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Facts
The assessee purchased a property, and the Assessing Officer (AO) made an addition of INR 37,43,000 under Section 56(2)(x) by comparing the stamp duty value (INR 1,17,43,000) with the declared purchase consideration (INR 87,34,700). The assessee disputed this and sought a reference to a District Valuation Officer (DVO), but the AO completed the assessment while the DVO report was pending. The CIT(A) subsequently confirmed the addition, also without considering the DVO report.
Held
The Income Tax Appellate Tribunal (ITAT) noted that the DVO report had been received after the CIT(A)'s order. Since the lower authorities had not considered this crucial report, the ITAT set aside the assessment order and remanded the case back to the AO. The AO was directed to pass a fresh assessment order after taking the DVO report into consideration and providing the assessee a reasonable opportunity to be heard.
Key Issues
Whether an addition under Section 56(2)(x) is valid when a DVO report, referred at the assessee's request for valuation, is pending and not considered by the lower authorities.
Sections Cited
250, 143(3), 144B, 56(2)(x), 234A, 234B, 234C, 50C, 155(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K (SMC
order : 31.07.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 23/05/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 29/09/2022, passed under Section 143(3) read with Section 144B of the Act for the Assessment Year 2020-2021.
2. The Assessee has raised following grounds of appeal :
“1. The Commissioner of Income Tax Appeal, National erred in Faceless Appeal Centre ["CIT(A) NFAC"] confirming order passed U/s. 143(3) r.w.s. 144B of the Income Tax Act 1961, Assessment Year 2020-2021 therefore order passed is illegal, invalid and bad in law; 2. The learned CIT(A) NFAC erred in confirming the addition made by assessing officer at Rs. 37,43,000/-, therefore order passed is unjustified, unwarranted and excessive; 3. The CIT(A) NFAC failed to consider the valuation report submitted by assessee during course of assessment proceedings, therefore the order passed U/s. 143(3) r.w.s. 144B is illegal, invalid and bad in law; 4. The CIT(A) NFAC ought to have accepted the sale consideration amount paid by the assessee at Rs.80,00,000/- & stamp duty and registration charges Rs. 7,35,280/- as the seller in urgent need of money and not considering various other facts; therefore addition confirmed U/s. 56(2)(x) made at Rs.37,43,000/- is unjustified, unwarranted and excessive; 5. The Ld. CITA(A) NFAC failed to consider that assessment order passed when matter was referred to District Valuation Officer and report is awaited till date and without DVO report making addition of Rs. 37,43,000/-is illegal, invalid and bad in law; 6. On the facts and circumstances the learned CIT(A) NFAC erred in not considering the difference in fair market value and sale consideration being nominal. therefore addition confirmed U/s. 56(2)(x) made at Rs. 37,43,000/-is unjustified, unwarranted and excessive; 7. On the facts and circumstances the learned CIT(A) NFAC ought to have considered that total value of the property alongwith stamp duty and registration charges paid by the assessee were Rs.87,35,280/- only and making further addition at Rs. 37,43,000/- u/s 56(2)(x) is unjustified, unwarranted and excessive; 8. The assessee is denied the liability of interest charges U/s. 234A, 234B and 234C of the Income Tax Act, the same may kindly be deleted”.
The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2000-2021 on 27/01/2021 which was later revised on 20/02/2021. The case of Assessee was selected under Faceless E-Assessment Scheme, 2020 to examine the 2 Assessment Year 2020-2021 purchase value of the property along with income disclose under Section 56(2)(x) of the Act. The Assessing Officer was of the view that the property purchased by the Assessee had stamp duty value of INR.1,17,43,000/- whereas the Assessee had paid purchase consideration of INR.87,34,700/-. Therefore, according to the Assessing Officer, the difference of INR.37,43,000/- was liable to tax in the hands of Assessee as income from other sources under Section 56(2)(x) of the Act. However, the Assessee disputed adoption of the aforesaid stamp duty value and therefore, reference was made to District Valuation Officer (in short „DVO‟). Since the report of the DVO was pending, Assessing Officer completed the assessment by making an addition of INR.37,43,000/- under Section 56(2)(x) of the Act.
