NARENDRA KUMAR GILL,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the assessee against the order of the ld. CIT(A), Muzaffarnagar, dated 25.01.2017.

ITA No. 1532/Del/2017 2 Narendra Kumar Gill reassessment proceedings and as such, the assessment so made is liable to be quashed.

2.1. That the learned CTT(A) has further erred both in law and on facts in upholding the validity of the notice u/s 148 of the Act when the said notice was issued to “Narendra Kumar Gill (HUF)'" having a different PAN, however, the assessment as frames was that of the “individual" bearing a different PAN as that mentioned on the notice u/s 148 of the Act.

2.2 The learned CIT(A) failed to quash the impugned order by overlooking that the learned Assessing Officer arbitrarily misused the powers given under the Act by further not providing the reasons recorded to the assessee bearing his PAN and thus, the learned Assessing Officer has grossly violated and misused the provisions of the statute and the assessment made thereto should be quashed, as such.

2.3 That the Learned CIT(A) has erred in law and on facts in invoking the provisions of Section 292B of the Act for rectifying the defects of the notice u/s 148 of the Act by wrongly interpreting the provisions and not considering the case laws assessee relied upon wherein the facts squarely covered assessee's ease.

3.1. That the provision of section 55A(a) authorize the assessing officer to refer for valuation only when the value as claimed is less than its "fair market value". The provision prior to amendment on 01.07.2012 is relevant to assessment year 2009-10. Ld. Pr. CIT has erred in holding that amended provisions will apply on the assessments which are pending on the date of amendment and section 55A of the Act lays down the procedure and erred in holding that amended provisions are applicable on the assessment proceedings for year 2009-10 in spite of the amendment on 01.07.2012.

3.2. That the Learned CIT(A) has erred in law and on facts to held that reference is rightly made to DVO in provisions of section 55A without considering the words "is less than the fair market value" and erred in

ITA No. 1532/Del/2017 3 Narendra Kumar Gill considering the reference under section 55A(b) which clearly states that it will apply in any other case i.e. a case not covered by section 55A(a) of the Act.

3.3. That the Learned CIT(A) has without considering the provisions of section 55A has erred in approving the valuation report of DVO, which was not placed on records upto assessment and without considering the basis of valuation taken by DVO, who has applied the stamp valuation not the fair market value as on 01.04.1981. So the reference and consequential report of DVO is beyond the preview of section 55A.

3.4. That further the learned CIT(A) failed to appre4ciate the ratio laid down in ITO v Padarti Venkata Rama Chandra Rao [2016] 74 Taxmann.Com 195 in differentiating Cost of Acquisition u/s 55(2)(b) of the Act from "Fair Market Value".

4.1. That the Learned CIT(A) has further erred by not appreciating that the value as taken by the assessee is based on valuation of report of Govt. Approved Valuer.

4.2. That the reference to the Valuation Officer can only be made when the learned assessing officer is of the opinion that the value as declared by the assessee is below the fair market value of the property. The reference of property which is located at "G.T. Road, Muzaffarnagar and commercial property" mentioning as the property situated in "Rampuri Mohalla, Muzaffarnagar" is borne out of mere suspicion and surmises.

4.3. That the learned CIT(A) has grossly erred both in law and on facts in relying on the DVO report believing that the same was on record, however, the assessment as framed by the learned Assessing Officer lacked the reliance on the same, as the impugned order was passed on 31.03.2015 and the report, a fact also affirmed by the learned CIT(A) was passed on 08.01.2016. The reliance on the4 same believing it to be brought on record is not only wrong but makes the impugned assessment as framed as void-ab-initio.

ITA No. 1532/Del/2017 4 Narendra Kumar Gill 5. That the capital gain as computed by learned assessing officer is wrong and Learned CIT(A) has erred in re-computing the capital gain on the basis of valuation report of DVO, which amount to re-assessment, which is barred by limitation.

RELIEF CLAIMED:

It is therefore, prayed that the order of learned CIT(A) be held to be un-tenable and further, assessment under section 147/143(3) of the Act is without jurisdiction and also, additions made along with interest levied may kindly be deleted and appeal of the appellant be allowed.”

Brief facts of the issue

“Modern Service Station” after constructing a building of 82 sq.

mts. on the land measuring 689 sq. mts. (821 sq. yds.). The

said land was sold vide sale deed dated 31.12.2008 reflecting

the sale consideration of land of Rs.50 lacs out of which the

share of the assessee was Rs.37,50,000/-. The AO determined

that the stamp duty value of the property of Rs.1,93,93,650/-

and made addition of Rs.1,40,33,973/- under the head “Long

Term Capital Gain” after invoking the provisions of Section 50C

r.w.s. 48 of the Income Tax Act, 1961.

assessee escaped assessment with regard to the capital gains

arising out of the sale of immovable property namely “Modern

Service Station” situated at Rampuri, Muzaffarnagar. The

ITA No. 1532/Del/2017 5 Narendra Kumar Gill Assessing Officer, ITO Ward-1(2), Muzaffarnagar issued notice

u/s 148 of the Income Tax Act, 1961 on 18.03.2014.

duly served on the assessee. On the dates of hearing fixed on

11.12.2014, 17.12.2014, 29.12.2014, 12.01.2015, 15.01.2015,

02.02.2015, 19.02.2015 and 03.03.2015 nobody attended. The

assessee has not filed any return incompliance to the notice.

Hence, an opportunity was given to the assessee vide notice u/s

144 of the Act dated 13.03.2015. Then, in compliance to the

notice issued, the assessee filed the ITR on 16.03.2015

declaring an income of Rs.5,53,890/-. The assessee filed replies

to the queries of the Assessing Officer on 19.03.2015 and on

20.03.2015. Finally, the assessment proceedings have been

concluded on 31.03.2015 resulting in passing on an assessment

order with the income determined of Rs.1,41,79,759/- which

includes long term capital gain of Rs.1,40,33,973/- against the

return income of Rs.5,53,890/- which was inclusive of the

capital gain of Rs.4,08,107/- as determined by the assesse.

