2023 (12) TMI 352 - HC - Income Tax

Assessment u/s 153A - Unaccounted capital gain from sale of immovable property - addition was made on the basis of valuation report prepared by Shri Pankaj Mistry, Valuer which was accepted and never objected to by the assessee - Whether Tribunal has erred holding that there was no incriminating material without appreciating that the addition was based on the Valuation Report which in itself is an incriminating material and deleted addition? - HELD THAT - We are of the opinion that there is no infirmity in the impugned order passed by the appellate authority as the appellant has failed to obtain any corroborative material put to the valuation report to come to the conclusion that any amount is received by the assessee on sale of the property in question and what is declared in the books of account. There is no allegation that the consideration declared by the assessee was above the value taken for the purpose of stamp duty by the valuation authorities as per provisions under Section 50C of the Act. No substantial question of law.

Summary

Issues involved:
The issues involved in this judgment are whether the Appellate Tribunal erred in holding that there was no incriminating material for the addition made based on the Valuation Report, and whether the Tribunal erred in deleting the addition of unaccounted capital gain from the sale of immovable property.

Issue 1: Incriminating Material from Valuation Report
The Assessing Officer observed during survey proceedings that a group had purchased land from the assessee and made an addition for suppressed capital gains based on a valuation report. The CIT(A) deleted the addition, stating that the valuation was for a loan application, done more than two years after the transfer, and without any proof of undisclosed payments. The Tribunal upheld this decision, noting that the property was disclosed in the books, and no incriminating material was found. The Tribunal emphasized that without incriminating material, no addition should be made under Section 153A of the Income Tax Act.

Issue 2: Deletion of Capital Gain Addition
The Assessing Officer added the capital gain amount based on the valuation report, which the CIT(A) deleted. The Tribunal agreed with the CIT(A), stating that the valuation was done for a bank loan application, after two years of transfer, and without any proof of undisclosed payments. The Tribunal highlighted that the valuation was not subject to scrutiny or verification, and no incriminating documents were found. Additionally, the Tribunal referenced Section 50C of the Act, which mandates the deemed consideration to be equal to the stamp valuation authority's value. The Tribunal affirmed the CIT(A)'s decision to delete the addition, as it was not justified based on the circumstances and the spirit of the Act.

Separate Judgment by the Judges:
The Honorable Judges, after considering the arguments and findings of the CIT(A) and the Tribunal, concluded that the impugned order was valid. They noted that the appellant failed to provide corroborative material to challenge the valuation report and that there was no allegation of the consideration being above the value for stamp duty as per Section 50C of the Act. Therefore, the Judges found no infirmity in the appellate authority's decision and dismissed the appeal for lack of merit.