2021 (11) TMI 95 - AT - Income Tax

Addition on account of mismatch between the TDS and income shown in as much as it is duly reconciled - HELD THAT - Admittedly, there was the difference between the income shown from 26AS viz a viz income shown in the books of accounts. However, such difference were duly explain by the assessee in the reconciliation statement available on record. But on perusal of the order of the authorities below, we note that such reconciliation statement was not considered by them. To our mind, the consideration of the impugned reconciliation statement is necessary to put an end on the ongoing dispute. Accordingly, we are inclined to restore the issue to the file of the AO for fresh adjudication as per the provisions of law and after considering the reconciliation statement filed by the assessee. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Capital gain computation - Addition under the provisions of section 50C - contention of the assessee by observing that the stamp value as determined for the purpose of stamp duty shall be taken as the sale consideration in pursuance to the provisions of section 50C - HELD THAT - Admittedly, the capital asset was transferred by the assessee in the year under consideration through the agreement to sale with possession. All the conditions of section 53A of the Act have been duly satisfied. Therefore, in our considered view the provisions of section 50C of the Act shall be applicable for computing the capital gain. In the present case the property has been transferred by way of an agreement as discussed above. Accordingly, the AO has taken the stamp value for the purpose of computing the capital gain under the provisions of section 50C of the Act which was worked out at ₹ 41,74,217/- only. In view of the above, we hold that the provisions of section 50C of the Act are applicable in the present case for computing the capital gain. Rejection valuation report filed by the assessee - AO cannot reject the valuation report filed by the assessee without referring the same to the DVO under the provisions of sub section (2) of section 50C.AO has not referred the matter to the DVO for determining the fair value of the property as contemplated above - we are inclined to restore this issue to the file of the AO with the direction to refer the same to the DVO for the purpose of valuation and decide the issue a fresh as per the provisions of law. Hence the ground of appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Addition of ?11,87,796/- due to mismatch between TDS and income shown.
2. Addition of ?39,68,928/- under section 50C of the Income Tax Act.

Issue-Wise Detailed Analysis:

1. Addition of ?11,87,796/- due to mismatch between TDS and income shown:

The first issue concerns the confirmation by the CIT(A) of an addition of ?11,87,796/- made by the AO due to a discrepancy between the gross income shown in the assessee's books and the income reported in Form 26AS issued by the Revenue. The assessee, engaged in the trading of PVC raw materials, had different heads of income such as interest, contractual receipts, and commission. The AO found discrepancies in these amounts, notably under sections 194A, 194C, and 194H of the Act.

The assessee explained that the differences arose due to various reasons, including the inclusion of service tax in the income on which TDS was deducted, incorrect TDS deductions by clients under wrong sections, and waived interest amounts on delayed payments. Despite these explanations, the AO did not find sufficient corroborative evidence and added the difference to the total income.

Upon appeal, the CIT(A) upheld the AO's decision, noting that the assessee failed to provide sufficient evidence to fully reconcile the discrepancies. The assessee then appealed to the ITAT, arguing that the reconciliation statements and ledger accounts provided were not properly considered by the lower authorities. The Revenue did not object to a fresh adjudication.

The ITAT noted that the reconciliation statements were indeed necessary to resolve the dispute and found that the lower authorities had not considered these statements. Consequently, the ITAT restored the issue to the AO for fresh adjudication, directing that the reconciliation statements be duly considered as per the law. Thus, the appeal on this ground was allowed for statistical purposes.

2. Addition of ?39,68,928/- under section 50C:

The second issue involves the confirmation by the CIT(A) of an addition of ?39,68,928/- under section 50C of the Act. The assessee had acquired a godown and sold it in the relevant assessment year for ?3,31,000/-. The AO found that the Jantry value (stamp duty value) of the property was much higher at ?40,550/- per square meter. The assessee contended that the property was located in an unauthorized area with unclear title, and thus, the sale consideration should not be based on the stamp value.

The AO rejected the assessee's valuation report, citing various deficiencies and inconsistencies, and invoked section 50C to adopt the stamp value for computing the capital gain. The CIT(A) upheld this decision, stating that the stamp value should be considered as per section 50C.

The assessee appealed to the ITAT, arguing that the property was unauthorized and should not be subject to section 50C. The Revenue countered that there was no evidence to suggest the land was agricultural or that the ownership was disputed.

The ITAT reviewed the case and noted that the property transfer satisfied the conditions of section 53A of the Transfer of Property Act, making section 50C applicable. However, the ITAT found that the AO had not referred the valuation report to the District Valuation Officer (DVO) as required under section 50C(2) of the Act. The ITAT directed the AO to refer the matter to the DVO for a fair valuation of the property and to decide the issue afresh based on the DVO's valuation. Thus, the appeal on this ground was also allowed for statistical purposes.

Conclusion:

In conclusion, the ITAT restored both issues to the AO for fresh adjudication, directing proper consideration of the reconciliation statements and a referral to the DVO for property valuation, respectively. The appeal filed by the assessee was allowed for statistical purposes.

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