2023 (9) TMI 798 - AT - Income Tax

Addition u/s 56(2)(vii)(b)(ii) - difference in the value that was adopted by the stamp valuation authority for payment of stamp duty as against the value for which the sale transaction was executed - declining reference by the A.O to the Valuation Cell for determining the fair market value (FMV) of the said property - HELD THAT - A conjoint reading of Section 56(2)(vii) r.w.s. 50C(2)(b), therein reveals that such right is available only where the value so adopted or assessed or assessable by the stamp valuation authority for the purpose of payment of stamp duty in respect of the transfer transaction had, inter alia, not been disputed by the assessee in any appeal or revision and no reference has been made before any other authority, court or the High Court. As in the present case, the assessee had disputed the stamp value of the property in question that was adopted by the stamp valuation authority, i.e. Collector of Stamp, Bastar (C.G.) at Rs. 5,43,68,144/-, and he had refixed/reduced the market value to Rs. 4,34,94,500/- as against the aforesaid market value of Rs. 5,43,68,100/-, therefore, as per the aforesaid mandate of law, the assessee was precluded from seeking any reference by the A.O for valuation of the property by the valuation cell. We consider that as no infirmity emerges from the declining of the assessee s request for making a reference by the A.O. for the valuation of the property by the valuation cell u/s. 56(2)(vii)(b)(ii) r.w.s. 50C(2) of the Act; therefore, the order passed by the CIT(Appeals) is upheld. Decided against assessee.

Summary

Issues Involved:
1. Confirmation of Addition under Section 56(2)(vii)(b)(ii)
2. Consideration of Assessee's Explanation
3. Right to Seek Reference for Valuation

Summary:

1. Confirmation of Addition under Section 56(2)(vii)(b)(ii):
The assessee challenged the addition of Rs. 8,19,725/- made by the Assessing Officer (A.O) under Section 56(2)(vii)(b)(ii) of the Income-tax Act, 1961, which was confirmed by the Commissioner of Income-Tax (Appeals) [CIT(A)]. The A.O observed that the assessee, along with 19 co-purchasers, bought a property for Rs. 2.71 crore, whereas the stamp valuation was Rs. 4,34,94,500/-. The A.O added the difference in value as "Income from other sources."

2. Consideration of Assessee's Explanation:
The assessee argued that the stamp duty value was disputed due to the property's demographic location and other factors. The A.O noted that both purchasers and sellers had disputed the stamp valuation in the Court of Collector of Stamp, Bastar, which reduced the value to Rs. 4,34,94,500/-. Since this revised value was accepted by both parties, the A.O rejected the assessee's request for a reference to the Valuation Officer.

3. Right to Seek Reference for Valuation:
The Tribunal examined whether the assessee, who disputed the stamp duty value, could seek a reference to the Valuation Officer under the "3rd proviso" to Section 56(2)(vii) read with Section 50C(2). It was clarified that this right is available only if the value adopted by the stamp valuation authority has not been disputed in any appeal or revision. Since the assessee had already disputed the value, he was precluded from seeking such a reference.

Conclusion:
The Tribunal upheld the CIT(A)'s order, confirming that the addition of Rs. 8,19,725/- under Section 56(2)(vii)(b)(ii) was justified. The assessee's appeal was dismissed, and the order was pronounced in open court on 15th September 2023.