2022 (7) TMI 812 - AT - Income Tax

Tribunal overturns tax assessment, directs Assessing Officer to use stamp duty value as purchase consideration.

Shri G. Shanmuganathan, C/o S. Ramachandran, B. Com, FCA, Chartered Accountant Versus The Deputy Commissioner of Income Tax, Central Circle I, Coimbatore

Shri G. Shanmuganathan, C/o S. Ramachandran, B. Com, FCA, Chartered Accountant Versus The Deputy Commissioner of Income Tax, Central Circle I, Coimbatore ... Issues involved:1. Assessment of undisclosed income based on land purchase cost discrepancy.2. Jurisdiction issue regarding survey conducted under section 133A.3. Adjudication of the cost of land purchase and tax implications under section 69B.Detailed Analysis:1. The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2007-08. The Assessing Officer initiated proceedings under section 147 of the Income Tax Act based on a survey conducted at the assessee's business premises. The issue revolved around the discrepancy in the cost of land purchase, with the Assessing Officer assessing undisclosed income under section 69B. The Commissioner directed adoption of a higher cost per acre, which was contested by the assessee in the appeal before the Tribunal.2. The Tribunal addressed the jurisdiction issue raised in ground No. 6, which was remitted back to the Commissioner for adjudication. The matter was recalled for adjudicating other grounds raised by the assessee. The Tribunal proceeded to adjudicate the issue of fixing the cost of land purchase on merits, considering the impounded materials from the survey and the assessment completed by the Assessing Officer. The Tribunal noted the absence of verification from the seller and the failure to consider impounded materials by the Commissioner.3. The Tribunal analyzed the orders of the authorities below and observed that the Commissioner had not given cognizance to the impounded materials crucial for assessing the purchase consideration. The Tribunal disagreed with the Commissioner's concept that the cost paid by the assessee should be at least as much as others paid to the seller. Considering the lack of verification and absence of reference to determining the fair market value, the Tribunal directed the Assessing Officer to adopt the stamp duty value of the Sub-Registrar Office as the actual purchase consideration per acre. Consequently, the Tribunal allowed the ground raised by the assessee, resulting in the appeal being allowed.This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key arguments and decisions made by the Tribunal.