The dispute originated when an Assessing Officer taxed Mr. Desai on an Rs 18.24 lakh difference between his purchase price and the stamp duty rate for Maharashtra land. Although a subsequent valuation by the department matched Desai's actual payment of Rs 14.08 lakh, an appellate authority in Delhi dismissed his case on technical delay grounds. The Surat tribunal resolved the matter by ordering the assessing officer to grant full relief and accept the valuation report.
Key points
Appellate authorities cannot ignore official Departmental Valuation Officer reports that…: Appellate authorities cannot ignore official Departmental Valuation Officer reports that have already been placed on the record.
Aligning a purchase price with an official departmental valuation effectively invalidates…: Aligning a purchase price with an official departmental valuation effectively invalidates additions made under Section 56(2)(vii)(b).
The tribunal directed the Assessing Officer to grant full tax relief based on the recorde…: The tribunal directed the Assessing Officer to grant full tax relief based on the recorded sale deed value.
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When Mr Desai, a farmer from Katargam in Surat, Gujarat, bought a piece of land in Mouje Nakhre tal, Ratnagiri, Maharashtra, he got into trouble with the Income Tax Department. The problem arose because Desai bought the land for Rs 18.24 lakh less than its stamp duty value. According to income tax law, if you buy any property for less than its stamp duty value then under Section 56(2)(vii)(b), you will have to pay income tax on the differential value which was Rs 18.24 lakh for Desai.
Unfamiliar with income tax regulations , Desai filed his income tax return (ITR) on October 14, 2014, declaring a total income of Rs 2.43 lakh, of which Rs 81,500 was agricultural income. The Income Department Assessing Officer (AO) was already aware of Desai’s land purchase and was waiting for him to declare it in his ITR. W hen Desai did not declare it, his case was selected for limited scrutiny and a notice under Section 143(2) was issued to him on September 1, 2015. Subsequently,more income tax notices were sent to him.
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