2018 (12) TMI 516 - AT - Income Tax

Capital gain - Deemed sale consideration u/s 50C as against sale consideration as per the registered sale deed - Held that - The contention of the assessee is that the higher stamp value has not been finalized basis the notice issued under section 54 of the stamp Act and it could be subject matter of appeal and till such time, such higher value has not been finalized, the same cannot be accepted for section 50C purposes. The copy of conveyance deed, the order of the sub-registrar, the notice under section 54 of the stamp Act and the status of any appeal being preferred against the said order are not brought on record by either of the parties. In absence of adequate material on record, we are therefore unable to take a view in the matter. The matter is accordingly set-aside to the file of the AO to examine the same a fresh after seeking requisite information from the Sub-Registrar authority regarding the final value so determined in respect of impunged property and decide as per law taking into consideration the above discussions. In the result, the ground is allowed for statistical purposes. Cost of acquisition of the land taken by the AO as against cost of acquisition taken by the appellant in the return of income while working out long term capital gains on sale of property as jointly owned by the assessee along with his brother - Held that - The valuer was issued notice u/s 133(6) and in response, he submitted that no document/purchase deed was provided by the assessee regarding valuation of land and he has taken the land rate basis the commercial land rates of various areas in Jaipur city for the location Ramgang Bazar to Galta Gate. Further, what those land rates are, there is no data which has been shown as forming part of the valuation report. We therefore find serious deficiency in the approach of the valuer. Firstly, where he has himself described the property as residential located in a residential area and occupied by the assessee for own residence and not rented out, a fact not been disputed even before us, that on basis, he has considered the commercial land rate. Secondly, what stopped the assessee who has appointed the valuer in sharing a copy of the registered purchase deed with the valuer. This shows the conduct of the assessee and his intention of seeking a valuation report which supports his case of a higher value instead of determining a fair market value which is the mandate of law. Therefore, we are of the considered view that the lower authorities have rightly rejected the valuation report and do not agree with the contention of the ld AR that the AO could not have rejected the valuation report and ought to have accepted the same. The approach of the AO has however been found acceptable to us. To our mind, he has taken a sound basis of taking the value as per actual purchase deed dated 17.04.1980 and taking an average appreciation in the value of property @ 10% p.a., determined the fair market value at ₹ 38,500. Addition under the head salary - income was taken at ₹ 1,80,000/- as against income of ₹ 1,44,000/- as declared by the assessee - Held that - The salary for the impugned year is ₹ 144,000 and salary for the next year is ₹ 180,000 and by mistake, salary certificate for the next year has been submitted during the assessment proceedings, however a correct certificate has been submitted during the appellate proceedings. AO is directed to verify the salary certificates with the return of income and where the same is found in order, allow the necessary relief to the assessee. In the result, the ground of appeal is allowed with above directions - Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Sustaining addition under the head "Long Term Capital Gain" of ?27,08,092.
2. Sustaining the value of the sold property at ?92,80,201 as adopted by the AO u/s 50C against the apparent sale consideration of ?75,00,000.
3. Upholding the cost of acquisition of the land at ?38,500 against the appellant's claimed cost of ?5,80,000.
4. Sustaining the addition of ?36,000 under the head "Salary Income."

Issue-wise Detailed Analysis:

1. Sustaining Addition under "Long Term Capital Gain" of ?27,08,092:
The assessee challenged the addition made by the AO under the head "Long Term Capital Gain." The AO assessed the income under this head at ?23,34,292 against a loss of ?3,73,800 declared by the assessee. The primary contention was the AO's reliance on the valuation of the property by the Sub-Registrar, which was higher than the sale consideration declared by the assessee. The Tribunal noted the absence of documentation supporting the assessee's claim that the higher valuation was under dispute and pending finalization. The Tribunal set aside the matter to the AO for fresh examination, directing the AO to seek requisite information from the Sub-Registrar and decide as per law. The ground was allowed for statistical purposes.

2. Sustaining the Value of the Sold Property at ?92,80,201:
The assessee contested the deemed sale consideration u/s 50C, arguing that the matter of adopting higher valuation was pending before the Sub-Registrar. The AO adopted the sale consideration of ?92,80,201 based on the Sub-Registrar's valuation, rejecting the assessee's declared sale consideration of ?75,00,000. The Tribunal found that the assessee did not provide any documentation to support the claim that the higher valuation was under appeal. The Tribunal directed the AO to re-examine the matter after obtaining final valuation details from the Sub-Registrar. The ground was allowed for statistical purposes.

3. Upholding the Cost of Acquisition of the Land at ?38,500:
The assessee claimed the cost of acquisition at ?5,80,000 based on a registered valuer's report, while the AO considered the cost at ?38,500 based on the purchase deed dated 17.04.1980. The AO observed discrepancies in the valuer's report, including the use of commercial rates for a residential property. The Tribunal upheld the AO's approach, noting that the valuer did not provide necessary documentation and used inappropriate valuation methods. The Tribunal agreed with the AO's determination of the fair market value at ?38,500, considering a 10% annual appreciation. The ground was dismissed.

4. Sustaining the Addition of ?36,000 under "Salary Income":
The AO made an addition of ?36,000 under the head "Salary Income," taking the income at ?1,80,000 against ?1,44,000 declared by the assessee. The assessee argued that the discrepancy was due to a typographical error by the accountant, who mistakenly prepared a salary certificate for the subsequent year. The Tribunal directed the AO to verify the salary certificates with the return of income and allow necessary relief if found in order. The ground was allowed with directions.

Conclusion:
The appeal was partly allowed for statistical purposes, with directions for the AO to re-examine certain matters and verify documentation as per the Tribunal's instructions. The Tribunal emphasized the need for adequate documentation and proper valuation methods in determining the fair market value and assessing income under various heads.