2012 (7) TMI 302 - AT - Income Tax

Mandatory reference to Valuation Officer when assessee objects to valuation adopted by Assessing officer on invocation of Section 50C - Sale of property - addition on account of LTCG - assessee contended that AO should have issued notice and given an opportunity to the assessee before invoking the provisions of section 50C - Held that - In the instant case, it is seen that the assessee s objection, to the AO s adoption of the guideline value of Rs. 26.40 lacs in place of the stated consideration of Rs 8 lakhs in the sale deed, were rejected by the AO and therefore we are of the view that in accordance with the provisions of section 50C(2)(a), he should have made a reference to the Valuation Officer of the Income Tax Department for valuation of the said property. Such an action of AO is in violation of the provisions of section 50C(2). In the interest of justice, matter remitted to file of AO for de novo consideration by making a reference to the Valuation Officer. Unexplained cash deposits in bank - assessee submitted that these cash deposits are savings out of money given to the assessee for expenses by her husband who is assessed to tax - Held that - It strange that said submission of assessee is brushed aside without calling for any report in the matter from the Assessing Officer regarding the genuineness of the assessee s claim as to the source of these cash deposits. Matter remitted to file of AO - Decided in favor of assessee for statistical purposes. Unexplained cash deposits -

Summary

Issues:
1. Computation of Long Term Capital Gains (LTCG) on the sale of property.
2. Addition of unexplained cash deposits in the assessee's bank account.

Computation of Long Term Capital Gains (LTCG) on the sale of property:

The case involved the dispute over the computation of LTCG on the sale of a property by the assessee. The Assessing Officer substituted the guideline value for stamp duty purposes in place of the actual sale consideration, resulting in a higher LTCG. The assessee objected to this computation, arguing that no notice was issued to invoke section 50C of the Income Tax Act. The assessee requested an opportunity to be heard before invoking the provision and a valuation of the property by the Valuation Officer. The Departmental Representative supported the Assessing Officer's action, stating it was in accordance with the law. The Tribunal noted that section 50C(2) mandates a reference to the Valuation Officer if the assessee challenges the guideline value. As the Assessing Officer did not follow this procedure, the Tribunal remitted the issue back for a fresh computation after valuation by the Valuation Officer, ensuring the assessee's rights were upheld.

Addition of unexplained cash deposits in the assessee's bank account:

The Assessing Officer added a sum as unexplained cash deposits in the assessee's bank account, which the assessee claimed were savings from money given by her husband. The CIT(A) upheld the addition without further examination. The Tribunal found that the authorities did not adequately investigate the source of the cash deposits. The Tribunal remitted the issue back to the Assessing Officer for re-examination and reconsideration of the explanation provided by the assessee regarding the source of the cash deposits. This decision aimed to ensure a proper assessment of the situation and to uphold the principles of natural justice.

In conclusion, the Appellate Tribunal ITAT, Bangalore addressed the issues of LTCG computation and unexplained cash deposits meticulously, ensuring that the assessee's rights were upheld and that a fair assessment was conducted. The judgment emphasized adherence to legal procedures and principles of justice in resolving the disputes raised by the assessee.