2019 (9) TMI 1415 - AT - Income Tax

Revision u/s 263 - difference between sale consideration actually paid and the guideline value fixed by the Government - addition in respect of the provisions of section 56(2)(vii) - HELD THAT - Difference between sale consideration actually paid and the guideline value fixed by the Government in the present case being only 24/- lakhs the stamp duty variation would be only in the range of 2.4 lakhs. Where the assessee has already spent 1, 44, 00, 000/- and registration cost of nearly 14.4 lakhs and additional 2.4 lakhs admittedly would not be challenged by the assessee especially when considering the rigmarole in respect of filing the appeal for reduction of the stamp duty valuation. But that cannot be the ground for making a direct addition in respect of the provisions of section 56(2)(vii) of the Act. Government of Tamil Nadu has found that the guideline value fixed earlier with effect from 01.04.2012 was very much on the higher side and it consequently reduced the same in 2017 which clearly shows that the assessee should be given the benefit of the revised valuation. Once the revised valuation is taken into consideration the guideline value in respect of the property would be lower than the actual consideration paid by the assessee. This is also not the case where any evidence of on-money payment has been found - addition as directed by the ld.PCIT in his order u/s.263 of the Act is unsustainable when the guideline value as prescribed by the Government of Tamil Nadu with effect from June, 2017 is taken into consideration. - Decided in favour of assessee.

Summary

Issues:
Assessment u/s.263 of the Income Tax Act, 1961 - Discrepancy in property valuation for stamp duty - Validity of revisional power u/s.263 - Compliance with section 56(2)(vii) of the Act.

Analysis:
The appeal was filed against the order of the Principal Commissioner of Income-tax-5, Chennai, under section 263 of the Income Tax Act, 1961, for the assessment year 2014-15. The dispute arose from the purchase of a property for &8377; 1,44,00,000, with a differential amount between the market value and sale consideration leading to a revisional order u/s.263 by the PCIT. The assessee contended that the guideline value was revised by the Government of Tamil Nadu in 2017 to &8377; 2,680, significantly lower than the registration value of &8377; 1,44,00,000. The PCIT directed the AO to assess the differential amount of &8377; 24,00,000, which the assessee challenged. The Tribunal noted that the stamp duty variation due to the difference in values would be minimal, and the revised guideline value favored the assessee. The Tribunal held that the PCIT's addition was unsustainable under section 56(2)(vii) of the Act, as the revised valuation by the State Government should be considered. Consequently, the order of the Principal Commissioner of Income-tax-5, Chennai, was quashed, and the appeal of the assessee was allowed.

This case involved a discrepancy in property valuation for stamp duty purposes, triggering a revisional order u/s.263 of the Act. The Tribunal emphasized that the actual consideration paid by the assessee should be considered, especially when the revised guideline value by the Government of Tamil Nadu was significantly lower than the registration value. The Tribunal highlighted that the PCIT's addition based on section 56(2)(vii) was unsustainable, given the revised valuation and absence of evidence of on-money payment. The Tribunal concluded that the assessee should benefit from the revised valuation, leading to the quashing of the PCIT's order and allowing the assessee's appeal.