Shyam Sunder Bhaeti, Jodhpur V. ITO, Ward-1(4), Jodhpur

ITA 57/JODH/2020

AI Insights

The case involves an appeal by the legal heir of the deceased assessee, Late Sh. Shyam Sunder Bhaeti, against the order of the Commissioner of Income-tax (Appeals)-1, Jodhpur, which pertained to the assessment year 2016-17. The primary dispute was regarding the addition of Rs.4,65,187 under section 56(2)(vii)(b) of the Income-tax Act, 1961, which was deemed as income due to the difference between the declared sale consideration of a property and its value determined by the stamp duty authority. The Assessing Officer had added this amount to the assessee's income, which was contested and partially reduced by the first appellate authority. The Tribunal's decision focused on the procedural missteps by the Assessing Officer in not referring the valuation dispute to the DVO and incorrectly applying the date of valuation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122679 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 19-02-2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV MOHAN
• Keywords: Sale consideration of property below Jantri Value
• Section: 56(2)(vii)(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH ‘SMC’, JODHPUR BEFORE SHRI SAKTIJIT DEY, VICE-PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 57/Jodh/2020 Assessment Year: 2016-17 (Through Virtual Mode) Late Sh. Shyam Sunder Bhaeti, Through L/h. Ram Kishore Bhaeti 122 C, Krishna Mandir Road, Subhash Chowk, Ratanada, Jodhpur. PAN: AIOPB9503H Versus Income-tax Officer, Ward-1(4),Jodhpur. (Appellant) (Respondent) Assessee by : Ms. Divya Phophalia, C.A. Revenue by : Sh. Rajeev Mohan, JCIT-DR Date of hearing : 14.09.2023 Date of pronouncement: 20.09.2023 ORDER This is an appeal by the assessee against order dated 24.12.2019 of learned Commissioner of Income-tax (Appeals)-1, Jodhpur for the assessment year 2016-17. 2. At the outset, we must observe, since, the assessee has died during the pendency of present appeal, he has been substituted ITA No. 57/Jodh/2020 2 through his legal heir. Be that as it may, the only dispute in the present appeal is with regard to addition of an amount of Rs.4,65,187/- under section 56(2)(vii)(b) of the Income-tax Act, 1961. 3. Briefly, the facts are, the deceased assessee was a resident individual. For the assessment year under dispute, the assessee has filed its return of income on 15.03.2017 declaring income of Rs.2,36,390/-. In course of assessment proceedings, while examining the materials on record, the Assessing Officer noticed that in the assessment year under consideration, the assessee had purchased an immovable property for a declared sale consideration of Rs.60,00,000/-. However, on the date of registration of the sale deed on 24.09.2015, the stamp duty authority has determined the value of the property at Rs.83,25,800/- for stamp duty purpose. Noticing this fact, the Assessing Officer was of the view that the difference in value as per the declared sale consideration and as determined by stamp duty authority has to be treated as income under section 56(2)(vii)(b) of the Act. Though, the assessee objected to the proposed addition, however, rejecting the objection of the assessee, the Assessing Officer added an amount of Rs.13,56,717/- to the income of the ITA No. 57/Jodh/2020 3 assessee by taking the share of the assessee in the sale consideration at 58.33%. The assessee contested the aforesaid addition before learned first appellate authority. Partly accepting assessee’s contention, learned first appellate authority held that since, the property purchased was co-owned by five individuals, assessee’s share in the deemed sale consideration can be computed at 20%. Accordingly, he restricted the addition to Rs.4,65,187/-. 4. We have considered rival submissions and perused materials on record. Basically, the contention of the assessee is two-fold. Firstly, in case there is an objection against the value determined by the stamp valuation authority, the Assessing Officer is duty bound to make a reference to the Departmental Valuation Officer (DVO) to determine the value of the property. Whereas, the Assessing Officer has not followed the statutory mandate. Secondly, the assessee along with other co-owners had executed agreement to sale on 12.08.2010. Whereas, due to some dispute arising out of tenants occupying the property, the final sale deed could be registered only on 07.10.2015. Thus, according to the assessee, the rate prevailing on the date of execution of agreement to sale should be taken as the ITA No. 57/Jodh/2020 4 value of property and not the value of property determined on the date of registration of sale deed. 5. We find substantial merit in the aforesaid contention of the assessee. On a conjoint reading of section 56(2)(vii)(b) of the Act, which is applicable to a purchaser of immovable property and section 50C, which is applicable to a seller of immovable property, it is observed that both have pari materia provisions. The third proviso to section 56(2)(vii)(b) enjoins upon the Assessing Officer a duty to refer the valuation to the DVO in case the assessee disputes the stamp duty valuation. Further, the first proviso to section 56(2)(vii)(b) makes it clear that if the date of agreement fixing the amount of sale consideration and the date of registration are not the same, the stamp duty valuation on the date of agreement to sale can be taken as the deemed sale consideration. Thus, if we examine the facts of the present appeal keeping in view the aforesaid statutory provisions, it is very much clear that the Assessing Officer has not complied with the condition of third proviso to section 56(2)(vii)(b) of the Act. Whereas, he failed to apply the benefit given under the first proviso to section 56(2)(vii)(b) of the Act. Thus, in our view, the addition made on this ITA No. 57/Jodh/2020 5 score is unsustainable. Accordingly, we delete the addition sustained by learned first appellate authority. 6. In the result, appeal is allowed. Order pronounced in the open court on 20/09/2023. Sd/- Sd/- (GIRISH AGRAWAL) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT Dated: 20.09.2023 *aks/-