Fair market value and survey

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Querist : Anonymous

Querist : Anonymous (Querist)

25 October 2013 If a individual enters into Agreement of Sale to purchase a immovable property (consideration mentioned therein is Rs.13.5 lakhs.)
However, in the Sale deed consideration mentioned is Rs. 6.50 lakhs (property value as per Stamp Duty).
Actual consideration passed on is 9.40 lakhs.

Which value will be considered for Assessment.
A copy of the Agreement of Sale is received by Assessing Officer.
What are the consequences regarding tax liability and whether Survey may be conducted based on the Copy of Agreement of Sale?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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25 October 2013 Dear Narendra,

You mean to say that agreement for sale actually mention Rs 13.5 Lakhs as the consideration?

If yes, then you are in for a nice soup. You shall have to explain where did the remaining money go? and its very much a case for making additions to the income, and levy of penalty for concealment of income.

and YES, AO very much has the right to conduct inquiries on the basis of the agreement of sale.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 October 2013 Which will the Fair market value : value as per Agreement of Sale or as per Stamp duty valuation?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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25 October 2013 well i dont think it is a case of fair value of the property. fair value comes into question when the asset is sold at value less than stamp duty valuation.

In your case, you have document where you are agreeing to sell the property at a value twice the amount of stamp duty valuation. So for me its a case of tax evasion.

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