TaxTMI 
TaxTMI 
2026 (10) TMI 503
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....ion report was received by email on 01/10/2022 and, accordingly, the time limit for passing the order expired on 30/11/2022, whereas the order was passed on 05/12/2022. 2. Ground 2: Merits of the case 2.1. The learned CIT(A) and the learned Assessing Officer erred in making an addition under section 56(2)(x) of INR 34,70,396 (50% share) assuming that the fair market value of the subject property is equivalent to stamp duty value at INR 2,19,40,792 (as against the purchase consideration of INR 1,50,00,000), without considering the adverse factors impacting the valuation and even not considering the Report issued by the Department Valuation Officer (ld. DVO) who arrived at FMV which is much lesser than the Stamp Duty Value. 2.2. The learned ld. DVO, the learned AO and the learned CIT(A) failed to consider the multiple adverse factors affecting the valuation of the subject property, namely: a. the land area on which the building is constructed is only 115 sq. metres (17 m x 6.8 m); b. the building is part of a Slum Rehabilitation Scheme; c. there is no open space outside the building and no car parking facility; d. the siz....
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.... rejected the ld. DVO report and proceeded to adopt the Stamp Duty Value of Rs. 2,19,40,792/-. 3.1. Accordingly, after considering assessee's 50% share, the difference of Rs. 69,40,792/- was apportioned, resulting in an addition of Rs. 34,70,396/- (50% share) under section 56(2)(x). Aggrieved, assessee went in appeal before ld. CIT(A) who sustained the addition so made. Aggrieved, assessee is in appeal before the Tribunal. 4. During the course of hearing, ld. Counsel for assessee submitted that the statutory period for completion of impugned assessment expired on 30.09.2022. It was submitted that assessee had requested reference to the ld. DVO and that the valuation report was emailed by the ld. DVO on 01.10.2022 to NEAC, with a copy marked to assessee. According to assessee, this communication establishes that the valuation report had reached the faceless assessment machinery on 01.10.2022. Assessee accordingly contended that the period to be excluded under Explanation 1(v) to section 153 should be reckoned only up to 01.10.2022 and that, applying the first proviso to Explanation 1, the assessment ought to have been completed by 01.12.2022. Since the assessment order was....
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....ord: first, in para 3.3(iii) of the assessment order while narrating receipt of the ld. DVO report, and again in ld. Assessing Officer's communication dated 01.11.2022 while referring to the forwarding of the report by the Technical Unit. 5.1. On the other hand, assessee has placed reliance upon an email dated 01.10.2022 by which ld. DVO forwarded the valuation report to NEAC, with a copy to assessee. Assessee's case is that this establishes receipt of the report by the faceless assessment machinery on that date. In our considered view, the distinction between these two dates assumes significance in the context of the statutory scheme governing faceless assessment. Section 144B(5) provides: (5) All communication among the assessment unit, review unit, verification unit or technical unit or with the assessee or any other person with respect to the information or document or evidence or any other details, as may be necessary for the purposes of making a faceless assessment shall be through the National Faceless Assessment Centre; 5.2. Section 144B(6), insofar as relevant, further provides: (6) All communications between the National Faceless Assessment....
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....3.2021, under which the income-tax authorities of the National Faceless Assessment Centre were vested with concurrent powers and functions of Assessing Officers to facilitate faceless assessment proceedings. The notification confers concurrent powers and functions; it does not dispense with the statutory procedure prescribed under section 144B. Notification No.22/2021 was issued under section 120 and was intended to facilitate conduct of faceless assessment proceedings. The expression "concurrent" enables the designated authorities to exercise the relevant powers, but it cannot be read to mean that two different units may simultaneously deal with the same task independently, outside the process flow prescribed by section 144B. The faceless mechanism is deliberately structured as a team-based and functionally specialised system. The Assessment Unit identifies the issue and, where technical assistance is necessary, seeks such assistance through the National Faceless Assessment Centre. The Technical Unit provides the technical input; the report thereafter travels back through the National Faceless Assessment Centre to the Assessment Unit. The Assessment Unit then proceeds with the ass....
