Valuation of the Stamp Valuation Authority cannot override value recorded in sale deed

In The Income Tax Officer vs. Shri Ajay Sharma,, the assessee has declared short term capital gain of

Rs.19,59,668. The assessee has declared the sale consideration at Rs.1,27,50,000 vide sale deed executed dated 11th March, 2010. The document shows that stamp duty was paid at Rs.1,83,02,910 as reflected in the AIR information as against sale consideration of Rs.1,27,50,000 and there is a difference of Rs.55,52,910. Thus the provisions of Section 50C of the I.T. Act were found attracted in this case. The A.O. accordingly made addition of Rs.55,52,910 on account of difference and taken as additional short term capital gain and added to the income of the assessee.

The Appellate Tribunal rejecting the claim of the department held that The valuation of the Stamp Valuation Authority is not a conclusive evidence of receipt of the money by assessee over and above what is recorded in the sale deed. The A.O. has not brought any concrete evidence of concealment of income in the order. The A.O. at the stage of assessment, simply applied the deeming provisions of Section 50C of the I.T. Act without bringing any evidence on record for concealment of income or furnishing  inaccurate particulars by the assessee. In the absence of any positive evidence with respect to concealment of income, there were no justification for the A.O. to levy penalty in the matter. The Hon’ble Kolkata High Court in the case of CIT vs. Madan Theatres Ltd., (supra), on identical facts, dismissed the departmental appeal in which it was held as under :

“Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property.”