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TMI Blog2020 (12) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the property when purchased was under semi construction stage and there were disputes between builders and the purchasers and ultimately the builder was abandoned the project and left. The assessee also stated that what was purchased as per the agreement is different than what was given to him as the property was sold to two persons. So there is dispute in the area acquired by the assessee also. In such circumstances, it was all the more necessary for the AO to refer it to the Valuation Officer which he miserably failed. Even at the stage of appellate proceedings when the assessee produced Valuation Officer s report who valued Flat No. 601 in the very same Building at ₹.1,00,76,000/- the Ld.CIT(A) should have called for remand report and in turn the Valuation Officer s report which the Ld.CIT(A) failed to do so. In such circumstances the addition made by the Assessing Officer is totally unjustified and cannot be sustained. Revenue cannot be allowed a second inning by sending the matter back to the Assessing Officer to prove before the Assessing Officer that the sale consideration was the fair market value of the property purchased by the assessee when the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constructed and not for the properties partially constructed and no fresh facts have to be examined and therefore prayed that in view of the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., v. CIT [229 ITR 383] the additional ground be admitted for adjudication. 5. On the other hand, Ld. DR has opposed for admission of the additional ground. Ld. DR submits that since there is no distinction in the Act as to the applicability of the provisions of section 56(2) to either fully constructed properties or partially constructed properties, the additional ground shall not be entertained at this stage. 6. On hearing both sides, we are of the view that the additional ground raised by the assessee is purely a legal ground and required no verification of the facts and thus following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., v. CIT (supra), we admit the additional ground for adjudication. 7. Briefly stated the facts are that, assessee engaged in the business of readymade garments in the name of M/s Shadab Garments filed his return of income on 04.09.2014 declaring total income of ₹.2,67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) confirmed the addition made and passed the order against the assessee. 9. Now firstly coming to the regular grounds of appeal, Ground No. 1 of grounds of appeal is general in nature and requires no adjudication. 10. With regard to Ground No. 2 of grounds of appeal i.e. the Ld.CIT(A) erred in confirming the order of the Assessing Officer though Assessment Order is liable to be canceled on the ground that the Assessing Officer failed to refer the issue of valuation to the District Valuation Officer though he was legally required to do so, Ld. Counsel for the assessee submits that the Assessing Officer did not refer the matter of valuation of the property to the District Valuation Officer even though the assessee disputed the valuation made by the Stamp Valuation Authority. Ld. Counsel for the assessee submitted that during the course of assessment proceedings, the assessee had filed before the Assessing Officer a copy of Valuation Report of the Perfect Valuation Consultants, being a Govt. Regd. Valuer who valued the flat at ₹.82.60 lakhs. The same was filed before the Ld. Assessing Officer since the assessee disputed the valuation made by the stamp valuation autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter disputing the valuation adopted by the stamp valuation authority, still it is a fact that assessee objected as he did file the copy of valuation report from a Government approved valuer according to which the value of the property is much less than the Stamp Duty value of the property and it clearly shows that the assessee disputed the valuation. 13. Learned Counsel for the assessee with regard to the fulfillment of second condition of section 50C(2) of the Act submitted that assessee has not disputed the valuation made by the Stamp Valuation Authority by way of any appeal or revision before any other authority, Court or High Court. Accordingly, the second condition also stands fulfilled. Thus, it is submitted that both the conditions as stipulated u/s 50C(2) of the Act are satisfied. It is submitted that though the assessee has disputed the valuation adopted by the stamp valuation authority by furnishing a copy of valuation report the courts have held that even where a simple request is made by the assessee to refer the matter of valuation to the District Valuation Officer, the Assessing Officer is duty bound to do the same. This is because the term may used in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. 19. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. In this case the Assessing Officer while completing the assessment noticed that assessee had purchased immovable property i.e. Flat No. 1102 in the Building Nebulla Empress for an amount of ₹.40,00,000/-. However, he observed that the market rate of the said property as per Stamp Duty Authority is ₹.2,20,49,999/-. The assessee was therefore required to explain as to why the difference between stamp value and the purchase value amounting to ₹.1,80,49,999/- should not be considered as income chargeable to tax under the head Income from Other Sources under section 56(2)(vii) of the Act. 20. In reply assessee filed letter explaining as to why the property was purchased only for ₹.40,00,000/- which is as under: - The assessee has actually acquired only one residential unit of 225 sq.ft. Flat A-1102 during the year and further the assessee's wife has acquired A-1102 and both the flats were acquired at combined price of ₹ 40 lacs. The area by combination of assessee and his wife is much lower of the value adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alued at ₹.1,00,76,000/-. We observed that even at this stage the Ld.CIT(A) did not choose to either call for the remand report or refer it to the Valuation Officer for the correct valuation of the property, instead he finds no reason to accept and apply the valuation of some other flat which in his opinion is atleast five floor above Flat No 601 with consequential escalation in cost, different areas of two flats