2017 (6) TMI 1049 - HC - Income Tax

Addition made u/s 69B - comparable prevailing rates of the properties of the same locality and the valuation report of the said property obtained from the DVO as per Section 55A ignored by Tribunal deleting the addition - Held that - As observed by the Tribunal that the comparable sales instances produced on record are of commercial properties and the property in question is a residential flat. The explanation given by the assessee has been considered by the Tribunal. The assessee has given explanation that after 1981, the said property was lying vacant, the property was ill-reputed inasmuch as the Municipal Corporation had issued notice under Section 52 of the MRTP Act for illegal possession. The agreement of sale is also produced on record. The initial burden is upon the Revenue. The explanation given by the assessee is required to be considered objectively. The Tribunal has also held that the explanation given by the assessee is a plausible explanation. Tribunal has arrived at a reasonable and plausible conclusion. No substantial question of law arises.

Summary

Issues:
Appeal against Tribunal's judgment on deletion of addition made by Assessing Officer under Section 69B of the Act.

Analysis:
The present appeal before the High Court of Bombay arose against the Tribunal's decision to allow the appeal of the assessee, leading to the Revenue filing the appeal. The main ground of appeal questioned whether the Tribunal was justified in deleting the addition made by the Assessing Officer under Section 69B of the Act, amounting to ?1,06,18,870. The Revenue argued that the Tribunal erred in ignoring the comparable prevailing rates of properties in the same locality and the valuation report obtained from the DVO as per Section 55A of the Act.

In response, the appellant's counsel contended that the Tribunal's decision to delete the addition was unjustified. The counsel highlighted that although the Revenue lacked direct evidence as they were not a party to the transaction, the Assessing Officer's valuation based on the valuation report and comparable sales instances was accurate. The counsel emphasized that the Tribunal's deletion of the addition under Section 69B was erroneous and improper given the facts of the case.

Upon reviewing the judgments of the Assessing Officer, CIT(A), and the Tribunal, the High Court noted that the Tribunal considered the comparable sales instances provided, which were of commercial properties, while the disputed property was a residential flat. The Tribunal also took into account the explanation provided by the assessee, stating that the property had been vacant since 1981 and faced legal issues with the Municipal Corporation. Additionally, the agreement of sale was presented as evidence. The Tribunal found the assessee's explanation to be plausible and reasonable, shifting the initial burden onto the Revenue.

Based on the assessee's explanation and the Tribunal's assessment, the High Court concluded that the Tribunal's decision was reasonable and no substantial question of law arose. Consequently, the appeal was dismissed with no costs awarded.