Case Law Details
Rounak Farms Private Ltd Vs ACIT (ITAT Pune)
Introduction: In the case of Rounak Farms Private Ltd. vs. ACIT, the issue at hand concerns the confirmation of additions made under section 69B of the Income Tax Act (ITA) for the assessment year 2011-12. This appeal was filed against the order dated 18-09-2020 passed by the Commissioner of Income Tax (Appeals)-11, Pune [CIT(A)].
Detailed Analysis: Rounak Farms Private Ltd. is a private limited company engaged in the business of land dealing. A search and seizure action under section 132 of the Income Tax Act was conducted at the residential and business premises associated with Shri Ramchandra Maruti Mohite’s group in Kolhapur on 25th and 26th August 2011. The assessee company, related to this group, had acquired certain properties for a total consideration of Rs. 1,09,65,140 during the period from 31st July 2010 to 31st March 2011.
To determine the cost of these properties in the hands of the assessee, the Assessing Officer (AO) referred the matter to the Departmental Valuation Officer (DVO). The DVO’s report, dated 29th October 2013, estimated the cost of the properties at Rs. 3,21,01,000. The AO, in a letter dated 11th November 2013, asked the assessee to explain why the difference of Rs. 2,11,35,860 (Rs. 3,21,01,000 – Rs. 1,09,65,140) should not be treated as taxable.
The assessee objected to the DVO’s report, claiming that the purchase price complied with the provisions of section 50C of the Act. However, the AO did not accept these submissions and added the amount of Rs. 2,11,35,860 to the assessee’s total income under section 69B.
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