and amenities etc., 23. We observe that the assessee all along is disputing the valuation by submitting Registered Valuer report before the Assessing Officer and also explaining that the property was semi furnished and even at the first appellate stage the report of the Valuation Officer II, Mumbai was also furnished wherein in the very same Building Flat No. 601 was valued at ₹.1,00,76,000/- but the lower authorities completely brushed aside the objections of the assessee. The Assessing Officer failed in his duty to refer the matter to the Valuation Officer as provided u/s. 50(C)(ii) r.w. proviso to section 56(2)(vii) of the Act. 24. In the case of ITO v. Astha Goel the Delhi Tribunal in ITA.No. 6005/Del/2017 dated 08.10.2018 considered almost similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stamp valuation authority. Further, during the appellate proceedings, the assessee had filed sale instances of two comparable cases in the nearby area which were forwarded by the ld. CIT(A) to the Assessing Officer and the Assessing Officer at that time also did not refer the matter to the DVO. Therefore, the order of the ld. CIT(A) being in accordance with law should be upheld. 16. We find merit in the above argument of the ld. counsel for the assessee. It is an admitted fact that during the course of assessment proceedings the assessee had filed a valuation report of Captain Suresh Dutt Associates, Government of India approved and registered valuers, who valued the property at ₹ 75,40,000/- vide their report dated 07.06.2013, copy of which is placed at pages 33 to 37 of the Paper Book. It is also an admitted fact that the assessee during the course of assessment proceedings had filed the representations made by the Narela Industrial Complex Welfare Association to the then Chief Minister of Delhi dated 09.12.2010 and another on 30.01.2014, copies of which are placed at pages 29 to 32 of the Paper Book. However, it is strange to note that there is not a whisper in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket rates and circle rates are enhanced arbitrarily without any logic were also filed. The submission of AR of assessee has been considered and documents now furnished has been examined and placed on records. The copy of valuation report and the letters written to the Chief Minister were also filed by the AR of assessee during the course of assessment proceedings, but the Assessing Officer had not considered the same. Now at the remand report stage the AR of assessee filed copies of two sale deed i.e. dated 13.07.2013 and 08.11.2015 of the same locality and area of the property. These new evidences were not produced before the AO during the assessment proceedings where the properties were sold well below the Circle Rates. The AR argued that due to slump in the property market, the properties in the Narela Industrial area are being sold well below the Circle rates. The documentary evidences now furnished by the AR of assessee is placed on records. In view of above narrated submissions and the facts of the case, it is requested that the appeal of the assessee may please be adjudicated on the merits of the case. 17. So far as the reliance placed on by the Revenue on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted above is generally by calling what is known as remand report . The purpose of this enabling clause is essentially to ensure that the matter of assessment reaches finality with all the requisite facts found. The assessment proceedings re- opened on the basis of preliminary satisfaction that some part of the income has escaped assessment, particularly when some unexplained credit entries have come to the notice (as in Section 68), cannot conclude, save and except by reaching satisfaction on the touchstone of the three tests mentioned earlier; viz. the identity of the third party making the payment, its creditworthiness and genuineness of the transaction. Whilst it is true that the assessee cannot be called upon to adduce conclusive proof on all these three questions, it is nonetheless legitimate expectation of the process that he would bring in some proof so as to discharge the initial burden placed on him. Since Section 68 itself declares that the credited sum would have to be included in the income of the assessee in the absence of explanation, or in the event of explanation being not satisfactory, it naturally follows that the material submitted by the assessee with his ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circle rate in the same area, the ld. CIT(A) called for a remand report from the Assessing Officer and the Assessing Officer at that time also did not refer the matter to the DVO. Therefore, under these circumstances, the decision of the Hon ble Delhi High Court in the case of Jansampark Advertising and Marketing Ltd. (supra) as relied on by the Revenue in the grounds of appeal will not be applicable to the facts of the present case. 19. We find identical issue had come up before the Tribunal in the case of Aditya Narain Verma (HUF) (supra). In the said decision also, the Department had requested the Tribunal for setting aside the matter to the file of the Assessing Officer for referring the case to the valuation officer. However, the Tribunal after considering the various submissions made by the assessee rejected such request of the Revenue and upheld the order of the ld. CIT(A) by observing as under :- 4.1 On the very perusal of the provisions laid down under section 50C of the Act reproduced hereinabove. we fully concur with the finding of the Id. CIT (Appeals) that when the assessee in the present case had claimed before Assessing Officer that the value adopted or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o crystalize the actual value of investment by the assessee in the purchase of the property by way of bringing material documentary evidence on record to establish the unexplained investment in the property by the assessee. Merely, rejection of the reply of assessee without giving valid reasons can not justify the action of the subordinate authorities. 