TaxTMI 
TaxTMI 
2024 (10) TMI 929
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....250 of the Act dated 7 February 2024, passed by the Commissioner of Income-Tax (Appeals) National Faceless Appeal Centre [the learned CIT(A)] in relation to the appeal filed against order under section 147 read with 144B of the Act dated & November 2023 passed by The Faceless Assessment Centre (the learned AO) on the following grounds, each of which is without prejudice to and independent of the others 2. On the facts and in circumstances of the case and in law the learned CIT(A)/learned Assessing Officer: General 1. erred in computing the total income of the Appellant at Rs 5,53,44,602 as against the returned income of Rs. 57,55,640; Failure to provide opportunity of being heard through video conference hearing. 2 Failed to grand the Appellant an opportunity of being heard through video-conference hearing in spite of the Appellant requesting the same and thereby, violating the principal of natural justice. Arguments on merits. 3 erred in confirming the addition made under section 50(2)(vi) of the Act amounting to Rs 4,96,31,000 4. erred is not appreciating that the entire purchase consideration has been discha....
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....ly issued which is in contravention of Circular No. 10/ 2010 dated 14 August 2019 thereby rendering the impugned order non-est and vitiating the entire re-assessment proceedings. Invalidity of proceedings under section 147 of the Act 11 erred is re-opening the assessment proceedings under section 147 of the Act without appreciating that the information relied upon has no linkage with the Appellant and without any tangible maternal and thereby the proceedings are invalid and bad too. 12 erred in not taking approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General prior to issuance of notice under section 148 of the Act as contained in section 151) of the Act of more than three years have elapsed from the end of the relevant assessment year, whereas the learned AO had taken sanction under section 151) of the Act and hence for want of correct sanction, the entire assessment proceedings should be quashed, 13. erred re-opening the assessment proceedings without appreciating that proceedings are invalid and bad in law in the absence of "information" which suggests that the income ch....
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..../- from Agies Realtors and developers private limited [ Seller] on 23 June 2016. Assessee paid a further sum of Rs. 9,006,600 as Stamp duty and Rs. 30,000 as registration fees. However, the stamp duty value of the above property was Rs. 180,131,000/-. Therefore, the provisions of section 50C, 56 (2) (viia) (b)/43CA applies. 6. Subsequently the honourable Supreme Court decided the issue in 444 ITR 1 [ Ashish Agarwal's case] pursuant to which assessee received a notice under section 148A (b) of the act on 19/05/2022 which was responded to by the assessee on 7/6/2022 . Assessee raised the contention that this issue has already been considered in assessment proceedings under section 143 (3) of the act. Subsequently notice under section 148 was issued on 28/7/2022 and further in order under section 148A (d) was issued on 28 July 2022. 7. Assessee responded by filing the return of income on 23 August 2022 and also a reply on the same date raising additional objections. Assessee was issued a notice under section 143 (2) on 8 January 2023 and further notice under section 142 (1) on 11/1/2023. Subsequently the assessee was issued a show cause notice on 9/05/2023 that why t....
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....ning of the assessment challenging the same on the basis of mere change in the opinion and absence of live link of the material received with respect to the escapement of income, the learned CIT - A held that according to the assessing Officer the reopening was based on the information available as there was a difference between the stamp duty valuation and sale consideration of the property which was taxable under section 56 (2) (viia) of the act and thus income had escaped the assessment. Further the assessee has neither submitted before the assessing officer nor before him that the stamp duty value taken by the assessing officer is incorrect. Accordingly, the reopening was held to be valid. iii. With respect to ground number 8 - 13 on the merits of the addition under section 56 (2) of Rs. 49,631,000/-, the learned CIT - A held that the property has been verified by the learned district valuation officer and notice under section 148A (d) of the act was issued on 28/7/2022 with prior approval of the principal Commissioner of income tax. The assessee was provided the opportunity and the information and same are disposed of by speaking order. The reference was made by the a....
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....ition on the merits of the case. 16. The learned authorized representative submitted a paper book containing 718 pages as factual paper book and further filed a legal paper book relying on several judicial precedents from pages 719 to 919. 17. The learned authorized representative first submitted the facts of the case that assessee has purchased a property at a total consideration of Rs. 130,500,000, the stamp duty valuation of the property is Rs. 180,131,000, thus there is a difference in the valuation of the property and the agreed consideration is Rs. 49,631,000/-. The assessee purchased this property from ages Realtors private limited, in the case of the seller, this property was referred to the valuation cell for the purpose of determination of the fair market value of consideration. The learned district valuation officer valued the property in case of seller at Rs. 195,050,452/-. Thus, the only valuation that has been made is the valuation of the property from the perspective of the seller of transacted property where assessee is a buyer. Assessee does not know anything about the valuation mechanism and the factual aspect discussed with DVO by the seller. During the cou....
