Tribunal confirms income tax addition under Section 56(2)(vii)(b)(ii)

The Tribunal upheld the Commissioner of Income-Tax (Appeals)'s decision to confirm the addition of Rs. 8,19,725 under Section 56(2)(vii)(b)(ii) of the Income-tax Act, 1961. The assessee's challenge regarding the property's valuation based on stamp duty was rejected as the revised value accepted by both parties precluded the assessee from seeking a reference to the Valuation Officer. The Tribunal ruled that the right to seek such a reference is only available if the stamp valuation authority's value has not been disputed previously. The assessee's appeal was dismissed, affirming the addition as justified.

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Issues Involved:
1. Confirmation of Addition under Section 56(2)(vii)(b)(ii)
2. Consideration of Assessee's Explanation
3. Right to Seek Reference for Valuation

Summary:

1. Confirmation of Addition under Section 56(2)(vii)(b)(ii):
The assessee challenged the addition of Rs. 8,19,725/- made by the Assessing Officer (A.O) under Section 56(2)(vii)(b)(ii) of the Income-tax Act, 1961, which was confirmed by the Commissioner of Income-Tax (Appeals) [CIT(A)]. The A.O observed that the assessee, along with 19 co-purchasers, bought a property for Rs. 2.71 crore, whereas the stamp valuation was Rs. 4,34,94,500/-. The A.O added the difference in value as "Income from other sources."

2. Consideration of Assessee's Explanation:
The assessee argued that the stamp duty value was disputed due to the property's demographic location and other factors. The A.O noted that both purchasers and sellers had disputed the stamp valuation in the Court of Collector of Stamp, Bastar, which reduced the value to Rs. 4,34,94,500/-. Since this revised value was accepted by both parties, the A.O rejected the assessee's request for a reference to the Valuation Officer.

3. Right to Seek Reference for Valuation:
The Tribunal examined whether the assessee, who disputed the stamp duty value, could seek a reference to the Valuation Officer under the "3rd proviso" to Section 56(2)(vii) read with Section 50C(2). It was clarified that this right is available only if the value adopted by the stamp valuation authority has not been disputed in any appeal or revision. Since the assessee had already disputed the value, he was precluded from seeking such a reference.

Conclusion:
The Tribunal upheld the CIT(A)'s order, confirming that the addition of Rs. 8,19,725/- under Section 56(2)(vii)(b)(ii) was justified. The assessee's appeal was dismissed, and the order was pronounced in open court on 15th September 2023.

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