In [2025] 176 taxmann.com 470 (Calcutta) Britannia Industries acquired land and building from Bombay Dyeing at a price significantly lower to the stamp duty value.
In support it held an independent valuation report of an expert. Besides it made a disclosure in tax audit report stating the property was not fully developed and has uneven surfaces and the assessee had to spent substantial money to enable setting up of a mega industrial unit.
The assessment went peacefully. Later the Commissioner invoked 56 (2) (x) which technically also failed as the agreement for sale was prior to applicable date of 1.4.2017.
The High Court made a significant observation. It stated that the valuation adopted by the Stamp Authorities is not always sacrosanct and power has been given for reference to the valuation authority where the assessee would also be entitled to contest such valuation as the said authority is being treated as an expert on the said subject.
For the fact that the notes of the tax audit report and the notes to the computation of income filed along with the return of income explained the difference and also mention about the fact of valuation by an expert according to the Court no case was made out to intervene under section 263.
Besides the AO taxed the reversal of a provision which was not allowed as an expense when created by virtue of section 43B leading to double taxation.
Currently there is no provisions in the tax audit report or income tax return and also there is no enclosure possible to annex computation of income and notes.
Computation and notes are key just like in case of financials, must find place in the return /tax audit report. It would greatly prevent any untoward disturbances like these and reduce unnecessary litigation, safeguard honest taxpayers and also enhance transparency and fairness in assessments.