Farmer bought land at less than stamp duty value, got income tax notice; How DVO report helped him win Rs 18.24 lakh tax dispute in ITAT Surat

When Mr Desai, a farmer from Katargam in Surat, Gujarat, bought a piece of land in Mouje Nakhre tal, Ratnagiri, Maharashtra, he got into trouble with the Income Tax Department. The problem arose because Desai bought the land for Rs 18.24 lakh less than its stamp duty value. According to income tax law, if you buy any property for less than its stamp duty value then under Section 56(2)(vii)(b), you will have to pay income tax on the differential value which was Rs 18.24 lakh for Desai.

Unfamiliar with income tax regulations , Desai filed his income tax return (ITR) on October 14, 2014, declaring a total income of Rs 2.43 lakh, of which Rs 81,500 was agricultural income. The Income Department Assessing Officer (AO) was already aware of Desai’s land purchase and was waiting for him to declare it in his ITR.

W hen Desai did not declare it, his case was selected for limited scrutiny and a notice under Section 143(2) was issued to him on September 1, 2015. Subsequently,more income tax notices were sent to him.

Paid Rs 6.5 crore and bought a property with stamp duty value of Rs 8.85 crore, got income tax notice for unexplained investment; He fought back won relief in ITATDesai responded to these tax notices and his Chartered Accountant, Arjav Vidani, attended the proceedings.