TaxTMI 
TaxTMI 
2018 (10) TMI 500
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....gs, the Assessing Officer noticed from the purchase deed of the property located at E-886, Narela Industrial Complex DSIIDC Narela, Delhi that the assessee had jointly purchased 50% undivided share in the above property with Shri Rachit Garg at a price of Rs. 75,00,000/- and the circle rate value was Rs. 2,80,00,000/-. The Assessing Officer, therefore, asked the assessee to explain as to why the provisions of section 56(2)(vii)(b)(ii) be not invoked and the difference in the amount be added to her total income. In response to the same, the assessee filed a letter along with an affidavit dated 26.09.2016, the contents of which have been reproduced by the Assessing Officer in the body of the assessment order and which read as under :- "I, Aastha Goel, D/o Shri Ashok Kumar Goel aged 26 years, Resident of 28/42, Punjabi Bagh, New Delhi-110026 do hereby solemnly affirm and declare as under :- i. That I am a regular income tax assessee having PAN: AROPG0416H and having my jurisdiction with the Assessing Officer, Ward 42(1), New Delhi. ii. That I have filed my income tax return for the assessment year 2014-15 on Dt. 31.07.2014, Ack. No.319920770310714. ....
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....igned by him. However, the Assessing Officer was not satisfied with the explanation given by the assessee. According to him, it is settled position of law that "Owner" means a person who has got valid title legally conveyed to him after complying with the requirement of law such as the Transfer of Property Act, Registration Act, etc. Since in the instant case the property was purchased jointly and the assessee was having undivided share of 50%, which has later been sold by the assessee herself which clearly demonstrates that the assessee was having all the rights in the property and it was her sweet will to sell it at any point of time, therefore, the Assessing Officer rejecting the various explanations given by the assessee and invoking the provisions of section 56(2)(vii)(b) made addition of Rs. 1,02,50,000/- to the total income of the assessee being the difference between the value as per stamp valuation authority of Rs. 1,40,00,000/- and the value as per purchase deed of Rs. 37,50,000/-. 6. Before the ld. CIT(A), it was submitted that the addition made by the Assessing Officer is based on mere surmises and conjectures. It was submitted that there has been an indiscriminate r....
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....Remand Report given by the Ld. AR of the appellant as well as the judicial pronouncements of the higher appellate authorities and the Hon'ble Courts. I incline to agree with the contention of the Ld. AR that Ld. AO is not justified in making the addition of Rs. 1,02,50,000/- u/s 56(2)(vii)(b) of the Act on account of difference between value of property as per stamp valuation and value as per purchase deed of the property under consideration in view of the following facts and circumstances of the appellant's case:- (i) The assessment u/s 143(3) of Act was completed on 05.12.2016 at in income of Rs. 1,07,00,000/- as against returned income of Rs. 4,50,000/- by ITO Ward 42(1), New Delhi, after making an addition of Rs. 1,02,50,000/- on account of difference between value of property as per stamp valuation and value as per purchase deed. (ii) Brief facts in this case is that as per the purchase deed of the property located at E-886, Narela Industrial Complex DSIIDC Narela, Delhi the assessee had jointly purchased 50% undivided share in the property with Sh. Rachit Garg at a price of Rs. 75,00,000/- whereas as per circle rate the value of the property was Rs. ....
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.... rate of the property bought was the Fair market Value. No reference have been made to the DVO either during the course of the original assessment proceedings, when duly disputing the circle rate of the property, the appellant filed the letters and documents referred supra. Further no reference was made even during the remand proceedings by the Ld. AO though the differences between the circle rate and the consideration paid is being specifically disputed and it is being submitted time and again and all through out that the said circle rate was notional, unrealistic, arbitrary indiscriminate as well as not in commensuration to the prevailing fair market value at the relevant times. However, despite all the above, no power was exercised by the Ld. AO under the relevant provisions of the Act so as to arrive at the Fair Market Value a the asset purchased. (v) To decide the grounds of appeal it is worth to discuss the whole provisions of section 56(2)(vii) of the Act including the proviso thereof which are as under: - Quote 56(2)(vii) Where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st ....
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....e to the judgment of R. Dalmia and Ors. v. CIT 236 ITR 480 (SC), for the proposition that the expression "so far as may be" applies to all the provisions. (i) That this provision has employed the word "shall". By use of the word "shall", the provision has been made mandatory and it cannot be construed as directory. (ii) What has been made applicable by this provision is the provision of this Act." (iii) Deeming provisions are to be extended to the legitimate purpose for which these are enacted. Accordingly, proviso to Section 56(2)(vii) has to be treated as mandatory. Thereby meaning that ion all cases covered by the said proviso, the provisions of section 50C as also of section 155(15) shall apply in all cases. It is therefore the Ld. AR has submitted that, it can, on the strength of the above judicial propositions, be contended and would be held that, the procedure of reference to the DVO as per section 50C(2) of the Act shall also apply to the extent it is practical or possible even in case of purchase of immovable property for a value less than the circle rates, provided the said value [as proposed to be added to his income u/s 56(2)(vii)(b)(....
