2023 (12) TMI 923 - AT - Income Tax

Validity of notice issued u/s 143(2) - validity of the assessment order in absence of any effective order passed u/s 127 - HELD THAT - We notice that the present issues are covered against the assessee in view of the Hon ble Supreme Court judgment in the case of Kalinga Institute of Industrial Technology 2023 (6) TMI 1076 - SC ORDER wherein as held that when assessee had participated pursuance to the notice issued u/s 142(1) and had not questioned the jurisdiction of the assessing officer as per section 124(3)(a) of the I.T. Act precludes the assessee from questioning the jurisdiction of the assessing officer. While going through the present facts of the case and issue involved, we find that assessee has never raised any question before the AO challenging the jurisdiction of AO within 30 days of receipt of notice u/s 142(1) of the Act as well as transfer of jurisdiction u/s 127 of the Act. In such circumstances both the grounds taken by the assessee has no merit, therefore, the grounds taken by the assessee are hereby dismissed. Applicability of section 43CA - valuation of impugned sold out units as determined by the AO in terms of value determined by the stamp duty authority - whether agreement of sale was entered prior to applicability of the provision itself by the Finance Act, 2013 w.e.f. A.Y. 2014-15? - HELD THAT - When the impugned order was passed by the ld. CIT(A) did not consider the DVO s report as available with him while passing the impugned order, we feel it necessary to remand back the instant issue to the file of AO with the direction to reconsider the valuation report furnished by DVO by applying proposition of law as laid down in the case of Maria Fernandes Cheryl vs ITO 2021 (1) TMI 620 - ITAT MUMBAI and also considering the documents as well as necessary submission made by the assessee before him and it is also directed that while doing so the ld. AO should give opportunity of being heard to the assessee. In terms of above, the instant issue is hereby allowed for statistical purposes. DVO s report in the case of assessee was furnished beyond the limitation period as prescribed under the law, therefore, the DVO s report cannot be considered for the purpose of assessing the income of the assessee - While going through the impugned order, we notice that DVO s report was never taking into consideration for the purpose of assessing the income of the assessee by the authority below and while going to the facts and circumstances of the case, we find that present issue involved in this appeal is similar to the decision supra would apply mutantis mutandis. Accordingly, we set aside the matter to the file of AO with a direction to decide the issue afresh. Both the appeals of the assessee are hereby allowed for statistical purposes.

Summary

Issues involved:
The issues involved in this case are:
1. Validity of notice u/s 143(2) and legality of assessment order without an effective order u/s 127.
2. Applicability of section 43CA of the Income Tax Act, 1961 to the case where the agreement of sale was entered prior to the provision's applicability.

Issue 1: Validity of notice u/s 143(2) and legality of assessment order without an effective order u/s 127:
The appellant challenged the validity of the notice issued u/s 143(2) by the assessing officer and the legality of the assessment order due to the absence of an effective order u/s 127. The appellant argued that the notice was invalid as the assessing officer did not have jurisdiction over the assessee, citing CBDT instructions and a previous tribunal decision. The appellant contended that the assessing officer accepted that jurisdiction lay with a different authority based on pecuniary limits. The Departmental Representative argued that the jurisdiction was with the assessing officer based on PAN jurisdiction and internal procedures for transferring cases. The Tribunal dismissed the appellant's grounds, citing a Supreme Court judgment that precludes the assessee from questioning jurisdiction if they participated without objection.

Issue 2: Applicability of section 43CA to pre-existing sale agreement:
The appellant contested the application of section 43CA to their case, as the sale agreement was entered before the provision's introduction. The appellant argued for a retrospective application based on a clarificatory nature of a subsequent amendment. The appellant requested consideration of cases where the valuation difference is less than 10%. The assessing officer submitted a detailed analysis of the valuation differences. The Tribunal remanded the issue back to the assessing officer to reconsider the valuation report in light of relevant case law and submissions by the appellant, providing an opportunity for the appellant to be heard.

Separate Judgment:
In a similar case (ITA No. 691/Kol/2023), the Tribunal directed the assessing officer to decide the issue afresh as the valuation report by the Departmental Valuation Officer was furnished beyond the limitation period. The Tribunal found the issue to be similar to another case and set it aside for fresh consideration.

Conclusion:
Both appeals of the assessee were allowed for statistical purposes, with one issue remanded back to the assessing officer for reconsideration and the other issue allowed for statistical purposes.