ITAT dismisses Interest Charged by AO on Reply to Notice u/s 148 Filed within 30 Days

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently dismissed the interest charged by the Assessing Officer on reply to notice under Section 148 of Income Tax Act filed within 30 days.

The Assessee Mrs. Ruchita Jindal filed a return of income declaring total income of Rs.18,05,670/- for the year under consideration. Thereafter the assessment was reopened by issuing of notice under Section 148 of the Income Tax Act. A notice under Section 143(2) was issued to the assessee.

 During the year under consideration, the assessee had purchased a property being Flat No. 3102, India Bulls Sky, S.V. Marg, Lower Parel,  Mumbai for the consideration of Rs. 7 crores.

However, the value of the said flat as per valuation of stamp authorities was Rs.7,61,57,000/-. On the request of the assessee reference was made to the Departmental Valuation Officer for valuation of the said property under Section 142A of the Income Tax Act.

The Departmental Valuation Officer, Mumbai vide valuation report determined the fair market value of the said purchased property at Rs.7,09,37,033/- on the date agreement as on 23.06.2014.

The Departmental Valuation Officer or DCO  also determined the value of the said property on the date of booking allotment as on 01.11.2013 at Rs. 7,05,66,565/- .

During the course of assessment proceedings the assessee submitted that for the purpose of Section 56(2)(vii)(b) of the Income Tax Act, the date of allotment is to be considered as relevant date.

However, the Assessing Officer did not agreed with the submission of the assessee and added the difference between the purchase price and fair market value of the property determined by the Departmental Valuation Officer as on the date of agreement and added the amount of Rs.9,37,033/- to the total income of the assessee.

Aggrieved, the assessee filed the appeal before the CIT (A). The CIT (A) dismissed the appeal of the assessee.

The Single Bench consisting of an Accountant Member Amarjit Singh observed that the assessing officer erred in charging interest under Section 234A of Rs.2,895/- on the reason that assessee has filed the return of income in response to notice under Section 148 of the Income Tax Act within 30 days from the date of notice is restored to the file of the Assessing Officer for deciding the same as per law after verification of the claim made by the assessee. Therefore, this ground of appeal of the assessee was allowed for statistical purposes.  

The Bench further observed that the  assessee made part of the payment of Rs. 51 lac vide cheque no. 620130 drawn from the corporation bank claiming as date of allotment. The payment plan was also referred to a page no. 6 of the document comprising 26 pages placed in the paper book.

The Departmental Valuation Officer  as per annexure 1(A) of the valuation report had also determined the valuation of the flat as on 01.11.2013 at Rs.7,05,66,565/- on the date of allotment. After considering the provisions of Section 56(2) (vii)(b) of the Income Tax Act.

The single-member tribunal  Bench directed the assessing officer to restrict the addition to the extent of Rs.5,66,565/- after taking into consideration the value determined on the date of allotment by the District Valuation Officer  as on 01.11.2013.

In result, the appeal filed by assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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