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....as received by ld. Assessing Officer through the Technical Unit on 06.10.2022. The period from the date of reference to the date of receipt is accordingly excluded. Since the remaining period available to ld. Assessing Officer thereafter was less than sixty days, the first proviso to Explanation 1 extends the remaining period to sixty days. On that basis, the assessment order dated 05.12.2022 falls within the permissible period. 6.2. We accordingly reject assessee's contention that the report is required to be treated as having been received on 01.10.2022 merely because a copy of the report was emailed to assessee with NEAC in copy. Accordingly, Ground No.1 is dismissed. 7. We now turn to the substantive issue concerning the addition of Rs. 34,70,396/- under section 56(2)(x). Assessee and her spouse purchased the subject property jointly for a total consideration of Rs. 1.50 crore. The Stamp Valuation Authority adopted a value of Rs. 2,19,40,792/-. Assessee disputed the valuation and requested reference to ld. DVO. Ld. DVO's report dated 28.09.2022 determined the value of the property at Rs. 1,68,90,000/-. Ld. Assessing Officer did not accept ld. DVO's valuation. ....
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....om the provisions of section 16A of the Wealth-tax Act, 1957, which are specifically incorporated into the valuation mechanism under section 50C. Section 16A(5) provides: "On the date specified in the notice under sub-section (4), or as soon thereafter as may be, after hearing such evidence as assessee may produce and after considering such evidence as the Valuation Officer may require on any specified points and after taking into account all relevant material which he has gathered, the Valuation Officer shall, by order in writing, estimate the value of the asset and send a copy of his order to the Assessing Officer and to assessee." 8.2. Section 16A(6) then provides: "On receipt of the order under sub-section (3) or sub-section (5) from the Valuation Officer, the Assessing Officer shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer." 8.3. From the above, it is noted that the expression used by the legislature is "shall" and, more importantly, the assessment is required to be completed "in conformity with" the estimate of the Valuation Officer. 9.....
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....contends that even this valuation is on the higher side because the peculiar features of the property were not properly factored into the valuation. Assessee had specifically pointed out that: i. the land area on which Building A-1 was constructed was only 17 metres x 6.8 metres, i.e. approximately 115 sq. metres; ii. Building A-1 was a composite building forming part of an SRA project; iii. the ground and first floors were rehabilitation components; iv. there was hardly any open space and there was no car parking facility; v. the flat had an odd size and shape resembling a railway compartment; vi. large beams in the middle of the rooms reduced the utility of the flat; vii. the subject building had inferior surroundings and was adjacent to hutments/chawls; and viii. the property was the last property sold by the developer and had remained unsold for a considerable period. 9.3. These submissions were also stated to have been made during the assessment proceedings and before the ld. CIT(A). The statement of facts records that assessee furnished the purchase agreement, solicitor's certificate, housing loan ....
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.... with superior amenities such as lifts, parking, open spaces and firefighting systems. In contrast, the Appellant's flat is located in Krushna Castle, which comprises rehabilitation tenements and lacks basic amenities such as parking and open space. • The ld. DVO compared without considering these material differences and other negative factors such as inferior surroundings and inefficient flat layout (images enclosed as Annexure I). • In contrast, the independent Government-registered valuer has undertaken a valuation based on actual comparable instances within the Appellant's building, noting that the rate for flats in the Appellant's building remained largely stable between 2013 and 2019 at approximately INR 12,496 per sq. ft. (Pages 239-242 of the PB) • Despite this, the independent valuer factored in an increase of 69% (approx. 11.5% per year over six years) and arrived at a valuation of INR 1.52 crore, which is close to the actual transaction value of INR 1.50 crore. (Refer Page 242 of the PB) 9.6. The table above brings out a material aspect which, in our considered view, has not been properly examined by the lower authorities. Ld. D....