Jurisdictional Issue – Notice u/s 148:

submissions summing of the arguments alongwith the case laws

ITA No. 1532/Del/2017 6 Narendra Kumar Gill which have been duly perused in detail alongwith the paper

book and record available before us. The crux of the arguments

are as under:

HUF having PAN – AAAHN8408F and another in individual

capacity having PAN – ACVPJ8013G. 2. The assessee received notice u/s 148 issued by ITO,

Ward-1(2), Muzaffarnagar reflecting the PAN of the HUF

of the assessee i.e. AAAHN8408F. 3. Thereafter, another notice dated 20.05.2014 was received

by the assessee, issued by ITO Ward-1(2), Muzaffarnagar

u/s 142(1) of the Act directing him to comply with the

notice issued u/s 148. 4. Thereafter, another notice dated 05.01.2015 issued by

ITO Ward-1(2), Muzaffarnagar u/s 142(1) was received by

the assessee, directing him to furnish the details of

income of family, purchase deed of property sold during

FY 2008-09, details of movable and immovable properties

held by the assessee or his family members as on

31.03.2009 and also the names of family members, their

sources of income and copies of ITRs, if any. The

ITA No. 1532/Del/2017 7 Narendra Kumar Gill assessee replied to the queries on 19.03.2015 and

20.03.2015. 5. The assessee submitted that the land belongs to the

assessee in his individual capacity and the same was sold

in the individual capacity. 6. The assessee was served with the notice issued by the

Assessing Officer u/s 144 reflecting PAN – ACVPG8013G,

this PAN pertained to the assessee individual. 7. In order to avoid best judgement assessment, the

assessee filed the return in his individual capacity on

16.03.2015 along with detailed reply. 8. During the proceeding, the assessee was also informed

that reassessment proceeding was initiated on the basis

of sale of land on 31.12.2008. 9. That the impugned order so passed by the Ld. CIT(A) is

bad-in-law as it is devoid of the acknowledgment of the

fact that no valid notice u/s 148 of the act was issued to

the assessee prior to culmination of the re-assessment

proceedings and as such, the assessment so made is

liable to be quashed. 10. The Ld. CIT(A) has further erred both in law and on facts

in upholding the validity of notice u/s 148 of the Act

ITA No. 1532/Del/2017 8 Narendra Kumar Gill when the said notice was issued to “Narendra Kumar Gill

(HUF)” having a different PAN, however, the assessment

as framed was that of the “individual” bearing a different

PAN as that mentioned on the notice u/s 148 of the Act. 11. The Ld. CIT(A) failed to quash the impugned order by

overlooking that the Ld. Assessing Officer arbitrarily

misused the powers given under the Act by further not

providing the reasons recorded to the assessee bearing

his PAN and thus, the Ld. Assessing Officer has grossly

violated and misused the provisions of the statute and

the assessment made thereto should be quashed as such. 12. The Ld. CIT(A) has erred in law and on facts in invoking

the provisions of section 292B of the Act for rectifying

the defects of the notice u/s 148 of the Act by wrongly

interpreting the provisions and not considering the case

laws assessee relied upon wherein the facts squarely

covered assessee’s case. 13. The assessment order-dated 31.03.2015 framed by the

Assessing xxxxxxxxxxxxx individual capacity is bad-in-

law as no notice u/s 148 had been issued by the

Assessing Officer to the assessee in his individual

capacity.

ITA No. 1532/Del/2017 9 Narendra Kumar Gill 14. The notice u/s 147 was issued by the Assessing Officer to

the assessee in his HUF capacity as it reflected the PAN

of assessee HUF as AAAHN8408F. 15. The notice u/s 147 of the Act clearly reflected that the

Assessing Officer was requiring the return containing

details of the person in respect of which assessee was

assessable or whose income was chargeable to tax in the

hands of assessee. 16. The notice-dated 05.01.2015 also reflected that the

assessee was directed to file the details of income of his

family. 17. The issuance of valid notice u/s 147 is a jurisdictional

aspect and any defect therein is not curable. It is not an

irregularity but an illegality. 18. A valid notice u/s 147 confers jurisdiction on the

Assessing Officer to assess / reassess the income of

assessee or the income of person in respect of which

assessee is assessable, which has escaped assessment. In

the present case, assessment is framed in individual

capacity but no notice u/s 148 had been issued to the

assessee in individual capacity.

ITA No. 1532/Del/2017 10 Narendra Kumar Gill 19. It is an undisputed fact that notice u/s 148 reflected PAN

of HUF, it was admitted even by the Assessing Officer in

his remand report stating that PAN of HUF was wrongly

mentioned. 20. The Assessing Officer has also tried to save the notice by

stating in the remand report that notice u/s 142(1) dated

05.01.2015 had reflected that the assessee was required

to make compliance of para (b) only which was right tick

marked. Assessing Officer had crossed para (a) & (c).

Thus, the Assessing Officer had allegedly not required the

details of income of family but required details of income

of the individual. 21. The Assessing Officer has also stated that in the office

copy of the notice-dated 05.01.2015, “Parivaar” word has

not been right tick marked whereas in the notice served

upon the assessee, the said word “Parivaar” has been

right tick marked. It is to be submitted that a wrong

inference had been drawn by the CIT(A) that the assessee

had tempered with the said notice- dated 05.01.2015.

Such an observation is highly objectionable. 22. Even otherwise, without prejudice to above, it is

submitted that the notice u/s 148 has to be validly

ITA No. 1532/Del/2017 11 Narendra Kumar Gill issued. If it is not so then the assessment framed in

pursuance to such notice is a nullity. Even subsequent

notices, issued u/s 142(1), though correct, do not confer

jurisdiction on the Assessing Officer to assess / reassess

the escaped income. It is a well established principle of

law that even acquiescence does not confer jurisdiction

on the Assessing Officer. 23. The Assessing Officer has taken support of section 292B

& 292BB in the remand report; however the said sections

are not applicable to the facts of the present case.

Section 292B is quoted as under:

“292B - No return of income, assessment, notice,

summons or other proceeding, furnished or made or

issued or taken or purported to have been furnished or

made or issued or taken in pursuance of any of the

provisions of this Act shall be invalid or shall be deemed

to be invalid merely by reason of any mistake, defect or

omission in such return of income, assessment, notice,

summons or other proceeding if such return of income,

assessment, notice, summons or other proceeding is in

substance and effect in conformity with or according to

the intent and purpose of this Act.”

