Satya Pal Khurana Vs ACIT (ITAT Delhi)
ITAT Delhi held that circle rate couldn’t be applied as the property was sold under distress. Accordingly, matter remanded back to AO to determine fair market value of property taking into consideration that the sale was under distress.
Facts- The case of the assessee was selected for limited scrutiny for the reason of verification of capital gain/loss on property. On account of no response on the part of the assessee, AO completed ex-parte assessment considering sale consideration as declared by the assessee at Rs.48,25,000/- from the sale of two properties during the year is replaced by Rs.77,75,000/- being the value adopted by stamp valuation authority in terms of section 50C of the Act. Accordingly, AO made the addition of the differential amount of Rs.29,50,000/-.
CIT(A) dismissed the claim of the assessee of distress sale and confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee was not in position to get vacant possession of the said property. Despite of the fact that he has got the eviction order from the competent courts also and after making rigorous efforts of getting the vacant possession of the said shop he was not able to get the possession. When the assesse found himself helpless and unable to succeed in getting vacant possession, he left with no other option but to reach for compromise with the tenant. All these facts leads to the conclusion that the property was sold under distress, and, therefore, the circle rate could not be applied more particularly looking to the fact under such circumstances no other person would be interested in buying such type of disputed property. Therefore, it is the duty of the Ld. CIT(A) to refer the matter to the AO for determination of the fair market value of the said property as on the date of agreement to sale in April, 2012 for the purposes of charging capital gain in terms of section 50(2) of the Act. Since, the Ld. CIT(A) has not carried out this exercise, therefore, we set aside the issue to the file of the AO with a direction that valuation of fair market value be done as on April, 2012 when the assessee has entered into agreement of sale and substitute the such valuation as the fair market value so determined after taken into consideration the fact that sale was under distress and work out amount of long term capital gain. Needless to say that assessee be provided reasonable opportunities of being heard before concluding the matter.
