2021 (10) TMI 561 - AT - Income Tax

Reopening of assessment u/s 147 - computing long term capital gains - sale consideration received by the assessee as per s. 50C - referece to DVO - DR has submitted that once the issue of valuation of property has been referred to DVO as per the request of the assessee, the A.O has to follow the same and therefore, he strongly supported the LTCG calculated by the A.O as per the DVO report - HELD THAT - We find that the A.O in this case has correctly reopened the assessment by following due procedure and we find no infirmity in the order passed by the Ld. CIT(A). Thus, grounds of appeal No.1 to 3 raised by the assessee are dismissed. Addition of capital gain - The assessee has sold the property for ₹ 7,00,000/-, whereas the market value as per SRO is at ₹ 68,77,000/-. When the A.O has initially asked, the assessee has submitted that the land was purchased along with three persons and thereafter they gave up their ownership through a settlement. However, the original seller Shri Doraisamy shall continued to stay on the land and his son Shri D. Gopal took the control of the land. So far as this fact is concerned, the assessee has not placed any material. When the AO has asked the assessee to submit E.C, as per E.C the person who purchased the land from the assessee subsequently partitioned the land and sold it to various individuals during 2008 to 2012 and again the A.O has asked explanation. The assessee has submitted that the land to the extent of 4600 Sq. meters appropriated by the Govt. of Tamil Nadu under the Urban Land Ceiling Act only left over 12 cents. In the assessment order, the A.O has noted that Shri Doraisamy has sold the property to the assessee and the assessee has sold the land to Shri D. Gopal, Son of Doraisamy and further, Shri D Gopal sold it to various parties. All these transactions have been properly registered with the Sub-Registrar and stamp value has been paid in all these transactions therefore, the land was forcibly taken over by Shri D. Gopal and appropriated by the Govt. of Tamil Nadu is not believed by the A.O - assessee has not placed any evidence in respect of continuous possession of the Shri Doraisamy and also land was forcibly taken away by the Doraisamy son D. Gopal. These are the only explanations given by the assessee without any basis. Therefore, these baseless reasons given by the assessee cannot be considered. Apart from the above, as per the assessee request, the issue was referred to the District Valuation Officer, the DVO vide order dated 15.10.2018 valued the property for ₹ 45,20,000/-. The A.O by considering the same, recomputed the capital gains and the same was confirmed by the Ld. CIT(A) - By considering the entire facts and circumstances of the case, we find no infirmity in the order passed by the Ld. CIT(A). Hence, these grounds of appeal raised by the assessee are dismissed.

Summary

Issues Involved:
1. Reopening of assessment
2. Addition in respect of sale consideration

Reopening of Assessment:
The appeal challenged the order of the Commissioner of Income Tax (Appeals) regarding the reopening of assessment for the Assessment Year 2008-09. The grounds of appeal questioned the jurisdiction under section 147 of the Act and the validity of the reassessment completed. The appellant argued that the order was passed out of time and lacked proper reasons and justification. However, the Tribunal found that the Assessing Officer correctly reopened the assessment following due procedure, leading to the dismissal of the grounds of appeal related to reopening.

Addition in Respect of Sale Consideration:
The case involved the addition of ?45,20,000 as sale consideration for the purpose of computing long term capital gains. The appellant claimed that the property sold was a distress sale and that the government had appropriated part of the land under the Urban Land Ceiling Act, rendering the sale transaction invalid. The District Valuation Officer estimated the property value at ?45,20,000, leading to the re-calculation of capital gains. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) based on the DVO report, dismissing the appellant's arguments. The Tribunal found the explanations provided by the assessee to be baseless and lacking evidence, ultimately confirming the addition in respect of the sale consideration.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the orders related to both the reopening of assessment and the addition in respect of the sale consideration. The judgment was pronounced on 8th October 2021 in Chennai.