ITA No. 1532/Del/2017 12 Narendra Kumar Gill 24. Section 292B saves only those notices in which there is

an inadvertent error or an apparent error. It saves those

notices which in substance and effect issued according to

the interest and purpose of the Act. In the present case,

there is no inadvertent error in the notice issued by the

Assessing Officer. It specifically reflects the PAN of HUF.

Assessing Officer that the assessee has sold immovable

property namely Modern Service Station, the Assessing Officer

has recorded the reasons to believe in the case of Shri Narendra

Kumar Gill (Individual) for the instant assessment year and the

same can be verified from the record. The Assessing Officer has

issued notice validly and in the said notice it has been clearly mentioned that the status of the assessee as “�ि�” meaning

thereby the notice has been issued to “Individual” in English.

Further, the assessment was also completed in the name of the

assessee in his individual capacity. Also the notice u/s 142(1) of

the Act dated 05.01.2015 issued by the AO to the assessee is

meant to assess the assessee in individual capacity. It has been

argued that the notice was meant for assessing Shri Narendra

Kumar Gill and it is a fact on record that only the PAN number

was mistakenly quoted. It was argued that paras in the notice

ITA No. 1532/Del/2017 13 Narendra Kumar Gill क, ग have been ticked off which proves that the notice was not

issued to Shri Narendra Kumar Gill (HUF). It was also argued

that in the notice issued u/s 148, the status of the assessee has

been clearly mentioned as individual in the second para of the

notice u/s 148. It was further argued that the assessee was

fully aware that the notice has been issued to him in individual

capacity and also filed the return of income on 16.03.2015 in

his individual capacity. Having filed the return in his individual

capacity which was assessed as individual, the contention of the

assessee at this juncture, that the notice was issued to HUF was

wrong on facts. It was argued that the ITR in the capacity of

individual has been filed with PAN No. ACPBG8013G which has

been duly assessed after going through the details filed by the

assessee in his individual capacity in response to the notice

issued. The office record also shows that no sign has been marked by the by the Assessing Officer which indicates प�रवार की

आय (i.e. HUF). Rather, it clearly mentions “�ि�” means

“Individual”.

material available on record.

ITA No. 1532/Del/2017 14 Narendra Kumar Gill 9. From the above discussion, the moot issue to be decided is

whether mentioning the PAN of another entity mistakenly

instead of the PAN of the assessee makes the notice issued u/s

148 invalid or not when the notice is addressed to Shri

Narendra Kumar Gill and the body of the notice clearly reflects

that the notice has been issued to the assessee in his individual

capacity.

9.1 At this juncture, we hold that there is no need to dwell

upon the issue of notice u/s 142 or the contents thereof, as the

notice u/s 142(1) do not confer any jurisdiction to the Assessing

Officer. Hence, taking cognizance of the notice u/s 142(1) or

the contents of the notice will only deviate the main issue of

invoking the jurisdiction.

escapement of income was attributed and also the notice issued

by the AO. The reasons recorded by the AO on 14.03.2014

clearly mentions the name of the assessee as Shri Narendra

Kumar Gill. There was no mention of HUF in the reasons. For

the sake of ready reference, the scanned version of reasons

recorded by the AO for issue of notice u/s 148 is reproduced

below:

ITA No. 1532/Del/2017 15 Narendra Kumar Gill Reason for issuing Notice u/s 148 of the Income Tax Act, 1961

Sh. Narendra Kumr Gill 861, Mangal Bhawan, South Bhopa Road, Muzaffarnagar, A.Y. 2009-10

Dated: 14.03.2014

As per information available with the undersigned, the assessee has sold an immovable property in the joint name of 3 persons situated at Moh. Rampuri, Muzafarnagar area 689.70 sq. mtr. During the financial years A.y. 2008-09 at a sale consideration at Rs.50,00,000/- whereas stamp duty has been paid on circle rate at Rs.1,93,93,650/- which is the difference of consideration Rs.1,93,93,650 - Rs.50,00,000/- ÷ ½ = Rs.71,96,825/- taxable under the provisions of 50-C of the Income Tax Act, 1961. As per sale deed the share of the assessee is ½ share of the total property.

Therefore, I have the reason to believe that the assessee has income chargeable to tax of Rs.71,96,825/-. Therefore, it is necessary so issue notice u/s 148 of the Income Tax Act, 1961.

Yours faithfully, Sd/- (A.K. Rajak), Income Tax Officer, Ward-1(2), Muzaffarnagar

notice dated 18.03.2014, there has been a clear mention of the word “�ि�” which means “Individual”. For the sake of ready

reference, the scanned version of notice u/s 148 is reproduced

below: [Page no. 61 of the CIT(A)]

ITA No. 1532/Del/2017 16 Narendra Kumar Gill

ITA No. 1532/Del/2017 17 Narendra Kumar Gill आयकर अिधिनयम १९६१ की धारा १४७ के सूचना Notice under Section 148 of the Income Tax Act, 1961 अ4थायी लेखा सं9ा PAN AAAHN8408F Office of the Income Tax Officer, Ward-1(2), Muzaffarnagar Dated: 18.03.2014 सेवा मJ, To Shri Narendra Kumar Gill, 861, Mangal Bhawan, Bhopa Road, Muzaffarnagar चूंिक मेरे पास ऐसा िवSबास करने का कारन ही की िनधाVरण बषV 2009-10 के िलए कर से ZमायV आपकी आय /………………. की आय िजसके स\] मJ आप कर आयकर िनधाV�रत िकया जाना है, आयकर अिधिनयम १९६१ की धारा १४७ के आशय के अनुसार िनधाVरण से छूट गई है। Whereas I have reason to believe that you income/the income of………….in respect of which you are assessable chargeable to tax for the assessment year 2009-10 has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. इसीिलए मै उh िनधाVरण बषV की आय का िनधाVरण/पुनः िनवारण / आवjक मोक / पुनः संगिणत करने का Zlाव करता mँ और इसके pारा अपेqा करता mँ िक इस सूचना के तािमल होने की तारीख से ३० िदनों के अंदर उh िनधाVरण योu अपनी आय / �ि� की आय, िजनके स\] मJ आयकर िनधाVरण िकया जाता है, की िववरणी िनधाV�रत फॉमV मJ Zlुत करJ । I, therefore, propose to assess/re-assess the income/re-compute loss/depreciation allowance for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of you income/the income of………….in respect of which you are assessable. यह सूचना आयकर आयुh / अपर आयकर आयुh मुज़yरनगर कJ zीय Z{q कर बोडV से आवjक समाधान Zा} करके जारी की गई है। This notice is being issued after obtaining the necessary satisfaction of the Commission of Income Tax/ Addl. Commissioner of Income Tax…………the Central Board of Direct Taxes. Sd/- (Signature of Officer) (A.K. Rajak)

