ASHOKKUMAR JIVRAJBHAI GUJARATI,SURAT V. ITO, WARD 3(2)(1), SURAT

ITA 510/SRT/2024

AI Insights

The case involves Ashokkumar Jivrajbhai Gujarati, who appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which confirmed the Assessing Officer's addition of Rs.18,86,850 to his income for the Assessment Year 2018-19. This addition was based on the difference between the fair market value of agricultural land he purchased and the sale consideration he declared. The DVO valued the land significantly higher than the declared sale consideration, leading to the tax addition under section 56(2)(x) of the Income Tax Act, 1961. The Tribunal found merit in the assessee's argument regarding the DVO's valuation being on the higher side and adjusted the valuation rate for tax purposes.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470575 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 01-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 01-05-2024
• Other Referred Cases: Nitinkumar Manubhai Patel vs. ITO, Sanjay Jayantilal Shah vs. ACIT, Hasmukhbhai Gopalbhai Patel vs. ACIT, Mr. Arjanbhai B. Davariya (HUF) vs. DCIT, Baba Exports House vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Fair market value; Valuation report

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 510/SRT/2024 for AY: 2018-19 (Physical hearing) Ashokkumar Jivrajbhai Gujarati, 286/287, Hari Darshan Society, B/h. Singapore, Nana Faliya, Katargam, Surat – 395004. PAN : AHTPG0906F Vs The AO, NFAC, Delhi Jurisdictional AO: The ITO, Ward – 3(2)(1), Aayakar Bhawan, Majura Gate, Surat APPELLANT RESPONDEDNT Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Institution 01/05/2024 Date of hearing 01/10/2024 Date of pronouncement 07/10/2024 Order under Section 254(1) of Income tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (in short ‘the NFAC’), Delhi, dated 10.04.2024 for Assessment Year (AY) 2018- 19. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.18,86,850/- on account of excess fair market value as given in the Valuation Report over the purchase consideration treated as alleged income from other sources u/s 56(2)(x) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restore back to the CIT(A) or AO. 3. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. Assessing Officer has erred in initiating penalty u/s 270A of the Income Tax Act, 1961. ITA No.510/SRT/2024/AY.2018-19 Ashokkumar Jivrajbhai Gujarati 2 4. It is therefore prayed that the above addition may please be delete as learned members of the tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 2. Brief facts of the case assessment order hat assessee is an individual, filed his return of income for AY.2018-19, declaring total income of Rs.7,34,940/- on 30.10.2018. The case of the assessee was selected for scrutiny on the issue of investment in immovable property. During assessment, the Assessing Officer noted that assessee has purchased agricultural land at Revenue Survey No.188, Block No.171, Account No.319, admeasuring 28302 square meter at Mota Borasara, Taluka – Mangrol, District Surat. The assessee has shown sale consideration of Rs.25,00,000/-, however, the Stamp Valuation Authority valued the transaction for the purpose of registration of sale deed at Rs.62,26,000/-, thus, there is difference of Rs.37,26,000/-. The Assessing Officer was of the view that provision of section 56(2)(x) is attracted. The assessee was asked to explain by issuing show cause notice as to why the difference viz a viz sale consideration and value determined by Stamp Valuation Authority be not added to the income of assessee. The contents of show cause notice are recorded in para 6 of assessment order. The Assessing Officer recorded that assessee is in reply show cause notice stated that fair market value of said land may be considered at Rs.43,86,850/- as per valuation report of District Valuation Officer (DVO). The Assessing Officer accordingly brought the difference of Rs.18,86,850/- (43,86,850 – 25,00,000) to taxation and added under section 56(2)(x) of the Act. ITA No.510/SRT/2024/AY.2018-19 Ashokkumar Jivrajbhai Gujarati 3 3. Aggrieved by the addition in the assessment order, the assessee filed appeal before Ld. CIT(A). The Ld. CIT(A) confirmed the action of Assessing Officer by holding that Assessing Officer adopted the value of asset as per report of DVO. The Assessing Officer is right in invoking the section 56(2)(x) of the Act. Thus, there is no infirmity in the order of Assessing Officer. Further aggrieved, the assessee has filed present appeal before this Tribunal. 4. I have heard the submission of learned Authorized Representative (Ld. AR) of the assessee and learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. AR of the assessee submits that he has a very limited prayer for consideration that the assessee filed objection before DVO in detail, but such objections were not considered by DVO while preparing his report. The DVO inspected the property / impugned land in March, 2021, though the actual sale took place in September, 2017. On the date of inspection, the DVO in his report described the nature of impugned land on the date of his inspection as recorded in para 5.7 of his record i.e. “PUC agricultural land, but there was no crops cultivation activities going on the date of inspection. No electricity connection in PUC, also no bore bell is in PUC. PUC is leveled land. On date of inspection