TaxTMI 
TaxTMI 
2022 (8) TMI 848
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.... 3. That the appellant craves leave to add, amend, alter or withdraw any ground of appeal before final hearing. 3. Facts of the case in brief are that the assessment in this case was completed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'Act') on 22/12/2017 at an income of Rs. 1,30,58,890/- against the returned income of Rs. 97,67,890/- by making an addition of Rs. 32,91,000/- under section 56(2)(vii)(b) of the Act. 4. During the course of assessment proceedings the assessee raised the objection under section 50C of the Act claiming that the price which the assessee had paid for the purchase of the property was correct fair market value and the stamp duty value adopted by the stamp valuation authority exceeds the fair market value on the date of transfer. The AO made a reference to the valuation officer to determine the fair market value of the property on the date of its sale and to determine as to whether the stamp duty value determined by the stamp value authority was excessive in comparison to the fair market value of the property. Thereafter Distt. Valuation Officer vide his letter no. 305 dated 30/01/2018 ascertained the fair market v....
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.... addition amounting to Rs. 32.91 Lakhs (i.e. 50% of the difference between collector rate and purchase price) by invoking the provision of Section 56(2)(vii)(b) of the Act. Thereafter, on being referred, the DVO assessed the Fair Market Value of the said property at Rs. 175.42 Lakhs (i.e. 50% value of the property). Therefore, the net difference between the fair market value and the purchase price of the property comes to Rs. 13.42 Lakhs only and which is just 8.28% at which the property is purchased by the assessee and therefore the provisions of Section 56(2)(vii)(b) of the Act shall not be applied in the instant case. 5.1 The reliance was placed on the decision of the ITAT Chandigarh Bench in the case of ACIT, Circle, Sangrur Vs. M/s Standard Combines Pvt. Ltd. and the decision dt. 22/10/2008 reported at 1 SET 102 (2009) of the Hon'ble Patna High Court in the case of Bimla Singh Vs. CIT. 5.2 During the course of appellate proceedings the Ld. CIT(A) asked the assessee further information, the relevant part of which was as under: "2. It is seen from the assessment records and submissions made during the appellate proceedings that the claims are being made to the fin....
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....as far in excess of purchase price, the AO invoked the provision of section 56(2)(vii)(b) of the Act. The Ld. CIT(A) further observed that the case laws is relied by the assessee were distinguishable as they predominantly pertained to the differences arising from cost of construction of house property whereas the impugned property was commercial which was readymade fit for outright purchase and there was no scope of personal expenditure or cost apportionable to personal supervision nor was the construction spread over a period of seven years as in the case of Bimla Singh Vs. CIT(supra). He, therefore sustained the addition. 6. Now the assessee is in appeal. 7. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that no addition was made in the hands of the co-owner and that the difference in valuation after the order passed by the AO under section 154 of the Act was 8.28% i.e less than 10% therefore, no addition was called for. The reliance was placed on the following case laws: • Krishna Enterprises Vs. Addl. CIT 2016 (12) TMI ITAT Mumbai • Dy. CIT Vs. Mahalxmi Rope Works Ltd. 2019(3) T....
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.... of basement Nos. 2 and 3 at Rahul Chambers. There is also no dispute to the fact that the stamp valuation authorities have adopted the value at Rs. 28,73,000 for the purpose of stamp duty. There is also no dispute to the fact that on being objected by the assessee for substitution of the same figure under s. 50C(2) of the Act, the AO referred the matter to the DVO who determined the FMV of the property on the date of sale at Rs. 20,55,000. We find that the learned CIT(A) upheld the action of the AO in substituting the value determined by the DVO on the ground that the assessee has not objected to the valuation either before the DVO or before the AO or even before him. Further, according to him, as per the provisions of s. 50C, the AO is bound to take the valuation as per the stamp valuation authorities and he is not empowered to go beyond the valuation made by the stamp valuation authorities. However, since the AO has already adopted the FMV determined by the DVO he upheld the action of the AO. It is the submission of the learned counsel for the assessee that the assessee can challenge the valuation determined by the DVO as per the provisions of s. 50C(2) of the Act. However, acco....
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....he provisions of S. 50C(1) the value ado ted by the stamp valuation authorities in respect of transfer of a capital asset shall be deemed to be the full value of consideration received or accruing as a result of transfer if such value is more than the value or consideration received by the assessee. As per the provisions of sub-so (2) of the said section if the assessee claims before the AO that such valuation by the stamp valuation authorities under sub-so (l) exceeds the FMV of the property as on the date of transfer the AO may refer the valuation of the capital asset to the DVO. As per the said sub-section where any such reference is made the various provisions of WT Act as mentioned in sub-so (2) referred above shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the AO under sub-so (1) of S. 16A of the WT Act. We find the provisions of S. 16A of the WT Act deal with reference to the Valuation Officer by the AO. Similarly S. 23A(l)(i) inter alia confers right of appeal to the CIT(A) to any person objecting to any order of the DVO under S. 35 having the effect of enhancing the valuation of any asset or....
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....0 per cent. The Courts and Tribunals are consistently taking a liberal approach in favour of the assessee where the difference between the value adopted by the assessee and the value adopted by the DVO is less than 10 per cent. We find that the Pune Bench of the Tribunal in the case of Asstt. CIT vs. Harpreet Hotels (P) Ltd. vide ITA Nos. 1156- 1160/Pn/2000 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide ITA No. 441IPnl2004 for the asst. yr. 1992- 93 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by t....