SYED RAFAT ZUBAIR RIZVI,LUCKNOW vs. COMMISSIONER OF INCOME-TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI

Because appellant sold 14Flats, 2shops & 2Lands in Assessment year 2015-16 The said building was constructed in the year 2005-06 as a commercial building knows as Essaar Mall. But due to local factors assessee failed to sold his premises and after many years of failure he decided to convert the same into residential building and the flats were constructed in the year 2013. Due to blockage of fund and non-sale of flats assessee sold at the lower rate Approval of Residential Construction form the UP Awas evam Vikas Parishad was also obtained before converting the commercial construction to residential.

Because an addition of Rs.87,46.596/- is made by Ld. Assessing officer on the basis of Valuation report vide letter F.No.1200to 1213/AVO/ITD/LKO/2017-18/872 dated 19.03.2018 which was sustained by learned Commissioner of Income Tax (Appeals), Income Tax department, NFAC Syed Rafat Zubair Rizvi

Because fair market Value evaluated by Valuation officer is not the true indicator of actual market value because the property has not been valued as per normal practice in real estate business. Construction cost is based on estimated rate not on actual market rate of the same or adjoining area. Also construction cost shall include the conversion of commercial construction to residential. Hence Construction cost is not justified.

Because circle rate is not always the true indicator of the market value of the property as the market value keeps on fluctuating at different times. Further there could be various factors like location of the property, decrease in the prices, vastu compliant etc., when market value can be less than the stamp duty value. The Appellant has justified reason in support of charging lower price in respect of some of the flats sold by it.

Because the Ld. ACIT did not bring any material on record to show that the appellant received higher price than declared. Under such circumstances, we are of the considered opinion that the action of the authorities in this regard cannot be justified.

Because the valuation by the stamp valuation authority is based on the circle rates. There circle rates adopt uniform rate for an entire locality, which inherently disregards peculiar features of a particular property. Even in a particular area on account of location factors and possibilities of commercial use, there can be wide variation in the price of land and price of constructed structure based on the type of construction, availability of costumers as well as need of funds. However circle rate disregards all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by stamp valuation authorities was to be adopted in all situations, there was no need of reference DVO under section 43CA. The sweeping generalizations inherent in the circle rates cannot hold well in all situations

Because No proceedings were initiated against the buyer of the flat in Regard to its cost.

Because many properties were sold by entering into the agreement before the enactment of the sec 43CA of the Income Tax Act, 1961 i.e. prior 01/04/2014. In the case of Shri Krishnaraj Buildhome Pvt Ltd v/s ITO Jaipur the Hon'ble Income Tax Appellate Tribunal, Jaipur held that 43CA cannot be applicable on the property entered into agreement of sale before the enactment of section 43CA of the income tax Act, 1961. And also Hon'ble Income Tax Appellate Tribunal, Mumbai held the same in case of Shree Laxmi Enterprises v/s PCIT 41.”

At the very outset, it is seen that the appeal of the assessee is delayed by 16 days’. The assessee has filed a condonation petition in which it has been submitted that the assessee received the order of the ld. CIT(A) on 26.03.2024 but was ill from 29.05.2024 to 7.06.2024 and therefore, could not submit the appeal on time. An affidavit was also filed in support of this application. Considering the same, the appeal is admitted for adjudication. Syed Rafat Zubair Rizvi

At the time of taking up the appeal for hearing, the counsel for the assessee filed an affidavit signed by the assessee in which it was submitted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme, 2024 and therefore, he had voluntarily decided to withdraw the aforesaid appeal pending before the Tribunal. The ld. AR submitted before us that Form No. 2 had been issued in the instant case and therefore, the assessee did not wish to pursue the appeal. 4. Shri. Amit Kumar, DR had no objection to the withdrawal of the appeal. We, therefore, dismiss the appeal of the assessee as withdrawn, subject to liberty to the assessee to re-approach the Tribunal, in case the settlement of the dispute under Direct Tax Vivad Se Vishwas Scheme, 2024, is not completed for any reason. 5. In the result, the appeal of the assessee is dismissed.