2015 (8) TMI 1159 - AT - Income Tax

Addition made by following the valuation method u/s.50C - Held that - In the present case, the AO had made addition on the basis of the difference in value of the property declared by the assessee as sale consideration and the value that was adopted by the Stamp Valuation Authority. The submission of ld.AR that in the case of co-owners, the matter has been restored to AO by the Tribunal has not been controverted by ld.DR. We find that in the case(s) of S/Shri Ajay Hasmukhlal Jariwala and Dhanesh K.Jariwala HUF, the other co-owners, the Coordinate Bench of this Tribunal 2015 (8) TMI 454 - ITAT AHMEDABAD had set aside the issue to the file of AO, by holding in view of the provisions of section 50C(2) of the Act, we are of the considered view that the AO was not justified in adopting the value of the property as adopted by the stamp valuation authority without referring to the DVO for ascertaining the fair market value of the property. Therefore, the orders of the authorities below on this issue are hereby set aside and the additional ground raised by the assessee is restored back to the file of AO to decide the same in accordance with law. Needless to say that the AO would afford reasonable opportunity of being heard to the assessee before passing the order. Thus, additional ground raised by the assessee is allowed for statistical purposes

Issues Involved:

1. Consideration of revised return filed prior to the date of receipt of assessment order.
2. Admission of revised return as additional ground under Rule 46A(1)(a) and 46A(1)(c).
3. Consideration of affidavit contents and the presumption of assessee's awareness of the assessment order date.
4. Valuation report for property as of 01/04/1981 filed with the revised return.
5. Request to set aside lower authorities' orders and recompute Long Term Capital Gain (LTCG) as per revised return.
6. Deduction under Section 50EC for Rs. 1,00,000 invested.
7. Additional ground for referring the matter to District Valuation Officer (DVO) against stamp duty valuation under Section 50C.

Detailed Analysis:

1. Consideration of Revised Return:
The CIT(A) erred in not considering the revised return filed before the completion of the assessment. The revised return was filed within the permissible period but after the completion of the assessment. As per Section 139(5) of the I.T. Act, a revised return can be filed within one year from the end of the relevant assessment year or before the completion of the assessment. Therefore, the revised return filed by the assessee after the assessment completion was considered non-est.

2. Admission of Revised Return as Additional Ground:
The CIT(A) did not admit the revised return as additional evidence under Rule 46A(1)(a) and Rule 46A(1)(c). The revised return was considered non-est due to its filing after the assessment completion. Even if considered as additional evidence, it would not benefit the appellant since the revised return adopted the stamp duty valuation as the full value of consideration, thus not affecting the computation of capital gain.

3. Consideration of Affidavit Contents:
The CIT(A) did not consider the contents of the affidavit filed by the assessee, which stated that the assessee was not aware of the date of passing the assessment order. The CIT(A) presumed that the assessee should have been aware of the assessment order date, which led to the rejection of the affidavit's contents.

4. Valuation Report Filed with Revised Return:
The CIT(A) did not appreciate the valuation report valuing the property as of 01/04/1981 filed with the revised return. The valuation report contradicted the valuation in the original return, and thus, it was considered an afterthought aimed at reducing tax liability. The revised return claimed a fair market value of Rs. 386,667/- instead of Rs. 270,258/- as in the original return, which was rejected.

5. Recompute LTCG as per Revised Return:
The assessee requested that the orders of the lower authorities be set aside and the matter be restored to the AO to recompute the LTCG as per the revised return. The CIT(A) upheld the AO's application of Section 50C, determining the LTCG without interference. The AO had computed the capital gain based on the stamp duty valuation, which was higher than the assessee's declared sale consideration.

6. Deduction under Section 50EC:
The CIT(A) did not allow the deduction of Rs. 1,00,000 under Section 50EC claimed in the revised return due to the lack of details and evidence regarding the investment. The revised return was considered non-est, and thus, the deduction claim was not entertained.

7. Additional Ground for Referring to DVO:
The assessee raised an additional ground to refer the matter to the DVO against the stamp duty valuation under Section 50C. The AO did not accept the request to refer the case to the DVO for ascertaining the fair market value of the property. The Tribunal noted that in similar cases involving co-owners, the matter was set aside to the AO to make the assessment in accordance with the DVO's valuation. Following this precedent, the Tribunal set aside the issue to the AO with directions to decide in accordance with the law after providing reasonable opportunity of hearing to the assessee.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, setting aside the issue to the AO to decide in accordance with the law, following the precedent in similar cases involving co-owners. The AO is directed to refer the valuation to the DVO and provide a reasonable opportunity of hearing to the assessee.

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