2023 (10) TMI 545 - AT - Income Tax

Undisclosed income of capital gain - determination of cost of acquisition - AO found that the value adopted by the appellant was without any basis and which seems to be on higher side, a reference was made to the Valuation Officer u/s 55A of the Act for determining the fair market value of this property as on 01.04.1981 - HELD THAT - Appellant never submitted this valuation report earlier during the course of assessment proceeding, neither raised any objection before the Valuation Officer in regard to the valuation of the land on the rate adopted by the Valuation Report as reflecting from the valuation report dated 15/16-3-2016, the copy whereof has already been reproduced by the Ld. AO in the assessment order. Taking into consideration this particular aspect of the matter, the working of capital gain furnished by the appellant was not found to be acceptable and the value determined by the Valuation Report Dated 15/16-3- 2016, the cost of acquisition of land as on 01.04.1981 at Rs. 19,024/- and taxable LTCG has been computed As valuation certificate has been obtained by the appellant from the Registered Valuer only upon re-assessment proceeding initiated and not submitted to the Ld. AO till 28.03.2016 by which period the Valuation Report from the DVO dated 15/16-3-2016 has already been obtained by the Ld. AO., and no objection was raised by the appellant against the DVO's report, neither any evidences were sought to be relied upon by the appellant in respect of value of the land in question, the Ld. CIT(A) confirmed the addition. It is an admitted fact that on 28.03.2016, the Ld. AO received the valuation report submitted by the appellant, much after the valuation report dated 15/16-03-2016 as obtained by the Ld. AO from the DVO . In spite of the several opportunities, no objection was filed in regard to the same by the appellant neither any evidence has been relied upon even during the appellate proceeding. Thus, we do not find any reason to interfere with the order of confirmation of addition made by the Ld. CIT(A) which according to us is just and proper. The same is, therefore, upheld. The appellant s ground of appeal is found to devoid of any merit and, thus, dismissed. Decided against assessee.

Summary

Issues Involved:
1. Addition of Rs. 1,23,50,000/- on account of undisclosed income from capital gains.
2. Validity of the valuation report used for determining the fair market value of the property as on 01.04.1981.

Summary:

Issue 1: Addition of Rs. 1,23,50,000/- on account of undisclosed income from capital gains

The appeal concerns the addition of Rs. 1,23,50,000/- made by the ITO on account of undisclosed income from capital gains for the Assessment Year 2012-13. The appellant, a vegetable vendor, sold a commercial plot of land for Rs. 1,25,00,000/- without filing a return of income or declaring the capital gain. The ITO reopened the assessment under Section 147 of the Income Tax Act, 1961, and issued a notice under Section 148. The appellant declared a total income of Rs. 1,80,610/- and claimed a long-term capital loss of Rs. 1,47,331/-, adopting a fair market value of Rs. 16,11,125/- as on 01.04.1981. However, the Valuation Officer determined the fair market value as Rs. 19,024/-, leading to the addition of Rs. 1,23,50,662/- to the appellant's income.

Issue 2: Validity of the valuation report used for determining the fair market value of the property as on 01.04.1981

The appellant contended that the valuation report by the Valuation Officer was erroneous and submitted an alternative valuation report dated 25.07.2015, showing a market value of Rs. 15,00,000/- as on 01.04.1981. However, this report was not submitted during the assessment proceedings, nor were any objections raised against the Valuation Officer's report. The Ld. CIT(A) confirmed the addition, noting that the appellant obtained the valuation certificate only after the reassessment proceedings had begun and failed to provide any documentary evidence to support the valuation.

The Tribunal upheld the Ld. CIT(A)'s decision, stating that the appellant had multiple opportunities to contest the valuation but failed to do so. The Tribunal found no reason to interfere with the order of confirmation of the addition made by the Ld. CIT(A), considering it just and proper. Consequently, the appellant's grounds of appeal were dismissed.

Conclusion:

The assessee's appeal was dismissed, and the addition of Rs. 1,23,50,662/- on account of undisclosed income from capital gains was upheld. The Tribunal found that the valuation report used by the ITO was valid and the appellant's objections were not substantiated with evidence.