The Income Tax Appellate Tribunal (ITAT), SMC Bench, Kolkata, directed the Assessing Officer (AO) to refer the valuation of a jointly purchased property, where the difference was taxed entirely in the hands of co-purchaser, to the District Valuation Officer (DVO).
The assessee, Sunit Kumar Pattanayak, purchased a property jointly with his brother at a lower price, and his failure to file a return under Section 139 of the Income Tax Act,1961 led the authority to initiate proceedings against him.
After filing the return in response to the notice furnished by the authority, the AO, without referring the matter to the DVO, concluded that the stamp duty value of the property purchased is greater than its actual price and added the entire difference amount taxable to the total income of the assessee without considering him as a co-owner of the property.
The assessee also submitted supporting documents, such as the bank’s home loan sanction letter, in which it was precisely stated that the home loan was sanctioned jointly.
The Commissioner of Income Tax (Appeals) (CIT(A)) rejected the assessee’s appeal and upheld the AO’s order for not having a valuation report from a registered valuer.
The counsel for the assessee submitted that as per statute, if the declared value of the property is in dispute, it should be referred back to the DVO to ascertain its fair market value. And if the fair value is higher than its purchase price, then the difference amount should only be added at 50% to the income of the assessee and not the total amount.
The counsel, before the tribunal, also seeks an opportunity of being heard for the assessee to substantiate his case with the supporting evidentiary documents.
After noting the judgment of the High Court of Calcutta in the case of Sunil Kumar Agarwal Vs. CIT [2014] and considering valid submissions of the assessee, the ITAT bench of Laxmi Prasad Sahu (Accountant member) allowed appeal and directed the AO to refer the matter to the DVO.
