Clipped from: https://indiankanoon.org/doc/65274485/
Income Tax Appellate Tribunal – Mumbai
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "F" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER)
ITA No. 5883/MUM/2024
Assessment Year: 2015-16
Mr. Vivek Omprakash Abrol, Dy. CIT-Cir-22(1),
1, Neumec Height, Sant Chokha (Order passed by erstwhile AO, Asst.
Mela Road, Vile Parle (East), Vs. CIT-Cir-22(3), Mumbai),
Mumbai-400057. Piramal Chambers, 3rd floor,
Lalbaug,
Mumbai-400012.
PAN NO. AABPA 2313 B
Appellant Respondent
Assessee by : Mr. Shreyash Shah/
Mr. Kunal Shah/Ramesh Vora
Revenue by : Ms. Kanupriya Damor, Sr. DR
Date of He aring : 29/01/2025
Date of pronouncement : 17/03/2025
ORDER
PER OM PRAKASH KANT, AM
This appeal is directed against order dated 26.10.2023 passed by the Ld. National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:Mr. Vivek Omprakash Abrol 2 ITA No. 5883/MUM/2024 1. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) (Appeals)-(NFAC) (NFAC) has erred in rejecting the Valuation Report of the DVO without considering the detailed submissions made by the Appellant. Hence, the rejection of the DVO Report Report on the grounds of alleged anomalies in the report is unjustified, unwarranted and uncalled for. 2. The learned Commissioner of Income Tax (Appeals) has exceeded his jurisdiction in rejecting the DVO’s valuation grounds of certain report dated 13th June, 2018 on the grounds anomalies noticed and rejected the same as not being mandatory to adopt the same. 3. The Learned Commissioner of Income Tax (Appeals) (Appeals)-
(NFAC) has not appreciated the submissions made for the deletions of the additions made by the Learned Assessing Officer in view of DVO’s valuation report dated Assessing 13th June 2018 2019 for the one property as the additions were made subject to the valuation report of the DVO.
4. On the facts and circumstances of the case, the Learned Commissioner of Income (Appeals) (Appeals)-(NFAC) AC) has erred in disregarding the Valuation Report of the DVO, which is coterminous to the assessment order, to the extent the same is not challenged by the appellant in the appeal before him and thereby erred in adjudicating the issues subject matter of appeal before him.
that were not subject
5. That the learned Commissioner of Income Tax (Appeals) (NFAC) has erred in rejecting the DVO’s Valuation report without providing opportunities to the Department’s DVO and the Appellant to rebut the grounds of the learned CITCI (A) for rejection and hence the CIT (A) order is in contravention of Principles of Natural Justice and is liable to quashed.
6. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) (Appeals)- (NFAC) has erred in not appreciating the Appellant’s submission that the rectification of the assessment under Section 155(15) required to be carried out by giving effect of the DVO’s valuation report dated 13th June 2018 as the additions were made subject to the adoption of the said DVO’s valuation of the said four properties.
Mr. Vivek Omprakash Abrol 3 ITA No. 5883/MUM/2024
7. The Learned Commissioner of Income Tax (Appeal NFAC) erred in not calling for the rectification order from the Learned Assessing Officer in view of the DVO Report dated 13th June 2018 has been passed and tthe Assessment Order passed under Section 143(3) dated 23d December 2017 was subject to rectification under Section 155(15) of the Act (refer para 5.4 of the Assessment Order) and hence, the order passed by the CIT Appeal is against the provisions of law an and in violation of the principles of natural justice;
8. Alternatively, the Learned Commissioner of Income Tax (Appeals NFAC) erred in not considering the various limitations, deficiencies in the valuation of the property situate at CTS No.346 and 347, situat situate e at Village Malvani, Taluka Borivali, Mumbai Suburban District registered with the Sub Registrar of Assurance on 18th Sub-Registrar December 2014. The DVO has valued the aforesaid property vide its valuation Report dated 13th June 2018 at Rs. 1,14,34,000/ 1,14,34,000/- as against the he assessed market value of Rs.2,10,82,000/-.
Rs.2,10,82,000/
9. The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter aforesaid grounds of appeal as and when the occasion demands.
