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Bio-Care Technologies v. Income Tax Officer – 32(1)(1) Kautilya Bhavan H/301, Suryodaya Apartments Bandra Kurla Complex RawalPada, Dahisar (East) Mumbai – 400051 Mumbai – 400068 Maharashtra PAN. AAKFB9915D (APPELLANT) (RESPONDENT) Assessee Represented by : Shri Paras Savla Department Represented by : Ms. PradnyaGholap, Sr.DR Date of Conclusion of hearing : 17.04.2025 Date of Pronouncement of Order : 30.04.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;
The appeal by the assessee is directed against order of National Faceless Appeal Centre (NFAC) / CIT(A) dated 16.10.2024 for the A.Y. 2018-19. The assessee has raised the following grounds of appeal: -
1. GENERAL On the facts and circumstances of the case and in law, the National Faceless Appeal Centre / Commissioner of income Tax (Appeals) (NFAC/ CIT(A)] has erred in dismissing the appeal and confirming the additions made by the Assessing officer.
2. Reassessment proceedings bad in law a) On the facts and circumstances of the case and in law, the Ld. AO and further Ld.NFAC / CIT(A) erred in reopening the assessment; the reassessment proceedings are bad in law and liable to be quashed. b) Without prejudice to above, the notice u/s 148A(b), the order u/s 148A(d), and the reopening notice u/s 148 has been issued by the Jurisdictional Assessing officer instead of Faceless Assessing officer, and hence the reassessment proceedings are beyond jurisdiction and void-ab-initio. c) Without prejudice to above, the notice u/s 148A(b) has been issued without sharing the information and hence the reopening proceedings are bad in law.
3. Natural justice violated (AY: 2018-19) Bio-Care Technologies On the facts and circumstances of the case and in law, the Ld. AO and further Ld. NFAC / CIT(A) failed to grant sufficient opportunity to present the case and thus principles of natural justice are grossly violated.
4. Addition of Rs. 17,25,000/- u/s 56(2)(x) a) The Ld. NFAC / CIT(A) erred in making the addition of Rs.5,59,022/- u/s 56(2)(x) being difference in value of property as determined by the valuation officer and the purchase consideration as paid by the Appellant. b) The Ld. NFAC / CIT(A) failed to appreciate that valuer submitted the report determined the value as of 01-06-2019 whereas the Appellant had purchasedthe property on 16-05-2017 and hence cannot be compared. c) The Ld. NFAC / CIT(A) as well as the Valuation officer failed to consider the similar sale instances submitted by the Appellant.
5. Interest u/s 234A, 234B and 234C On merits, the Appellant denies its liability to the levy of penal interest u/s. 234A, 234B and 234C, hence the interest levied may be directed to be deleted.
6. The Appellant submits that all the above grounds are without prejudice to each other. The Appellant craves leave to add, amend, alter, delete or substitute any of the aforesaid grounds at any time before or at the time of hearing of the matter with the Income Tax Appellate Tribunal.”
Brief facts of the case are, assessee is a firm, filed its return of income for the A.Y. 2018-19 declaring income at Rs. 3,710/-. Assessing Officer received information through insight portal of department that assessee has sold a property for a sale consideration of Rs.19,50,000/-. Market value of the property was as determined by Stamp Valuation Authorities was at Rs.44,61,622/-. As there is difference between the sale consideration and the market value [probably assessed by the in stamp value authority] to be of Rs. 25,11,622/-, therefore the provision of section 50C of the Income Tax Act, 1961 (in short “Act”) could attracts. Assessing Officer on going through return of income of assessee, find that the assessee has not included such transaction in its return of income and has not offered due tax on such transaction. Notice under section 148A(b) of the Act was issued to assessee on 18.03.2022 to furnish clarification on the issue. The Assessing Officer (AY: 2018-19) Bio-Care Technologies recorded that assessee has offered no explanation within the time allowed in the notice. The Assessing Officer passed order under section 148A(d) of the Act on 06.04.2022 and simultaneously issued notice under section 148 dated 06.04.2022 of the Act on same day after recording reasons and taking necessary approval from the specified authority. The Assessing Officer further recorded that in response to notice under section 148 of the Act no return of income is filed. The Assessing Officer issued show-cause notice under section 142 of the Act on 31.05.2023 for seeking various information. The Assessing Officer in Para No. 5 of his order recorded that as per information, the assessee purchased office premises No. 125 on 1st Floor in “H” Building known as Mainframe Premises Co-operative Society Ltd, situated at village Maroshi, Aarey Milk Colony, Goregaon (East), Mumbai on 16.05.2017 by showing sale consideration of Rs. 19,50,000/-. The stamp authority valued the property was Rs.44,61,622/-. Thus, provision of section 56(2)(x) of the Act is attracted as the stamp duty value exceeded the purchase consideration. The assessee filed its reply as recorded by Assessing Officer in Para No. 5.1 of the assessment order. The Assessing Officer further recorded that on the request of assessee matter was referred to District valuation officer (DVO). The DVO estimated the valued the property at Rs. 25,09,022/-. On receipt of valuation report from DVO, the assessee was asked to submit its objection (clarification) about the valuation report. The Assessing Officer recorded that assessee failed to submit his objection. The Assessing Officer on the basis of report of DVO made addition of Rs.5,59,022/- [25,09,022 – 19,50,000] under section 56(2) of the Act.
