SURESH INDERMAL JAIN,MUMBAI vs. ITO - 8(3)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J (SMC)” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 2742/MUM/2026 Assessment Year: 2019-20

Suresh Indermal Jain, National Faceless Appeal Centre 507, 5th floor, Aurum Mall, 18- / ITO – 8(3)(1), 616, 6th Floor, 22, Sheikh Memon Street, Vs. Aayakar Bhavan, Maharishi Kalbadevi H.O., Mumbai – Karve Road, Mumbai-400020, 400002, Maharashtra. Maharashtra. PAN NO. ADEPJ 9238 Q Appellant Respondent

: Shri Suchek Anchaliya, C.A. Assessee by : Shri Mukesh Thakwani (SR DR) Revenue by

: 18/06/2026 Date of Hearing : 24/06/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

This appeal by the Assessee is directed against the order dated 25.02.2026, passed by the learned Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi (in short, “the Ld. CIT(A)”), for Assessment Year 2019-20, raising following grounds:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), vide order dated 25.02.2026 erred in confirming the order of the Learned Assessing Officer ('Ld. AO'), by not considering the fact that the assumption of

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jurisdiction by the Ld. AO is bad in law as the conditions laid down under the Act for initiating reassessment proceeding u/s 147 of the Act have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), vide order dated 25.02.2026 erred in confirming the addition of Rs. 19,82,818/- u/s 56(2)(x) of the Act, made by the Ld. AO, without appreciating the fact that the valuation report of the District Valuation Officer, dated 20.11.2025, obtained u/s 55A of the Act, had accepted the valuation adopted by the appellant. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), vide order dated 25.02.2026 erred in not considering the valuation report submitted by the Departmental Valuation Officer, which was obtained pursuant to reference made by the Ld. AO u/s 55A of the Act and which determined the fair market value of the disputed property and thereby violating the principles of natural justice. 4. The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another.” 2. Briefly stated facts of the case are the assessee, an individual, is engaged in the business of wholesale trading of gold jewellery under the trade name M/s My Goldee and is also a Director in M/s V-Dia Jewels Pvt. Ltd. For the year under consideration, he filed his return of income on 19.10.2019 declaring a total income of ₹23,70,420/-. The return was processed under Section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) vide intimation dated 18.02.2020, accepting the returned income.

2.1 Subsequently, information was flagged on the Insight Portal under the Risk Management Strategy (CRIU-VRU), indicating that during the relevant previous year the assessee had purchased an immovable property for a consideration lower than its stamp duty valuation, thereby giving rise to a potential applicability of the provisions of Section 56(2)(x) of the Act. On the basis of the said

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information, proceedings under Section 148A of the Act were initiated. A notice under Section 148A(b) was issued on 14.03.2023, to which the assessee furnished a detailed reply along with copies of the sale deed and other supporting documents. Thereafter, an order under Section 148A(d) was passed on 05.04.2023, followed by issuance of notice under Section 148 of the Act. 2.2 During the re-assessment proceeding the assessee submitted that assessee had acquired 1/3rd undivided share in a tenanted land and building situated at 37, 3rd Panjrapole Lane, 60/62 Kika Street, Mumbai - 400004 from one Shri Sanjay Shantilal Jain. The said 1/3rd share of the property was acquired in the joint ownership with Mr. Kirti Kumar Sharma with each holding an equal 50: 50 shares in the acquired interest. It was submitted that the stamp duty value of the said one-third undivided share was determined at ₹1,10,93,636/-, whereas the aggregate consideration paid for the acquisition was ₹72,00,000/-. Out of the said consideration, ₹36,00,000/- was contributed by the assessee and the remaining ₹36,00,000/- by the co-purchaser. The Assessing Officer, however, treated the difference of ₹39,65,636/- between the stamp duty value and the declared consideration as income chargeable under Section 56(2)(x) of the Act and apportioned the same equally between the two co-purchasers. Consequently, a sum of ₹19,82,818/- was added to the income of the assessee under

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Section 56(2)(x) of the Act. It is pertinent to note that, during the course of assessment proceedings, the assessee had specifically requested for a reference to the Departmental Valuation Officer (DVO) for determination of the fair market value of the property. Acting upon such request, the Assessing Officer made a reference to the DVO. However, as the valuation report was not received before the limitation period for completion of assessment expired on 31.03.2025, the Assessing Officer proceeded to complete the reassessment by adopting the stamp duty value, while specifically recording that necessary rectification would be carried out upon receipt of the DVO’s report. 2.3 Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A). During the pendency of the appellate proceedings, the valuation report was received from the Departmental Valuation Officer. Nevertheless, the same was not taken into consideration by the Ld. CIT(A), who proceeded on the premise that no DVO valuation was available on record and consequently upheld the addition made by the Assessing Officer. The relevant finding recorded by the Ld. CIT(A) reads as under: “29. At the appellate stage, in the absence of any DVO valuation or other cogent evidence showing that the fair market value falls within the statutory tolerance band, there is no justification for interfering with the Assessing Officer’s reliance on stamp duty value and the resultant addition under Section 56(2)(x).” 3. We have heard the rival submissions and carefully perused the material available on record. At the time of hearing, the learned

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counsel for the assessee placed before us a copy of the valuation report furnished by the Departmental Valuation Officer, which was received in November, 2025. It was submitted that immediately upon receipt of the report, the same was forwarded to the Assessing Officer with a request for rectification of the assessment order. However, despite the lapse of considerable time, no consequential action has been taken by the Assessing Officer. 3.1 A perusal of the DVO’s report reveals that the fair market value of the property in question has been determined at ₹72,00,000/-, which is exactly the same as the consideration disclosed in the registered sale deed. Thus, the very foundation on which the addition under Section 56(2)(x) was made, namely the difference between the stamp duty value and the fair market value of the property, stands completely negated by the expert valuation obtained by the Revenue itself.

3.2 Once the competent Valuation Officer, acting pursuant to a statutory reference, has determined the fair market value at the same figure as disclosed by the assessee, there remains no basis whatsoever for sustaining any addition under Section 56(2)(x) of the Act. The report of the DVO constitutes a material piece of evidence having direct bearing on the controversy and ought to have been duly considered by the appellate authority. The failure of the Ld. CIT(A) to take note of the valuation report, despite its availability

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during the appellate proceedings, has resulted in a manifest error in the impugned order.

3.3 It is a settled principle of law that an addition cannot survive when the very factual premise upon which it is founded ceases to exist. In the present case, the DVO’s report conclusively establishes that the consideration disclosed by the assessee represents the fair market value of the property. Consequently, no income can be brought to tax under Section 56(2)(x) of the Act.

3.3 In view of the foregoing discussion, we are of the considered opinion that the addition made under Section 56(2)(x) cannot be sustained in light of the valuation report furnished by the Departmental Valuation Officer. Accordingly, the orders of the authorities below are set aside.

3.4 Since the Assessing Officer had himself recorded in the reassessment order that necessary rectification would be undertaken upon receipt of the DVO’s report, we deem it appropriate to restore the matter to his file with a direction to give full effect to the valuation report and delete the addition, if the consequential rectification has not already been carried out.The grounds raised by the assessee are accordingly allowed.

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Order pronounced in the open Court on 24/06/2026.

Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/06/2026 Kunal Kr, P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER,

//True Copy// (Assistant Registrar) ITAT, Mumbai