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2013 (9) TMI 807 - HC - Income TaxAddition under Section 69B on the sale of land property Held that - DVO, for the purpose of valuation, had taken the market price of land in Okhla Industrial Area, New Delhi in 1994 and had referred to 1994 DDA rate of land fixed for Lawrence Road Industrial Area. He came to the conclusion that the difference in land rate in Okhla and Lawrence Road Industrial Area in 1994 was 38.75%, i.e., land at Okhla was more expensive by 38.75%. Thereafter, the DVO referred to one sale deed in Okhla Industrial Area in the year 2001 for a plot measuring 1648 square metres. This property was sold for Rs.3,70,00,000/-. After making some reductions for cost of building etc., he computed the value of the property at Lawrence Road Industrial Area by giving benefit of 38.75% in the year 2001. Since the valuation report of the valuer Sh. K.B.Sharma dated 22nd September, 1999 has not been placed on record, the order passed by the tribunal rejecting the valuation report of the DVO can be questioned and challenged as perverse Decided against the Revenue.
Issues involved:
1. Sale consideration disclosed by the seller and purchaser of a property. 2. Addition made by the Assessing Officer on account of understatement of sale consideration. 3. Unexplained investment in property under Section 69B of the Income Tax Act, 1961. 4. Validity of the order passed by the Income Tax Appellate Tribunal. 5. Reliability of the valuation reports and documents submitted. Issue 1: Sale consideration disclosed by the seller and purchaser: The judgment revolves around the sale consideration disclosed by the seller, M/s Ashoka Ice and Cold Storage, and the purchaser, Dinesh Kumar Agarwal, of a specific property. The total sale consideration disclosed was Rs.64,32,800 for property No. C-15, Lawrence Road Industrial Area, as per documents executed on 3rd January, 2005, for the Assessment Year 2005-06. Issue 2: Addition made by the Assessing Officer: The Assessing Officer relied on the report of the District Valuation Officer (DVO) to determine the property value at Rs.3,30,24,000. However, considering the property as leasehold with 36 out of 99 years of lease remaining, the Assessing Officer moderated the value to Rs.1,65,12,000. The difference between this value and the disclosed value of Rs.64,32,800 was treated as unexplained payment and receipt, leading to an addition of Rs.1,06,12,000 under Section 69B. Issue 3: Unexplained investment under Section 69B: The addition made under Section 69B was challenged by the assessees, and the first appellate authority deleted the addition, a decision upheld by the tribunal. The tribunal found flaws in the DVO report, including debatable computations and lack of multiple cases for valuation, leading to the deletion of the addition. Issue 4: Validity of the Tribunal's order: The tribunal's decision to reject the DVO report and uphold the deletion of the addition under Section 69B was challenged by the Revenue. However, the High Court noted that the valuation report of K.R. Sharma dated 22nd September, 1999, a crucial document, was not available on record. As a result, the tribunal's decision was not deemed perverse, and the second question was decided against the Revenue. Issue 5: Reliability of valuation reports and documents: The High Court expressed surprise that certain valuation reports, including the one by K.R. Sharma dated 22nd June, 1999, were not adequately addressed by the tribunal or the Assessing Officer. The absence of crucial reports and contradictions in the DVO report led to the dismissal of the appeals, as the foundation of the Assessing Officer's order was affected by the rejection of the DVO report. In conclusion, the High Court dismissed the appeals, emphasizing the importance of reliable valuation reports and documents in determining the correctness of additions made by the Assessing Officer under Section 69B of the Income Tax Act, 1961.
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