NISHA BHAVISH BHUTA ,MUMBAI vs. ITO 33(2)(4), MUMBAI

These two appeals by two different assessee’s are taken up together as the issue raised in these appeals germinate from same set of facts. The assessee in had purchased a immovable property i.e. Unit No.A-004 in a building Boomerang along with one parking space in the basement of a building at Saki Nake, Andheri(E), Mumbai from the assessee in ITA No.5312/Mum/2019. Thus, these two appeals are by the vendee and the vendor of the same property. The Assessing Officers of the respective assessees have made addition on account of under valuation of sale consideration in respective case. In short, the transaction in dispute in these appeals are two sides of the same coin. Therefore, these appeals are taken up together for adjudication and are decided by this common order.

For the sake of convenience facts are narrated from the appeal in ITA No.1316/Mum/2010. The facts of the case in short are : The assessee had purchased a commercial property i.e. Unit-A/4 along with a Car parking in the basement of Building Boomerang for a consideration of Rs.84,18,057/- from M/s. CGS Corporate Services Pvt. Ltd. (assessee in ITA No.5312/Mum/2019). During assessment proceedings the Assessing Officer noticed that the Stamp Duty value of the property is Rs.1,32,02,235/-. The Assessing Officer invoked the provisions of section 56(2)(vii) of the Act and referred the valuation to Department Valuation Officer (DVO). Pending DVO’s report, the Assessing Officer made addition of the difference between stamp duty value and sale consideration declared by the assessee i.e. Rs.23,92,089/-. After completion of assessment u/s. 143(3) vide order dated 21/12/2017, the Assessing Officer received report from DVO. The DVO determined fair market value of the (A.Y 2015-16) ITA NO.5312/MUM/2019(A.Y 2015-16)

Shri Dharan V. Gandhi appearing on behalf of the assessees submits that the Assessing Officer made addition on the basis of fair market value as per DVO’s report. The ld. Authorized Representative of the assessee pointed that the property was purchased by CGS Corporate Services Pvt. Ltd. from unrelated third party M/s. Centaur Mercantile Pvt. Ltd. vide agreement dated 15/04/2014 for a consideration of Rs.84, 18,057/-. Within a short span of 10 months the assessee purchased the same property from CGS Corporate Pvt. Ltd. at the same cost. This fact has been acknowledged by the DVO in para 3.1of his report. The DVO in order to determine the fair market value of the property cherry picked sale instances of property having higher built up area instead of sale instances of property having similar built up area in the same very building. The comparative rate of sale instances of unit in the same building are annexed as annexure -II to DVO’s report (Page-18 of the Paper Book). A perusal of the table of sale instances show that the DVO has ignored the sale consideration of same very property 10 months back and has only considered the sale consideration of the property which are bigger in size for which higher consideration has been paid. No reason has been given by DVO for ignoring the sale instance of the property which is subject matter under consideration and was purchased by the vendor 10 months back. Further, the DVO increased fair market value taking growth of 1% per month from the date of purchase by the vendor. No valid reason or basis has been given by (A.Y 2015-16) ITA NO.5312/MUM/2019(A.Y 2015-16)

Per contra, Shri Chetan M. Kacha representing the Department vehemently defended the impugned order. The ld. Departmental Representative submits that the Assessing Officer has made addition after seeking report from the DVO. The ld. Departmental Representative prayed for dismissing appeal of the assessee and upholding the impugned order.

Both sides heard, orders of authorities below examined. The Assessing Officer made addition by adopting fair market value of the property determined by the DVO. From the report of DVO it is seen that the DVO has cherry picked sale instances of the properties for comparison, wherein the rate per sq.mtr. is the highest instead of comparing the property of the assessee with a property having similar area or the sale consideration of property purchased by assessee that was purchased by vendor 10 months back. It is an undisputed fact that the property purchased by the assessee was acquired by the vendor 10 months prior to sale. No extra ordinary circumstances have been pointed by the DVO leading to high appreciation in the market value of property in a short span of 10 months. The DVO applied growth rate of 1% per month as time correction, no plausible reason is given by DVO for adopting such a growth rate. Thus, I am of considered view that fair market value determined by the DVO suffers from infirmities. From sale instances given in Annexure to DVO’s report it is seen that the adjoining Unit i.e. Unit No.003A having almost the same built-up area as that of the assessee

The facts in the present appeal are identical to the facts in . The assessee in appeal No.5312/Mum/2019 is the seller of the property purchased by the assessee in ITA No.1316/Mum/2020. The report of DVO for valuation of property is the same in both the appeals. In the said DVO’s report has been rejected. Thus, the findings given while adjudicating the appeal of assessee in ITA NO.1316/Mum/2020 would mutatis mutandis apply to ITA NO.5312/Mum/2019. For parity of reasons, the appeal by assessee in ITA No.5312/Mum/2019 is allowed.

In the result, appeal in are allowed.