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Facts
The assessee purchased a property for Rs. 60 lakhs, but the Stamp Duty Authority valued it at Rs. 4,16,22,500/-. The DVO valued it at Rs. 2,52,61,000/-. The assessee claimed the property was purchased in an auction, with earnest money paid in December 2017.
Held
The Tribunal held that since the earnest money was paid in December 2017, the valuation should be determined as of December 2017 as per the proviso to Section 56(2)(x) of the Act. The matter was remitted back to the Assessing Officer for re-valuation.
Key Issues
Whether the valuation of the property should be determined as per the date of auction or the date of registration, considering the payment of earnest money.
Sections Cited
250, 143(3), 144B, 55A, 16(A)(5), 56(2)(x)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI ANIKESH BANERJEE
Instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi *for brevity, ‘Ld.CIT(A)’) passed under section 250 of the Income-tax Act, 1961 (for brevity, ‘the Act’), date of order 27/09/2024 for A.Y. 2020-21. The impugned order was emanated from the order of the Assessment Unit, Income-tax Department passed under section 143(3)readwith section 144B of the Act, date of order 24/08/2022.
Ashokkumar Premchand Jain 2. The brief facts of the case are that the assessee has filed the return of income in the individual capacity. The assessee’s case was selected for limited scrutiny for verifying the issue of purchase of property which is shown to have been less than the value of the Stamp Duty Authority. During the impugned assessment year, the assessee purchased a property named as ‘Mody Building’ situated at C.S.No.1245, Bhuleshwar Division, C-Ward at 31-33-35, Shamseth Street, Mumbai, admeasuring about 233 sq.yds. During the assessment proceedings, the Ld.AO observed that the conveyance deed of the building dated 20/03/2020 revealed that the said property is duly registered with the Joint Sub- Registrar, Mumbai City-3 and the set forth value of the said property was Rs.60 lakhs whereas the Stamp Duty Authority valued the property at Rs. 4,16,22,500/-. In this regard, the assessee has filed the valuation report and the value of the property was determined amount to Rs. 53,60,000/-. The matter was referred to the DVO for valuation under section 55A read with section 16(A)(5) of the Wealth- tax Act, 1957 and the value was determined by the DVO at Rs.2,52,61,000/-. In this regard, the show cause notice was issued, and the assessment was completed with an addition of Rs.1,92,61,000/- {Rs.2,52,61,000/- (-) Rs.60,00,000/-}. The assessee filed an appeal before the Ld. CIT(A) and pleaded that the said property was purchased in auction and as per the valuation of the government approved valuer was Rs.53,60,000/-. So the entire addition will be deleted. But the Ld.CIT(A) upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us.
The Ld.AR argued and filed a paper book containing pages 1-316, which are kept in the record. In argument, the Ld.AR submitted that the assessee purchased the property through auction and the government valuation was made Ashokkumar Premchand Jain at Rs.53,60,000/-. Accordingly, the set-forth value was determined at Rs.60 lakhs. The copy of the valuation report by a government approved value, viz. V.P Katkar Engineers & Valuers, is placed in APB pages 75-76. The Ld.AR invited our attention in the valuation report duly passed by the DVO on 30/05/2022, annexed in APB pages 296 to 316, which reveals that the valuation was done as on 20/03/2020 and accordingly, the order was passed on 30/05/2022 by the Valuation Officer-II, Mumbai. The Ld.AR further argued that the assessee had purchased the property in auction; the earnest money was already paid in 2017. The copy of the bank statements which reflect the payment of earnest money amount to Rs.12,75,000/- was duly paid on 3 different dates in the month of December 2017. So, the 1st&2nd provision of section 56(2)(x) is applicable and the determination of the value of the property will be as on 2017. We find thatthe valuation of the property is determined by the Valuation Officer as on 2020. The copy of the bank statement is annexed in APB 168 – 171.
The Ld.DR argued and relied on the orders of the revenue authorities.
We have considered the arguments presented by both parties and reviewed the documents on record. It is noted that, based on the reference made by the Ld. AO, the Valuation Officer determined the value of the property at Rs.2,52,61,000/- as of March 20, 2020, under Section 55A of the Act. However, since the assessee paid the earnest money in December 2017, the proviso to Section 56(2)(x) applies, requiring the valuation to be determined as of December 2017.Accordingly, we remit the matter back to the Ld. Assessing Officer with instructions to conduct the valuation based on the property's value as of December 2017, in consultation with the DVO. The provisions of Section 56(2)(x)