ITA No. 1532/Del/2017 18 Narendra Kumar Gill 12. We also find that only the PAN mentioned in the notice do

not belong to the assessee.

AR.

Hussain IbrahimJi Mithiborvala (1971) 82 ITR 821 (SC): Refers

to reopening of a wrong year. In that case the assessment for

year 1949-50 has been reopened instead of assessment year

1948-49.

14.1 The issue in the instant case is different. Whereas in the

instant case, the assessment was rightly reopened and rightly

completed in the hands of the assessee for the correct year.

that under the scheme of the Income-tax Act the “Individual”

and the 'Hindu undivided family' are treated as separate units

of assessment and if a notice under s. 34 of the Act is wrongly

issued to the assessee in the status of an 'individual' and not in

the correct status of 'Hindu undivided family', the notice is

illegal and ultra-vires and without jurisdiction. [391F-G] The

Income-tax Officer was therefore justified in ignoring the first

ITA No. 1532/Del/2017 19 Narendra Kumar Gill notice under s. 34 of the Act and the return filed by the

assessee in response to that notice and consequently the

assessment made by the Income-tax Officer pursuant to the

second notice was a valid assessment. [391H] In this case the

Hon’ble Supreme Court reversed the judgment of the Hon’ble

High Court wherein the Hon’ble High Court held that In

reference, the High Court held that the first of the notices

under s. 34 was not invalid in law and consequently the issue

of the second notice was illegal and the assessment

made in pursuance of it was illegal.

15.1 We have gone through above said judgment. In this case

first notice was issued in the name of the “Individual” instead of

“HUF” and the correct notice issued to the “HUF” is after a

period of 8 years. Hence, the Hon’ble Court ruled that the

second notice was invalid. Thus, the facts of this case are

different set of facts, hence not applicable.

17 (ALL): The learned counsel for the Revenue has not

advanced any argument that the finding of the Tribunal that

notice under Section 148 of the Act was meant for the Karta of

the HUF and not in his individual capacity. The only point urged

ITA No. 1532/Del/2017 20 Narendra Kumar Gill by the learned counsel for the Revenue was that since the

assessee has filed a return of HUF and the income sought to be

reassessed was of HUF, the proceedings are valid,

notwithstanding the fact that the notice was issued to the

assessee in his individual capacity. Moreover, the finding of the

Tribunal that the notice under Section 148 of the Act did not

disclose that it was issued to reassess the escaped income of

the HUF, is a finding of fact. In the statement of the case, the

Tribunal has mentioned that it is annexing the copies of the

notices issued under Section 148 of the Act. But, the copies of

those notices have not been annexed along with the statement

of the case, sent by the Tribunal. Nor they have been included

in the paper book filed by the Department. In this state of

affairs, this Court proceeded to adjudicate the referred two

questions in the light of the findings of fact recorded by the

Tribunal, taking them to be correct. Both the counsel advanced

the arguments only on the question as to whether the notice

issued to an assessee in his individual capacity can be treated

to be a valid notice to reassess the income of HUF of which he

is a Karta.

ITA No. 1532/Del/2017 21 Narendra Kumar Gill 16.1 In the above case, the notice was issued to the individual

and assessment was completed in the case of HUF. However, in

the instant case, the notice was issued to the individual, it was

mentioned in the notice specifically that it is for the individual

and assessment was also completed in the case of individual.

We are, therefore, of opinion that the notice under Section

34 issued to Sri Madan Lal Agarwal on 29th September, 1962,

was vague and as such invalid. The vagueness of the said notice

did not stand cured because the ITO at a later stage informed

the assessee that he was to file his return in the status of HUF.

The proceedings following such a vague and invalid notice also

stand vitiated. In this view of the matter, it is not necessary for

us to go into the various other grounds raised by the learned

counsel for the assessee for questioning the validity of the

proceedings under Section 147(a) of the I.T. Act, 1961.

17.1 While the above judgment clearly deals with the

vagueness, in the case before us, the notice rather specifically mentioned that it is meant for “individual” – “�ि�”.

ITA No. 1532/Del/2017 22 Narendra Kumar Gill 18. P.N. Sasikumar and Others vs CIT (1987) 170 ITR 80

(Ker): In this case, the dispute is whether the notice has to be

served on the AOP or an individual when the assessment was

meant to be made in the hands of the AOP. The facts are not

applicable to the instant case.

Taxmann.com 67 (Pune-Trib): In this case, “the PAN Number

appearing in the Notice under section 148 pertains to individual

(Karta) and not the Noticee HUF. He next contended that a bare

perusal of recorded reasons under section 148(2) would show

that the reasons have been recorded in the name of Individual

i.e. 'Shri Dnyaneshwar Govind Kalbhor' whereas the assessment

is framed in the hands of HUF and not the Individual”. In this

case, the notice issued to entity ‘X’ and assessment was made

in the case of entity ‘Y’, hence these facts are not applicable to

the instant case before us.

19.1 In the case before us, the land has been sold by the

assessee, the satisfaction has been recorded by the AO in the

case of the assessee, the notice has been issued in the case of

the assessee, the notice has been addressed and served on the

assessee, the notice clearly mentioned that the assessment is

ITA No. 1532/Del/2017 23 Narendra Kumar Gill being made in his ‘Individual’ (“�ि�”) capacity. There was no

mention of HUF either in the satisfaction recorded nor in the

body of the notice that has been issued.

obligations and amounts to disturbing the settled position of the assessee.