10. All aforesaid grounds of appeal are independent, in the alternative and without prejudice to one another.
2. Briefly stated, facts of the case are that the assessee filed its return of income on 04.08.2016 declaring total income at Rs.1,53,28,600/-.. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the tax Act, 1961 (in short ‘the Act’) were issued and complied Income-tax with. During the scrutiny proceedings, the Assessing Officer noted that in the financial year relevant to the assessment year under deration, the assessee had purchased one immovable property consideration, Rs.99,00,000/ but Stamp Duty against purchase consideration of Rs.99,00,000/-
Mr. Vivek Omprakash Abrol 4 ITA No. 5883/MUM/2024 Value Authorities valued the property at Rs.2,10,83,000/ Rs.2,10,83,000/-. The Assessing Officer accordingly had show caused to the assessee as to hy the addition u/s 56(2)(vii)(b)(ii) of the Act not been made on why account of different between value determined by the stamp valuation authority and the purchase consideration. The assessee objected to the adoption of the value determined by the Stamp value authority and requested for referring the matter for fo valuation by the District Valuation Officer (DVO) as per the provisions of the section 56(2) r.w. section 50C of the Act. The ld AO accordingly referred the matter to the ld DVO. As the assessment was getting time barred Officer, without waiting the report of DVO, passed the Assessing Officer, the assessment order dated 27.12.2017 making the addition of Rs.1,11,83,000/- u/s 56(2)(vii) of the Act adopting value of the property as per Stamp Value Authority. The assessee had already filed an appeal before the Ld. Commissioner of Income-tax Income (Appeals) against the aforesaid assessment order and subsequently, the t DVO issued its report on 13.06.2018 u/s 55A of the Act. The DVO estimated the fair market value of the property as on 18.12.2014 at property Rs.1,14,34,000/-.. A copy of the valuation report issued by the DVO has been placed on Paper Book page 115 to 121. Pursuant to the filed a rectification issuance of the report by the DVO, the assessee file application dated 20.01.2020 u/s u/s 155(15) of the Act before the AO.
along with Form No. 26AS, evidencing tax payment of Rs.6,71,050/- on 28.03.2019 with reference to the difference determined between the DVO and purchase transaction value.
Mr. Vivek Omprakash Abrol 5 ITA No. 5883/MUM/2024 Though the assessee filed two reminders to the Assessing Officer for carrying out rectification but no such rectification was carried out by the Assessing Officer. Meanwhile, the CIT(A) passed its order dated 26.12.2023 u/s 250 of the Act confirming the addition made by the Assessing Officer. The relevant relevant finding of the Ld. CIT(A) is reproduced as under:”8.2.1 8.2.1 In his written submissions the appellant has also furnished the report of the DVO which was received after passing the assessment order. The DVO has taken the value of the property at Rs. 1,14,34,000/ ,000/- against the Stamp Valuation Authority’s Rs.2,10,83,000/ the appellant challenge both the valuation at Rs.2,10,83,000/- figures. He has also disputed the valuation figure arrived by the DVO. The appellant also relied upon number of case laws in his favour. However it it is noticed that the appellant has not taken alternative ground that if the addition made by the A.O. is deleted and the valuation of the DVO is taken for consideration. It appears that the appellant has automatically presumed that the report of the DVO is s mandatory for the A.O. Whereas, the report of the DVO is not mandatory for the Assessing Officer. I have gone through the report of the DVO and noticed that the DVO has arrived the rate of the property at Rs. 7,216/- 7,216/ per square meter as on 18.12.2014. In his Annexure-ll Annexure ll of the report, the DVO has taken 3 properties for arriving the above said amount. But it is interesting to note that properties taken DVO are showing high variation in the rate Rs.1,799/ Rs.3,846/- and Rs. 13,452/ ranging from Rs.1,799/-, 13,452/-. The conduct uct of the DVO is un understandable, he should have taken un-understandable, bigger sample for working on the market rate. I hold the report of the DVO is not acceptable and rely upon the rate circulated by the Stamp Authorities. Thereby, I am confirming the addition made by A.O.at Rs. 1, 11,83,000/-.”
3. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 221. The Ld. counsel for the assessee submitted that the Assessing Officer is statutorily bound by the the DVO u/s 55A of the Act.
valuation report submitted by the Therefore, the Assessing Officer was required to rectify its order in Mr. Vivek Omprakash Abrol 6 ITA No. 5883/MUM/2024 accordance with section 155(15) of the Act upon receipt by the DVO report. The Ld. counsel for the assessee relied on the following decisions in support of his contention :a) CIT vs. Dr. Indra Swaroop Bhatnagar 349 ITR 210 (Allahabad) b) PCIT vs. Rajibhai Nagjibhai Thesia 388 ITR 358 (Gujarat) c) ITO vs. Dipika Dinesh Kocharekar ITA No. 2374/Mum/2019 d) Jalan Chemical Industries (P.) Ltd. vs. ITO 43 taxmann.com com 229 (Kolkata – Trib.) e) Shri Anil Murlidhar Deshmukh vs. The Income Tax Officer ITA No. 1821/Pun/2017
4. On the contrary, the Ld. Departmental Representative (DR) submitted that DVO’s ‘s report might be mandatory on the Assessing Officer but the Ld. CIT(A) was not bound by the said report if there mistake or error in the report of the DVO. He are glaring mistakes accordingly submitted that the matter may be restored back to the file of the Ld. CIT(A)) for giving opportunity of being heard to the DVO and explain the mistakes or the deficiencies or inconsistencies appearing in the report of the DVO.
