DEEPIKA DILIP NADKAR,THANE vs. INCOME TAX OFFICER, WARD 3(1), THANE

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: SMC BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 9374/MUM/2025 िनधा�रण वष�/Assessment Year: 2020-21) Deepika Dilip Nadkar Income Tax Officer, Ward 3(1) B-1/ 101, Millennium Arcade, 2nd Floor, Rani Mansion, Murbad Gopinath Chowk Dombivli West, Vs. Road, Kalyan Thane-421202, Maharashtra Thane-421301, Maharashtra अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AEJPN8174R

अपीलाथ� �ारा/Appellant represented by: Shri Nikhil Mutha, CA ��थ� �ारा/Respondent represented by: Smt. Sujatha Iyyanger, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 19.06.2026 घोषणा की तारीख / Date of pronouncement: 10.09.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by assessee is against the order of ld. CIT(A)-48, Mumbai vide DIN: ITBA/APL/S/250/2025-26/1079435815(1), dated 08.08.2025 passed against the assessment order by ld. DCIT, CC-2(1), Mumbai u/s 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 13.03.2024 for the Assessment Year 2020-21.

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 × 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 size and shape of the flat are very small, resembling a railway compartment; e. large beams in the middle of rooms reduce the utility of the flat, etc. 2.3. The learned CIT(A) further erred in assuming that the ld. DVO had valued the subject property at INR 2,19,40,792, which is factually incorrect, and also in recording adverse factors which does not relate to the subject property while concluding the order.

2.4. The learned AO erred in rejecting the valuation report issued by the ld. DVO assessing the value at INR 1,68,90,000 and concluding that the stamp duty value is fair market value of the subject property by comparing the same with a flat on the 13th floor of Bhairav Darshan CHS Ltd., which does not suffer from any of the adverse factors listed above.

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.

Sr. Particulars Date Remarks No Statutory time limit for (a) completion of assessment 30.09.2022 18 months from the end of the AY u/s 153 (b) Reference made to ld. DVO As per para 3(iii) of the 13.09.2022 u/s 142A Assessment order (Page 81 of PB) Final Valuation Report E-mail received to the Appellant (c) received via email to 01.10.2022 (Page 232 of PB) Appellant and Ld. AO Issue letter by Ld. AO Objection filed vide submission (d) requesting to submit any 13.10.2022 dated 18/10/2022 (Page 194 to objections for ld. DVO report 200) Extension of time limit to pass order after applying (e) 19 days - Explanation 1(v) to section 153 of the Act Add: Additional Days in Since period of limitation post terms of proviso to exclusion is less than 60 days, (f) 41 days Explanation 1 to section 153 the remaining period gets of the Act extended to 60 days (in totality) (g) Last date to pass the order 01.12.2022 i.e., 60 days from 1/10/2022 (h) Actual date of passing the 05.12.2022 - Assessment Order

4.1. Assessee further relied upon section 144B(5), Notification No.22/2021 dated 31.03.2021 and the concept of concurrent jurisdiction under the faceless assessment mechanism. It was submitted that the receipt of the communication by NEAC/NFAC ought to be treated as receipt by ld. Assessing Officer.

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 Centre and the assessee, or his authorized representative, or any other person shall be exchanged exclusively by electronic mode; and all internal communications between the National Faceless Centre, Regional Faceless Centres and various units shall be exchanged exclusively by electronic mode; Provided that the provisions of this sub-section shall not apply to the enquiry or verification conducted by the verification unit in the circumstances referred to in sub-section (g) of clause (xii) of sub-section (7);

5.3. The statutory architecture is therefore clear. Section 144B does not merely prescribe electronic communication. It prescribes the channel through which communication is to move between the different units and between the faceless centre and assessee. Section 144B(5) is particularly material. Where the Assessment Unit requires technical assistance, the communication is to pass through the National Faceless Assessment Centre. Correspondingly, clause (x) of section 144B(1) requires the National Faceless Assessment Centre to send the report received from the Technical Unit to the concerned Assessment Unit. This statutory process is important in the present case because the report in question was not merely a report exchanged privately between the ld. DVO and assessee. It was a report generated pursuant to a reference made by the Assessment Unit through the faceless assessment machinery.

