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2023 (4) TMI 842 - AT - Income TaxAddition u/s 56(2)(vii)(b)(i) - difference between the actual purchase consideration of 3 N.A. plots of land and market value as per stamp valuation authorities - CIT(A) rejected the contention of the assessee that the 3 NA plots received by the assessee were stock in trade and thus upheld the action of AO of property being capital asset in the hands of the assessee - HELD THAT:- As in the case of CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. [1971 (9) TMI 3 - SUPREME COURT] observed that whether a particular holding of shares is by way of investment or forms part of the stock-in-trade, is a matter within the knowledge of the assessee, when holds the share and it should, in normal circumstances, be in position to produce evidence from its record as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. Assessee has not demonstrated before us that whether he fulfils the criteria for treating the purchase of three plots as a stock in trade of his business. Merely presumption by the assessee that those three plots were intended for further sale and therefore those were stock in trade, is not sufficient and it has to be proved by way of evidences, which the assessee has failed, therefore, no error in the order of the CIT(A) on the issue in dispute in upholding the applicability of section 56(2)(vii)(b) in the case of the assessee. Accordingly, we dismiss the ground No. 1 of the appeal of the assessee. Valuation report of Departmental Valuation Officer - assessee contested the valuation report of the Departmental Valuation Report before the Ld. CIT(A) but he did not any cognizance to those submission of the assessee - HELD THAT:- On perusal of Departmental Valuation Report we find that Ld. DVO has taken into consideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the property under description. Departmental Valuer has relied on for instances of the sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those lands were not subjected to encroachment, then he is required to consider impact of adverse possession by the encroacher on the land of the assessee and corresponding impact on the value of the property. During the course of the hearing DR also expressed his inability to verify or confirm this fact readily. In the circumstances, we feel it appropriate to restore this issue back to the file of AO for verification from the Ld. Departmental Valuation Officer and consider the impact of encroachment on the land, if not already considered in the valuation report dated 31/10/2017. The ground of the appeal of the assessee is accordingly allowed for the statistical purposes. Amount paid in cash by Sh Rajeev Y Patil towards the consideration for purchase of property - HELD THAT:- Assessee failed to substantiate whether those payments made by Rajeev Y Patil have been made to the seller of the land on behalf of the assessee. The assessee did not produce Mr Rajeev Y Patil or the seller of the land before the lower authorities to support his contention that those cash amounts were paid on behalf of the assessee. In such circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The Ground of the appeal of the assessee is accordingly dismissed.
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