5. We have heard rival submissions of the parties and perused the relevant materials on record ew of the objection of the record. In view assessee to the stamp duty valuation, the Ld. Assessing Officer referred the matter of the valuation to the District Valuation Officer. As the report was not received till completion of the assessment proceedings, the Assessing Officer made the addition on the basis of Officer Mr. Vivek Omprakash Abrol 7 ITA No. 5883/MUM/2024 the stamp duty valuation of the property. The assessee preferred appeal against the said assessment order which was pending before the Ld. CIT(A). The DVO issued his report after filing of the appeal before the Ld. CIT(A). On receipt of the DVOs report, the assessee filed a copy same before the Assessing Officer and requested for the rectification of the assessment order. Simultaneously, the assessee also filed a copy before the Ld. CIT(A). The Ld. CIT(A) observed glaring mistakes in the DVOs report and therefore he rejected the same whereas the Assessing Officer did not act upon the rectification application, application probably in view of the fact that issue was already decided by the Ld. CIT(A). Before us, the Ld. counsel for the assessee referred to the provision of section 55A of the Act and submitted that after receipt of the report from the DVO, the Assessing Officer is bound to adopt the amount of value of the property as determined by the DVO.
DVO In n support thereof the Ld. counsel for the assessee has relied on the decision of the Hon’ble Allahabad High Court in the case of CIT v. Indra Swaroop Bhatnagar. In the said decision the Hon’ble Court referred to the provisions of section 50C(2)(b) of the Act he Hon’ble High Court Act. The relying on the decision of Dr. H. Rahman [1991] 189 ITR 307 observed that the Assessing Officer is bound to follow the DVOs report. The relevant finding of the Hon’ble High Court is reproduced as under :”10. 10. The above preposition of law has been upheld in the case of Dr. H. Rahman (supra) while interpreting the provision of section 50C. Mr. Vivek Omprakash Abrol 8 ITA No. 5883/MUM/2024 In this section, the provisions of the Wealth-tax Wealth tax Act are applicable. This hon’ble court observed that (page 308) : “A reading of the sub-section sub shows that the Wealth-tax tax Officer has no option but to proceed to complete the assessment in conformity with the assessment of the Valuation Officer in so far as the valuation of the asset in question is concerned. This is also als the view taken by a Division Bench of this court in M. C. Khunnah v. Union of India [1979] 118 ITR 414 (All).”
11. In view of the above discussions and by considering the totality of the facts and circumstances of the case, it is crystal clear that ally, when the Assessing Officer has obtained the D. V. O. generally, report then the same is binding. Therefore, we find no reason to interfere with the impugned order passed by the Tribunal, it is hereby upheld with the reasons mentioned therein.”
therein.
5.1 Further, the Ld. counsel for the assessee relied on the decision of the Hon’ble Gujarat High Court in the case of Ravjibhai Nagjibhai Thesia (supra), wherein where also the Hon’ble High Court held that once the reference made u/s 50C of the Act is made to the Valuation Officer er for valuation of the capital asset, the Assessing Officer is obliged to complete the assessment in conformity with the estimate made by the Valuation Officer pursuant to such reference made by him. The Co-ordinate ordinate Bench of the Tribunal in the case of Dipika Dinesh Kocharekar (supra) also followed the decision of the Tribunal in the case of Jalan Chemicals Industries (P.) Ltd. (supra) and Shri Anil Murlidhar Deshmukh (supra) n case of Jalan (supra). In Chemical(supra,) the Tribunal has held that once reference has been made to the DVO, the Assessing Officer has to proceed in conformity to the estimate given by the DVO.. In the case Shri Anil Murlidhar Deshmukh (supra), the Tribunal has held that the report of the DVO is binding on the AO unless the assessee shows such suc Mr. Vivek Omprakash Abrol 9 ITA No. 5883/MUM/2024 glaring mistake in such valuation. In that case, the Ld. counsel referred to the various mistakes in the order of the DVO however the Tribunal after examining such mistakes rejected the contention of the assessee. The relevant finding of the Tribunal is reproduced as under:”5. 5. In my opinion, the argument of the ld. AR is not fully correct. Report of the DVO is binding on the AO in terms of sub-section sub (3) of section 50C of the Act, which mandates that : ‘Subject to the provisions contained in sub-section sub (2), where the value ascertained section (2) exceeds the value adopted or assessed or under sub-section assessable by the stamp valuation authority referred to in sub- sub section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer’. The ld. CIT(A) has rightly referred to the judgment of the Hon’ble Allahabad High Court in CIT v. Dr. Indra Swaroop Bhatnagar [2012] 349 ITR 210/[2013] 213 Taxman 52/30 taxmann.com 293 in which case also the similar proposition has been reiterated by holding that : ‘it is crystal clear that generally, when the A.O. has obtained the D.V.O. Report then the same is binding’. It is thus clear clear that the report of the DVO is binding on the AO, unless the assessee shows some glaring mistakes in such valuation. I, therefore, uphold the stand taken by the ld. CIT(A), in principle, on this score.
