2017 (7) TMI 257 - AT - Income Tax

Addition made towards long term capital gains - assessee has not filed return of income u/s 139 - assessee filed return of income in response to notice u/s 148 - Held that - AO was not justified in basically taking the purchase document value at ₹.3,80,000/- , which was purchased in 1993. Neither the assessee has produced any valuation of Registered Valuer for adopting the purchase cost at ₹.23,50,000/- for acquisition of land nor similar instance in the surroundings or even the Assessing Officer has obtained the opinion of the DVO for estimating the cost of acquisition of land. AO has not justified saying that there was no appreciation on the value of land acquired in the year 1993 and sold in the year 2009. Either in the village or in the city, there would be some appreciation on the value of the property or especially from the year 2006 onwards, there was appreciation more than double the value of the cost of the property. For assessing the value of furniture as well as other expenses such as brokerage, etc. also AO has estimated the value without any basis. Thus to assess the cost of acquisition of land, the Assessing Officer should refer the matter to the Valuation Cell to assess the market value of the property and after giving an opportunity of hearing to the assessee, the issue may be decided in accordance with law. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against confirmation of addition towards long term capital gains for assessment years 2009-10 and 2010-11.

Analysis:
For assessment year 2009-10, the assessee did not file a return of income initially but later admitted long term capital gains from property sale. The Assessing Officer calculated total income at ?64,17,220, leading to an appeal to the CIT(A) which was dismissed. The Tribunal found discrepancies in the Assessing Officer's valuation methods and lack of evidence for cost of acquisition. The Tribunal directed a reevaluation by the Valuation Cell for fair assessment.

For assessment year 2010-11, similar issues arose regarding the cost of acquisition and valuation methods. The Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for a fresh decision after providing adequate hearing opportunities to the assessee.

In conclusion, both appeals were allowed for statistical purposes due to inconsistencies in valuation and lack of supporting evidence for cost of acquisition. The Tribunal emphasized the need for a fair assessment based on accurate valuation methods and proper evidence, directing the Assessing Officer to reevaluate the issues in accordance with the law.