2022 (1) TMI 1042 - AT - Income Tax

Reopening of assessment u/s 147 - Capital gain computation - HELD THAT - As perused the material available on record and gone through the orders of the authorities below. The assessee has not placed any material on record, suggesting that he duly disclosed the capital gain arising out of the sale transaction of the property admeasuring 250 sq. mtrs. at D-213, G-8, Sector-39, Noida and registered sale price was ₹ 22 Lakhs. However, as per the stamp duty valuation, the value was adopted at ₹ 29,02,000/-. Therefore, there is no merit in the grounds raised by the assessee hence, Ground Nos. 1 to 3 raised by the assessee are dismissed. Adopting fair market value of the property - HELD THAT - AO in the assessment order has stated that as per the Sale Deed, the value of property estimated by Stamp Valuation Authority at ₹ 47,25,000/- and computed long term capital gain at ₹ 27,25,000/-. But Ld. CIT(A) adopted the value at ₹ 38,95,000/-. As find that there is a discrepancy in the value stated in the reasons and adopted while framing the assessment, Ld. CIT(A) has not addressed this issue - we set aside the impugned order and restore the issue of valuation of the property to the file of Ld. CIT(A) to decide the same after adverting to the issue regarding discrepancy in the reasons recorded by the Assessing Officer and finally value adopted by him u/s. 50C of the Act since there is no whisper by the authorities below in this regard. Thus, Ground Nos. 4 5 raised by the assessee are partly allowed for statistical purposes.

Issues:
1. Validity of jurisdiction under section 147/148 of the Income Tax Act.
2. Assessment of market value of property based on circle rate versus independent evidence.
3. Adoption of sale consideration for capital gain calculation.
4. Legal grounds for re-opening the assessment.
5. Discrepancy in valuation of property between reasons recorded and assessment.

Issue 1: Validity of jurisdiction under section 147/148 of the Income Tax Act

The appellant challenged the assumption of jurisdiction under sections 147/148 of the Act, claiming it to be arbitrary and unjust. The appellant argued that there was no valid material to form a reason to believe for re-assessment. The appellant contended that the Assessing Officer (AO) did not apply his mind while framing the reasons for re-assessment, leading to an arbitrary and excessive exercise of jurisdiction. However, the Tribunal found that the appellant failed to provide any material suggesting the proper disclosure of capital gains from a property sale, thus dismissing the grounds raised by the appellant regarding the legality of re-opening the assessment.

Issue 2: Assessment of market value of property based on circle rate versus independent evidence

The appellant disputed the method used by the Authorized Valuation Officer (AVO) to determine the market value of a land/plot based on the circle rate, arguing that it should have been assessed using independent evidence. The appellant claimed that the valuation, including salvage value, was arbitrary and unjust. However, the Tribunal noted that the Departmental Valuation Officer (DVO) and the CIT(A) had differing assessments of the property's fair market value. Due to a discrepancy between the reasons recorded by the AO and the valuation adopted, the Tribunal set aside the assessment and remanded the issue to the CIT(A) for proper consideration, partially allowing the appellant's grounds for statistical purposes.

Issue 3: Adoption of sale consideration for capital gain calculation

The appellant raised concerns about the adoption of the sale consideration for calculating capital gains, arguing that the CIT(A) erred in relying on a higher sale deed price instead of a lower price pointed out by the appellant. The Tribunal found that the AO had initially computed the long-term capital gain based on the Stamp Valuation Authority's assessment, but the CIT(A) adopted a different value. Due to the discrepancy in valuation, the Tribunal set aside the CIT(A)'s decision and directed a reassessment to address the inconsistency between the reasons recorded and the value adopted, partially allowing the appellant's grounds.

Issue 4: Legal grounds for re-opening the assessment

The Tribunal examined the reasons for re-opening the assessment, which were based on information received regarding a property sale. The AO believed that income had escaped assessment due to the appellant's failure to fully disclose material facts. Despite the appellant's contentions, the Tribunal found no merit in the grounds raised, as the appellant did not provide evidence to support the proper disclosure of capital gains. Consequently, the Tribunal dismissed the appellant's challenges to the legality of the re-opening of the assessment.

Issue 5: Discrepancy in valuation of property between reasons recorded and assessment

The Tribunal noted a discrepancy in the valuation of the property between the reasons recorded by the AO and the assessment made by the CIT(A). The AO had estimated the property value based on the Sale Deed and Stamp Valuation Authority, while the CIT(A) adopted a different value. Due to this inconsistency, the Tribunal set aside the assessment and directed a reassessment by the CIT(A) to address the discrepancy, partially allowing the appellant's grounds for statistical purposes.

In conclusion, the Tribunal partially allowed the appellant's appeal for statistical purposes, remanding certain issues back to the CIT(A) for proper consideration and reassessment. The Tribunal emphasized the importance of proper valuation methods and the need for consistency between reasons recorded and assessments made in tax matters.

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