ITAT Holds Stamp Duty Value Cannot Replace Purchase Consideration Without DVO Report :

The assessee's return for AY 2018-19 declared total income of Rs 13,67,450. His case was selected for limited scrutiny under the e-Assessment Scheme, 2019, on the issue of investment in immovable properties. Notices under Sections 143(2) and 142(1), along with a questionnaire, were duly served.

Based on system-generated information, the AO observed four property transactions where there was a difference between the purchase consideration and the respective stamp duty values. The assessee requested that Property No. 1 be referred to the DVO. Accordingly, the AO made a reference on 31 March 2021. However, the DVO's valuation report was not received before the assessment order was passed on 21 September 2021. Regarding the other three properties, the assessee categorically submitted that he had never purchased them and that they did not belong to him. Since the assessee did not furnish details concerning properties which he denied owning, the AO proceeded to make an addition of Rs 86,42,655 under Section 56(2)(x).

The CIT(A) subsequently upheld the assessment order as there was no appearance on behalf of the assessee during the appellate proceedings. The Tribunal observed that the assessee had admittedly purchased Property No. 1 for Rs 19,09,090, against a stamp duty value of Rs 36,69,000. However, the AO had referred the property to the DVO on 31 March 2021, and no DVO report was available when the assessment order was passed.

The Tribunal noted that Section 142A(6) prescribed a period of six months for furnishing the valuation report from the end of the month in which the reference was made. Since the prescribed period had already expired and the DVO report was not received, the AO was not empowered to substitute the stamp duty value for the purchase consideration. Accordingly, the addition of Rs 17,59,910 relating to Property No. 1 could not be sustained.

With respect to Properties Nos. 2, 3 and 4, the Tribunal found that the AO had not confronted the assessee with the underlying data or information available on the system. Since the assessee had denied purchasing or owning these properties, the Tribunal held that he could not be expected to furnish details regarding transactions which he specifically disputed.

Consequently, the Tribunal held that additions under Section 56(2)(x) could not be sustained in respect of the three properties, amounting to Rs 29,07,600, Rs 16,67,545 and Rs 23,07,600, respectively. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the entire addition made under Section 56(2)(x). Accordingly, the assessee's appeal was allowed.