No doubt, such action has certain civil consequences implicit in it and it

imparts jurisdiction to the Assessing officer to reopen a completed or a

time barred assessment and thus seeks to disturb an assessment which

has otherwise reached finality. Section 147, thus cannot be invoked lightly

or without application of mind and without reasonable satisfaction of the

Assessing officer and without meeting the time limits set out in the

provisions of Section 147 as is a substantive provision and imparts

jurisdiction. A jurisdictional defect cannot be ascribed to be a mere

technical defect and thus cannot be condoned by invoking section 292B of

the Act. There is a marked distinction between want of basic and inherent

jurisdiction and irregular exercise of jurisdiction. Defect on irregular

exercise of jurisdiction alone can possibly be cured by taking shelter

of section 292B. In the instant case, on going through the record, it can be

said that the Assessing Officer invoked the provisions which can be

considered judicious in invoking the jurisdiction. The reasons have been

recorded rightly after going through the information and the notice has

been rightly issued. When we try to look into the jurisdictional defect, we

ITA No. 1532/Del/2017 24 Narendra Kumar Gill don’t find there is any jurisdictional defect by the assessee by the way of

assuming of jurisdiction or recording of satisfaction or issue of notice or

specifying very clearly to whom the assessment is proposed. The wrong

mention of PAN may utmost taken as a mistake but not a defect. There is

no defect in exercise of jurisdiction only there is a mistake of typing a

wrong PAN. When we examine whether this incorrect mention of PAN can

make the entire notice invalid, we are guided by the entire facts and

circumstances of the case. We are not persuaded by the arguments of the

representative of the assessee to read “HUF” in the notice when the notice mentions clearly about the “individual” (“�ि�”). In the printed notice,

word “�ि�” the has been specifically mentioned in the

handwriting by the AO indicates clear application of the mind of

the Assessing Officer while issuing the notice. We cannot read into HUF when “�ि�” is written on the notice. The reasons

recorded were not of HUF but of the assessee in “individual”

capacity. Neither the word “HUF” nor the PAN of “HUF”

mentioned in the reasons record, hence we cannot assume

something which is not on record.

Hon’ble Court held that the notice to be valid in view of section 292-B of

the Act as it conformed to the substance of the Act and was to effectuate

ITA No. 1532/Del/2017 25 Narendra Kumar Gill the purpose of the Act. Further it was held that defects or omissions, if

any, in the notice did not cause any prejudice to the petitioners. The court

went on to state that it can assume jurisdiction only when the notice on

the face of it is illegal and that the court must not adopted a

hypertechnical approach to quash a notice because it does not conform to

all the niceties expected by an assessee in such a notice. The court has to

adopt a broad and pragmatic view in construing such a notice in order to

find out whether in substance and effect it is in conformity with or

according to the intent and purpose of the Act. An inconsequential

technicality must not be allowed to defeat justice.

envisaged to all the stakeholders whether it is the citizen or the

state. In our case, the assessee as well as the revenue. Even,

the revenue is precluded from treating the “return of income”

filed by the assessee as null and void in cases where there has

ITA No. 1532/Del/2017 26 Narendra Kumar Gill been a mistake, defect or omission in such return of income.

The mistakes in the return such as wrong quoting of the Section

or provision pertaining deduction, exemption or wrong filing of

the column or wrong typing of PAN or address are not to be

treated as fatal to make a valid return invalid. Section 292B has

been invoked to benefit the assesses where the returns have

been filed in correct jurisdiction. In the case of Nicholas

Applegate South East Asia Fund Ltd. Vs ADIT, the Co-ordinate

Bench of ITAT held that the question of application of Section

292B cannot be prejudged by finding that return, notice, etc. is

not as per the requirement of the statute and is/are invalid; the

finding that the return or notice etc. is invalid or to what extent

it is invalid is unnecessary and counterproductive; if in

substance and in effect return, notice or assessment is in

conformity with or according to intent and purpose of the Act,

the mistake defect or omission is to be ignored as per the

underlining philosophy of Section 292B. There is a marked

difference between want of basic or inherent jurisdiction and

exercise of authority which has not been vested with the

Assessing Officer. In the instant case, the Assessing Officer has

rightly invoked the provisions of Section 148 by recording the

reasons and by issue of notice to the proper person to which it

ITA No. 1532/Del/2017 27 Narendra Kumar Gill was intended to. The Co-ordinate Bench of the Tribunal in ITA

No. 3875/Mum/2005 in the case of NASE Asia Fund Ltd. held

that “10. On a plain reading of this section, it is observed that

the return of income, etc., shall not be considered as invalid

merely by ·defect or omission in such return if it is in substance

and effect in conformity with the intent and purpose of this Act.

The rationale behind this section is that the return of income,

assessment notice, summons or other proceedings should not be

‘held to be invalid due to technical mistakes, which otherwise

do not have much impact touching its legality provided such

return, assessment notice, summons or other proceedings, etc.,

are otherwise in conformity with the purpose of the Act. The

‘purpose of the Act is to charge income tax on the total income

of the assessee. This ‘purpose’ is best fulfilled if the correct

income is determined and tax is charged thereon. It involves

the making of assessment by the AO in which the particulars at

income as furnished by the assessee are scrutinized for

determining the correct total income. There may be a case in

which the assessee has intentionally or unintentionally claimed

wrong deductions or exemptions etc., to which he is not

entitled. In that case the AO makes the disallowances as per

law. Still in another situation the assessee may have stated the

ITA No. 1532/Del/2017 28 Narendra Kumar Gill correct income and no disallowance etc. are required. The

‘purpose of the Act’ is achieved when the correct total income is

determined either by way of making adjustments by the

Assessing Officer and enhancing the stated income to the

correct income or by the assessee himself by furnishing the

correct particulars of income, not warranting any enhancement

by the AO. It, therefore, transpires that if a return has been

furnished by the assessee which is otherwise in substance and

effect in conformity with or according to the intent and purpose

of this Act, then any technical defect in it would not render it to

be invalid. In such a situation the provisions of section 292B

would come to the rescue of the assessee and thus debar the

revenue authorities from declaring such return to be invalid”.