5.4. Assessee's reliance upon the email dated 01.10.2022 establishes, at the highest, that assessee received a copy of the ld. DVO's report and that an email was addressed to NEAC with assessee in copy. It does not, by itself, establish that the report was received by the Assessment Unit through the prescribed statutory channel on that date. There is no material placed before us demonstrating that the report was received by the Assessment Unit/NFAC through the prescribed process on 01.10.2022. In contrast, the assessment record specifically records receipt through the Technical Unit on 06.10.2022, under a specified DIN. We therefore find no basis to substitute the date of 01.10.2022, merely because assessee happened to receive a copy of the report on that date, for the date of receipt recorded by the Assessment Unit through the prescribed faceless assessment channel.

5.5. Assessee has also placed reliance upon Notification No.22/2021 dated 31.03.2021, 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 assessment on the basis of the material available to it. This division is not merely administrative. It is the mechanism through which the exercise of different functions is coordinated.

5.6. To accept assessee's interpretation would lead to a situation where the ld. DVO, having been approached through the faceless mechanism, could independently send the report directly to assessee and thereby fix the date of receipt for limitation purposes, even though the report had not yet been transmitted through the prescribed channel to the Assessment Unit. Such an interpretation would render the process contemplated under section 144B(5) and section 144B(1)(x) otiose. Concurrent jurisdiction, therefore, cannot be understood as simultaneous and uncoordinated exercise of the same function by different authorities. It is concurrent in the sense that the designated authorities possess the necessary statutory powers within the faceless framework; the exercise of those powers remains subject to the prescribed process flow.

5.7. In the present case, the Assessment Unit made the reference to the ld. DVO through the Technical Unit. The report is recorded as having been received by ld. Assessing Officer through the Technical Unit on 06.10.2022. The subsequent communication of ld. Assessing Officer dated 01.11.2022 also refers to the same date. In the absence of evidence showing receipt by the Assessment Unit through the prescribed channel on 01.10.2022, the latter date cannot be adopted for computing limitation.

6.1. The provision is explicit that the relevant terminal date is the date on which the report is received by the Assessing Officer. The first proviso to Explanation 1 further provides that where, immediately after exclusion of the relevant period, the period available to ld. Assessing Officer is less than sixty days, the remaining period shall be extended to sixty days. In the present case, the original limitation expired on 30.09.2022. The reference was made on 13.09.2022 and the report, as recorded in the assessment proceedings, was 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.

7.1. We find that this latter observation is factually not borne out from ld. DVO’s report reproduced in the assessment order. Ld. DVO’s report determines the value at Rs.1,68,90,000/-, whereas Rs.2,19,40,792/- is the value adopted by the Stamp Valuation Authority. This distinction is material.

8.1. The statutory scheme therefore does not contemplate a situation where, after making a reference to the Valuation Officer, ld. Assessing Officer may simply discard the valuation report and revert to the stamp valuation without regard to the valuation so determined. This becomes further clear from 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.

9.1. We find the ratio of the aforesaid decision apposite for the limited proposition that once the statutory valuation mechanism is invoked and the valuation is obtained from the Valuation Officer, ld. Assessing Officer cannot sit in appeal over the technical valuation and simply discard it in favour of the stamp valuation. In the present case, ld. Assessing Officer did precisely that. Ld. Assessing Officer had himself made a reference to ld. DVO. Ld. DVO determined the value at Rs.1,68,90,000/-. Ld. Assessing Officer thereafter raised queries with the Technical Unit and, on the basis of the responses received, rejected the ld. DVO report and reverted to the stamp duty value. In our considered view, such an approach is not in conformity with the statutory valuation mechanism.

9.2. This, however, does not conclude the matter in favour of assessee. Assessee herself has disputed the valuation determined by ld. DVO at Rs.1,68,90,000/-. Assessee 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 details, stamp duty details and other material before ld. Assessing Officer. Assessee further placed before the ld. CIT(A) an independent valuation report obtained from a Government Registered Valuer. The said valuer, after considering comparable transactions within the same building and applying an increase for the passage of time, determined the value at Rs.1,52,10,000/-.

