Property Purchase below circle rate

This query is : Resolved

KETAN (Querist)
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09 July 2011 Hi,

One of my client has brought a property below the circle rate. It is understood that the seller will be charged to capital gains tax at the circle rate even if the sale consideration is below the circle rate. But AO has made an addition in income of my client u/s 69 on account of undisclosed investment saying that one can not buy a property below circle rate. What is the correct position in this matter. Are the any case laws which we can use to counter the claim of the AO?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 July 2011 1. The purchase price of say Rs.1.00 lac which is mentioned in the registered document. Circle rate is say 1.50 lac on which the stamp duty is paid.
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2. Assesee can show payment of only 1.00 lac to the seller.

But, how he can pay additional 0.50 lac.
Whether AO would have accepted assessee's
claim while calculating STCG, had the said property been sold during the same year ?

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The AO might have not gathered any information from the seller as well as from the assessee. Addition made by relying only on the circle rates, will not sustain in appeal. Some original homework must have been done by the AO before doing so.

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You can go in appeal through a CA who is handling appeal work.

KETAN

KETAN (Querist)
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12 July 2011 Dear Sir,

Thanks for the advice.

Can you please provide any case law in this matter.

Thanks in advance

KETAN

KETAN (Querist)
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01 February 2012 won the appeal. department has decided not to go for further appeal.

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