MRS. JAYA ARJUN KANUGA,MUMBAI vs. INCOME TAX OFFICER,19(2)(1), MUMBAI

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ITA 4611/MUM/2023Status: DisposedITAT Mumbai14 June 2024AY 2014-2015Bench: the ld. A.O. The said valuer had valued the property at Rs.25 lacs. The ld. A.O. did not accept the valuation report submitted by the assessee and referred the matter of valuation to the DVO. However, the ld. A.O. did not receive the report from the DVO before the completion of the assessment and, hence, he made an addition of Rs.79.37 lacs u/s.56(2)(vii)(b) of the Act on protective basis.4. In the appellate proceedings, the valuation report of the DVO was produced before the ld. CIT(A). Th3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal observed that the DVO did not properly consider the assessee's objections regarding the property valuation. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO, directing a fresh reference to the DVO. The DVO is mandated to provide the assessee with a proper opportunity to be heard and address all objections before finalizing the valuation, after which the AO will make a fresh decision.

What were the facts?

The assessee challenged a confirmed addition of Rs. 20.51 lacs by the CIT(A) under section 56(2)(vii)(b) for AY 2014-15, which arose from the difference between stamp duty valuation and sale consideration of a property. Initially, the AO made a protective addition of Rs. 79.37 lacs without considering the DVO's report, after the assessee's valuer reported Rs. 25 lacs. The CIT(A) reduced the addition to Rs. 20.51 lacs after the DVO valued the property at Rs. 69.03 lacs, considering the assessee's 50% share, but the assessee contended that the DVO failed to consider her detailed objections.

What were the issues?

Whether the DVO properly considered the assessee's objections during property valuation for addition under section 56(2)(vii)(b) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 250,Section 56(2)(vii)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI B R BASKARAN, AMAND SHRI SANDEEP SINGH KARHAIL, JM

Hearing: 13.06.2024Pronounced: 14.06.2024

O R D E R Per B R Baskaran, AM:

The assessee filed this appeal challenging the order dated 27.10.2023 passed by the learned Commissioner of Income Tax (Appeals)(‘ld.CIT(A) for short),National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), relevant to the Assessment Year (‘A.Y.’ for short) 2014-15.

2.

The assessee is aggrieved with the decision of the ld. CIT(A) in confirming the addition of Rs.20,51,000/- made by the ld. Assessing Officer ('A.O.' for short) u/s. 56(2)(vii)(b) of the Act.

3.

The learned Authorised Representative ('ld. AR' for short) submitted that the impugned addition has been made by the ld. A.O. on account of difference between the submitted that the assessee had objected to the stamp duty valuation by filing a copy of valuer’s report before the ld. A.O. The said valuer had valued the property at Rs.25 lacs.

The ld. A.O. did not acceptthe valuation report submitted by the assessee and referred the matter of valuation to the DVO. However, the ld. A.O. did not receive the report from the DVO before the completion of the assessment and, hence, he made an addition of Rs.79.37 lacs u/s. 56(2)(vii)(b) of the Act on protective basis.

4.

In the appellate proceedings, the valuation report of the DVO was produced before the ld. CIT(A). The ld. DVO had valued the property at Rs.69.03 lacs. Since the share of the assessee in the said property was 50%, the ld. CIT(A) directed the ld. A.O. to assess 50% of the difference in the valuation in the hands of the assessee. Consequently, the addition made u/s 56(2)(vii)(b) came to be reduced to Rs.20.51 lacs. The assessee is still aggrieved.

5.

The learned Authorised Representative ('ld. AR' for short) submitted that the assessee has filed a detailed objection before the DVO, objecting to the valuation done by him. However, the ld. DVO did not consider any of the objections filed by the assessee.

On the contrary, he has mentioned in the valuation report that the assessee did not co- operate with him, which is factually incorrect. He also furnished a copy of objections raised by the assessee. Accordingly, the ld. AR submitted that the assessee may be provided with one more opportunity with the direction to the DVO to properly deal with the objections of the assessee. perused the materials available on record. The submission made by the ld. AR would show that the DVO did not consider the objections raised by the assessee. Accordingly, we are of the view that the matter of valuation should be restored to the file of AO for examining it afresh. Accordingly, we set aside the order passed by the ld. CIT(A) and restore the matter to the file of the ld. A.O. with a direction to refer the matter of valuation to the DVO again. The ld. DVO shall provide proper opportunity to the assessee and duly address the objections raised by the assessee before finalizing the valuation. After the receipt of report of the valuation from the DVO, the ld. A.O. may take appropriate decision in accordance with the law, after affording adequate opportunity of being heard to the assessee.

7.

In the result, the appeal filed by the assessee is treated as allowed.

Order pronounced in the open court on 14.06.2024

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