(AY: 2018-19) Bio-Care Technologies 3. Aggrieved by the additions in the assessment order, the assessee filed appeal before Ld.CIT(A). Before Ld.CIT(A), assessee challenged the validity of reopening under section 147 of the Act as well as addition on merit. The Assessee also filed its written submissions. The Assessee in his submission submitted that “office premises” purchased by the assessee is situated in off- market area. The location of the property is not very good. The property was in a dilapidated condition. Actual price of the building was very less though the stamp value rate is high. The market rate of the property is determined on the basis of various factors. The stamp value rate does not reflect real value of property. Thus, sale consideration is correct. The valuation officer has wrongly worked out the fair market value of the property as on 01.06.2019. The property was purchased on 16.05.2017. The Assessing Officer inadvertently considered such fair market value and passed order without considering the actual facts. The assessee also filed his own report obtained from Government Registered Valuer, who has determined the market value of the property as on 16.05.2017 at Rs. 20,07,729/-. The Government Registered valuer also gave six comparable instance of almost similar area about the transactions made in May, 2017 or in 2019 & 2020. The assessee stated that Assessing Officer has not considered such report.
The Ld.CIT(A) after considering the submissions of the assessee upheld the order of the Assessing Officer by taking a view that on the request of assessee the matter was referred to valuation officer who has estimated the fair market value of asset at Rs.25,09,022/- and the Assessing Officer made addition on the basis of such report. On the objection of assessee that fair (AY: 2018-19) Bio-Care Technologies market value was determined as on 01.06.2019 instead of actual date of purchase, the Ld. CIT(A) held that there is a difference between the stamp duty value and the consideration then difference between the value determined by stamp duty authority and sale consideration is to be added in the income in the year consideration. The DVO has considered all the relevant material and information related to prevailing market conditions of the area. Thus the action of the Assessing Officer is in accordance with law. On the objection of assessee that no fair and proper opportunity was given, Ld.CIT(A) held that details available on record shows that sufficient opportunities of being heard was provided to the assessee to furnish all supporting documents. The matter was referred to DVO on the request of the assessee. With the above observations, Ld. CIT(A) dismissed the appeal of the assessee. Further, aggrieved the assessee has filed the present appeal before Tribunal.
I have heard submissions of Learned Authorised Representative (Ld.AR) of the assessee and the Learned Senior Departmental Representative (Sr. DR) of the revenue. Ground No.1 is general in nature and needs no specific adjudication. Ground No. 2 relates to validity of re-assessment proceedings. Ld.AR of the assessee submitted that notice under section 148 of the Act has been issued by jurisdictional Assessing Officer instead of faceless Assessing Officer. Therefore, the re-assessment proceedings are without jurisdiction and void ab-initio. Once the Assessing Officer assumed jurisdiction which is ab-initio, subsequent action there upon is non-est. Further notice under section 148A(b) of the Act was issued without providing information and the (AY: 2018-19) Bio-Care Technologies reopening proceedings are bad in law. The ld. AR further submitted that along with notice issued under section 148A(b) of the Act dated 18.03.2022, the Assessing Officer furnished details of information. The information was annexed along with the said notice. As per information, Assessing Officer recorded that assessee has sold a property for Rs.19,50,000/- such information is factually incorrect. The assessee has not sold such property; rather the assessee had purchased the property. Thus, the basis of reopening is itself wrong. Thus, Assessing Officer passed order under section 148A(d) without verification of facts. Once the basis of issuance of notice itself is wrong the action thereon is void ab-initio. The assessee in response to order under section 148A(d) of the Act, in its reply dated 08.02.2023 clearly stated that they are not involved in any such transactions and that they have not sold any property and that a wrong notice has been issued to them. The assessee prayed for dropping the reopening. Right from the beginning the assessee has raised objection against the wrong information.
