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Facts
The Assessing Officer (AO) adopted the property value as per stamp duty authority, disregarding the appellant's valuation report and not referring the case to the DVO. Addition was made under Section 56(2)(x). The CIT(A) confirmed the addition.
Held
The Tribunal held that the issue should be remitted to the AO. The AO is directed to refer the matter to the DVO before making any addition under Section 56(2)(x), and the appellant should be given an effective opportunity.
Key Issues
Whether the AO erred in making addition without referring the property valuation to the DVO as per Section 50C and Section 56(2)(x) of the Income Tax Act, 1961.
Sections Cited
50C, 56(2)(x)
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Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
Before: Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM)
2. On the facts and circumstances of Appellant's case and in law the Id. CIT (A) erred in confirming the action of the Id. A.O. in making addition of sum of Rs. 25,55,833/- by invoking the provision of section 56(2)(x) of the Act, for the reasons mentioned in the impugned order or otherwise.
3. The Appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing.
The Appellant prays your Honour to direct the Learned Assessing Officer to delete the additions/disallowances made in the impugned order.
From the assessment order, it is observed that the Ld. AO has adopted the value of property as per stamp value authority and completed the 2 Mohamed Javeed Mohammed Bumedia assessment disregarding the valuation report submitted by the appellant during assessment proceedings. The appellant claims that the property in question also was not referred to the DVO by Ld. AO despite his specific request and made the addition in terms of section 56(2)(x) of the I.T. Act.
Aggrieved by the order of Ld. AO, an appeal was filed by the appellant before Ld. CIT(A) who has confirmed the addition after discussing the case on merits of the case. There is non-compliance to the hearing notices issued by Ld. CIT(A), it is observed from the order of Ld. CIT(A).
During the hearing proceedings before the ITAT, the Ld. AR of appellant has relied on the grounds of appeal and requested for an opportunity to submit his reply before the first appellate authority. It was pleaded that there is a basic flaw in the assessment order to the effect that before invoking the provisions of section 56(2)(x) of the Act the issue should be referred to the DVO, as requested by the appellant. The Ld. AR of the appellant has argued that the property in question be referred to the DVO by Ld. AO and take action as per law.
The Ld. DR relied on the orders of the lower authorities and pleaded for confirming the addition as there is no compliance of hearing notices before the first appellate authority.
Heard rival submissions and it is decided that the issue is remitted to the file of Ld. AO. The Ld. AO is directed to refer the matter to DVO as requested by Ld. AR of the appellant, before making addition u/s. 56(2)(x) of the Act. The appellant may be given an effective opportunity before passing the order. The appellant is directed to cooperate with the Department in completing the assessment at the earliest.
With the above directions, the matter is set aside to the file of Ld. AO.
3 Mohamed Javeed Mohammed Bumedia
The appeal of appellant is allowed for statistical purposes.
Order pronounced in the open Court on 25/02/2025.