RIYAZ YACOOB MERCHANT,MUMBAI vs. ITO WARD-20(3)(1), MUMBAI

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ITA 5542/MUM/2025Status: DisposedITAT Mumbai20 May 2026AY 2009-105 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and held that the Assessing Officer erred by not referring the matter to the DVO as required under Section 50C(2) before making the addition. The appeal was allowed for statistical purposes with directions to the AO.

What were the facts?

The assessee's case was reopened for AY 2009-10, and an addition of Rs. 13,53,250/- was made under Section 50C due to the difference between the agreement value and stamp duty valuation of a flat. The Assessing Officer did not refer the matter to the Departmental Valuation Officer (DVO) before making the addition.

What were the issues?

Whether the reassessment was validly initiated and whether the addition under Section 50C was justified without a reference to the DVO for valuation.

Which sections of the Income-tax Act were involved?

Section 143,Section 147,Section 50C

AI-generated summary — verify with the full judgment below

PER PAWAN SINGH, JUDICIAL MEMBER:

1.

This appeal by assessee is directed against the order of ld. CIT(A)/NFAC dated

24.03.2025for Assessment Year (AY) 2009-10. The assessee has raised following

grounds of appeal:

“1. The CIT(A) erred in confirming reassessment order of the Appellant u/s. 143 r.w.s 147 of I.T. Act, 1961 as there is full disclosure of material facts and income has not escaped assessment due to failure on part of appellant to disclose full and true facts. The case falls under proviso to section 147 of I.T. Act., and therefore the Assessment Order is barred by limitation.

2.

The CIT (A) erred in confirming addition of Rs. 13,53,250/- u/s. 50 C of I.T. Act, 1961, by reopening of Assessment of Appellant by Assessing Officer in Reassessment proceedings. Alternatively, even if section 50C is applicable in this case, as per amendment in the Finance Act regarding 50C provisions, difference in Capital Gains declared by Assessee and amount taken by Assessing Officer is less then 10% or 5% of the Stamp duty valuation as treated by the Assessing Officer. Therefore, addition is required to be quashed by your Honour.

RiyazYacoob Merchant (AY: 2009-10) ITA No. 5542/Mum/2025

3.

The CIT (A) has passed an ex parte order without deciding the case on merits and confirmed the addition on basis of Assessing Officer's view. The ex-parte order was passed due to change in Chartered Accountant and non-availability of proper email to present the case.

4.

The Learned Order of the CIT(A) and Assessing Officer is barred by limitation and also reassessment is only based on change of opinion.

5.

The Learned CIT(A) and Assessing Officer failed to refer the valuation Officer for proper valuation of Property at the time of Sale rather than relying solely on the basis of Stamp Duty Registration Authority at the time of reopening assessment of the Assessee u/s. 50C of I.T. Act. In the alternate submission assuming not admitting, the matter may be remanded to the CIT(A) for referring matter to the DVO for valuation and for determining fair value of Property for Section 50C of I.T. Act addition.

6.

The CIT (A) by not providing proper and sufficient opportunity has breached the Principles of Natural Justice, due to that, reassessment order requires to be quashed and set aside.

7.

The Order of S.143 r.w.s 147 passed by the CIT (A) confirming addition of income of Rs.13,53,250/- u/s. 50 C of I.T. Act., is bad in law and without jurisdiction.

8.

Your appellant craves leave to add, amend, alter or delete any of the foregoing grounds of appeal.”

2.

Rival submissions of both the parties have been heard and record perused. The

ld. Authorised Representative (AR) of the assessee fairly submits that there is a

delay of about 115 days in filing appeal before Tribunal. Though the registry of

the Tribunal has pointed out that delay of 96 days in filing appeal. The assessee

has filed application for condonation of delay. The delay is neither intentional nor

deliberate. The assessee engaged a consultant for taking care of appellate

proceeding. However, he has neither intimated nor made any compliance before

ld. CIT(A). The order of ld. CIT(A) was not communicated to assessee on

RiyazYacoob Merchant (AY: 2009-10) ITA No. 5542/Mum/2025 physical form. The assessee engaged another consultant for filing appeal before

Tribunal. The assessee in fact interested in pursuing his case on merit. The delay

may be condoned and the assessee may be allowed to contest the case on merit.