case) is in substance and effect in conformity with or according

to the intent and purpose of the Act, the action of the AO

cannot be faulted with. Section 292B meant to save only those

notices in which there is in advertent error. Its saves those

notices which in substance and effect issued according to the

interest and purpose of the Act. In the present case, there is an

in advertent error in the notice issued by the AO reflecting only

the PAN column of the notice mentions PAN of the “HUF” instead

ITA No. 1532/Del/2017 29 Narendra Kumar Gill of the ‘individual’ whereas the body of the notice and the

address shows that the notice is clearly meant for the assessee

himself. The provisions of Section 292B have been further

clarified the Circular No. 179 of CBDT dated 30.09.1975 that

this provision has been made to provide against purely technical

objects without substance coming in the way of validity of the

assessment proceedings. In the case of CIT Vs Masonellan India

Ltd. 245 ITR 568 (Ker.), the Hon’ble Court held that Section

292B can be invoked if the action was in substance and in effect

in conformity with the intent and purpose of the Act. The entire

proposition arises from the established juris prudence that

substance over form is the underlying philosophy of Section

292B. If in substance and in effect the notice is in conformity

and with or according to the intent and purpose of the Income

Tax Act, the mistake is to be ignored. Quoting a wrong PAN in

the presence of numerous evidences to prove the intent and the

purpose is a subject matter of Section 292B in the instant case.

If the significance of word “substance” and “effect” is kept in

mind then there is no justification to treat the notice as in

valid. In the case of Shrish M. Dalvi 287 ITR 242 (Mum), the

Hon’ble Court observed that as long as the defect or mistake

has not caused prejudice to the assessee, the mistake was

ITA No. 1532/Del/2017 30 Narendra Kumar Gill protected under the umbrella of Section 292B of the Act. The

procedural provision has to be examined from the stand point of

substantial complaints. Where such violation has occasioned

prejudice to the assessee then only the assessee is protected

from the rigors of wrong exercise of jurisdiction. As long as, no

prejudice is occasioned to the assessee, as in this case the

notice issued is protected by the provisions of Section 292B.

issued to Shri XXXXX “HUF” or Shri XXXXX “Karta” or Shri

XXXXX “Karta HUF” is a valid notice when the assessment

proceedings are meant for Shri XXXXX “individual”. In the

instant case, the notice has been addressed to “Shri Narendra Kumar Gill” and also mentioned the word “�ि�” which makes it

more clear and explicit to whom the notice is aimed at. It is the

assessee whether individual, HUF, company, firm, AOP which

owns the PAN. When the issue of primacy of the assessee over

the PAN or primacy of the PAN over the assessee is to be

considered, it is certainly the assessee (individual, HUF,

company, firm, AOP) takes precedence.

judgments of the various Courts, the reasons recorded, the

ITA No. 1532/Del/2017 31 Narendra Kumar Gill address on the notice, the body of the notice issue of notice, we

hold that the notice of the Assessing Officer wherein there is a

mistake only in the PAN number, the notice is covered by the

provisions of Section 292B.

The issue of Valuation:

the property which was purchased by his father Shri Bui Chand

on 03.07.1969 alongwith other co-owners, his father Shri

Mangai Singh, mother Smt Giriraj Kaur and brother Shri Om

Prakash. Meanwhile Shri Mangai Singh expired and his share

devolved on his son Shri Bui Chand and Shri Om Prakash. Vide

Hibenama (Gift Deed) dated 10.06.1974, Shri Om Prakash gifted

his share in land to his brother Shri Bui Chand. Shri Bui Chand

expired on 08.08.1972 and the assessee - Narendra Kumar Gill

inherited the assets of his father Shri Bui Chand including the

land in question. Thus assessee owned 75% of the land

measuring 689.70 sq mtr (825 sq yd). On this land, assessee

was running a petrol pump in the name of Modern Service

Station after constructing a building on 82 sq mtr of land. The

assessee furnished a sale deed dated 31.12.2008 reflecting the

sale of land at a consideration of Rs.50,00,000/-, share of the

ITA No. 1532/Del/2017 32 Narendra Kumar Gill assessee being 37,50,000/- though the building of petrol pump

and the machinery thereon was not sold by the assessee. The

assessee also explained that the property was mortgaged with

the bank and therefore, it was a distress sale. Since as a

consequence of sale, loss was incurred by the assessee the

same was not reflected in the return filed originally.

Muzaffarnagar sought the information regarding commercial rate

of the property from Tehsildar Sadar Muzaffarnagar, who vide

letter-dated 02.02.2015 stated that in the year 1981, rate of

the commercial property were not available though the rate of

property situated in Ram Puri Labdawala was Rs.2000-3000 per

sq yd. Tehsildar has also stated that on local inquiry it was

informed that the market rate of the aforesaid area was approx

72,000 to 73,000 per sq. yd. Before the Assessing Officer,

assessee had furnished valuation report of the registered

valuer, reflecting the value of property at Rs.32,39,000/- as on

01.04.1981, share of the assessee was 24,29,060/-.