On merits, the Ld.AR of the assessee submitted that DVO while estimating the fair market value of the asset has not considered various factors. He has not given comparable instances of sale in May 2017 rather relied on comparable instances of sale of March 2018 or 2019. The assessee has filed report of T.P. Katekar, Government Registered Valuer, who has estimated/determined value of property as on 16.05.2017 at Rs. 20,07,729/- on the basis of various comparable including four comparable of same locality. Ld.AR submitted that comparable instances narrated by Government Registered Valuer are more authentic and may be accepted.
(AY: 2018-19) Bio-Care Technologies 7. On the other hand, Learned Senior Departmental Representative (Sr. DR) for the revenue, on the objection against the validity of reopening submitted that assessee neither filed return of income in the time allowed in the notice under section 148 of the Act nor raised any objection before Assessing Officer or nor such objection was raised before Ld.CIT(A). Thus, the assessee is now precluded for raising such objection against validity of reopening. On merits, Sr. DR for the revenue submits that on the request of the assessee matter was referred to valuation officer for determination of fair market value of the asset. The report of DVO is binding on the Assessing Officer. Before DVO, assessee has not filed any such objection. The report of the Government Registered Valuer was not filed before Assessing Officer. All the relevant factors for determination of fair market value were considered by DVO. The DVO has already determined the property at Rs.25,09,022/- by allowing sufficient relief to the assessee. The assessee is not entitled for any further relief.
I have considered the rival submissions of both the parties and I have gone though the orders of lower authorities carefully. Firstly, I shall consider the submissions of the parties on validity of reopening. I find that the case of assessee was reopened on the basis of information in the insight portal. The Assessing Officer issued show cause notice to the assessee to explain the facts vide notice dated 18.03.20122, but the assessee failed to make any response. Again order under section 148A(a) was passed and notice under section 148 was issued. The assessee again failed to file return of income in the time allowed in te notice under section 148. Even no objection was raised (AY: 2018-19) Bio-Care Technologies against reopening. In my view, in the present case, the Assessing Officer was having definite information about the transaction of property by the assessee, though it was in the form of sale. Though, later on the information was discovered about purchase of the property. Thus, there is no infirmity in the action of Assessing Officer, so far as reopening is concerned. Hence, ground No. 2 of the appeal is dismissed.
Ground No. 3 relates to violation of natural justice. No specific violation or opportunity of hearing was argued before me, thus, this ground of appeal is also dismissed.
10. Ground No. 4 relates to addition of Rs. 5,59,022/-. There is no dispute that the assessee purchased office premises No. 125 on 1st Floor in “H” Building known as Mainframe Premises Co-operative Society Ltd, situated at village Maroshi, Aarey Milk Colony, Goregaon (East), Mumbai on 16.05.2017 by showing sale consideration of Rs. 19,50,000/-. The stamp authority valued the property was Rs.44,61,622/-. I find that on the request of the assessee the Assessing Officer made reference to DVO. The DVO estimated the value of asset at Rs. 25,09,022/- against the value of Rs. 44,61,622/-. Now the bone of contention between the assessee and the revenue is various comparable instances adopted by DVO as well as by Government Registered Valuer. The copy of registered valuer report is available at page No. 85 to 92 of the paper book and the report of DVO is at page no. 10-3 to 108. On careful comparison of both the report I find that in both the report there is reference of various comparable instances of the same locality, but rate are different, thus, the Assessing Officer is directed to take average rate of both (AY: 2018-19) Bio-Care Technologies the valuation report and recomputed the addition under section 56(2). In the result, ground No. 4 of the appeal is partly allowed. Other grounds are consequential and needs no adjudication.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 30th April, 2025.