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2022 (12) TMI 628 - AT - Income TaxAddition u/s 56(2)(vii)(b) - AO referred the valuation of property to Valuation Cell of the Income Tax Department and the DVO has determined value of property - difference between guideline value of the property and consideration paid for purchase of said property, then, said difference should be treated as income of the assessee in terms of s.56(2)(vii)(b) - difference between the DVO value and consideration shown in the registered document, at the rate of 1/5th on each co-owner name and made addition - HELD THAT - There is no dispute with regard to the fact that there is a difference between consideration paid for purchase of property as per registered document and guideline value of the property fixed by the authorities for payment of stamp duty. In dispute that the AO has referred valuation of the property to the DVO and the DVO has determined value of the property. Therefore, difference between the DVO value and consideration paid for purchase of property should be assessed as income of the purchasers in terms of s 56(2)(vii)(b) - AO after considering relevant facts has rightly made addition towards differential consideration u/s 56(2)(vii)(b) - CIT(A) has rightly appreciated the facts and sustained the additions made by the AO and thus, we are inclined to uphold the findings of the CIT(A) and dismiss the appeals filed by all the assessees.
Issues:
Appeals against addition made under section 56(2)(vii)(b) of the Act for differential consideration between guideline value and actual consideration paid for property. Detailed Analysis: The appeals were filed by different assessees against identical orders of the Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The appeals pertained to the addition made by the Assessing Officer towards the difference between the guideline value of the property and the consideration paid for the purchase of the property under section 56(2)(vii)(b) of the Act. Since the facts were similar and the issues common, the appeals were heard together for convenience and disposed of by a consolidated order. The assessees challenged the addition made by the Assessing Officer under section 56(2)(vii)(b) of the Act, which pertained to the differential consideration between the guideline value and the actual consideration paid for the property. The Assessing Officer had assessed the differential amount as income of the assessees based on the valuation of the property by the Departmental Valuation Officer (DVO). The Commissioner of Income Tax (Appeals) upheld the additions made by the Assessing Officer, leading the assessees to appeal before the Income Tax Appellate Tribunal (ITAT). During the proceedings, the representative for the assessees argued that the difference in valuation was adequately explained and, therefore, the addition under section 56(2)(vii)(b) was unwarranted. On the contrary, the Departmental Representative supported the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer, emphasizing that any variance between the guideline value and the actual consideration should be treated as income under the Act. After considering the arguments and reviewing the facts and orders of the lower authorities, the ITAT noted the undisputed difference between the consideration paid for the property and the guideline value fixed by the authorities. The DVO had determined the value of the property, which was significantly higher than the consideration paid. Consequently, the ITAT held that the differential amount should be treated as income of the purchasers under section 56(2)(vii)(b) of the Act. The ITAT agreed with the Assessing Officer's decision to make the addition and upheld the findings of the Commissioner of Income Tax (Appeals), ultimately dismissing the appeals filed by all the assessees. In conclusion, the ITAT dismissed the appeals of all the assessees, affirming the addition made under section 56(2)(vii)(b) of the Act for the differential consideration between the guideline value and the actual consideration paid for the property.
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