6. Now, I turn to the specific objections of the ass assessee essee against the report of the DVO. Firstly, the ld. AR submitted that the DVO considered three sale instances with varying rates of Rs. 10900/-, 10900/ Rs. 15614/- and Rs. 15714/- per square metre respectively, but determined the fair market value of the proper ty at Rs. 18,808/-
property 18,808/ p.s.m. It was submitted that the DVO should have restricted himself to the rates as per the sale instances rather than increasing the fair market value of the property beyond such rates. This was opposed by the ld. DR.
any substance in the argument of the ld. AR. It is
7. I do not find any apparent from sale instances noted by the DVO on page 38 of the paper book that these sales took place on 18.07.2011, 31.03.2011 and 19.03.2011 respectively. As against such dates, the assessee sold its property perty on 23.11.2012. The DVO has simply increased the fair market value of the sale instances considering the time lag, location, shape and size etc. of the property. Such an objection was taken by assessee before the DVO, who rightly dealt with the same Mr. Vivek Omprakash Abrol 10 ITA No. 5883/MUM/2024 vide ide para 8.2 of his report by mentioning that he arrived at the fair market value as on the date of valuation as per valuation guidelines issued by DIT and considering other relevant factors. In my considered opinion, sale instances noted by a DVO can only be a starting point for determining the fair market value of any property, which need necessary modifications depending on the peculiar facts and circumstances of the property which has to be valued. All the relevant factors, such as, time lag, location, shape and size of the property and future potential etc. need to be considered before determining the fair market value of the property as on the date of sale. Considering the totality of facts and circumstances of the instant case, I am satisfied that the DVO was correct in determining fair market value of the property in his calculation after taking into account the cumulative effect of all the germane factors.
8. The next objection taken by the ld. AR is that plot of the assessee was small in size and not not in proper shape and hence reduction should have been carried out. In the considered opinion of this Tribunal, if the size of a plot is small, it is natural that its fair market value will be higher because of the potentiality of its easy sale. This objection objection raised by assessee has also been dealt with by the DVO in a cumulative way, in para 8.2 of his report, when he estimated the value by considering the ‘time lag, location, shape, size and future potential’ of the plot. This objection, thus, does not stand and any further legal scrutiny.
9. Next objection of the ld. AR is that litigation was going on in respect of the property sold and hence, fair market value of the property should have been scaled down. In my considered opinion, correctly projected by the assessee in as this factor has not been correctly much as the litigation was prevalent at the time of purchase of the property by the assessee, which got settled there and then. There is reference to some litigation after the instant sale of property also. Since no litigation was pending as on the date of sale, there can be no relevance of any future litigation in the valuation of property. The DVO has rightly noted this fact in para 8.2 of his report while dealing with the objection (1) of the assessee. There is no force in this contention as well, which is hereby repelled.”
repelled.