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....nd they cannot simply delete addition made by Assessing Officer on ground of lack of inquiry, thus, if the AO had failed to conduct the relevant inquiry then it was the duty of the CIT (A) to conduct inquiry. 3. The appellant craves the right to add, alter or amend any ground of appeal before or during the course of the hearing of the appeal." 11. The ld. DR strongly challenged the order of the ld. CIT(A). He submitted that the ld. CIT(A) himself should have referred the matter to the DVO for determination of the fair market value of the property. Since he has not done so, therefore, the order of the ld. CIT(A) should be reversed and that of the Assessing Officer be restored. For the above proposition, he relied on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Jansampark Advertising and Marketing Ltd. reported in 56 taxmann.com 286. 12. The ld. counsel for the assessee on the other hand strongly supported the order of the ld. CIT(A). She submitted that the property was purchased by the assessee along with her husband who holds 50% share in the said property. The return of income filed by her husband was accepted by the Department, although in su....
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.... DCIT vs. Rohtas Projects Ltd., 282 ITR 42. (iv) ACIT, Anima Investment Ltd., 247 ITR 22. (v) Raj Kumar Jain vs. ACIT, 208 ITR 22. 14. We have considered the rival arguments made by both the sides and perused the material available on record. We find the assessee in the instant case had jointly purchased the property located at E-886, Narela Industrial Complex DSIIDC Narela, Delhi with her husband Shri Rachit Garg each having 50% undivided share in the said property at purchase price of Rs. 75,00,000/-. We find on the basis of price adopted by the stamp valuation authority at Rs. 2,80,00,000/-, the Assessing Officer made addition of Rs. 1,02,50,000/- in the hands of the assessee by following the provisions of section 56(2) of the I.T. Act. We find, in appeal, the ld. CIT(A) deleted the addition, the reasons for which have already been reproduced in the preceding paragraph. It is the submission of the ld. DR that since the ld. CIT(A), instead of calling for a report from the DVO, had deleted the addition on the basis of submissions made by the assessee, therefore, the order of the ld. CIT(A) is not in accordance with law and the order of the ld. CIT(A) be revers....
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....evidences in shape of sale instances to the Assessing Officer for his comments. At that time also, the Assessing Officer did not refer the matter to the DVO and simply requested the ld. CIT(A) to adjudicate the issue on merit of the case. The relevant portion of the remand report, copy of which is placed at page 42 and 43 of the Paper Book, reads as under :- "The AR of assessee vide his letter dated 27.06.2017, during the remand stage furnished the sale deeds of two properties of same location and area i.e. 350 sq.mts. The descriptions of the both the properties is as under :- S. No. Address of property Area in sq.mtrs. Date of sale deed Value as per Circle rates (Rs.) Value as registered sale deed (Rs.) 1. 957, Sector G, Narela Indl. Complex, Delhi 350 Sq. Mtrs. 08.11.2015 3,58,57,500/- 70,00,000/- 2. 855, Block E, DSIDC Narela Indl. Area, Delhi 350 Sq. Mtrs. 13.07.2013 2,80,00,000/- 90,00,000/- The copy of valuation report in respect of property No.886, Block E, Narela Industrial Area, Delhi dated 07.06.2013 of Captain Suresh Dutt & Associates also filed during the remand stage. The copies of letter by the In....
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....provisions of section 68 of the I.T. Act, 1961 made addition which was deleted by the ld. CIT(A) and subsequently the Tribunal upheld the order of the ld. CIT(A). On further appeal by the Revenue, the Hon'ble High Court observed as under :- "38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, "further inquiry", in terms of sub-section (4) which reads as under:- "The Commissio....
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....ansactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a "further inquiry" in exercise of the power under Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld. 43. In the result, the questions of law stand answered in favour of the Revenue though with a direction that the matter of assessment arising out of notice under Section 148 Income Tax Act issued on 18.04.2007 for AY 2004-05 in respect of the assessee would stand remitted to the CIT (Appeals) for fresh consideration/adjudication in accordance with law." 18. However, the facts in the instant case are completely different. The Assessing Officer had not discussed anything about the valuation report filed by the assessee during the course of assessment proceedings. The representations filed by the trade organization before the then Chief Minister of Delhi about the arbitrary adoption of circle rate by....