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2022 (9) TMI 240 - AT - Income TaxCapital gain on sale of land and bungalow - FMV determination - power to refer the matter to the valuation officer - HELD THAT - Value claimed by the assessee is at variance with the fair market value. Indeed the AO can refer the matter to the valuation officer if registered valuer value the property as on 1st April 1981 which is at variance with the fair market value. However such amendment is prospective in nature and therefore the same cannot be applied to the earlier years. In this regard, we find support and guidance from the judgment in the case of CIT Vs. Gauranginiben S. Shodhan Indl 2014 (2) TMI 78 - GUJARAT HIGH COURT . The relevant extract of the judgment has already been extracted in the preceding paragraphs. As the dispute before us relates to the year prior to the amended provisions of section 55A of the Act which is applicable prospectively. Therefore such amended provisions cannot be applied to the case on hand. Thus we are inclined to reverse the order of the CIT-A, and accordingly we direct the AO to work out the capital gain on sale of land and bungalow after taking the value as on 1st April 1981 as declared by the assessee. Hence the ground of appeal of the assessee is allowed. Exemption u/s 54F - As we have allowed the main ground of the assessee with regard to value of the property as on 1st April 1981 which will result into long term capital loss in the hand of the assessee. Therefore, the issue of allowance of exemption under section 54F of the Act become redundant. Hence the ground of appeal of the assessee is hereby dismissed being infructuous. Addition u/s 68 on account of loans or gifts - cash deposit in the bank of the creditors - HELD THAT - The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. The assessee in order to prove the identity and credit worthiness of creditor and genuineness of transaction has furnished the details such as copy of ITR, copy of ledger account confirmation, bank statements, etc. The authorities below also not doubted the identity of the creditor and genuineness of the transaction. The addition was made only for the reason that the AO was not satisfied with the credit worthiness of the creditors. The view of the AO was based on fact that there were cash deposit in the bank of the creditors. It is well settled position of law that the assessee is only required to prove to sources of credit in his/her/it books of accounts not the sources of source. In our considered view the credit worthiness of the creditors cannot be doubted merely on the basis that there were cash deposit in their bank account unless some adverse material brought on record - if AO has any reservation with regard to the credit worthiness, the AO should have conducted independent enquiry from the parties or brought contrary materials on record - we are of the view that the assessee has discharged primary onus cast under section 68 and onus shifted on the AO to bring contrary material by making independent inquiries but the AO failed to do so. Hence, we hereby set aside the order of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. Addition of deposit of cash in the bank account - onus to prove - HELD THAT - The onus lies upon the assessee to justify the cash deposit in the bank account represents the agriculture income. But the assessee has failed to submit any documentary evidence before the lower authorities. At the time of hearing before us, a question was also put up to the learned AR for the assessee why the agriculture income was not included in the total income of the assessee for the purpose of calculating the tax. The learned AR could not make any satisfactory reply. Thus in the absence of sufficient documentary evidence, we do not find any merit in the argument advanced by the learned AR appearing on behalf of the assessee. Accordingly the ground raised by the assessee is hereby dismissed.
Issues Involved:
1. Confirmation of additions/disallowances by CIT(A) regarding FMV of properties, stamp duty value, exemption under section 54F, unexplained loan and gifts, and unexplained cash deposits. 2. Legitimacy of reference to DVO for valuation as on 01.04.1981. 3. Claim of exemption under section 54F. 4. Addition under section 68 for unexplained loans and gifts. 5. Addition for unexplained cash deposits in the bank. Detailed Analysis: 1. Confirmation of Additions/Disallowances: The assessee challenged the CIT(A)'s order upholding the additions and disallowances made by the AO, arguing that the order was illegal and against natural justice principles. The specific additions/disallowances contested included the FMV of properties as on 01.04.1981, stamp duty value under section 50C, exemption under section 54F, unexplained loans and gifts, and unexplained cash deposits. 2. Legitimacy of Reference to DVO for Valuation as on 01.04.1981: The assessee owned two properties, a land and a bungalow, acquired before 01.04.1981 and sold during the assessment year. The AO, unsatisfied with the valuation provided by the registered valuer, referred the matter to the District Valuation Officer (DVO) under section 55A. The DVO valued the properties significantly lower than the registered valuer. The AO revised the capital gains based on the DVO's valuation and stamp duty values. The ITAT held that the AO had no power to substitute the value determined by the registered valuer as on 01.04.1981, as per the provisions of section 55A applicable for the relevant year. The Tribunal cited the Gujarat High Court's judgment in CIT vs. Gauranginiben S. Shodhan Indl, which clarified that the AO could not refer the matter to the DVO unless the value claimed by the assessee was less than the fair market value. The Tribunal reversed the CIT(A)'s order and directed the AO to accept the values declared by the assessee. 3. Claim of Exemption Under Section 54F: The assessee's claim for exemption under section 54F became redundant as the Tribunal's decision on the main issue resulted in a long-term capital loss. Consequently, the Tribunal dismissed this ground of appeal as infructuous. 4. Addition Under Section 68 for Unexplained Loans and Gifts: The AO added Rs. 12,63,000 to the assessee's income under section 68, citing insufficient evidence of the creditors' creditworthiness. The assessee provided confirmations, ITRs, and bank statements, but the AO doubted the creditworthiness due to cash deposits in the creditors' accounts. The Tribunal held that the assessee had discharged the primary onus under section 68 by providing necessary documentation. The AO failed to conduct independent inquiries or bring contrary material on record. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition. 5. Addition for Unexplained Cash Deposits in the Bank: The AO added Rs. 5,90,000 as unexplained income, rejecting the assessee's claim that the cash deposits were from agricultural income due to a lack of supporting evidence. The CIT(A) upheld this addition. The Tribunal found that the assessee failed to provide sufficient documentary evidence to substantiate the claim of agricultural income. The Tribunal dismissed this ground of appeal, affirming the addition made by the AO. Conclusion: The appeal was partly allowed. The Tribunal directed the AO to accept the property values declared by the assessee and delete the addition under section 68. However, the addition for unexplained cash deposits was upheld.
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