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....d the valuation report from the government approved valuer at the time of the sale which shows that the value of the property is Rs. 130,694,000 at the time of the sale. He referred to the valuation report of the registered valuer placed at page number 239 - 250 of the paper books. Thus his argument was that in absence of any mala fide , provisions of section 56 (2) of the act cannot be invoked relying on circular number 1 - 2011 dated 6 April 2011 wherein it is mentioned that the provisions of this section were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts, particularly after abolition of the gift tax act. He relied upon the several judicial precedents of the coordinate benches and submitted that that assessee has made a bona fide purchase of the property and therefore as the provisions of section 56 (2) are anti-evasion provisions, same cannot be applied to a bona fide transaction. 19. further valuation report has to be made in the case of the assessee which is the primarily requirement when assessee objected to the stamp duty rate. In case of the assessee despite objection, no fresh valuation is carried out and m....
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....e submitted that the learned DVO has taken the comparable sale instances of B wing, the property of the assessee is situated in C wing . The property situated in B wing are in different wing which are smaller in size. He further submitted that during financial year 2021 - 22 which also shows that the valuation of the property has gone down. 23. He submitted that even if the valuation of the learned district valuation officer is considered, the sale instances provided by him clearly provides the per square meter rates in the range of Rs. 341,668 - Rs. 366,977 which are only marginally higher than the appellant's valuation of Rs. 302,073 per square meter considering the tolerance band limit of 10%. The learned district valuation officer without any reason has considered the rate of Rs. 451,490 per square meter. He referred to the report of the DVO it is mentioned that by adjusting the sale instances of the properties with reference to time lag, size, floor, location and situation, the average effective rate considered reasonable for valuation of the said property was taken at Rs. 451,490 per square meter as on the date of 23/6/2016. He submitted that there is no basis in the repor....
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.... of income tax - 20, Mumbai has been obtained prior to issuing a notice under section 148A (d) of the act. He referred to the provisions of section 151 and submitted that the approval is wrongly taken and therefore he relied upon the decision of the honourable Bombay High Court in case of Siemens financial services (P) Ltd (2023) 154 taxmann.com 159 (Bombay) and submitted that such an approval is invalid and renders the reassessment proceedings also invalid. He further relied upon the decision of the honourable Bombay High Court in case of RuthSunil Mantri dated 17 October 2023 and several other decisions of the honourable jurisdictional High Court. Accordingly, it was stated that that the impugned reassessment proceedings where sanction to issue notice under section 148 of the act and order under section 148A (d) of the act has been obtained under section 151 (i) of the act instead of 151 (ii) of the acts was to the root of the matter and the reassessment proceedings deserves to be quashed. 27. Notice under section 148 has been issued by the jurisdictional assessing officer[ JAO], which should have been issued by the faceless assessing officer. He referred to the notice and sub....
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....geable to tax has escaped assessment in view of the civility instruction dated 10 December 2021 where information is defined. The learned assessing officer has not provided what exact information has been received. 31. He further submitted that that reassessment proceedings under section 147 of the act cannot be initiated merely on the ground that the learned assessing officer has lost sight of the statutory provisions like 50C, 43CA and section 56 (2) of the act. For this proposition he relied upon the decision of the honourable Bombay High Court in case of in ICOR Ltd dated 23 July 2018. 32. He further submitted that that the assessment order is barred by limitation for the reason that according to section 153 (2) of the act the assessment proceedings was supposed to be completed within 12 months from the end of the financial year in which notice under section 148 was issued. The notice under section 148 was issued on 30 June 2021 under the old regime for reopening of the assessment proceedings. Subsequently to the decision of the honourable Supreme Court in case of assessee were well, the proceedings were converted into a new regime in order under section 148A of the act w....
