2022 (1) TMI 294 - AT - Income Tax

Reopening of assessment u/s 147 - determining the short term capital gains - adopting different value from market value of the property - contention of the assessee that due to dispute in the property, she was compelled to dispose the property lower than the value adopted by the Stamp Valuation Authorities - Non reference of matter to DVO - HELD THAT - If the AO finds that the value adopted by the assessee is lesser than the Stamp Valuation Authority due to the specific reasons, the AO was required to refer the matter to the DVO to ascertain the market value of the property. But the AO did not adopt the said procedure as mandated under section 50C(2) of the Act. The assessee, all along, has objected to the valuation and submitted the required documents to prove that the market value of the property is lesser than the Stamp Valuation Authority. On being asked by the bench, ld DR could not controvert the above position as to why the matter was not referred to the DVO for ascertaining the market value of the property at the relevant time. In the case of Smt. Chitti Parvatha Vardhanamma (supra), the assessee did not ask the AO to referred the matter to the DVO, hence, the AO was compelled to complete the assessment by adopting the guidelines value considered by the SRO. But in the present case, the assessment was completed u/s.144/147 of the Act in the absence of the assessee. Only when the matter carried to first appellate stage, the assessee objected to the value adopted by the AO without referring the matter to the DVO by giving the detailed reasons as to why the sale consideration was lesser amount. Hence, the decision relied by ld DR is distinguishable on facts. In view of above, we do not find any infirmity in the findings of the ld CIT(A) to interfere and, accordingly, dismiss the grounds of the revenue. Unexplained investment in purchase of property - CIT- A restricted he addition - HELD THAT - During the assessment proceedings, as the assessee has not filed details, the addition was made by the AO. The assessee filed some evidences during the appeal/remand proceedings which are examined by the AO. The position emerging from examination of the evidences and details filed by the assessee is that the payments are made over a period of time from 26.5.2007 to 16.5.2008 and demand draft for ₹ 15,00,000/- was dated 2.6.2007 mentioned by the AO in remand report (para 6.2(a)(b), the question arises as to assessability of the amount for the assessment year under consideration. It is seen from the details that payments of ₹ 9,00,000/- on 15.5.2008 and ₹ 8,00,000/- on 16.5.2008 are only transactions during the relevant period. The investment or payments made during the relevant period are ₹ 17,00,000/-. In view of the factual position as above, the addition is restricted correctly. - Decided against assessee.

Summary

Issues:
1. Appeal by revenue against CIT(A)'s order for AY 2010-2011.
2. Appeal by assessee against CIT(A)'s order for AY 2009-2010.

Issue 1: Appeal for AY 2010-2011

The revenue appealed against the CIT(A)'s order for AY 2010-2011, challenging the deletion of the addition made by the Assessing Officer (AO) towards short term capital gains tax. The AO determined the gains based on the property sale value, which the assessee disputed. The CIT(A) considered the evidence provided by the assessee, including documents showing the property title dispute and objections to the valuation. The CIT(A) noted that the AO did not refer the valuation to the Valuation Officer as required by Section 50C(2). The Tribunal upheld the CIT(A)'s decision, emphasizing the AO's failure to follow the mandated procedure and the assessee's objections supported by evidence. The Tribunal dismissed the revenue's appeal, affirming the deletion of the addition.

Issue 2: Appeal for AY 2009-2010

In the appeal for AY 2009-2010, the assessee contested the CIT(A)'s decision to treat a part of the investment in a property as unexplained. The AO treated the entire investment as unexplained due to the assessee's non-compliance. The CIT(A) partially allowed the appeal, limiting the addition to ?17,00,000 based on the evidence provided by the assessee regarding the payment timeline. The Tribunal found the CIT(A)'s decision reasonable and upheld the restriction of the addition to ?17,00,000. Consequently, the assessee's appeal was dismissed.

This detailed analysis of the judgment highlights the key issues addressed in the appeals for AY 2010-2011 and AY 2009-2010, providing a comprehensive overview of the legal proceedings and decisions made by the authorities and the Tribunal.