JAI HIND CO OPERATIVE HOUSING SOCIETY LIMITED,VILE PARLE (W), JUHU, MUMBAI vs. ACIT, CIRCLE 32(1), BANDRA EAST, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.1180/Mum/2025 (Assessment year: 2004-05)

Jai Hind Co Operative Housing vs ACIT, Circle 32(1), Mumbai Society Ltd. Kautilya Bhavan, Bandra Kurla Plot No.51, N S Road No.11, Complex, Bandra East, Mumbai- JVPD Scheme, Vile Parle (W), 400051 Juhu, Mumbai-400049 PAN:AAAAJ2782R APPELLANT RESPONDENT Assessee by : Shri Vijay Mehta Respondent by : Shri Aditya Rai (Sr.DR) Date of hearing : 10/04/2026 Date of pronouncement : 20/04/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2004-05, date of order 22.09.2023. The impugned order emanated from the order of the Ld. Income Tax Officer Circle 25(2) (4), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 263 of the Act date of order 18.03.2015.

2 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. 2. The brief facts of the case are that the assessee filed the return and declaring total income nil. The assessment u/sec. 143(3) r.w.s. 147 was completed by determining total income Rs.5,93,420/-. Subsequently, it has been noticed while computing the long term capital gain the sale consideration had been taken Rs.74,17,895/- by the assessee as against the market value of the property as per provision section 50C of the Act amount to Rs. 11,88,43,200/-. Therefore, the assessment was treated as erroneous and prejudicial to the interest of revenue. By invoking provision 263 of the Act, the Ld. Principal Commissioner of Income tax had set aside the assessment order. During the proceeding of OGE the Ld. AO found that out of 14 Cooperative Societies including that of assessee owned a common properties under the lease deed executed in their favor of Bombay Housing Board to the lease for the period of 999 years. The original deed of convenience executed by Bombay Housing Board with the 14 Cooperative Societies in the year 1960. Subsequently, there was a MOU entered into between the 14 Cooperative Societies including the assessee on 26.01.2000 under the JVPD Scheme & was given possession to Juhu Vile Parle Development Housing Association Ltd to manage and maintain the common land belongs to of 14 societies as settled the terms of disposal thereby grant to lease, sale etc. On 26.01.2000 the 14 Society Members of JVPD Association entered an MOU with Vasundhara Cooperative Housing Society Ltd. which belongs to Maharashtra Cadre of Indian Police Service. The transfer deed executed on 14.05.2003. The assessee being 8% shareholder in this case receipt consideration of Rs.5,93,420/- for transfer of land. On verification of record Ld. AO found that the stamp duty valuation is amount to Rs.11,88,43,200/- as determined by the stamp duty authorities. So, the assessee’s share comes to Rs. 95,07,456/-. As per provisions

3 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. u/sec. 50C the values should have been considered as sale value. So the amount taxable as capital gain in this transaction of the assessee was duly determined Rs.95,07,456/-. As against the amount of Rs.5,93,420 as determined by the Ld. AO accordingly, the Ld. AO passed an OGE, and calculated the capital gain tax amount to Rs.84,53,260/- by considering the market value as per section 50C amount of Rs.94,83,687/- (as 8% share). The assessee submitted the prayer for considering the valuation through DVO, the Ld. AO accordingly issued the notice for obtaining valuation report from the DVO. But before completion of the assessment no such valuation report was obtained by the assessee. Accordingly, Ld. AO completed the assessment without obtaining the valuation report from DVO. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the impugned assessment order. Being aggrieved asseseee filed an appeal before us. 3. The Ld. AR argued filed a paper book containing pages 1 to 132 which has been placed on record. Respectfully relying on the order of the Hon’ble Supreme Court in case of National Thermal Power Corporation reported in 229 ITR 383 (SC) the Ld. AR filed the additional ground which is reproduced as below: “Please refer to the above matter. The above appeal is arising out of Assessment Order passed by the Assessing Officer u/s. 143(3) r.w.s.263 of the Act. In the said order, the Assessing Officer has made the addition u/s. 50C of the Act. However, the Departmental Valuation Officer, to whom a reference was made by the Assessing Officer, has not forwarded any report to the Assessing Officer. Since, the Assessing Officer passed the order pending the receipt of Valuation Report from DVO, the Assessment Order is invalid and bad in law. By oversight, the above ground remained to be raised in the Original Appeal Memo. The same is now being raised by way of enclosed Additional Ground of Appeal. It is submitted that the Additional Ground raises pure question of law and no new facts are required to be brought on record.”