9.4. Assessee has accordingly placed three valuation positions before us:

Particulars Value Purchase consideration Rs.1,50,00,000/- Independent Government Registered Valuer Rs.1,52,10,000/- Ld. DVO Rs.1,68,90,000/- Stamp Valuation Authority Rs.2,19,40,792/-

9.5. The divergence between these values itself demonstrates that the valuation issue requires examination on the basis of appropriate comparable instances and the peculiar characteristics of the subject property. Assessee has placed the following comparative table. We reproduce the same below:

Considerations by Considerations by Appellant’s Appellant’s submission ld. DVO independent valuer Deficiencies considered • Although Bhairav Darshan Considered by the independent forms part of the same Slum comparable sale valuer (Refer Page 241 Rehabilitation Project, it is a instances of flats in to 242 of the PB): separate building constructed for ‘Bhairav Darshan • Appellant’s building commercial sale with superior Building’ to arrive under SRA does not amenities such as lifts, parking, at the computation have a separate open spaces and firefighting of valuation. entrance, unlike systems. In contrast, the Bhairav Darshan in the Appellant’s flat is located in Deficiencies same project Krushna Castle, which considered by ld. • Parking facility not comprises rehabilitation DVO (Refer Page available tenements and lacks basic 189 of the PB): • No open space amenities such as parking and • Parking facility not around the building open space. available • Backside of the • Surrounding area building attached to • The ld. DVO compared without is middle-class hutments/chawls considering these material residential-cum- • Improper flat layout, differences and other negative commercial with resulting in wastage of factors such as inferior mixed population space in common areas surroundings and inefficient flat • Nearest railway and reduced usable layout (images enclosed as station is area Annexure I). Elphinstone Road, • Occupants are Considerations by Considerations by Appellant’s Appellant’s submission ld. DVO independent valuer around 1.7 km from lower/middle-class • In contrast, the independent the subject property segment, resulting in Government-registered valuer relatively lower has undertaken a valuation demand for higher- based on actual comparable value flats instances within the Appellant’s • Market value of flats building, noting that the rate for did not increase flats in the Appellant’s building between 2013-2019, remained largely stable between and several flats were 2013 and 2019 at approximately sold below the INR 12,496 per sq. ft. (Pages Government ready 239–242 of the PB) reckoner value • 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. DVO's comparison was with flats in Bhairav Darshan Building. Assessee's contention is that although the building forms part of the same larger SRA project, the two buildings are materially different in their physical characteristics, amenities, surroundings and nature of occupation. The independent valuer, on the other hand, is stated to have considered actual sale instances within assessee's own building. This distinction cannot be brushed aside merely by observing that both buildings are situated within the same project.

9.7. There is yet another piece of evidence which has been brought on record by assessee. Assessee has stated that the very same property was subsequently sold on 25.01.2026 for a consideration of Rs.1,86,50,000/-, whereas the stamp duty value as on that date was stated to be Rs.1,72,30,488/-. We are conscious that the subsequent transaction has taken place nearly seven years after the original purchase and, therefore, the subsequent sale price cannot, by itself, be treated as determinative of the fair market value as on 09.04.2019. At the same time, this subsequent transaction cannot be ignored altogether. It is a transaction concerning the very same property and it demonstrates that, at a later point of time, the actual consideration exceeded the stamp duty value. This lends corroborative support to assessee's contention that the stamp duty value adopted at the time of the original purchase may not necessarily have represented the actual fair market value of the subject property after taking into account its peculiar characteristics. The subsequent sale is therefore a relevant piece of corroborative evidence which ought to be considered by the valuation authority while undertaking the exercise afresh.

10.1. Second, assessee has herself placed before the appellate authorities an independent valuation report determining the value at Rs.1,52,10,000/- and has pointed out specific defects and discrepancies in the ld. DVO's valuation methodology and comparable instances. Thus, while ld. Assessing Officer's rejection of the ld. DVO report cannot be sustained, it would equally not be appropriate for us to mechanically adopt the ld. DVO's figure of Rs.1,68,90,000/- without examining the objections raised by assessee against that very valuation.

(a) the Government-approved valuer’s report filed by the assessee;

(b) the specific objections and adverse factors raised by the assessee to the valuation adopted by the Stamp Valuation Authority as well as to the DVO’s earlier report dated 28.09.2022, including the comparability of the sale instances relied upon; and

(c) the evidence relating to the subsequent sale of the very same property, if furnished by the assessee.

11.1. Ld. Assessing Officer shall thereafter complete the assessment afresh, in accordance with law, on the basis of the valuation so determined, after affording adequate opportunity of being heard to the assessee. Needless to add, we have not expressed any final opinion on the correctness or otherwise of the value ultimately to be determined, and all contentions of both the parties on merits are kept open. Grounds 2 to 5 raised by the assessee are, accordingly, allowed for statistical purposes.

Order is pronounced in the open court on 10 September, 2026

Sd/- Sd/- Pawan Singh Girish Agrawal Judicial Member Accountant Member Dated: 10 September, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai