2024 (1) TMI 168 - HC - Income Tax

Income from other sources u/s 56(2)(x) - difference between the income disclosed in the return and the guideline value - petitioner reiterated that the document value represents the fair market value and that a reference should be made to the Departmental Valuation Cell for determination of the fair market value - HELD THAT - The assessment order proceeds on the basis that the guideline value of the relevant immovable asset represents the real market value. Such conclusion has been drawn without awaiting the valuation report from the third respondent. As a consequence, in spite of the petitioner asserting and reiterating that the sale consideration specified in the sale deed represents the fair market value, the petitioner has been put to prejudice without any material to support the conclusion that the guideline value represents the fair market value. Therefore, the petitioner is entitled to an interim stay of coercive action pending disposal of the statutory appeal. It is needless to say that it is also just and necessary that the statutory appeal be disposed of expeditiously. The fourth respondent is directed to dispose of the statutory appeal against the assessment order within a maximum period of three months from the date of receipt of a copy of this order. Until the statutory appeal is disposed of, the first and second respondents are restrained from initiating any coercive action pursuant to the assessment order for recovery of the disputed tax demand. There shall be no order as to costs.

Summary

Issues Involved:
The issues involved in the judgment are the delay in disposing of a statutory appeal challenging an assessment order and the request for an interim stay of the disputed tax demand.

Details of the Judgment:

Issue 1: Delay in Disposing of Statutory Appeal
The petitioner, an Income Tax assessee, sought direction for the fourth respondent to dispose of the statutory appeal challenging the assessment order within a reasonable time. The petitioner's return of income for the assessment year 2018 - 2019 was selected for scrutiny due to the difference between the income disclosed and the guideline value of an immovable property purchased by the petitioner. Despite the petitioner's request for valuation by the Departmental Valuation Officer, the assessment order was issued before receiving the valuation report. The petitioner argued for a stay of coercive action pending adjudication of the statutory appeal, citing Section 50C of the Income Tax Act as conferring a vital statutory right on an assessee regarding asset valuation.

Issue 2: Interim Stay of Tax Demand
The petitioner requested an interim stay of the disputed tax demand of Rs. 19,41,080/- pending the disposal of the statutory appeal. The assessment order was based on the guideline value of the property without waiting for the valuation report, causing prejudice to the petitioner. The petitioner contended that the guideline value did not represent the fair market value as specified in the sale deed. The respondents argued that the assessment order was issued before receiving the valuation report due to the prescribed limitation date for completion of assessment and that the statutory appeal was pending.

The Court directed the fourth respondent to dispose of the statutory appeal within three months and restrained the first and second respondents from initiating any coercive action for recovery of the disputed tax demand until the appeal is resolved. The judgment emphasized the importance of expeditiously disposing of the statutory appeal and closed the related application without any costs.