was deducted, incorrect TDS deductions by clients under wrong sections, and waived interest amounts on delayed payments. Despite these explanations, the AO did not find sufficient corroborative evidence and added the difference to the total income.Upon appeal, the CIT(A) upheld the AO's decision, noting that the assessee failed to provide sufficient evidence to fully reconcile the discrepancies. The assessee then appealed to the ITAT, arguing that the reconciliation statements and ledger accounts provided were not properly considered by the lower authorities. The Revenue did not object to a fresh adjudication.The ITAT noted that the reconciliation statements were indeed necessary to resolve the dispute and found that the lower authorities had not considered these statements. Consequently, the ITAT restored the issue to the AO for fresh adjudication, directing that the reconciliation statements be duly considered as per the law. Thus, the appeal on this ground was allowed for statistical purposes.2. Addition of Rs. 39,68,928/- under section 50C:The second issue involves the confirmation by the CIT(A) of an addition of Rs. 39,68,928/- under section 50C of the Act. The assessee had acquired a godown and sold it in the relevant assessment year for Rs. 3,31,000/-. The AO found that the Jantry value (stamp duty value) of the property was much higher at Rs. 40,550/- per square meter. The assessee contended that the property was located in an unauthorized area with unclear title, and thus, the sale consideration should not be based on the stamp value.The AO rejected the assessee's valuation report, citing various deficiencies and inconsistencies, and invoked section 50C to adopt the stamp value for computing the capital gain. The CIT(A) upheld this decision, stating that the stamp value should be considered as per section 50C.The assessee appealed to the ITAT, arguing that the property was unauthorized and should not be subject to section 50C. The Revenue countered that there was no evidence to suggest the land was agricultural or that the ownership was disputed.The ITAT reviewed the case and noted that the property transfer satisfied the conditions of section 53A of the Transfer of Property Act, making section 50C applicable. However, the ITAT found that the AO had not referred the valuation report to the District Valuation Officer (DVO) as required under section 50C(2) of the Act. The ITAT directed the AO to refer the matter to the DVO for a fair valuation of the property and to decide the issue afresh based on the DVO's valuation. Thus, the appeal on this ground was also allowed for statistical purposes.Conclusion:In conclusion, the ITAT restored both issues to the AO for fresh adjudication, directing proper consideration of the reconciliation statements and a referral to the DVO for property valuation, respectively. The appeal filed by the assessee was allowed for statistical purposes.