5.2 In view of the decisions relied upon by the assessee, it is settled that the Assessing Officer is bound to follow the valuation adopted by the DVO and he was required to pass the order in formity with such valuation. But in the instant case, the Ld. conformity CIT(A) who has rejected the valuation carried out by the DVO in Mr. Vivek Omprakash Abrol 11 ITA No. 5883/MUM/2024 view of a high variation in the rate ranging from Rs.1,799/-
Rs.1,799/ to Rs.13,452/-.. According to the Ld. CIT(A), the DVO should have taken a bigger sample for estimating rate. In our opinion, this being one of the glaring mistake in the report of the DVO, the Ld. CIT(A) has rejected the said report. But we e do not agree with the finding of the Ld. CIT(A) in adopting the rate circulated by the th Stamp Duty Authorities for sustaining the addition without providing DVO. The Ld. CIT(A), opportunity of being heard to the DVO. CIT(A) having power of the enhancement of addition, if he was not satisfied with the report of the DVO he should have provided opportunity opportunit of being heard to the DVO and after taking his comments and objection, objection he could have decided the valuation of the property. We find that the ordinate Bench decision in case of Suresh C. Mehta vs. Co-ordinate ITO (2013) 35 taxmann.com 230 (Mumbai) held that valuation report is not binding upon appellate authorities. Furthern the Hon’ble Madras High Court in case of M/s Jagannathan Sailaja Chitta vs. ITO [2019] 19] 49 ITCD 121 (MAD) held that ld. CIT(A) is duty bound to consider point to point objection of assessee over DVO report. The relevant finding of Hon’ble Madras High Court (supra) is reproduced as under:15. It is undoubted that both the Appellate Authority Authori and the Assessing Authority, in law, had powers of a Civil Court also vide Section 131 of the Act and, therefore, the Valuation Report of Departmental Valuation Officer as well as the Mr. Vivek Omprakash Abrol 12 ITA No. 5883/MUM/2024 presumption under Section 50C of the Act about the Fair Market Value has to be treated as an evidence or a legal presumption, which is open to be rebutted by the Assessee in accordance with law. 16. A bare reading of Scheme of Section 50C of the Act would show that Assessee can object to presumptive value as per Section 50C (1) and, therefore, it is only after hearing the objections of the Assessee, the Fair Market Value of the Capital Asset as per ‘Guidance Value’ can be determined by the authorities. The Assessee cannot be denied an opportunity to raise his objections even against the presumptive Fair Market Value under Section 50C (1) of the Act or Report of DVO under 50C (2) of the Act and the Assessing Authority or the Appellate Authorities, whose powers are co-extensive extensive with with those of the Assessing Authority, cannot refuse to meet those objections point by point. 17. The Fair Assessment Procedure under the scheme of assessment in the Income Tax Act has it at the root the principles nciples of natural justice and the same has not been denied by presumptive provisions, such as Section 50C of the Act and several other provisions in the scheme of the Act. 18. In the present facts noted above, we are of the opinion that noted CIT (A), where, for the first time, the Report of DVO came up, could either deal with the objections of Assessee himself or Mr. Vivek Omprakash Abrol 13 ITA No. 5883/MUM/2024 remit the matter back to the Assessing Authority for dealing with the said d objections in an appropriate and detailed manner. But, such an exercise does not seem to have been undertaken by him in the present case. 19. Therefore, we are constrained to remit the matter back to his stage, even though the Assessing Authority even at tthis belatedly, and allow the Appeal of the Assessee for the said purpose. We, accordingly, allow this Appeal and set aside the orders passed by the learned CIT (A) and also the learned Tribunal and remit the matter back to the Assessing Authority to decide both the questions about the valuation of the property to be taken while dealing with the objections of the assessee against the Report of Departmental Valuation Officer as well as the presumptive value under Section 50C of the Act and then compute ‘Fair Market Value’ under Section 48 of the Act and the relief under Section 54F of the Act. 20. In view of the above, the Substantial Questions of Law framed above are answered in favour of the Assessee and against the Revenue. 21. Before parting, we may say, that for weighing the evidence by the Assessing Authority, the Assessing Authority has the powers of a Civil Court conferred upon him by virtue of Section 131 of the Act by way of enforcing the attendance of by any person, including any officer of a banking company or Mr. Vivek Omprakash Abrol 14 ITA No. 5883/MUM/2024 examining him on oath, production of documents, discovery and inspection, as the case may be. Therefore, while dealing with the aforesaid piece of evidence, namely, Departmental namely, Valuation Officer’s Report or in allowing the Assessee to controvert the presumptive value under Section 50C of the Act, the Assessing Authority can very well exercise the said powers conferred ferred upon him. 5.3 In the instant case before us also the glaring mistakes have been pointed out by the ld CIT(A) in valuation report. Therefore, in the facts and circumstances of the case and in the interest of substantial justice, we feel it appropriat appropriate e to restore the matter back to the file of the Ld. CIT(A) with the direction to him to provide an opportunity of being heard to the Ld. DVO on the mistake observed by the ld CIT(A) and seek a revised report if required so and then decide the issue after providing adequate opportunity of being heard, both to the assessee as well as Assessing Officer. The grounds of appeal of the assessee are allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes.
/03/2025.
Order pronounced in the open Court on 17/03/2025.
Sd/- Sd/-
(RAJ KUMAR CHAUHAN)
CHAUHAN OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mr. Vivek Omprakash Abrol 15
ITA No. 5883/MUM/2024
Mumbai;
Dated: 17/03/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai
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