2023 (4) TMI 575 - AT - Income Tax

Income from other sources - Valuation of purchase of agricultural lands - difference between the purchase consideration and Stamp Duty Valuation exceed to be added as income u/s. 56(2)(vii)(b) - excess agricultural income - HELD THAT - CIT(A) while giving partial relief to the assessee has considered the difference between the declared value determined by the assessee and estimated value determined by the DVO is relating to two survey numbers only, wherein there is different in value and thereby given relief to the assessee. Since the above agricultural land is one lot of large extent of land purchased by the assessee along with his brother as co-owners, once the entire transactions is to be taken as one transaction then the difference between the declared value by the assessee and that is determined by the DVO, which is less than 5% only. Therefore taking into account, the totality of the transactions made by the assessee, we find that the invocation of Section 56(2)(vii)(b) does not arise in this case. Therefore we direct to delete the entire addition made by the AO u/s. 56(2)(vii)(b) of the Act. Decided in favour assessee.

Summary

Issues involved:
The main dispute revolves around the valuation of purchase of agricultural lands in two separate cases, leading to appeals against Appellate orders dated 17.09.2019 and 27.08.2019 passed by the Commissioner of Income Tax (Appeals), Jamnagar, arising from separate Assessment orders under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.

Case 1:
Facts: Two brothers purchased agricultural land for Rs. 2,47,75,000, with Stamp Duty Valuation at Rs. 2,59,59,184, resulting in a difference of Rs. 11,84,184. Assessing Officer issued a notice under section 56(2)(vii)(b) of the Act due to the exceeding difference.
Contentions: Assessee argued that valuation differences are common, citing legal precedents where differences less than 10% were disregarded. However, Assessing Officer added Rs. 11,53,674 under section 56(2)(vii)(b) and made additional income adjustments.
Decision: CIT(A) reduced the addition to Rs. 5,21,500, considering evidence and relevant materials, specifying valuation adjustments for certain properties. Assessee appealed against the partial confirmation.

Case 2:
Facts: Co-owner of the same agricultural lands appealed against addition made under section 56(2)(vii)(b) based on valuation discrepancies.
Arguments: Assessee contended that differences in valuation were expected due to various factors, and the total difference was less than 5% of the total value.
Outcome: After considering the totality of transactions and the nature of the purchase, the Tribunal directed deletion of the entire addition made by the Assessing Officer under section 56(2)(vii)(b) for both the appellants.

Conclusion:
The Tribunal allowed the appeals in both cases, directing the deletion of additions made under section 56(2)(vii)(b) for the purchase of agricultural lands, emphasizing the negligible differences in valuation and the collective nature of the transactions.