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

ITAT Ahmedabad upheld addition under section 56(2)(vii)(b)(ii) regarding difference between land purchase price and valuation officer's assessment. ... Addition u/s. 56(2)(vii)(b)(ii) - difference in purchase price of the land and value of land as per valuation officer - assessee had disputed the stamp duty value and on the objection of the assessee the matter was referred to the DVO - HELD THAT:- Assessee had not submitted any other Registered Valuer’s report before the DVO. The comparable cases considered by the DVO were also not objected by the assessee. CIT(A) has also dealt with the objection of the assessee in respect of difference in valuation being less than 15% of the sale price. FMV determined by the DVO was adopted only on the basis of objection of the assessee to the stamp duty value, with a request to refer the matter to the DVO. The Ld. CIT(A) has given a categorical finding that the value as per report of DVO was taken as per alternate plea of the assessee only. Under the circumstances, we don’t find any merit in the ground as raised by the assessee. The assessee has been unable to bring any material on record to controvert the findings of the Ld. CIT(A). We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A). The provision of section 56(2)(vii)(b)(ii) of the Act is found to be squarely applicable to the facts and circumstances of the case. Accordingly, the addition as confirmed by the Ld. CIT(A) u/s. 56(2)(vii)(b)(ii) of the Act, is upheld. Decided against assessee. 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.