2022 (10) TMI 455 - AT - Income Tax

Capital gain computation - AO observed that the assessee sold immovable property as per the value assessed by the Stamp Value Authority - AO rejected the assessee s contention and added a sum by invoking the provisions of section 50C Addition u/s 68 - Deduction u/s 54F - admitting Additional Evidence denied - applicability u/s.50C of the Act and confirming addition made by the AO though the said amount as per Stamp Duty Value is not received by the Appellant - assessee submitted that the assessee was unable to submitted bills before the AO during the course of assessment proceedings due to paucity of time - HELD THAT - As established law that in appropriate circumstances/cases, the Ld. CIT(Appeals) should admit additional evidence in the interest of justice, in case the filing of such evidence goes to the root of the matter and is essential to establish the justification/genuineness of the claim of the assessee. Further, we also observe that in the case of Tarun Manmohan Garg v DCIT 2017 (8) TMI 1461 - ITAT AHMEDABAD held that even in the absence of a specific request from the assessee, the AO has to give an option to the assessee to the follow the course provided by law under section 50C of the Act. Further, the Calcutta High Court in the case of Sunil Kumar Agrawal 2014 (6) TMI 13 - CALCUTTA HIGH COURT held that where according to assessee, agreed consideration as per conveyance deed was highest prevailing market price of property, it would follow that assessee disputed higher valuation made by Stamp valuation authority and in such case, Assessing Officer should have referred matter to a Valuation Officer as contemplated under section 50C. Accordingly, we are restoring the file to the assessing officer for fresh adjudication, after giving due opportunity to the assessee to place supporting documents/evidence in order to establish genuineness of unsecured loans to establish details/value regarding sale of property and to examine claim of deduction u/s. 54F of the Act after grating due opportunity of hearing to the assessee.

Summary

Issues:
1. Admission of additional evidence under Rule 46A by CIT(A).
2. Addition u/s. 68 for unsecured loans.
3. Addition under section 50C for property sale value.
4. Disallowance of claim under section 54F for capital gains tax exemption.
5. Validity of Assessment Order passed on a holiday.

Analysis:

1. Admission of Additional Evidence:
The assessee contended that the CIT(A) erred in not admitting additional evidence, crucial for establishing the genuineness of unsecured loans and completion of construction for claiming deduction under section 54F. The ITAT emphasized the importance of admitting evidence essential to substantiate the assessee's claims, citing precedents where such evidence was pivotal. Consequently, the ITAT directed the AO to reconsider the matter, allowing the assessee to present supporting documents to validate the unsecured loans, property sale value, and the claim under section 54F.

2. Addition u/s. 68 for Unsecured Loans:
The AO added a sum under section 68 due to the assessee's failure to prove the genuineness of unsecured loans. Despite the assessee's arguments regarding the creditors' identity and creditworthiness, the AO upheld the addition. The CIT(A) partially allowed the appeal, reducing the addition but did not fully accept the assessee's contentions. The ITAT acknowledged the assessee's challenges in providing details within the limited time frame during assessment proceedings and emphasized the need for thorough examination of the evidence.

3. Addition under Section 50C for Property Sale Value:
Regarding the addition under section 50C for property sale value, the AO relied on the Stamp Value Authority's assessment, while the assessee claimed a lower sale value. The ITAT highlighted the need for a comprehensive review of the property sale transaction, emphasizing the importance of considering all relevant evidence to determine the accurate valuation. The ITAT's decision to remand the matter to the AO for fresh adjudication aimed to ensure a fair assessment based on complete information.

4. Disallowance of Claim under Section 54F:
The AO disallowed the claim under section 54F due to the assessee's inability to provide documents supporting the purchase of a residential house. Despite the assessee's attempts to present evidence, the claim was rejected. The ITAT recognized the significance of substantiating claims with proper documentation and directed the AO to reevaluate the deduction under section 54F, granting the assessee an opportunity to provide necessary proof.

5. Validity of Assessment Order on a Holiday:
The additional grounds raised by the assessee questioned the validity of the Assessment Order passed on a holiday, arguing it was void ab initio. The ITAT did not address this specific issue in its analysis, focusing instead on the substantive tax matters raised in the appeal.

In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the importance of admitting crucial evidence and conducting a thorough assessment based on all relevant facts to ensure a just outcome.