MICHAEL AROKIA RATHAN,CHENNAI V. ITO, NCW-17(2), CHENNAI

ITA 293/CHNY/2025

AI Insights

The case involves an appeal by Shri Michael Arokia Rathan against the order of the Additional/Joint Commissioner of Income Tax(A)-1, Ahmedabad, which confirmed an addition of Rs.8,80,000 under section 56(2)(viib) of the Income Tax Act, 1961. This addition was made due to the difference between the consideration paid for a flat and its stamp duty value. The assessee argued that the stamp duty value was excessively high for the old apartment purchased. The Tribunal noted that the matter was referred to the DVO for valuation, but the report was not available at the time of assessment. The Tribunal decided to restore the matter to the AO to consider the DVO's report once available or allow the assessee to submit an independent valuation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107977 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR
• Keywords: Depreciation; Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 250

Judgement Text

"आयकरअपीलȣयअͬधकरण,‘डी’ Ûयायपीठ,चेÛन IN THE INCOME TAX APPELLATE TRIBUNAL‘D’ BENCH, CHENNAI Įीजॉज[जॉज[क े, उपाÚय¢एवंĮीएस.आर.रघुनाथा, लेखासदèयक ेसम¢ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:293/CHNY/2025 Ǔनधा[रणवष[/Assessment Year: 2017-18 Shri Michael Arokia Rathan, 16C,GreenHouse,29th Cross Street, Indira Nagar, Adyar, Chennai-600 020. PAN: AKYPM-5976-D Vs. Income Tax Officer, Non-Corporate Ward-17(2) Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮकᳱओरसे/Appellant by : : Mr.K.Venkatesh Prabhu, CA ᮧ᭜यथᱮकᳱओरसे/Respondent by : Mr.A.Sasikumar,CIT सुनवाईकȧतारȣख/Date of Hearing : 18.03.2025 घोषणाकȧतारȣख/Date of Pronouncement : 19.03.2025 आदेश /O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal at the instance of the assessee is directed against Addl/Joint Commissioner of Income Tax(A)-1, Ahmedabad, order dated 09.01.2025, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. - 2 - ITA No.293//CHNY/2025 2. The solitary issue is whether the CIT(A) is justified in confirming addition made u/s.56(2)(viib) of the Act amounting to Rs.8,80,000/-. 3. Brief facts of the case are as follows:- The assessee, an individual had filed return of income for assessment year 2017-18 on 02.08.2018 declaring total income of Rs.11,89,510/-. The assessment was completed u/s.143(3) of the Act vide order dated 20.12.2019. In the said assessment order, the AO has made addition of Rs.8,80,000/- u/s.56(2)(viib) of the Act. The said additionu/s.56(2)(viib) of the Act, was made for the reason that the assessee had purchased a flat on 30.10.2016 for a consideration of Rs.65 lakhs. However, for the purpose of stamp duty, assessee had paid stamp duty for the value of flat at Rs.73,80,000/-. Therefore, difference for the consideration paid by the assessee and stamp duty value amounting to Rs.8,80,000/- was brought to tax u/s.56(2)(viib) of the Act. It is to be mentioned that during the course of assessment proceedings, the assessee has objected to adoption of stamp duty value as the consideration paid by him for the purchase of flat on 30.10.2016. The assessee had claimed that flat was purchased by him is an old apartment and stamp duty value fixed is highly excessive. It was further stated that - 3 - ITA No.293//CHNY/2025 the building which was purchased by previous owner about 10 years back was registered for the value of Rs.24.00 lakhs was not given any depreciation when the assessee purchased the apartment on 30.10.2016. It was submitted by the learned AR that old apartment has been purchased by the assessee as a third owner. On the plea of the assessee, the AO had referred the matter to the DVO to ascertain fair market value as on date of purchase of the apartment. Since assessment was getting time barred, the AO completed the assessment without awaiting for the report of the DVO. 4. Aggrieved by the order of assessment, assessee preferred an appeal before First Appellate Authority. The CIT(A) held that assessee has not furnished a copy of valuation report. Therefore, addition of Rs.8,80,000/- u/s.56(2)(viib) of the Act is to be confirmed, subject to modification as per valuation determined by the DVO. 5. Aggrieved by the order of CIT(A), the assessee has filed present appeal before the Tribunal. The learned AR submitted that as on today, assessee has not received any notice from the DVO. It was submitted by the learned AR that the assessee can file a valuation report from an independent valuer of the impugned flat which was purchased by the assessee on 30.10.2016. It was - 4 - ITA No.293//CHNY/2025 submitted that issue may be restored to the files of the AO, so that if the DVO furnishes his valuation report, the same can be adopted and in the event, the DVO does not submit a valuation report, the assessee may be permitted to furnish valuation report from an independent valuer. 4. The learned DR supported orders of the AO and CIT(A). 5. We have heard rival submissions and perused material on record. Admittedly, in this case during the course of assessment proceedings, the issue of determination of fair market value of the apartment purchased by the assessee on 30.10.2016 was referred to the DVO. However, it is submitted that DVO has not given the valuation report as on today. The AO completed the assessment by bringing to tax the difference amount between consideration paid and stamp duty value / guideline value amounting to Rs.8,80,000/- u/s.56(2)(viib) of the Act. It is a fact that assessee during the course of assessment proceedings had strongly objected to adoption of purchase consideration at Rs.73,80,000/-, instead of Rs.65.00 lakhs paid by the assessee. It was stated by the assessee that he had purchased the flat as third owner and the flat being very old, the stamp duty value fixed by the State Government for the apartment is highly excessive. Since the AO, in para 5 of his order stated that - 5 - ITA No.293//CHNY/2025 he had referred the matter to DVO to ascertain fair market value of the apartment as on the date of purchase, we deem it appropriate to restore the matter back to the files of the AO. If the AO has referred the matter to the DVO and the DVO has given his report as regards fair market value of the impugned apartment, the AO shall adopt the same. In spite of the AO having referred the matter to DVO and the DVO having not submitted any report, we deem it appropriate to direct the assessee to furnish valuation report from the independent valuer to ascertain fair market value of the impugned apartment (as on the date of purchase) within a period of six months from the date of receipt of this order and same shall be adopted (If the DVO report is not received before the aforementioned date). It is ordered accordingly. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 19th March, 2025. Sd/- (एस.आर .रघुनाथा) (S.R. RAGHUNATHA) लेखसदèय/ACCOUNTANT MEMBER Sd/- (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चेÛनई/Chennai, Ǒदनांक/Date: 19.03.2025 - 6 - ITA No.293//CHNY/2025 DS आदेशकȧĤǓतͧलͪपअĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकरआयुÈत /CIT, Chennai/Salem 4. ͪवभागीयĤǓतǓनͬध/DR 5. गाड[फाईल/GF. "