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2025 (3) TMI 1119 - AT - Income TaxAddition u/s 56(2)(x) - difference between the actual purchase price of a property and its valuation by the District Valuation Officer (DVO) - HELD THAT - There is no reason to believe that the DVO has not valued the property correctly. After considering the submissions of both the parties when the registration value of the property is Rs. 60, 15, 959/- the burden lies on the assessee to establish that the value of the property mentioned in the Sale Deed is true and correct. In this case the assessee has not given even any valid evidence to believe that the value of the property is only Rs. 38, 44, 884/-. However the matter was referred to the DVO and DVO has valued at Rs. 42, 51, 700/-. Admittedly the registration value is Rs. 60, 15, 759/-. Therefore no hesitation to come to the conclusion that there is no infirmity in the orders passed by AO as well as the ld. CIT(Appeals) and also no infirmity in the valuation made by the DVO. Therefore there is no valid reason in the arguments of assessee saying that DVO has not properly valued the property. Hence the grounds raised by the assessee are liable to be dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the addition of Rs. 4,06,816/- to the assessee's income under Section 56(2)(x) of the Income Tax Act, based on the difference between the actual purchase price of a property and its valuation by the District Valuation Officer (DVO), was justified. The Tribunal also considered whether the procedural amendment increasing the permissible variance from 5% to 10%, introduced by the Finance Act, 2020, should apply retrospectively to the assessment year in question. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 56(2)(x) of the Income Tax Act deals with the taxation of income from other sources, specifically addressing discrepancies between the actual transaction value and the fair market value as determined by valuation authorities. The Finance Act, 2020, amended the permissible variance from 5% to 10%, effective from April 1, 2021. Court's Interpretation and Reasoning The Tribunal examined the valuation process and the evidence presented by both the assessee and the Department. The Tribunal noted that the valuation by the DVO, which was Rs. 42,51,700/-, was significantly lower than the registration value of Rs. 60,15,959/- but higher than the purchase price of Rs. 38,44,884/-. The Tribunal emphasized the burden on the assessee to demonstrate that the sale deed value was accurate, which the assessee failed to do. Key Evidence and Findings The Tribunal relied on the valuation report by the DVO and the registration value as key pieces of evidence. The assessee's argument that the DVO's valuation was incorrect was not supported by substantial evidence. The Tribunal found no infirmity in the valuation process conducted by the DVO. Application of Law to Facts The Tribunal applied Section 56(2)(x) to the facts, affirming that the addition was justified due to the significant discrepancy between the purchase price and the DVO's valuation. The Tribunal rejected the argument for retrospective application of the amended 10% variance rule, as the amendment explicitly applied from April 1, 2021, and the assessment year in question was 2018-19. Treatment of Competing Arguments The Tribunal considered the assessee's argument regarding the retrospective application of the 10% variance rule but dismissed it, citing the specific effective date of the amendment. The Tribunal also addressed the assessee's reliance on a precedent from the ITAT, Hyderabad Bench, but found it inapplicable due to the lack of statutory provision for valuation methods and the absence of prejudice against the assessee. Conclusions The Tribunal concluded that there was no error in the orders passed by the lower authorities and upheld the addition of Rs. 4,06,816/- to the assessee's income. The Tribunal found the DVO's valuation to be reasonable and dismissed the appeal. SIGNIFICANT HOLDINGS The Tribunal's significant holding was the affirmation of the addition under Section 56(2)(x) due to the discrepancy between the purchase price and the DVO's valuation. The Tribunal emphasized the importance of the burden of proof on the assessee to substantiate the sale deed value. Core Principles Established The Tribunal established that the burden of proof lies with the assessee to demonstrate the accuracy of the transaction value when it significantly deviates from the valuation determined by authorities. Additionally, procedural amendments to tax laws, such as changes in permissible variance, are not retrospectively applicable unless explicitly stated. Final Determinations on Each Issue The Tribunal dismissed the appeal, upholding the addition made by the Assessing Officer and confirmed by the CIT(Appeals). The Tribunal found no merit in the assessee's arguments regarding the valuation process or the retrospective application of the amended variance rule.
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