TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1813
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....of convenience and clarity, we treat the appeal in the case of Smt. Sejalben Chandrakantbhai Patel (ITA No. 701/Ahd/2025) as the lead case, and the facts are primarily drawn from her case record. 3. Facts of the Case 3.1 The facts of the case, as culled out from the assessment order dated 06.03.2023 passed under section 147 r.w.s. 144B by the Assessing Officer, Ward 13(1), Vadodara [hereinafter referred to as "Assessing Officer or AO"], and the subsequent revision order dated 03.03.2025 passed by the PCIT under section 263, are such that for the Assessment Year 2018-19, it was found from the Insight Portal and ITBA system that the assessee had not filed her return of income under section 139(1) of the Act, despite having undertaken substantial high-value transactions during the relevant financial year. Based on such information, the Assessing Officer reopened the case by issuing a notice under section 148 of the Act on 31.03.2022, and subsequently, statutory notices under sections 143(2) and 142(1) were issued. The reasons recorded for reopening indicate that the assessee had jointly sold three immovable properties during the financial year 2017-18 relevant to the assessment year....
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....f the Act and found that the assessment order dated 06.03.2023 was erroneous and prejudicial to the interests of the Revenue. The PCIT noted that although the AO had referred the matter of valuation of properties to the Departmental Valuation Officer (DVO) under section 55A for ascertaining the fair market value as on 01.04.2001, the final assessment order did not contain any discussion or reference to the said DVO report. The report of the DVO, as later obtained, disclosed substantial variations in the cost of acquisition compared to the figures adopted by the assessee based on registered valuer's report. The difference in indexed cost of acquisition, attributable to 4% share of the assessee, was quantified at Rs. 9,54,475/-. The PCIT held that failure on the part of AO to examine or even mention the DVO report amounted to non-application of mind and inadequate inquiry, thereby rendering the order erroneous and prejudicial to the interest of the Revenue. Accordingly, by order dated 03.03.2025 passed under section 263, the PCIT set aside the assessment order and directed the AO to reframe the assessment after considering the DVO report and after granting proper opportunity to the a....
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....nce to the Departmental Valuation Officer (DVO) was made or relied upon during the course of assessment, nor was any such report made available to the assessee at any stage. 4.3 The learned AR further submitted a specific factual chronology to demonstrate that the very foundation of the learned PCIT's assumption of jurisdiction-namely, the alleged valuation report of the Departmental Valuation Officer (DVO)-was non-existent at the time of completion of reassessment. It was pointed out that the assessment order under section 147 r.w.s. 144B was passed by the Assessing Officer on 06.03.2023 at 12:06:00 IST, whereas the request for valuation made by the Technical Unit for obtaining the fair market value of the impugned property was initiated only later in the evening on the same date, i.e., 06.03.2023 at 17:55:54 IST, as evidenced by the system-generated timestamp. The AR therefore contended that the reference for valuation, assuming it to be under section 55A of the Act, was not made by the Assessing Officer during the course of the assessment proceedings. In fact, it was neither acted upon by the AO nor available at the time of finalisation of the reassessment. It was argued that t....
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....uation report with supporting evidence before the Assessing Officer during reassessment, which formed the basis for the returned capital gains computation. The AR submitted that the DVO proceeded to carry out valuation without examining or considering the report already on record, thereby rendering his exercise one-sided, incomplete, and vitiated in law. It was contended that the DVO's conclusion, made in absence of material placed on record by the assessee and without granting opportunity to respond, could not override the report submitted by the assessee and accepted by the AO. 4.6 The learned AR further submitted that the Assessing Officer was under no statutory obligation to make a reference to the Valuation Officer under section 55A of the Act so long as the officer was satisfied with the cost of acquisition or the fair market value (FMV) as reported by the assessee, particularly where such valuation was backed by a report from a registered valuer. In support of this submission, the learned AR placed reliance on the decision of the Income Tax Appellate Tribunal, Delhi Bench "C" in the case of Jitindar Singh Chadha v. Pr. CIT [ITA No. 2732/Del/2018, order dated 31.12.2018]....
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....e by the learned AR for the assessee and the learned DR for the Revenue. We have also perused the reassessment orders dated 06.03.2023 and 01.03.2023 passed under section 147 r.w.s. 144B by the Assessing Officer in the respective cases of Smt. Sejalben Chandrakantbhai Patel and Smt. Binitaben Sandipkumar Patel, as well as the revision orders dated 03.03.2025 passed by the PCIT, under section 263 of the Act. The issue for consideration is whether the reassessment orders passed by the Assessing Officer accepting the capital gains computation furnished by the assessee's were erroneous and prejudicial to the interest of the Revenue, so as to warrant revision under section 263. 6.1 The material facts are undisputed. The assessee's jointly held immovable property to the extent of 4% share each, which was sold during the previous year relevant to A.Y. 2018-19. Based on the information flagged on the Insight Portal regarding the transaction, the case was reopened and notices under section 148 were issued. In response, the assessee's filed their returns of income declaring capital gains on the basis of a valuation report obtained from a registered valuer determining the fair market value a....
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.... and lacking in evidentiary reliability. Thus, the learned PCIT's reliance on such flawed report to brand the assessment as erroneous and prejudicial is, in our view, legally unsustainable. 6.5 As regards the learned DR's argument that the delay between the assessment order and the DVO reference on the same date was procedural in nature and not fatal, we are unable to agree. In the faceless assessment system, every digital act is timestamped and has legal finality. Once the order is authenticated and uploaded, it constitutes a concluded proceeding. A reference made by the Technical Unit after the conclusion of assessment cannot retroactively expand the assessment record. This is in consonance with the Explanation to Section 263, which defines "record" to include only the materials available at the time of passing the order-not those obtained subsequently. Therefore, the PCIT's jurisdiction under section 263, founded on such post-facto material, is vitiated ab initio. 6.6 Further, as rightly argued by the learned AR, the Assessing Officer is not mandatorily required to refer a valuation to the DVO under section 55A of the Act. The statute uses the term "may," which has been interp....
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.... the basis of a registered valuer's report. 10. Having considered the rival contentions and perused the material available on record, we find that the facts in the present case are even more compelling than those of the co-seller Smt. Sejalben Patel. It is not in dispute; indeed, it is specifically admitted by the learned PCIT in paragraph 7.1 of the impugned order that the Assessing Officer in the case of the present assessee had not made any reference to the DVO under section 55A of the Act, either during the course of reassessment proceedings or thereafter. The PCIT has sought to justify revision by importing a valuation report dated 24.11.2023 obtained in the case of the co-seller Smt. Sejalben Patel, who held identical 4% share in the jointly sold immovable properties. In our considered opinion, such reliance on third-party material, which did not form part of the record of the assessee's reassessment proceedings, and which was never referred to or relied upon by the AO in the present assessee's case, is clearly impermissible in law. The legal scope of "record" as defined in Explanation 1 to Section 263 confines itself to material that was either available to or ought to hav....