Registered valuer had taken the value of property at Rs.3,600/- per sq. mtr. on the basis of report of Tehsildar. The assessee

also furnished the rate list of various period to stress the point

that at all points of time, the value of commercial property and

ITA No. 1532/Del/2017 33 Narendra Kumar Gill residential property was different. Since for the purposes of

sale consideration, rate of commercial property was adopted

therefore for the purposes of cost of acquisition also commercial

rate was to be adopted.

claimed by the assessee sought the information from ADM

Finance who stated the rate of the property at Rs.100/- per sq.

yd. as on 01.04.1981. Accordingly, Assessing Officer took the sale consideration at the circle rate which was Rs.24,500/- per time and calculated the capital gain as sq mtr at the relevant under:-

Full value of consideration:

24,500 x 689.70 sq mtr = 1,93,93,650/-

Less : value of machinery = 2,00,000/-

Net amount = 1,91,93,650/-

Cost of acquisition:

Rs.120 per sq mtr x 689.70 sq mtr = Rs.82,764

Indexed cost of land = 82764x582/100 Rs.4,81,686/-

Long term capital gain Rs.1,87,11,964/-

Share of assessee (75%) Rs.1,40,33,973/-

ITA No. 1532/Del/2017 34 Narendra Kumar Gill Accordingly, Assessing Officer made the addition of capital

gain of Rs.1,40,33,973/- to the income of assessee.

ld. CIT(A). On merits, the assessee challenged the valuation of

land as on 01.04.1981 taken by the Assessing Officer at

Rs.120/- per sq mtr claiming that the said valuation pertained

to Rampuri which was a residential area whereas land in

question was situated on GT Road, Roorkee Road, Muzaffarnagar

which was a commercial property.

by the DVO (reference was made by the Assessing Officer

during the assessment proceeding) who had adopted the value

of land at Rs.167.50 sq mtr (Rs.120/- per sq mtr + 20% on

account of location being corner plot + 20% being commercial

property).

valuation as made by the DVO. He directed to take sale

consideration at Rs.24,500/- per sq. mtr. as per stamp duty

valuation and to take cost of acquisition as on 01.04.1981 at

Rs.167.50 per sq mtr as taken by DVO and to compute the

capital gain accordingly. The report of the DVO has been

ITA No. 1532/Del/2017 35 Narendra Kumar Gill received during the proceedings before the ld. CIT(A), while the

reference has been made during the assessment proceedings.

objected to the reference made to the valuation officer by the

assessing authority.

“1. The Ld. CIT(A) has taken into cognizance the

provisions of section 55(2)(b)(i) wherein the valuation by an

approved valuer is to be taken as “Fair Market Value” for

acquisition of property.

1.1 The provisions of section 55A(a) authorize the

Assessing Officer to refer for valuation only when the value

ITA No. 1532/Del/2017 36 Narendra Kumar Gill as claimed is less than its “Fair Market Value”. The provision

prior to amendment on 01.07.2012 is relevant to AY 2009-10.

Authorities erred in holding that amended provisions will

apply on the assessment which are pending on the date of

amendment and section 55A of the Act lays down the

procedure and erred in holding that amended provisions are

applicable on the assessment proceedings for year 2009-10 in

spite of amendment on 01.07.2012.

2 The Ld. CIT(A) wrongly held that reference is rightly made

to DVO in provisions of section 55A without considering the

words “is less than the fair market value” and erred in

considering the reference under section 55A(b) which clearly

states that it will apply in any other case i.e. a case not

covered by section 55A(a) of the Act.

3 That the Ld. CIT(A) has without considering the provisions

of section 55A has erred in approving the valuation report of

DVO, which was not placed on records upto assessment and

without considering the basis of valuation taken.

the ld. AR has argued that the reference to the Valuation

Officer u/s 55A cannot be resorted to when the value claim is

more than the fair market value. The ld. AR argued that the

ITA No. 1532/Del/2017 37 Narendra Kumar Gill provisions that have come into force w.e.f. 01.07.2012

cannot be applied to the case of the assessee pertaining to

the assessment year 2009-10.

situated at GT Road, Muzaffarnagar and commercial property

which was wrongly mentioned as Rampuri Mohalla,

Muzaffarnagar. The valuation of the prices at Rampuri and GT

Road varies to a great extent.

Manjulaben M. Unadkat (2015) 55 Taxmann 62 (Guj.), Mr.

Anjali Bharat Kabra Vs ITO, Ward-2(2), Jalgaon (2016) 75

Taxmann 5 (Pune-Trib.), CIT Vs Puja Prints (2014) 224

Taxmann 22/360 (Bom.).”

which have been duly perused.

material available on record.

jurisdiction by the AO u/s 55A.

ITA No. 1532/Del/2017 38 Narendra Kumar Gill 39. The provisions of Section 55A before 01.07.2012 reads as

under:

“55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer—

(a ) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value;

(b) in any other case, if the Assessing Officer is of opinion—

(i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or

(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do,

and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.

Explanation.—In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the Wealth- Tax Act, 1957 (27 of 1957).”

force w.e.f. 01.07.2012 read as under:

“55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer—

ITA No. 1532/Del/2017 39 Narendra Kumar Gill

(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed [is at variance with its fair market value];

(b) in any other case, if the Assessing Officer is of opinion—

(i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or

(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do,

than its fair market value” to “is at variance with its fair

market value”.

2012. Clause 20 of the Bill seeks to amend section 55A of the Income-

tax Act relating to reference to valuation officer. The existing provisions

contained in clause (a) of the aforesaid section 55A provide that an

Assessing Officer with a view to ascertain the fair market value of a capital

asset may refer the valuation of a capital asset to a Valuation Officer

where, in his opinion the value of the asset as claimed by the assessee is

less than its fair market value. It is proposed to amend the aforesaid

clause so as to provide that reference may be made to the Valuation

Officer for ascertaining the fair market value of a capital asset in case such

ITA No. 1532/Del/2017 40 Narendra Kumar Gill value is at variance with its fair market value instead of making a

reference only when such value is less than its fair market value. This

amendment will take effect from 1st July, 2012.

capital asset became the property of the tax payer (or of the previous

owner) before 1st April, 1981, the tax payer has the option of substituting

the cost of acquisition with the fair market value of the asset as on 1st

April, 1981. Higher the fair market value adopted by the tax payer as cost,

the lower would be his capital gains on sale. As per present provisions of

the Income-tax Act, the Assessing Officer could not refer this valuation to

a Valuation Officer, even if he was of the opinion that the value claimed by

the tax payer is higher than the fair market value, due to the specific

wording of the relevant provision. It is proposed to change the wording so

that if the Assessing Officer is of the opinion that the value taken by the

tax payer is higher than the fair market value of the asset as on 1st April

1981, then he can make a reference to the Valuation Officer. The

valuation officer would then determine the fair market value of the

property as on 1.4.1981. This amendment is applicable with effect from

1st July, 2012.

