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

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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.

Held

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.

Key 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.

Sections Cited

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

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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.

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.

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.

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.