6. After discussion with the Assessee and verification of documents filed, it is found that the Assessee failed to submit any cogent evidence of his submission that the sale consideration i.e. INR.80,00,000/- of a shop was the actual cost in place of stamp value of INR.1,17,43,000/-. For want of any documentary evidence, „distress sale‟ by owner of the alleged shop due to its condition and surroundings has been found a concocted story only. Therefore, difference of stamp value and sale consideration i.e. INR.37,43,000/- (INR.1,17,43,000/- - INR.80,00,000/-) is hereby added under Section 56(2)(x) of the Act to the income of the Assessee. The matter has been referred for valuation which report is awaited; Assessment Order is being passed on the basis of documents filed by the Assessee. This order is subject to rectification/revision under the provisions of Income-tax after receipt of valuation report. The steps for recovery of demand may not be taken till the receipt of report of valuation from valuation officer of department.
Being agreed to Assessee preferred appeal before CIT(A). Since the report of DVO was not received, the CIT(A) confirm the addition made by the Assessing Officer holding as under:
“7. Decision 3 Assessment Year 2020-2021 I have gone through the facts of the case, the assessment order and the submission of the appellant. It is seen that the appellant disputed the stamp duty value of the property at the assessment stage and on his request, the matter has been referred for valuation to the Valuation Officer. The AO has, after referring the case to the Valuation Officer, completed the assessment in terms of section 56(2)(x) of the Act. It has been stated in the third proviso to section 56(2)(x) as follows: "Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as property for the purpose of this sub-clause as they apply for valuation of capital asset under those section:" Therefore, the assessment order appealed against will be subject to amendment u/s 155(15) of the Act, once a report from the Valuation Officer is obtained. If the value ascertained by the Valuation Officer exceeds the value adopted by the stamp valuation authority, this assessment order will prevail; otherwise if the assessed value is less than the value adopted by the stamp valuation authority, then such value will be considered as the full value of consideration of purchase of the shop. Till the time, the report is obtained from the Valuation Officer, there is no reason that the assessment order under question should be considered as invalid or illegal or bad in law. I, therefore, confirm the assessment order, subject to necessary modification in terms of section 155(15) of the Act and dismiss the appeal of the appellant on all grounds raised
. In the result, appeal of the appellant is dismissed.”
5. Being aggrieved, the Assessee has preferred the present appeal before the Tribunal on the ground reproduced in paragraph 2 above.
When the appeal was taken up for hearing none was present on behalf of Assessee. However, we find that the Assessee had filed Paper-Book (containing 178 pages) placing various documents and details filed before the authorities below. The Learned Departmental 4 Assessment Year 2020-2021 Representative submitted that the report of DVO dated 20/10/2023 has been received. However, the Assessing Officer is yet to pass any order taking contingence of the same. We further note that the CIT(A) had disposed off the appeal vide order dated 23/05/2025, without taking into consideration the aforesaid report of the DVO. Therefore, given the facts and circumstances of the present case we are of the view that since the report of DVO has now been received, all the issues raised by Assessee in the present appeal can be taken up before the Assessing Officer while passing of the order giving effect to the report of the DVO. Accordingly, keeping in view the interest of justice and the facts of the present case, we set aside the Assessment Order, dated 29/09/2022, passed by the Assessing Officer with the directions to the Assessing Officer to pass the Assessment Order after taking into consideration the report of the DVO. Assessee would be at liberty to raise all the rights and contentions before Assessing Officer. The Assessing Officer is directed to consider all the rights and contentions so raised by the Assessee and grant to the Assessee a reasonable opportunity of being heard before passing the order. Accordingly, Ground No.1 raised by the Assessee is treated as allowed for statistical purpose. Since we have restore the issue back to the file of Assessing Officer with the aforesaid directions, Ground No.2 to 8 raised by the Assessee are dismissed as having been rendered infructuous.
In terms of above, the present appeal is treated as allowed for statistical purposes.