2015 (11) TMI 1571 - AT - Income Tax

Valuation - Addition of undisclosed income made u/s. 50C - sale of land - Revenue s endeavor is to restore the entire addition sum of ₹ 2,17,70,600/- based on jantri price of the land sold instead of DVO s valuation determining the same to be of ₹ 24,15,000/- - Held that - The hon ble Allahabad high court in case of CIT Vs. Dr. Indra Swaroop Bhatnagar Income 2013 (2) TMI 456 - ALLAHABAD HIGH COURT holds that a DVO s valuation u/s. 50C(2) binds an Assessing Officer/Revenue. No case law to the contrary is referred in the course of hearing. We find no fault with the lower appellate order in these facts and circumstances. The CIT(A) s action in restricting the impugned undisclosed income addition of ₹ 2,17,70,600/- to ₹ 24,15,000/- is accordingly confirmed. - Decided against revenue

Summary

Issues:
Challenge to addition of undisclosed income under section 50C of the Income Tax Act based on DVO's valuation.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad involved a challenge by the Revenue against the lower appellate order restricting the addition of undisclosed income under section 50C of the Income Tax Act for the assessment year 2006-07. The undisclosed income in question amounted to Rs. 2,17,70,600/- arising from the sale of land, which was sold for Rs. 16 lacs but had a stamp value of Rs. 2,33,70,600/- as determined by the stamp valuation authorities. The Assessing Officer reopened the assessee's case and made the addition invoking section 50C of the Act.

The assessee contended that the Assessing Officer should have referred the matter to the District Valuation Officer (DVO). The CIT(A) accepted this plea and obtained the DVO's report, which valued the land sold at Rs. 24,15,000/-. The CIT(A) directed the Assessing Officer to compute capital gains based on the DVO's valuation, which was less than the stamp value but higher than the actual sale price. This decision was challenged by the Revenue.

During the hearing, the Revenue sought to restore the entire addition based on the stamp value of the land, while the DVO's valuation was lower. The Tribunal referred to a judgment of the Allahabad High Court, which held that a DVO's valuation under section 50C(2) is binding on the Assessing Officer and the Revenue. No contrary case law was presented during the proceedings. Consequently, the Tribunal found no fault with the lower appellate order and confirmed the restriction of the undisclosed income addition to Rs. 24,15,000/-.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to limit the addition of undisclosed income to the valuation provided by the DVO. The order was pronounced in open court on 18-11-2015.