SUSHEELA DEVI,GORAKHPUR vs. INCOME TAX OFFICER, WARD -1(2), GORAKHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.17/VNS/2022 Assessment Year: 2011-12 Susheela Devi v. The Income Tax Officer – 1(2) Gurkmanpur Normal Road Gorakhpur New Colony TU Gorakhpur (U.P) TAN/PAN:AGMPD9840M (Applicant) (Respondent) Applicant by: Shri Abhinav Mehrotra, Advocate Respondent by: Smt. Amandeep Kaur, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 26.08.2021, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2011-12.

2.0 The brief facts of the case are that the Income Tax Department was in possession of information that the assessee had sold immovable property for a consideration of Rs.20.00 lakhs during the year under consideration. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called 'the Act’) after issuing notice under section 148 of the Act to the assessee. Subsequently, the Assessing Officer (AO) issued notice under section 142(1) of the Act along with questionnaire, requiring the assessee to furnish the details of property sold by the assessee. In response, the

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assessee submitted written reply and also produced the copy of return of income filed by the assessee on 13.12.2018 declaring a total income of Rs.13,434/-. After considering the written submissions and the Sale Deed of the property filed by the assessee, the AO noticed that the assessee had sold a land for a consideration of Rs.20.00 lakhs and the market value of the same was Rs.34,02,000/-. The AO, based on the market value of the property under consideration at Rs.34,02,000/-, worked out the Capital Gain of the property as under:

Sl. Particular Amount (Rs.) No. 1. Sale consideration 20,00,000/- 2. Stamp Value Rs.34,02,000/- 34,02,000/- 3. Total area of land= 204.46 sqr mtr. Sqr. Ft. area= 2200 4. Value of land as at 1981- 2200X12X711 13,45,827/- 100 Rs.1,87,704/- Building Value as shown Rs.11,58,123/- Total value of Land= 11,58,123+1,87,704= Rs.13,45,827/- No proof of investment in house property has been filed, hence no deduction u/s 54F is given. Stamp value 5. Capital Gain arise= 34,02,000-13,45,827 20,56,173/-

2.1 The Capital Gain of Rs.20,56,173/- worked out by the AO was added to the total income of the assessee and he completed the assessment under section 147 read with section 143(3) of the Act, computing the total income of the assessee at Rs.20,69,600/-.

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2.2 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.

2.3 Now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

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the Notice U/s 148 of Income Tax Act has been issued without any proper sanction/approval u/s 151 of Income Tax Act, rendering the entire proceedings bad in law. 4. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in law in dismissing the appeal of the assessee whereas the assessment order is itself bad in law, being without jurisdiction since the alleged Notice U/s 143(2) of the Act as also the re-assessment order, is time barred and also bad in law being without territorial jurisdiction. 5. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in law in approving the action of the Assessing Officer while computing the Capital Gains earned by the assessee and which is liable to tax, besides permitting a marginal relief towards incorporation of correct cost of acquisition. The Expenses incurred by the assessee towards sale of the asset cannot be denied. It is a universally accepted proposition that certain amount of expenses are incurred. The amount claimed by the assessee is also only Rs.45,500/-. 6. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has manifestly erred in law in not quashing the order of assessment in as much as it was wholly without jurisdiction for the assessing officer to complete the assessment without making a mandatory reference before the DVO, before rejecting the claim of the assessee, concerning the Sale Consideration of the purchased asset. It is settled law that wherever, assessee has objected/deemed-objected to the adoption of the circle rate as correct value of the asset,

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reference to DVO becomes mandatory. The additional sale consideration of Rs.14,02,000/- was never received by the assessee. 7. BECAUSE, wholly without prejudice to above, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has manifestly erred in law in not allowing the assessee, the permissible statutory deduction under Section 54F of the Income Tax Act, for a sum of Rs.24,25,840/-, representing investment made by assessee in the acquisition and construction of a new residential property. The benefit is clearly available to the assessee and has been illegally denied. 8. BECAUSE, on the facts and in the circumstances of the case, the CIT (A) has passed the order without providing the assessee with a due and proper opportunity of hearing and therefore the impugned order deserves to be set-aside being bad in law. 9. The humble assessee, craves for leave to add/amend any other ground with the prior permission of the Hon'ble Tribunal.

