TaxTMI 
TaxTMI 
2018 (10) TMI 500
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....rchase 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. iii. That my Ex-spouse Mr. Rachit Garg had purchased a property No.886....
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.... 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 rise in the circle rates of the area without considering the actual market rate. The representation sent by the Industrial Complex....
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....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. 2,80,00,000/-. Accordingly, the Ld. AO after invoking the provisions of Section 56(2)(vii)(b)(ii) of the Act made an addition of Rs. 1,02,50,000/- being 5....
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....uly 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 day of October, 2009 84[but before the 1st day of April, 2017],- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole o....
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....as 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)(ii)] is disputed by the Assessee. Thus, in view of the above referred judicial pronouncements and under the factual matrix it is that the reliance on the provisions of section 56(2)(vii)(b)(ii) while completely overlooking the Proviso to section 56(2)(vii) by the Ld. AO is wro....
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....ourse 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 summary assessment. However, no proceedings u/s 147 or 263 has been initiated. The assessee during the course of assessment proceedings has filed a report of the registered valuer. However, not a single word has been mentioned by the Assessing Officer in the assessment order about such valuation report. Although the asses....
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....6, 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 reversed. In his alternate argument it is his submission that the matter should be restored to the file of the Assessing Officer. 15. It the submission of the ld. counsel for the assessee that when the assessee had furnished copy of the registered valuer and has also brought to the notice of the Assessing Officer during the assessment proceedings regarding t....
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....- "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 Industrial Complex Welfare Association to the then Chief Minister of Delhi Smt. Sheila Dixit dated 09.12.2010 and to Shri Arvind Kejriwal dated 30.01.2014,1, stating that the circle rates of industrial plots in Narela Industrial area are much higher than the actual market rates and circle rates are enhanced arbitrarily without any logic were also filed. The submission of AR of assessee has b....
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.... 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 Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals)." 39. The further inquiry envisaged under Section 250(4) quoted above is generally by calling what is known as "remand report". The purpose of this enabling clause is essentially to ensure that the m....
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....T (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 the stamp valuation authority was also ignored by the Assessing Officer and instead of referring the matter to the DVO he made addition being the difference between the circle rate and actual sale consideration. When the assessee submitted various details including two sale instances below the circle rate in the same area, the ld. CIT(A) called for a remand report from the Assessing Officer and the Assessing Officer at that time also did not....