2015 (8) TMI 1478 - AT - Income Tax

Tribunal upholds assessee's appeal on property valuation, emphasizes procedural compliance and evidentiary standards

The Tribunal dismissed the Revenue's appeals and allowed the assessees' appeals concerning property valuation for the assessment year 2009-10. It upheld ... Suppression of sale consideration of the immovable property - Commissioner (Appeals) justification in arriving at the conclusion regarding the sale consideration without waiting for DVO’s report - HELD THAT:- AO’s order was not sustainable and the learned CIT has rightly deleted the addition based upon the Assessing Officer’s uncorroborated local enquiry”. By no stretch of imagination, it can be argued that the learned CIT(A) should have taken into account the DVO’s report which was received four days after the passing of the learned CIT(A)’s order. It is settled law that nobody can be asked to do the impossible - there in no infirmity in the order of the learned CIT(A). Before parting, we may state that the sale consideration has been valued by the stamp valuing authority. De– hors any cogent material on record that there has been any transaction of “on–money”, the same cannot be tinkered with. For this purpose, the Hon’ble Supreme Court in K.P. Varghese v/s ITO [1981 (9) TMI 1 - SUPREME COURT] is relevant. Accordingly, we affirm the orders of the learned CIT(A). Revision u/s 263 - Rectification u/s 154 as value by the DVO in the report received after the order of the learned CIT’s order was sought to be substituted - HELD THAT:- The order of the learned CIT(A) has merged with the order and application by the Assessing Officer. Section 263 provides the power to the Commissioner to exercise his jurisdiction under section 263, on the orders of the Assessing Officer and not where the order of the Assessing Officer has merged with the order of the learned CIT(A). The learned CIT, in his wisdom has rejected the Assessing Officer’s application under section 154. No appeal against the rejection has been preferred by the Revenue. Now, the Revenue has sought to revise the Assessing Officer’s order under section 263, which has already merged with the order of the learned CIT(A). This is not at all legally permissible. The order of the Assessing Officer has merged with that of the learned CIT(A). Provisions of section 263, do not mandate the Commissioner to revise such an order. Under these circumstances, we hold that the assumption of jurisdiction by the learned CIT was not legally permissible, hence, the same is liable to be quashed. We further note that the said DVO’s report has been mentioned by the learned CIT himself as based upon sale instances in nearby cases. We fail to understand as to why in such circumstances, the sale instance as per stamp registration authority of the assessee itself can be treated as sham de–hors any evidence on record regarding on–money transaction. This is against the exposition of the Hon’ble Supreme Court in K.P. Varghese (supra). In our considered opinion, tinkering with the sale amount duly reflected and registered by the registration authority is not proper and justified under section 263 in this case - Decided in favour of assessee Issues:1. Valuation of property for assessment year 2009-10.2. Justification of the Assessing Officer's actions without waiting for DVO's report.3. Validity of the Commissioner's decision to accept the sale consideration shown by the assessee.4. Legality of the orders passed by the learned Commissioner (Appeals) and the subsequent appeals by the Revenue and the assessees.Issue 1: Valuation of PropertyThe case involved appeals by the Revenue and the assessees regarding the valuation of properties for the assessment year 2009-10. The Assessing Officer had referred the matter to the District Valuation Officer (DVO) for valuation without waiting for the DVO's report. The Assessing Officer made additions based on local enquiry findings, which the Commissioner (Appeals) found to be unsubstantiated. The Commissioner directed deletion of the addition, leading to the Revenue's appeal.Issue 2: Assessing Officer's ActionsThe Revenue contended that the Commissioner erred in accepting the sale consideration shown by the assessee, despite the DVO's report valuing the transaction higher. The Tribunal found no fault in the Commissioner's decision, stating that the Assessing Officer's order was not sustainable as it lacked a proper basis. The Tribunal upheld the Commissioner's decision to delete the addition based on the Assessing Officer's unreliable local enquiry.Issue 3: Validity of Commissioner's DecisionIn the assessees' appeals, the Commissioner set aside the Assessing Officer's order under section 263, directing a denovo assessment after considering the DVO's report. The Tribunal held that the Commissioner's assumption of jurisdiction under section 263 was not permissible as the Assessing Officer's order had merged with the Commissioner (Appeals)'s order. The Tribunal quashed the Commissioner's order, emphasizing the importance of not tinkering with the sale amount registered by the authority without proper evidence.Issue 4: Legality of OrdersThe Tribunal dismissed the Revenue's appeals and allowed the assessees' appeals. It concluded that the Commissioner's actions in accepting the sale consideration and directing a denovo assessment were legally impermissible. The Tribunal emphasized the importance of following proper procedures and legal provisions in matters of property valuation and assessment.This judgment highlights the significance of following due process in property valuation assessments and the importance of relying on concrete evidence rather than unsubstantiated local enquiries. It also underscores the legal constraints on revising orders that have already merged with previous decisions and the necessity of adhering to established legal principles in tax matters.