2024 (12) TMI 386 - AT - Income Tax

Addition under section 56(2)(vii)(b)(ii) upheld as assessee failed to provide alternative valuation evidence against DVO assessment

Tejas C Joshi Versus Dy. Commissioner of Income Tax Central Circle 5 (3), 2 (2), Ahmedabad

Tejas C Joshi Versus Dy. Commissioner of Income Tax Central Circle 5 (3), 2 (2), Ahmedabad - TMI Issues Involved:1. Delay in filing the appeal.2. Addition of income under Section 56(2)(vii)(b)(ii) of the Income Tax Act due to difference in property valuation.3. Consideration of objections to the valuation by the District Valuation Officer (DVO).Issue-wise Detailed Analysis:1. Delay in Filing the Appeal:The appeal was filed by the assessee with a delay of 57 days. The delay was attributed to the pre-occupation of the assessee's accountant with finalizing accounts and filing tax returns, as well as the assessee being out of the country. An affidavit was submitted by the accountant explaining these circumstances. The Tribunal considered the explanation provided by the assessee and condoned the delay, allowing the appeal to be heard.2. Addition of Income under Section 56(2)(vii)(b)(ii):The assessee purchased land for Rs. 10,28,28,600, but the property was valued at Rs. 12,79,67,530 by the Deputy Collector, leading to additional stamp duty. The Assessing Officer (AO) added the difference of Rs. 2,51,39,530 as income under Section 56(2)(vii)(b)(ii) of the Income Tax Act. The First Appellate Authority (CIT(A)) provided partial relief, reducing the addition to Rs. 1,28,54,000 based on the DVO's report. The Tribunal upheld this addition, noting that the stamp duty value was higher than the consideration paid, which justified the AO's action under the provisions of the Act.3. Consideration of Objections to the Valuation by the DVO:The assessee contested the DVO's valuation, arguing that only 4674 sq.mtr. of the total 7790 sq.mtr. plot was acquired, as the rest was for public utility. The assessee also claimed that the comparable cases used by the DVO were not appropriate and that the difference in valuation was only 12.5%, which should be ignored. The Tribunal found that the DVO had considered all objections raised by the assessee and determined the fair market value (FMV) at Rs. 11,56,82,000. The CIT(A) had addressed these objections and confirmed the addition based on the DVO's valuation, as the difference exceeded the threshold stipulated by the Act. The Tribunal noted that the assessee did not provide any alternative valuation report and had not objected to the comparable cases used by the DVO. Consequently, the Tribunal upheld the CIT(A)'s order, confirming the addition of Rs. 1,28,54,000 as income from other sources under the deeming provisions of Section 56(2)(vii)(b)(ii).Conclusion:The Tribunal dismissed the appeal, finding no merit in the grounds raised by the assessee. The provisions of Section 56(2)(vii)(b)(ii) were deemed applicable, and the addition confirmed by the CIT(A) was upheld. The order was pronounced on 05/12/2024.