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.... representative submitted a comparative chart determining the rate per square meter after accounting for the difference in the comparable considered by the district valuation officer. He submitted that the rate per square meter of the property transacted is Rs. 302,073 whereas as per sale instances number 2 the value of the property determined by that DVO shows the rate per square meter of Rs. 348,675, the lowest sale instances shown by the learned district valuation officer shows the value of the rate per square feet at Rs. 366,977 and third instances of the learned district valuation officer shows the rate per square meter of Rs. 341,668. If average of all three sale instances are taken, then the averages rate per square meter comes to Rs. 352,440. He further submitted that the sale instances taken by the learned district valuation officer are of single flats [ not duplex] whereas the flat of the assessee is duplex and if a discount of at least 7.5% is granted coupled with a further discount of 7.5% on account of obstruction in the view than the average sale of the sale instances taken by the learned DVO comes to rate of Rs. 299,574 which is far less than the actual sale consider....
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....of decrease in the value of the asset as well as the several instances of comparable sale prices are not applicable as the learned this trick valuation officer is applied his mind to the facts and has made a valuation report which is binding of the learned assessing officer. In view of the above facts, he vehemently relied upon the order of the learned lower authorities and submitted that the addition made by the learned lower authorities deserves to be confirmed. 39. We have carefully considered the rival contention and perused the orders of the learned lower authorities. Facts are not reiterated. 40. Ground number 1 of the appeal is general in nature, no separate arguments were advanced, therefore it is dismissed. 41. Ground number 2 of the appeal is with respect to the failure to provide opportunity of being heard, as assessee has been granted an opportunity of being heard, no separate arguments were advanced, therefore, same is dismissed. 42. Ground number 3 - 9 are on the merits of the addition. Assessee has purchased a property at a consideration of Rs. 130,500,000, the stamp duty value of the same is Rs. 183,100,000, the valuation made by the district valuation o....
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....the assessee based on Asstt. CIT v. Tarun Agarwal [2018] 97 taxmann.com 346/173 ITD 107 (Agra - Trib.) , ITO v. Aditya Narain Verma (HUF) [2017] 88 taxmann.com 840 (Delhi - Trib.) , ITO v. Ramesh Chandra Kulshresth & Brothers HUF [IT Appeal No. 228 (Agra) of 2018, dated 10-10-2018]&2024] 165 taxmann.com 45 (Delhi - Trib.). It cannot be said that the valuation made in the case of the seller would also be applicable in case of a buyer, this is so because if the seller does not represent anything before the learned district valuation officer, it will go against the buyer which is not permitted. Therefore, if the two parties to the same transaction, objects to the valuation, there perspective and reasons may be different than the others. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50 C/ 56 (2) (viia) and Section 43 CA does not provide that valuation made by the DVIO is qua the property , in fact it is qua the assessee. Thus, on this ground itself, when the ld. AO fails to obtain the Report of DVO of the impugned property after giving assessee opportunity of representing before DVO, addition so made is to be d....
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.... 366,977/- and 341,668/-. Despite this the learned district valuation officer took power square meter value of the property sold/purchased at Rs. 451,490/- per square meter. There is no justification of the same in the whole of the valuation report. Thus, it is apparent that DVO has taken inspected property for valuation not the bear shell property transacted . 50. Even another property sold by the assessee in subsequent year also did not get the prize which is stated by the learned district valuation officer. Thus, the average of all three sale instances noted by the learned district valuation officer would give rate of Rs. 352,440/- per square meter. Compared to this, the assessee submitted a comparable sale on 9 March 2022 wherein identical duplex flat one floor below was sold for Rs. 117,500,000 where the rate per square meter was Rs. 269,805/-. This was an auction by HSBC bank. When there is an auction by a bank, it is more transparent and acceptable. The honourable Bombay High Court hold this as well as the decision of the coordinate benches. Even the reserve price fixed by the bank for auction of the above property was only Rs. 12.42 crores which was sold for a considerat....
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....jections, does not make the fresh valuation, naturally the report of the district valuation officer, cannot be used for making an addition in the hands of the assessee. This is in clear violation of provisions of section 142A (4) of the act. 52. Thus if we consider the various chart submitted before us, and if we adjust the discount of the obstruction due to Lokhandwala Minerva construction where the property website and economic on the basis of reports shows 30% down fall in the price, if we consider only 7.5% downfall in the average sale price considered by the learned District valuation officer in its report of Rs. 352,440/- per square meter, the average square meter rates would be Rs. 325,000 per square meter. If the assessee is granted benefit of the 10% of the tolerance limit of the sale consideration which will come to Rs. 332,280 per square meter, no addition could be made in the hands of the assessee despite many infirmities in the procedure as well as on factual aspects. 53. Accordingly on the merits, we direct the learned assessing officer to delete the addition of Rs. 4,96,31,000/- on account of provisions of section 56 (2) (vii) of the act. Accordingly ground num....