9. The Sub-section (2) clearly mandates that where the assessee claims that the value adopted or assessed or assessable by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer, the AO would refer the valuation of such property to the Valuation Officer. Hon ble Calcutta High Court, in the case of Sunil Kumar Agarwal Vs. CIT reported in 372 ITR 83 has clearly held that the AO, discharging quasi-judicial function, has the bounden duty to act fairly and to follow the course provided by law, which in that case, was the reference to the valuation officer. In the present case, in view of the assessee s specific dispute and claim before the AO that stamp valuation of the property sold was not its fair market value , it was the bounden duty of the AO to have made reference to the Valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in the case of Dr. Shahsi Kant Garg V. CIT 285 ITR 0158 has also observed that if under the provisions of the Act an authority is required to exercise power or do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any other manner. 12. In the present case, as discussed above the AO not only passed a cryptic order without disputing any of the grounds of dispute raised by the assessee but also failed to follow the procedure prescribed in law i.e. making of a reference to the DVO as mandated by section 50C (2) of the Act. Therefore, the addition made by the AO cannot be approved. 13. Now, having held that since the AO failed to follow the procedure prescribed under the law and for this reason the addition cannot be held legally valid, the next question arises for consideration is whether the case be set aside to the AO for following the said procedure and then pass fresh order. 14. In this respect we state that though the powers of the Tribunal are wide enough but they should not be used to allow the department to make up its shortcomings, doing so would defeat the purpose of justice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at remand should be made only in those cases where the original authorities have not passed orders in accordance with law but in no case, remand should be made only in those cases where the original authorities have not passed orders in accordance with law but in no case, remand should be made to enable an assessee to fill in the blanks or lacuna in the case which remains present. What applies to the assessee, would equally apply to the AO. Likewise, in the case of Smt. NeenaSyal vs. Asstt. CIT (1999) 70 ITD 62 (Chd.), the Chandigarh Bench of the Tribunal has observed that it is not the function of the Tribunal to allow further opportunity to the AO to cover up legal lapses made by him, by restoring the matter back to his file. Therefore, remand/setting aside order could not be made in this case to enable the AO to make up his earlier deficient work by initiating assessment proceedings for the third time after a lapse of considerable time. 17. In the case of Raj Kumar Jain, reported as 50 ITD 0001 (ITAT, Allahabad), Ch. G. Krishnamurthy, the then President of ITAT, as a Third Member also observed in para 5 as follows The Tribunal acting as an appellate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcle 2(3), Jhansi, ITA No 140/Agr/2018 (Order dated 02/07/2018), in almost similar facts allowed the assessee s appeal observing, vide para 14, as under The lower authorities passed the order in summery manner without going into the merits of the case and analyzing the legal issue involved, the applicability of Section 50C(2)(a) of the Act, in a particular. We further find that the AO has not found any adverse material evidence to indicate that the assessee has received any excess money over and above the sale consideration, in the return of income. In light of the peculiar facts of this case and in the absence of the DVO report, we are of the considered opinion that the assessee cannot put to travel up facing virtual trial to appear before the AO after three years to prove that the sale consideration declared by him was reasonable. 20. In the present case, it is noted that neither the Assessing Officer nor the Ld. CIT(A) appreciated the contentions raised by the assessee while adopting the the stamp duty value as fair market value of the property purchased nor referred the matter to the DVO as was required U/s 50C(2) of the Act. The AO has also not found or alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly located. Be that as it may, it remains as a matter of fact borne from the records that the assessee had claimed before the A.O that the value adopted by the stamp valuation authority exceeded the fair market value of the property under consideration. However, we find that the objection raised by the assessee to the proposed adoption of the circle value/segment rate by the A.O for the purpose of computing the LTCG on the sale of the property was however bypassed by the A.O, who reworked the LTCG by adopting the circle value/segment rate as the deemed sale consideration . 9. As per the mandate of clause (a) of sub-section (2) to section 50C, in case an assessee claims before the A.O. that the value adopted by the stamp valuation authority exceeds the fair market value of the property, then it is obligatory for the A.O to refer the matter to a valuation officer for ascertaining the same. However, in the case before us, we find that the A.O despite a specific objection to the said effect having been raised by the assessee in the course of the assessment proceedings, however dispensed with the said statutory obligation and failed to refer the valuation of the property under con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act has to be performed in that manner alone and not in any other manner. Similar view has been expressed by the other decisions cited by the ld. AR in this regard hereinabove. The first appellate order on the issue is thus upheld. We have given a thoughtful consideration and concur with the aforesaid view so taken by the Tribunal. In our considered view, now when the A.O despite specific objection raised by the assessee that the value adopted by the stamp valuation authority exceeded the fair market value of the property under consideration, had however failed to refer the matter to the valuation officer for ascertaining the same, therefore, the reworking of the LTCG by him not being in conformity with the mandate of law cannot be accepted. We thus are of a strong conviction that as the very mandate of law prescribed under the statute had whimsically been bypassed by the A.O, therefore, the consequential addition of ₹ 72,00,000/- made by him on the basis of the impugned reworking of the capital gains cannot be sustained, and deserves to be deleted. 27. In the case before us also the Assessing Officer completely ignored the valuation report of the Government R ..... 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