agricultural activities was going on nearby area”. The DVO estimated value of land at Rs.155/- per square meter. After purchase of land the assessee made leveling of the land for usable purpose. Thus, the DVO prepared his report on the basis of his observation as on March 2021. The comparable balance instance narrated by DVO is not a good comparable. The DVO referred four comparables of various block no. Nana Borasara, wherein the per square meter rate of ITA No.510/SRT/2024/AY.2018-19 Ashokkumar Jivrajbhai Gujarati 4 comparable are ranging from Rs. 126/- to Rs. 222/- per square meter. However, the DVO has adopted / suggested rate at Rs. 155/- per square meter. The Ld. AR submits that value estimated by DVO is on higher side and keeping in view the location and size of the land. The assessee purchased the land as per market rate. Though, the report of DVO is binding on the Assessing Officer, however, the appellate authority may differ with his report. The value of impugned land may be considered at the rate of sale consideration recorded in the sale deed. To support of his contention, the Ld. AR relied upon the following decisions:  Nitinkumar Manubhai Patel vs. ITO, ITA No.354/SRT/2024 (ITAT – Surat)  Sanjay Jayantilal Shah vs. ACIT, ITA No.212/SRT/2022 (ITAT – Surat)  Hasmukhbhai Gopalbhai Patel vs. ACIT, IT(SS)A No.52/SRT/2018 (ITAT – Surat)  Mr. Arjanbhai B. Davariya (HUF) vs. DCIT, ITA No.173/SRT/2018 (ITAT – Surat)  Baba Exports House vs. ACIT, 2024 (1) TMI 165 (ITAT – Delhi) 5. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the Revenue supported the order of lower authorities. The ld. Sr. DR supports that there is no infirmity in the valuation report of DVO. The DVO has considered all the relevant factors affecting the value of land while estimating the market value of land on the date of sale. The DVO has considered size, shape, location and future potential value of the land. The assessee has shown sale consideration at the rate of Rs.88/- per square meter, however, the DVO estimated Rs.155/- per square meter, which more than reasonable. The Assessing Officer as well as Ld. CIT(A) considered all the submission of assessee before passing the assessment order. The ld. Sr. DR of revenue submits that the assessee does not deserve any further relief. ITA No.510/SRT/2024/AY.2018-19 Ashokkumar Jivrajbhai Gujarati 5 6. I have considered the rival submission of both the parties and have gone through the orders of lower authorities. I have also deliberated on various documentary evidences filed before him as well as case laws relied upon by the ld. AR of the assesse. I find that there is no much dispute between the assessee and the revenue. The only dispute is only estimation of fair market value as on the date of sale of asset. The assessee has shown sale consideration at the rate of Rs.88/- per square meter on purchase of piece of land admeasuring 28,302. Since the DVO / Sub-Register Office valued the land at Rs.62,26,000/-, thus, there was a difference vis-à-vis the sale consideration shown by assessee and the value asset determined by Stamp Registration Authority for the purpose of registration of land. I find that during the assessment, a reference was made by Assessing Officer was estimation of fair market value of land. Though, the Assessing Officer has not expressly mentioned about such reference in assessment order. The DVO furnished his report dated 24.03.2021. The DVO estimated the value of land @ Rs. 155/- per square meter. The report of DVO is binding on the Assessing Officer. The Assessing Officer on the basis of report of DVO made an addition of difference on account of sale value shown by assessee vis-à- vis the value estimated by DVO. The ld CIT(A) confirmed the action of Assessing Officer. 7. Before me, the ld. AR of the assessee vehemently argued that DVO has estimated the value on higher side, though, the assessee has purchased a land at market rate. On careful perusal of various comparable, I find that the comparable instances narrated by DVO relates to the same village, however, ITA No.510/SRT/2024/AY.2018-19 Ashokkumar Jivrajbhai Gujarati 6 there is a difference of about Rs.94/- per square meter vis-à-vis, the comparable of RS No.53 and RS No.3, which are shown at Rs.126.16 per square meter and Rs.220.04 per square meter respectively. No doubt, the DVO has adopted Rs.155/- per square meter as on 15.09.2017. Though, average of four comparables instances is Rs.163.36 per square meter. Considering the difference in various comparable instances relied by DVO, in my considered view, Rs. 150/- per square meter would be reasonable and sufficient to meet the end of justice. Thus, keeping in view in all facts and circumstances of the present case and I direct the Assessing Officer to adopt Rs.150/- per square meter and compute the addition accordingly. In the result, the ground No.1 of the appeal is partly allowed. No submissions were made against Ground No. 2, therefore, this ground of appeal is treated as not pressed. Ground No. 3 is consequential and Ground No. 4 & 5 are general, thus need no specific adjudication. 8. In the result, the ground of appeal raised by the assessee is partly allowed. Order pronounced on 07/10/2024 in the open court. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 07/10/2024 SAMANTA Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order // TRUE COPY // Assistant Registrar/Sr.PS/PS, ITAT, Surat "