2023 (3) TMI 362 - AT - Income Tax

Addition u/s 56(2)(vii) - Jantri value of property was more as against the valuation shown in the documents - HELD THAT - The document was registered by showing consideration at Rs. 3.05 crores. Certified copy of valuation sheet was also furnished. We find that the assessee specifically submitted that rate of Jantri value is available on the State Government e-portal for general public information and the jantri value of property is Rs. 4200/- per square meter. The total area of transaction for the impugned land in R.S. No. 47, Block No. 86 purchased by assessee and his co-owners is 7102 per square meter, so Jantri value is Rs. 2,98,24,800/-. we find that no investigation of such fact was carried out by ld CIT(A) of his own. Rather, such submissions were remanded to the assessing officer, the assessing officer objected for considering such submissions. On merit of the additions, the assessing officer again retreated the similar contention as recorded in the assessment order. Total area purchased by the assessee and his co-owners of 7102 Square meter, which is not in dispute. As per Jantri rate of the Revenue Survey No. 47, Block No. 87, final plot No. 82 B Bamroli is Rs. 4200/- per square meter so total value of land as per Jantri Value is Rs. 2,98,24,800/-. The assessee has shown consideration of such transaction at Rs. 3.05 Crore, which is much more than the value of Stamp Valuation authority. Thus, the assessing officer made addition of difference of Rs. 3,38,486/- without verifying the factual position. Thus, direct the assessing officer to delete such addition made under section 56(2)(vii). In the result, ground No. 3 of the appeal is allowed. Unexplained investment - assessee made investment for purchasing of property which is not declared in the return of income nor offered for taxation - assessee submits that the investment made in the land is duly reflected in the balance sheet and payment was made from ICICI bank account which was duly shown in the return of income - HELD THAT - CIT(A) confirmed the addition without verifying the facts. Before me, the assessee made similar submissions as raised before ld CIT(A). On perusal of verification balance sheet of the assessee I find that land is reflected in his balance sheet and the payments were made from bank account which is duly shown in the return of income, copy of Profit and Loss account, balance sheet, capital account, copy of land purchase account and bank statement is already filed on record. Thus, no justification in confirming the addition by ld CIT(A). thus assessing officer is directed to delete the addition of unexplained investment of Rs. 12,33,150/-. We also find merit in the other submissions of the ld AR for the assessee that the case of his co-owners were also reopened under section 147 by recording similar reasons about the investment and difference in consideration shown of the registered sale deed and the value allegedly determined by the stamp valuation authority. However, in cases of two of his co-owners, the charges were dropped and no addition either under section 56(2)(vii) or unexplained investment was made. Thus, the assessee also succeeded on this submission that he cannot be treated differently by revenue authority on similar set of facts. Assessee appeal allowed.

Summary

Issues Involved:
1. Validity of the reassessment order.
2. Addition under Section 56(2)(vii) for the difference in property valuation.
3. Addition under Section 69 for unexplained investment.
4. Validity of reopening the assessment under Section 147/148.

Detailed Analysis:

1. Validity of the Reassessment Order:
The assessee contended that the reassessment order was "against the facts of the case, bad in law, illegal and needs to be quashed." The Tribunal dismissed these general grounds as they required no specific adjudication.

2. Addition under Section 56(2)(vii) for Difference in Property Valuation:
The Assessing Officer (AO) added Rs. 3,38,486/- to the assessee's income under Section 56(2)(vii) based on the difference between the Stamp Duty Authority's valuation and the sale deed value. The AO determined the market value of the property at Rs. 3.86 crores, while the sale deed showed Rs. 3.05 crores. The assessee's share was calculated as 4.038%, leading to the contested addition. The Tribunal found that the AO did not provide a basis for the valuation of Rs. 3.86 crores and ignored evidence provided by the assessee, including a certified valuation sheet from the Sub-Registrar showing a Jantri value of Rs. 2.98 crores. The Tribunal directed the AO to delete the addition, as the assessee's declared value was higher than the Jantri value.

3. Addition under Section 69 for Unexplained Investment:
The AO added Rs. 12,33,150/- as unexplained investment under Section 69, claiming the assessee did not provide satisfactory explanations or documents. The assessee argued that the investment was reflected in the balance sheet, and payments were made from a bank account shown in the return of income. The Tribunal found that the investment was indeed reflected in the balance sheet and supported by bank statements. Thus, the Tribunal directed the AO to delete the addition.

4. Validity of Reopening the Assessment under Section 147/148:
The assessee challenged the reopening of the assessment, arguing that the AO did not provide sufficient reasons or tangible material for believing that income had escaped assessment. The Tribunal noted that the AO's reasons for reopening did not mention any unaccounted investment in the land and were based on a "roving enquiry," which is not permissible. However, since the Tribunal allowed relief on the merits, the issue of reopening became academic and was not adjudicated further.

Conclusion:
The Tribunal allowed the appeal, directing the deletion of additions under Sections 56(2)(vii) and 69. The Tribunal also noted that similar transactions in the hands of co-owners were accepted without additions, supporting the assessee's claim of inconsistent treatment by the revenue authorities. The order was pronounced on 6th March 2023.