This case involves a challenge by the Revenue against the order of the ld. CIT(A)-16, New Delhi, concerning the purchase of a property by Mr. Manish Garg at No.-2-A, Club Road Civil Lines, Delhi. The appeal was filed due to discrepancies between the purchase price and the stamp duty value of the property, which was addressed under Section 56(2)(vii)(b) of the Income Tax Act.
The property in question was purchased for Rs.6,45,00,000, while the stamp duty value was assessed at Rs.12,04,20,000, leading to a significant difference that was brought to tax by the Assessing Officer (AO). Despite the property being bought at an auction as per the directives of the Hon’ble High Court, which would typically negate the possibility of under-the-table payments, the Revenue challenged the transaction.
The case was referred to the Department Valuation Officer (DVO) for accurate valuation, although the report was not available at the time of the hearing. The AO had to pass the order due to time constraints but noted that adjustments would be made post the DVO’s report. Ultimately, the tribunal recognized that the property purchase during a public auction, as per the Hon’ble High Court’s order, eliminated the potential for unaccounted payments.
The tribunal dismissed the Revenue’s appeal, affirming that no higher consideration than the auction price was paid and, thus, no additional tax could be levied on the alleged difference. The judgment was pronounced openly in court on May 24, 2022, by Judicial Member Mr. Anubhav Sharma and Accountant Member Dr. B.R.R. Kumar.
This case sets a significant precedent for transactions involving property purchases under court orders, particularly in public auctions where the payment transparency is upheld. It underscores the importance of aligning property valuations with legal directives to avoid unnecessary litigation and tax implications.
Dismissal of Revenue’s Challenge on FDI in Delhi Property: ITA No. 5230/DEL/2019
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform