TaxTMI 
TaxTMI 
2025 (12) TMI 69
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....e basis of information available with the Department. A notice under section 143(2) of the Act was issued on 30.09.2019. 3. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had on 26.12.2017, sold immovable property bearing Nos. 22, 24 and 26 on the ground floor of B Wing in the building known as "Gundecha Onclave" situated at Saki Village, Kherani Road, Mumbai - 400072 ("the subject property"). The sale consideration as per the registered sale deed was Rs. 1,75,00,000/-, which was duly reflected in the assessee's return of income. The Sub- Registrar, while registering the sale deed, adopted a higher value of Rs. 2,23,37,669/- for the purpose of stamp duty, and accordingly collected additional stamp duty. On noticing this difference between the declared consideration and the value adopted for stamp duty purposes, the Assessing Officer invoked section 50C(1) and proposed to adopt Rs. 2,23,37,669/- as the deemed full value of consideration for computing capital gains. In response, the assessee submitted that Rs. 1,75,00,000/- was the actual consideration received and that the value of the property adopted for the purpose of stamp duty wa....
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....er section 50C(2) to ascertain the fair market value of the property sold, and that the DVO's report was awaited at the time of assessment. It was noted that the Assessing Officer, while completing the assessment on 22.09.2021, had taken the stamp-duty valuation of Rs. 2,23,37,669/- as the deemed sale consideration. The CIT(A) held that the Assessing Officer was empowered to do so, since the DVO's report had not been received despite adequate time being allowed, and that the order could subsequently be rectified under section 154 once the DVO's report was received. Relying on the language of sections 142A, 153, and 155(15), the CIT(A) reasoned that the Assessing Officer was competent to finalise the assessment and later amend it if the valuation report necessitated such modification. The CIT(A) therefore concluded that the assessment order was legally valid and did not suffer from want of jurisdiction or violation of procedure under section 50C. The assessee's contention that the order was illegal for having been passed before receipt of the DVO's report was rejected. 10. Before CIT(A), the assessee also contended that the order was provisional in nature since it was made "subje....
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....It was further observed that the alleged cost of furniture of Rs. 14,42,029/- was not mentioned in the registered sale deed and hence could not be considered as improvement cost under section 48. As regards Rs. 61,000/- claimed as transfer expenses, the CIT(A) held that the same was based on an unsigned invoice for society charges and was not wholly connected with the transfer. The disallowances were thus upheld. 13. Further aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds: 1. The Ld. CIT(A) erred in upholding the Order dated 22.09.2021 even when the Ld. AO assumed Rs. 2,23,37,669 to be the fair market value of the subject property merely based on the value adopted for the purposes of stamp duty without waiting for the valuation report of the valuation officer or accepting the documents submitted by the Appellant showing that 1,75,00,000 was the actual consideration received by the Appellant. 2. The Ld. CIT(A) erred in upholding the Order dated 22.09.2021 without considering that the said Order is without jurisdiction and is liable to be quashed since the Order dated 28.09.2021 has been passed when the matter had b....
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....fy, withdraw, change or substitute all or any of the grounds of appeal at the time of or before the hearing of this appeal. 14. The learned Authorised Representative (AR) reiterated the facts of the case and submitted that the original assessment order dated 22.09.2021 passed under section 143(3) r.w.s. 144B is provisional in nature and, therefore, not a valid and sustainable order in law. It was submitted that the Assessing Officer himself had recorded in the body of the order that the same was "subject to rectification upon receipt of the valuation report" from the Valuation Officer to whom a reference had already been made under section 50C(2) of the Act. The AR further contended that the CIT(A) failed to appreciate this jurisdictional infirmity and proceeded to decide the appeal with reference to the rectification order passed under section 154 by the Assessing Officer, instead of adjudicating the legality of the original assessment order dated 22.09.2021. It was submitted that the rectification order being consequential in nature could not cure the fundamental defect in the original assessment. 15. In support of the above proposition, the AR drew attention to the specifi....
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.... Valuation Officer (DVO) is legally sustainable and whether the subsequent rectification under section 154 could cure such a defect. It is an undisputed fact that the Assessing Officer, having noticed that the sale consideration disclosed by the assessee was lower than the stamp duty valuation, invoked section 50C(1) and, upon the assessee's request, made a reference to the Valuation Officer under section 50C(2). Once such a reference is made, the statutory procedure mandates that the Assessing Officer must await the report of the Valuation Officer before finalising the assessment. The scheme of section 50C(2) read with section 142A(6) and Explanation 1(iii) to section 153 makes this position abundantly clear. The law explicitly excludes, for the purpose of limitation, the period commencing from the date of reference to the Valuation Officer till the date on which the report is received. 19. The legislative intent is that the assessment should be completed on the basis of the DVO's determination and not by pre-empting it. Completion of assessment without awaiting the report would defeat the very purpose of the statutory reference mechanism. The assessment order dated 22.09.2021 ....
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....nvoked the provisions of sec. 154 for re-computation of the long term capital gains on sale of 1/3rd shares of the residential property. The indexation cost of the property as per the valuation of the DVO is Rs. 40,42,240/- as against the indexed cost of acquisition adopted by the assessee is at Rs. 1,04,17,500/-. The Assessing Officer accordingly worked out the capital gain at Rs. 46,87,920/- while passing the order u/s 154 dt 24.3.2008. 6. It is thus clear that while resorting to the provisions of sec. 154, the Assessing Officer re-determined the issue of long term capital gains and particularly, the FMV as on 1.4.1981. It is settled proposition of law that a decision of a debatable point of law or fact cannot be corrected u/s 154 of the I T Act. The issue of determining the FMV as on 1.4.81 is highly debatable one and based on the estimates. Therefore, on such issue, any decision is not free from subjective consideration. It is not the case of the simple overlooking a provision of law or clerical or calculation mistake in computation of income; but it is a point to be decided by application of fact, law and mind as well. Therefore, the issue of FMV as on 1.4.81 does not....
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....ait the report-especially since Explanation 1(iii) to section 153 expressly excludes such period from limitation. By proceeding to finalize the assessment without the DVO's report and by leaving it open for rectification later, the Assessing Officer acted contrary to the legislative scheme and beyond the scope of his jurisdiction. Hence, the subsequent rectification purportedly made under section 154 is not a mere correction of an error apparent on record but a substantive re-determination of income on the basis of fresh material. Such an action amounts to review or reassessment, which is impermissible under section 154. 23. Section 153(5) read with Explanation 1(iii) provides that the period commencing from the date of reference to the Valuation Officer to the date of receipt of the report is to be excluded for computing the period of limitation. This statutory exclusion is a legislative recognition that the Assessing Officer is expected to await the valuation report and that the assessment cannot be completed prematurely. The Assessing Officer, therefore, had sufficient time in law to defer completion of assessment until the DVO's report was received. The action of finalising ....
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...., 1957, incorporated into section 50C(2) of the Income-tax Act, was granted to the assessee. The absence of such opportunity constitutes a clear violation of the statutory procedure and the principles of natural justice. Having regard to these circumstances, we are of the opinion that the assessee suffered genuine hardship both in the course of sale and in the subsequent assessment proceedings. 26. We further observe that the learned CIT(A) has not dealt with the judicial precedents specifically relied upon by the assessee in support of her contentions. The order of the CIT(A) merely records that the decisions cited are "distinguishable on facts," without undertaking any analytical discussion or assigning reasons for such distinction. The appellate authority is expected to examine each precedent cited before it, analyse its ratio, and record findings as to why it does or does not apply to the facts of the case. A summary rejection of binding or persuasive authorities without reasoned evaluation amounts to non-application of mind and renders the order vulnerable to judicial scrutiny. In the present case, such omission further weakens the sustainability of the impugned appellate o....