TaxTMI 
TaxTMI 
2016 (4) TMI 130
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....Rs. 5,00,674/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Income Tax was issued on 27.8.2009, which was duly served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has sold seven shops for a consideration of Rs. 25,83,750/-. According to the AO, the shops are situated in the heart of Surat City, and the prices shown by the assessee are nominal. The assessee must have received much higher consideration then the one disclosed by him. Therefore, he confronted the assessee as to why the receipt from the four shops should not be estimated at Rs. 60,00,000/- instead of Rs. 25,83,750/- shown by the assessee. In response to the query of the AO, the assessee contended that he was partner in M/s. Shri Rang Developers (partnership firm). The said firm was engaged in the business of development of project known as "21st Century Business Centre" at Survey No.3, Ward No.2, Nr.World Trade Centre, Ring Road, Surat. The firm was dissolved on and from 1st April, 2006. At the time of dissolution, there were certain assets and liabilities including the unrealized stock, i.e. office/shops. In order to clo....
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.... Rs. 2,500/- per sq. ft. on the basis that the rate of Rs. 2,500/- is most conservative price as the complex is situated in the heart of Surat city. Further, Jantri price of this area based on scientific study on 01.04.2008 is near to Rs. 3,200/- per sq. ft. and sale price in Mllennium Textile Market during the year under assessment is near to Rs. 3,500/- per sq. ft. and the building of appellant is located at very advantageous place on the same road on which Mllennium Textile Market is situated. However, to ascertain the market value, property was referred by AO to valuation authority u/s.55A of I.T. Act, but the report could not be received in the office of AO before the completion of assessment. On the basis of these facts, AO estimated market price of shops at Rs. 2,500/- per sq. ft. and made addition of Rs. 1,63,16,250/- as undisclosed profit under the head business income. 5.1 From the finding given by AO, it is clear that he has computed business income out of sale of shops by treating them as business assets. Though in the concluding para of assessment order it is not mentioned that income is being assessed as business income but the show cause notice issued as well as t....
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....sale consideration received or accruing to the seller as per sale document. 5.2 So far as reference to valuation authority u/s. 55A of IT. Act is concerned, AO has mentioned in the assessment order that after reference, valuation report from Valuation Officer could not be received till the completion of assessment proceedings. In this regard, appellant has mentioned that he had objected the reference on the ground that the reference to Valuation Officer was made by AO much after the completion of assessment proceedings. As pointed out by appellant in the appellate proceedings, reference to Valuation Officer was made on 27.07.2011 by AO whereas the assessment order was34 passed on 29.12.2010 for-the year under consideration. It has also been pointed out by appellant that he had written a letter to Commissioner of Income Tax-1, Surat on 07.11.2011 objecting the reference on the ground that reference had been made much after the completion of assessment proceedings and passing of order and as such there was no proceeding pending in his case. It has further been informed by appellant that there after no valuation of the said property has been done. However, these facts have been ver....
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....ince, the reference to Valuation Officer to value the market price of the property could not reach to the conclusion and proceedings were dropped without making valuation of property, the rates determined by Stamp Valuation Authority of those very shops are to be taken in to consideration for computing the capital gains. There are court decisions which say that in absence of valuation by departmental valuation authority, value adopted by Stamp Valuation Officer has to be taken as full value of consideration received or accruing as result of transfer of property. In the case Ambattur Clothing Co. Ltd vs. ACIT (326 ITR 245), Hon'ble Madras High Court has held that AO was justified in treating the value adopted by Stamp Valuation Authority as the deemed sale consideration received / accruing as a result of transfer. Hon'ble Bombay High Court in the case Bhatia Nagar Premises Co-operative Society Ltd vs. Union of India and others (334 ITR 145), held that section 50C is measure provided to bridge the gap as it was found that assessees were not correctly declaring the full value of consideration or resorting to the practice of under valuation and value adopted or assessed by the ....
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....ly. The ld.CIT(A) has also done that. This action of the ld.CIT(A) has not been challenged by the Revenue in its grounds of appeal. Therefore, we do not find any error in the order of the ld.CIT(A) on this issue. The ground no.1 is rejected. 7. In the ground no.2, the grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 15,65,000/-. 8. Brief facts of the case are that the AO has alleged that the assessee has given advances to some agriculturists in cash aggregating to Rs. 15,65,000/-. According to the AO, these advances were given without entering into any agreement. He harboured a belief that this must be unaccounted investments, and accordingly made addition. 9. On appeal, the ld.CIT(A) deleted the addition by observing as under: "6.3 I have considered the facts of the case and arguments given by the appellant. The basis of addition made by AO is that there was no agreement executed by appellant for advancing the money, no confirmation or proof was submitted by appellant in respect of money advanced and the debtors were not produced in person before him. However, appellant- has submitted that he had filed the copies of confirmations....