4 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. 4. The Ld. AR advanced his argument relying on the additional ground and invited our attention to the observations of the Ld. AO in the impugned assessment order contended in the relevant paragraph which is reproduced as below: “Accordingly, the property has been referred to the D.V.O. for valuation of property. On perusal of the valuation report furnished by the assessee as on 01.04.1981, the same appears to be very high. Hence, the undersigned has referred the D.V.O. for valuation of the property as on 01.04.1981 also; vide this office letter dated 16.09.2014. The DVO vide his letter dated 29.10.2014, has given notice to the assessee, copy of which is endorsed to the erstwhile ITO 21(1) (2), Mumbai. Since the assessment is getting barred by limitation as on 31.03.2015, the DVO has been requested to expedite the valuation at the earliest vide this office letters dated 26.12.2014 and 09.02.2015. However, no valuation report has been received from the DVO till date. In the absence of valuation report, the undersigned is left with no other alternative but to complete the assessment subject to rectification by adopting the market value as the sale consideration. The assessment will be rectified on receipt of valuation report from the DVO by adopting the valuation of the DVO as on 01.04.1981 and market value for the year of sale.”

5 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. proceeding any further with, or making any valuation under or punishment to, the impugned reference. There will be, however, no order as to costs.”

6 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. part of the "record" of the assessment. The law is well settled that rectification under section 154 can be exercised only to correct an error apparent from the record and not to bring in or rely upon a subsequent event or fresh material. ……….xxxxxxx…………. 22. Accordingly, the so-called rectification order dated 20.11.2024, passed after receipt of the DVO's report, cannot be sustained in law. The report of the Valuation Officer came into existence only after the completion of assessment and, therefore, did not form part of the "record" of the assessment proceedings. The Assessing Officer couldnot invoke section 154 to re- compute capital gains on the strength of such subsequent material. The authority of law under section 154 extends only to correction of mistakes apparent from the record, not to a situation where a fresh valuation or new evidence is brought in after completion of the assessment. Further, the very act of the Assessing Officer recording in the assessment order that it was "subject to rectification on receipt of valuation report from the Valuation Officer" shows that the order was incomplete and contingent upon a future event. The Income-tax Act does not recognize or authorize any such provisional assessment under section 143(3). Once the Assessing Officer had chosen to refer the matter to the DVO under section 50C(2), he was bound by statute to await the report-especially since Explanation 1(iii) to section 153 expressly excludes such period from limitation. By proceeding to finalize the assessment without the DVO's report and by leaving it open for rectification later, the Assessing Officer acted contrary to the legislative scheme and beyond the scope of his jurisdiction. Hence, the subsequent rectification purportedly made under section 154 is not a mere correction of an error apparent on record but a substantive re-determination of income on the basis of fresh material. Such an action amounts to review or reassessment, which is impermissible under section 154.

i. The assessment order dated 22.09.2021 passed under section 143(3) read with section 144B without awaiting the DVO's report, when such report was statutorily awaited, is not sustainable.

7 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. ii. The subsequent rectification order dated 20.11.2024 under section 154 is also not sustainable, as it seeks to alter the assessment based on material not forming part of the original record and cannot be regarded as a "mistake apparent from record." iii. The assessee's statutory right under section 50C(2) stood violated, and the assessment is consequently vitiated for breach of mandatory procedure and principles of natural justice. iv. The CIT(A) erred in law and on facts in upholding both the assessment and rectification orders and in confirming disallowances without proper opportunity.”

8 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd.

9 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. documents were placed on record, which is contrary to the submissions made by the assessee regarding non-service of the appellate order.

10 ITA No.1180/Mum/2025 Jai Hind Co Operative Housing Society Ltd. and respectfully following the judicial precedents, we hold that the assessment order passed without awaiting the DVO’s report, despite a valid reference made under section 50C(2), is vitiated in law and liable to be quashed. Accordingly, the additional ground raised by the assessee is allowed.