SAFAHAD YAR MOHAMMED SHAIKH,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

This appeal by the assessee is directed against the order dated 10.03.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘Ld. CIT(A)’], for the Assessment Year 2017-18, arising out of the assessment order dated 29.12.2023 passed under section 147 read with section 144B of the Income-tax Act, 1961 (‘the Act’).

The assessee has raised the following grounds of appeal:-

Brief facts of the case are that the assessee filed his return of income on 17.11.2017 declaring total income of ₹3,48,100/-. The case was reopened on the basis of information that the assessee had acquired a one-third share in an immovable property jointly purchased on 19.11.2016 for an aggregate consideration of ₹1,40,00,000/-. The stamp duty value of the property was ₹2,13,63,500/-. At the request of the assessee, the Assessing Officer referred the property to the Departmental Valuation Officer (‘DVO’), who, vide report dated 30.11.2023, determined its fair market value as on the date of purchase at ₹1,70,44,000/-. The Assessing Officer adopted the value determined by the DVO and added ₹10,14,667/-, being one-third of the difference of ₹30,44,000/- between the DVO value and the stated consideration, as income from other sources under section 56(2)(vii)(b) of the Act. Accordingly, the total income was assessed at ₹13,62,767/-.

Before the Ld. CIT(A), the assessee contended that the property was old, damaged, distressed and affected by disputes; that municipal dues were outstanding against the property; and that the transaction was concluded shortly after demonetisation. The assessee also disputed the valuation adopted by the DVO. The Ld. CIT(A) recorded that, in response to the notices issued during the appellate proceedings, the assessee furnished only part details on 02.03.2026. Holding that the assessee had not placed adequate documentary or technical evidence to dislodge the DVO’s valuation, the Ld. CIT(A) confirmed the addition and dismissed the appeal.

Before us, the learned Authorised Representative submitted that the assessee could not furnish the complete documentary evidence during the faceless appellate proceedings. He submitted that the impugned order came to be passed for want of the relevant documents and requested that one effective opportunity be granted to the assessee to place the complete material, including the documents relating to the condition of the property, municipal attachment/dues and the objections to the DVO’s report, before the first appellate authority.

The learned Departmental Representative supported the orders of the lower authorities. He submitted that sufficient opportunities had already been granted to the assessee and that no further opportunity was called for.

We have heard the rival submissions and perused the material available on record. The addition in dispute arises from the difference between the consideration recorded in the purchase agreement and the value determined by the DVO. The assessee’s consistent case is that the physical condition of the property, the pending conveyance, municipal attachment/dues and other disputes materially depressed its fair market value. These are factual aspects which necessarily require examination with reference to the underlying documents and the assessee’s specific objections to the valuation report.

The Ld. CIT(A) has recorded in paragraph 6 of the impugned order that the assessee furnished only part details on 02.03.2026. The appeal was thereafter decided against the assessee principally for want of substantive evidence such as valuation material, litigation documents and evidence concerning the condition of the property. Thus, the material which the assessee now seeks to rely upon has not been examined by the first appellate authority. In our considered view, the valuation dispute should be decided after the assessee is afforded one effective opportunity to place the complete supporting evidence on record. At the same time, the assessee, having failed to furnish the complete details despite the opportunities granted, cannot claim repeated opportunities as a matter of right.

In these circumstances, and in the interest of substantial justice, we set aside the impugned order and restore all the grounds of appeal to the file of the Ld. CIT(A) for adjudication afresh in accordance with law. The Ld. CIT(A) shall consider the assessee’s objections to the DVO’s valuation and all supporting evidence, and shall pass a reasoned and speaking order after granting adequate opportunity of hearing to the assessee. We have not expressed any opinion on the merits of the addition.

The assessee is directed to file the complete paper book and written submissions before the Ld. CIT(A) within the time allowed and 4 to promptly comply with every notice. In the event of failure without sufficient cause, the Ld. CIT(A) shall be at liberty to decide the appeal on the basis of the material available on record, in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.