3.

On merit, the ld. AR of the assessee submits that assessee is proprietor of S.R.

Impex engaged in business of all kinds of handmade footwear on wholesale and

retail basis. The assessee filed his return of income for A.Y. 2009-10 on

31.03.2011 declaring income of Rs. 1,63,550/-. The assessment was completed

under section 143(3) on 16.12.2011 assessing the same income as returned by

the assessee. The case of assessee was reopened on 21.04.2015. During

reassessment proceeding, the assessee furnished certain reply. The Assessing

Officer (AO) while passing the assessment order made addition under section

50C due to difference in the sale consideration of a flat purchased by assessee

along with his wife. The agreement value of flat was Rs. 70,22,500/-, however

stamp valuation authority valued the flat at Rs. 97,29,000/-. The AO made

addition on account of difference vis-à-vis, the sale value and the value

determined by stamp valuation authority. The assessee was having 50% share in

the flat accordingly addition of Rs. 13,53,250/- was made. The AO has not

referred the matter to Departmental Valuation Officer (DVO) as per this statutory

provision of section 50C. The ld. AR of the assessee submits that matter may be

restored back to the file of Jurisdictional Assessing Officer (JAO) with the

direction to make reference to DVO and with further liberty to assessee to

contest the fair market value of asset / flat before DVO.

RiyazYacoob Merchant (AY: 2009-10) ITA No. 5542/Mum/2025 4. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for

the revenue on the plea of condonation of delay submits that assessee has not

explained the delay. In case, the benches of the view that assessee deserves any

leniency, the matter may be restored to ld. CIT(A) as the order of ld. CIT(A) is

ex-parte. The assessee has not contested the proceeding before ld. CIT(A).

5.

We have considered the rival submissions of both the partiesand have gone

through the orders of lower authorities carefully. Firstly, we are considering the

plea of condonation of delay in filing appeal before Tribunal. Before us, the ld. AR

of the assessee vehemently urged that assessee is really interested in pursuing

his case on merit. There was no intentional or deliberate delay and that delay in

filing appeal was due to change of consultant. Considering the fact that assessee

is interested in pursuing his case on merit. Therefore, delay in filing appeal is

condoned. Now adverting to merits of the case.

6.

We find that while passing assessment order under section 143(3) r.w.s. 147 on

21.11.2016, the AO made addition under section 50C. The said addition was

made on account of difference vis-à-vis the sale consideration declared by

assessee and the value of flat determined by stamp valuation authority. We find

that before passing the assessment order, no reference under section 50C(2) was

made to DVO for ascertaining share market value of flat. The ld. CIT(A)

confirmed the action of assessing officer in its party proceeding for the want of

compliance before assessee. Considering the fact that no reference under section

50C(2) was made by assessing officer for estimation of fair market value of asset

RiyazYacoob Merchant (AY: 2009-10) ITA No. 5542/Mum/2025 on the date of purchase. Hence, the matter is restored back to the file of

Jurisdictional Assessing Officer (JAO) with the direction to make reference to

DVO. Similar view was taken by co-ordinate bench of Tribunal in Dinesh Ramesh

Matta ITA No. 5084/Mum/2025 relied by ld. AR of the assessee. In the result,

ground No. 2 & 5 of appeal of assessee is allowed for statistical purpose.

7.

No submissions on other or on legal ground of appeal were made, hence, such

grounds of appeal are treated as not pressed and dismissed as such.

8.

In the result, the appeal of the assessee is partly allowed.

Order was pronounced in the open Court on 20/05/2026.

/- S/- /- Sd/- Sd/- MAKARAND VASANT MAHADEOKAR PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 20/05/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file.

By Order

Assistant Registrar / DDO ITAT, Mumbai

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