2022 (7) TMI 1145

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....ts and in law by quashing the assessment framed u/s 153C of the IT Act, 1961 2. That the Ld. CIT(A) has erred on facts and in law in quashing the assessments framed u/s 153C on the ground that no incriminating material was seized without appreciating the facts that valuation reports has been seized from the premises and which constituted incriminating material and on that basis the AO had made additions. 3. That the Ld. CIT(A) has erred in law and facts in stating that the valuation reports was dated 16.12.2006 and pertained to A.Y. 2007-08 but ignored the fact that for, valuation it is not the date of valuation but the basis and the valuation perse is important and as the property was sold in F.Y. 2007-08 (relevant to A.Y....

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....r ("AO") recorded the satisfaction and issued notice u/s 153C/153A of the Act calling upon the assessee to file return of income within 15 days of the service of the aforesaid notice. In response thereto, the assessee filed a letter on 05.02.2013 stated that the income tax return already filed on 12.01.2011 may be treated to have been filed in response to the notice u/s 153C of the Act. Thereafter, the AO proceeded to make assessment by issuing notice under sections 143(2) and 142(1) of the Act. It is observed by the AO that the assessee is engaged in the business of real estate activities. During the course of the year under consideration, the assessee company, M/s S.S. Horticulture sold its land and building admeasuring 2.583 acres on 22.....

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....sment year under appeal. He also deleted the additions on merit as made by the AO. 4. Aggrieved against this action, the Revenue is in appeal before this Tribunal. 5. Ground Nos. 1 to 5 raised by the Revenue have been assailing the action of Ld.CIT(A) against the quashing of the assessment order on legal grounds. 6. Ld.CIT DR vehemently supported the assessment order and submitted that Ld.CIT(A) grossly erred in quashing the assessment order purely on the basis that there was no incriminating material pertaining to the assessment year under consideration. He submitted that there is no dispute with regard to the fact at the time of search a Valuation report of the property in question was found at the premises of the assessee. As pe....

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....sment has been framed on the basis of Valuation report found during the course of search that disclosed the fair market value of the property at higher value than that was disclosed in the Sale Deed. He submitted that firstly, the report is antidated that could not have been treated as the Valuation report related to the assessment year under consideration. The reason for higher valuation as in the normal course for obtaining higher housing bank loan, the AO was required to consider and bring on record contemporaneous evidence with regard to fair market value of the property. The AO himself referred the issue of valuation to the Department Valuation Officer ("DVO") and the value as assessed by the DVO is lower than the sale consideration as....

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....rought any material in support of his allegation regarding higher fair market value of the property. It is stated that both Stamp Valuation Authority as well as the DVO have assessed the fair market value of the property much lower than the value as disclosed in the Sale Deed. Moreover, the Valuation Report pertained to a date much prior to registration of Sale Deed. The AO has not brought any material in support except the Valuation report. The Valuation Report is merely an opinion. It cannot be equated with a document as envisaged u/s 153C(b) of the Act. We have given our thoughtful consideration the facts of the present case. We find that Ld.CIT(A) has decided the issue by observing as under:- "The appellant challenged the assum....

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....ied by the AO, did not pertain to the relevant Assessment Year. The law is well settled that for initiation of proceedings u/s 153C of the Act, there has to be some incriminating material related to the assessment year under consideration. In the present case, it is not the case where no material was available with the AO. During the course of search, a valuation report was found at the premises of third party wherein the fair market value of the property was assessed at higher value than what was disclosed by the assessee. Hence, there was a reasonable cause for the AO to initiate proceedings u/s 153C of the Act. The assessee stated that adopting of a higher fair market value by the approved valuer was for obtaining a loan from the bank. M....