2024 (4) TMI 883 - AT - Income Tax

Validity of assessment order u/s. 147 r.w.s 144 - AO proceeded to complete the assessment by treating the difference amount between the SRO value and the actual sale consideration paid as income from other sources - HELD THAT - AO ought to have considered the submissions, explanations and the evidences submitted before him while making the addition. It is also pertinent to mention here that during the assessment proceedings, if at all the AO is not convinced with the submissions made by the assessee with regard to the valuation of the property, AO is supposed to refer the matter to the Valuation Cell to obtained the market value of the property purchased by the assessee which was not done by the Ld. AO in the present case. Appeal filed by the assessee is allowed for statistical purposes DRP ought to have considered the submissions and the evidences produced before the Ld.AO, which were stated to be not properly appreciated by the Ld. AO, while rejecting objections raised by the assessee. Considering the prayer and the submissions of the AR and the nature of issues involved in the appeal, in the interest of justice, we hereby remit the matter back to the file of Ld. AO for de-novo consideration thereby providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues involved:
The issues involved in this case are the final assessment order of the Ld. Assessing Officer, treatment of property value under section 56(2)(vii)(b) of the Income Tax Act, 1961, non-compliance by the assessee, rejection of objections by the Ld. Dispute Resolution Panel, and the appeal against the final assessment order.

Assessment Order and Property Value:
The appeal was filed against the final assessment order of the Ld. Assessing Officer, challenging the treatment of the property value under section 56(2)(vii)(b) of the Income Tax Act, 1961. The Ld. AO observed that the assessee purchased a property below the market value, leading to the proposed addition of the difference as 'income from other sources'. Despite multiple notices and lack of response from the assessee, the Ld. AO proceeded with the assessment, resulting in the addition of the differential amount to the total income. The objections raised by the assessee before the Ld. Dispute Resolution Panel were rejected, leading to the final assessment order sustaining the addition.

Non-Compliance and Objections:
The assessee raised various grounds of appeal, including the failure of the Ld. AO to issue and serve notice under section 148 of the Act, disputing the tax treatment of the property value, and alleging lack of consideration of evidence by the Ld. AO. The assessee also contended that the assessment order was passed summarily without proper appreciation of submissions. The Ld. AR argued that the Ld. AO did not consider the evidence submitted and should have referred the matter to the Valuation Officer for a fair assessment. The Ld. DR opposed these submissions, stating that the assessee failed to substantiate her case despite ample opportunity.

Remittal and Decision:
After hearing the submissions, the Tribunal found that the Ld. AO should have considered the evidence and referred the matter to the Valuation Cell for proper valuation. The Tribunal noted that the objections raised by the assessee were not adequately addressed by the Ld. DRP. In the interest of justice, the Tribunal remitted the matter back to the Ld. AO for re-consideration, providing the assessee with another opportunity to present her case. The assessee was cautioned to cooperate promptly, failing which appropriate orders could be passed. The appeal was allowed for statistical purposes.