3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 220 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated Nil, for condonation of delay, stating therein that the impugned order of the Ld. First Appellate Authority was received by the assessee on 26.8.2021 and the limitation for filing the appeal was 26.10.2021. It was

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further submitted that due to the onslaught of the Covid Pandemic, from 15.3.2020, the Hon'ble Supreme Court extended the limitation for filing the appeals, etc., as per their Lordships’ order in Suo Moto case No.3 of 2020 and the Hon'ble Supreme Court had further extended the time limit vide its order dated 10.01.2022 in Misc. App. No. 21 of 2022 in Misc. App. No. 665 of 2021 in Suo Moto Writ Petition (C) No. 3 of 2020, for filing the appeal in cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022. The prayer of the Ld. A.R. was that the delay caused in filing the appeal was not deliberate, which may please be condoned and the appeal be heard on merits.

3.1 The Ld. Sr. D.R. objected to the delay being condoned.

3.2 In view of the prayer made by the Ld. A.R., we condone the delay in filing of the appeal and admit the appeal for hearing.

4.0 The Ld. A.R. submitted that, in this case, a perusal of the assessment order would show that the AO has made addition by observing that the assessee had sold a piece of land for Rs.20.00 lakhs, but its market value was Rs.34,02,000/- and had, thereafter, proceeded to make a proportionate disallowance after rejecting assessee’s claim for deduction under section 54F of the Act without referring the matter of difference in value to the Departmental Valuation Officer (DVO) and, thus, such

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addition and disallowance was against the settled principle of law as the AO did not call for any explanation from the assessee nor issued any show cause notice asking the assessee as to why the Stamp Duty Value may not be taken as the sale consideration in terms of section 50C of the Act. My attention was drawn to the provisions of section 50C of the Act and it was argued that the AO was bound to refer the matter to the Valuation Cell if the Stamp Duty Value exceeds the sale consideration. It was submitted that, however, no such reference was made. It was further submitted that the assessee had also made a claim of deduction under section 54 of the Act which was not allowed and subsequently the Ld. First Appellate Authority had also rejected assessee’s claim on the ground that the assessee had not filed the return of income under the provisions of section 139(1) of the Act and further in absence of sufficient evidence for claim, the claim was to be disallowed. Similarly, it was submitted that the lower authorities have also erred in disallowing the transfer expenses claimed of Rs.45,5000/- on the ground that such expenses were not substantiated by evidences.

5.0 Per contra, the Ld. Sr. D.R. placed reliance on the orders of both the authorities below and submitted that the lower authorities had rightly disallowed assessee’s claim inasmuch as the requisite evidences were not brought on record earlier and

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further there is no requirement for making any reference to the DVO if the same has not been specifically raised before the AO. It was submitted that the appeal of the assessee deserved to be dismissed.

6.0 I have heard the rival submissions and have also perused the material on record. The subject question before me is whether the AO was statutorily bound to refer the matter to the DVO in case the stamp duty value of the impugned transaction was higher than the value as reflected in the Sale Deed. The provisions of section 50C sub-section (2) of the Act provides that where the assessee claims before any AO that the value adopted or assessed (or assessable) by the Stamp Valuation Authority under sub-section (1) exceeds the Fair Market Value of the property as on the date of transfer, the AO may refer the valuation of capital asset to the Valuation Officer. Further, even if the assessee does not make any express claim for reference to the DVO and the AO is proceeding to tax the Capital Gain based on the Stamp Duty Value, which is higher than the sale consideration, in my considered opinion, the AO would be required to at least require the assessee to explain the reason for difference and also explain as to why the Stamp duty Valuation may not be taken as the actual sale consideration. However, the AO failed to give an opportunity to the assessee in this regard

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and, therefore, I deem it fit to direct the AO to refer the matter to the DVO and adjudicate the issue afresh after giving proper opportunity to the assessee. The order of the Ld. First Appellate Authority is set aside.

7.0 The appeal of the assessee stands allowed for statistical purposes.

Order pronounced in the open Court on 15/05/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:15/05/2026 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar/DDO