w.e.f. 01.07.2012 is clarificatory or procedural or substantive or

ITA No. 1532/Del/2017 41 Narendra Kumar Gill ratificatory or declaratory or retrospective or prospective. On

going through the explanatory note to the Finance Bill 2012, we

find that the amendment is substantive in nature and is

prospective. The amendment is applicable to all the proceedings

taken up after 01.07.2012. In the case of Dove Investments

Pvt. Ltd. Vs Gujarat Industrial Investment Corporation (2006)

129 Comp Cases 929 (SC), the Hon’ble Apex Court has observed

that regard must be had to the context, the subject matter and

object of the statutory provision in question in determining

whether the same is mandatory or directory. No universal

principle of law could be laid down in that behalf as to whether

a particular provision or enactment shall be considered

mandatory or directory. It is the duty of the Court to try to get

the real intention of the Legislature by carefully analyzing the

whole scope of the statute or section or phrase under

consideration. In the instant case, the notice has been issued

on 18.03.2014 and the proceedings have been concluded on

31.03.2015. Hence, the invoking of provisions of Section 55A

existing from 01.07.2012 by the Assessing Officer and reference

to the Valuation Officer which is in accordance with the

provisions of the Act inforce at that time, cannot be faulted

with.

ITA No. 1532/Del/2017 42 Narendra Kumar Gill

Objection to the Valuation Process:

of valuation on the grounds that the area of GT Road and

Rampuri Mohalla are different. The property is situated at

Roorkee Road, Muzaffarnagar between hospital to Roorkee

Chungi. The ld. AR argued that the Assessing Officer has no

reason to refer the property for valuation at the first instance.

Further, it was argued that the registered valuer has

determined the value as on 01.04.1981 @ Rs.3,600. The

Tahsildar Sadar has replied that the rates range from Rs.2000-

3000 per sq. yd. whereas the AO has taken Rs.120/- per sq.

yd. based on the report of the ADM Finance and the ld. CIT(A)

has determined the price @ Rs.167.50 per sq. mtr. based on the

report of the DVO. It was argued that the reference itself is

illegal and the valuation process is faulty.

material available on record.

Assessing Officer has rightly invoked the provisions of Section

ITA No. 1532/Del/2017 43 Narendra Kumar Gill 55A. To ascertain the value of the capital asset during the

assessment proceedings, the authorities need to determine the

value by making reference to the Valuation Officer for

ascertaining the correct value. The Assessing Officer has to

primarily examine the report given by the assessee by the way

of registered valuer and come to a satisfaction whether a

further reference is required or not. In the instant case, we find

that the AO has obtained circle rates notified by State

Government as provided by the ADM Finance and after going

through the difference in the values determined by the

registered valuer and the circle rates, the AO had come to

conclusion to refer the property to DVO. The grounds on which

the opinion of the AO is based are reflected at column 14 of the

reference letter by the AO to the DVO. Thus, the AO had

fulfilled the primary condition of satisfying himself for reference

to the DVO. From the record, we find that the property was

known as Plot No. 3, Mohalla Rampuri, Roorkee Road,

Muzaffarnagar and the same has been inspected by the

Valuation Officer, Meerut on 07.10.2015 and the report has

been finalized on 15.12.2015. Hence, there is no dispute about

the property in question that is to be valued. The DVO has in

his report mentioned that the property is at Mohalla Rampuri,

ITA No. 1532/Del/2017 44 Narendra Kumar Gill Roorkee Road, Muzaffarnagar and determined the FMV of the

land @ Rs.100/- per sq. mtr. and adjusted with construction

and determined an amount of Rs.167.50 per sq. mtr.

question if the value as determined by the registered valuer is

correct or the value determined by the DVO is correct.

perform the same task one in a private capacity and the other is

appointed by the department. Both authorities have to prepare

the reports based on the circle rate, construction parameters,

location, cost of materials and other established norms.

on the notified land rates for Mohalla Rampuri, Roorkee Road,

Muzaffarnagar which is the place of situs of the property and

after considering the construction, the DVO has determined the

value @ Rs.167.50 per sq. mtr. The assessee contended that

the deduction @7.5% is not justified as the construction work

was carried through the contractor. Similarly, the assessee has

disputed the civil work and the cost of structure. The assessee

has also disputed and sought extra amount for height @Rs.125

for 0.30 Mt.Ht. The assessee submitted that when the plot was

ITA No. 1532/Del/2017 45 Narendra Kumar Gill purchased it was a very low lying area and to built the service

station and petrol pump earth filling was required for which no

benefit has been given by the DVO. Similarly, it was contended

that as there is low out flow of water because of the service

station where washing of vehicles takes place and a front nala

was required to be constructed. No benefit has been given for

the cost of construction of the boundary wall. Similarly, the

tube well room of Ht. 3.35 Mt., Size: 11.15 Smt. has been

constructed and the benefit of the basic rates has been denied.

It was argued that the land rates segment has not been

properly applied.

the objection of the assessee. Further, we have also gone

through the reports of Tahsildar Sadar, ADM Finance regarding

the circle rates. While the report of the DVO is based on the

prices given as per the circle rates notified by the ADM Finance,

the value determined by the registered valuer was based on the

report of the Tahsildar which was based on the local enquiries.

There has been a dispute as to which segment price of Rampuri

Mohalla has to be taken into consideration. The benefit of

construction has not been adequately allowed.

ITA No. 1532/Del/2017 46 Narendra Kumar Gill 53. Hence, keeping in view the entire facts of the case, we

hold that the ends of the justice would well served by referring

the matter back to the file of the AO to accord further benefit to

the construction of nala, boundary wall, tube well, earth filling

work and to determine the price taking into consideration the

value of Mohalla Rampuri segment.

appreciations to Ms. Premlata Bansal, Sr. Adv. and Ms. Rakhi

Vimal, Sr. DR for their powerful, persuasive arguments.

reopening and reference to Valuation Officer is dismissed. The

process and method of determining the FMV is set aside with

directions.

Order Pronounced in the Open Court on 22/12/2020.

Sd/- Sd/- (Kuldip Singh) (Dr.B.R.R.Kumar) Judicial Member Accountant Member Dated: 22/12/2020 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR