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TMI Blog2024 (10) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property. In this case though the learned assessing officer referred the matter to the district valuation officer for making a fresh valuation report, which was not adhered to by the DVO and reiterated the valuation made by him in case of a seller. If the AO does not obtain the valuation report, then the addition deserves to be deleted if the difference between the actual consideration and the stamp duty value is made in the hands of the assessee based on Asstt. CIT v. Tarun Agarwal [ 2018 (8) TMI 1989 - ITAT AGRA] and Ramesh Chandra Kulshresth Brothers HUF [ 2018 (10) TMI 1849 - ITAT AGRA] It cannot be said that the valuation made in the case of the seller would also be applicable in case of a buyer, this is so because if the seller does not represent anything before the learned district valuation officer, it will go against the buyer which is not permitted. Therefore, if the two parties to the same transaction, objects to the valuation, there perspective and reasons may be different than the others. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50 C/ 56 (2) (viia) and Section 43CA does not provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of reports shows 30% down fall in the price, if we consider only 7.5% downfall in the average sale price considered by the learned District valuation officer in its report of Rs. 352,440/- per square meter, the average square meter rates would be Rs. 325,000 per square meter. If the assessee is granted benefit of the 10% of the tolerance limit of the sale consideration which will come to Rs. 332,280 per square meter, no addition could be made in the hands of the assessee despite many infirmities in the procedure as well as on factual aspects. Decided in favour of assessee. Validity of reopening of assessment - formation relied upon by the learned assessing officer does not have any linkage with the appellant and without any tangible material and therefore the reopening of the assessment is invalid - HELD THAT:- We find that in view of the decision of the honourable Supreme Court in case of Union of India versus Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] the above issue does not remain for contention. Further there is a tangible material which shows that the report indicates that there is a difference between the consideration of the property and the stamp duty value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Centre (the learned AO) on the following grounds, each of which is without prejudice to and independent of the others 2. On the facts and in circumstances of the case and in law the learned CIT(A)/learned Assessing Officer: General 1. erred in computing the total income of the Appellant at Rs 5,53,44,602 as against the returned income of Rs. 57,55,640; Failure to provide opportunity of being heard through video conference hearing. 2 Failed to grand the Appellant an opportunity of being heard through video-conference hearing in spite of the Appellant requesting the same and thereby, violating the principal of natural justice. Arguments on merits. 3 erred in confirming the addition made under section 50(2)(vi) of the Act amounting to Rs 4,96,31,000 4. erred is not appreciating that the entire purchase consideration has been discharged through banking channels and therefore provisions of section 56(2)(vii) of the Act being anti-abuse provisions, cannot be invoked in absence of any mala-ide intent 5. erred in not appreciating that the learned AO failed to appreciate that the purchase price of the impugned property was significantly lower than the circle ready reckoner rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any tangible maternal and thereby the proceedings are invalid and bad too. 12 erred in not taking approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General prior to issuance of notice under section 148 of the Act as contained in section 151) of the Act of more than three years have elapsed from the end of the relevant assessment year, whereas the learned AO had taken sanction under section 151) of the Act and hence for want of correct sanction, the entire assessment proceedings should be quashed, 13. erred re-opening the assessment proceedings without appreciating that proceedings are invalid and bad in law in the absence of information which suggests that the income chargeable to tax has escaped assessment: 14. ought to have appreciated that, basis Ashish Agarwal (444 ITR 1). Supreme Court has deemed notice issued under section 148 of the Act (under old law) as notice under section 148A(b) of the Act (under new law) and thereby time limit to complete re-assessment under section 153(2) of the Act would be computed from end of the year in which the notice under section 148 of the Act (under old law) is saved, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 which was responded to by the assessee on 7/6/2022 . Assessee raised the contention that this issue has already been considered in assessment proceedings under section 143 (3) of the act. Subsequently notice under section 148 was issued on 28/7/2022 and further in order under section 148A (d) was issued on 28 July 2022. 7. Assessee responded by filing the return of income on 23 August 2022 and also a reply on the same date raising additional objections. Assessee was issued a notice under section 143 (2) on 8 January 2023 and further notice under section 142 (1) on 11/1/2023. Subsequently the assessee was issued a show cause notice on 9/05/2023 that why the addition should not be made of Rs. 49,631,000/- in the hands of the assessee under section 56 (2) (viia) (b) of the act. The assessee responded on 15/5/2023 reiterating his earlier submission as well as the additional submission also raising an issue about the period of limitation. The hearing was also granted to the assessee. 8. Assessee during the course of hearing submitted on 22/05/2023 that the matter may be referred to the departmental valuation officer which was duly ascended to by the learned assessing officer and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amp duty value taken by the assessing officer is incorrect. Accordingly, the reopening was held to be valid. iii. With respect to ground number 8 13 on the merits of the addition under section 56 (2) of ₹ 49,631,000/ , the learned CIT A held that the property has been verified by the learned district valuation officer and notice under section 148A (d) of the act was issued on 28/7/2022 with prior approval of the principal Commissioner of income tax. The assessee was provided the opportunity and the information and same are disposed of by speaking order. The reference was made by the assessee officer to the learned district valuation officer who held that the property was valued at ₹ 195,050,452 as per the report in case of the seller. The objection of the assessee with respect to the valuation was also dealt with thus the learned district valuation officer has taken the value of the above property at the time of sale which has been done in favour of the appellant assessee that he has taken the value as per the location, situation, size etc. which is very much correct in the eyes of the appellate authority. Therefore, no infirmity can be found in that report. iv. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages Realtors private limited, in the case of the seller, this property was referred to the valuation cell for the purpose of determination of the fair market value of consideration. The learned district valuation officer valued the property in case of seller at Rs. 195,050,452/ . Thus, the only valuation that has been made is the valuation of the property from the perspective of the seller of transacted property where assessee is a buyer. Assessee does not know anything about the valuation mechanism and the factual aspect discussed with DVO by the seller. During the course of reassessment proceedings, assessee objected about the valuation as per the stamp duty authorities and also the valuation report of the DVO. Though the assessee referred the matter to the DVO, he refused to value the property once again stating that when the property is already valued ones in case of the seller, there is no requirement of valuing the property once again. Therefore, the valuation report made by the district valuation officer in case of a seller where the value of the property was determined at Rs. 195,050,452/ was considered as the report of the DVO in case of the assessee, buyer. As the valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticularly after abolition of the gift tax act. He relied upon the several judicial precedents of the coordinate benches and submitted that that assessee has made a bona fide purchase of the property and therefore as the provisions of section 56 (2) are anti-evasion provisions, same cannot be applied to a bona fide transaction. 19. further valuation report has to be made in the case of the assessee which is the primarily requirement when assessee objected to the stamp duty rate. In case of the assessee despite objection, no fresh valuation is carried out and merely the valuation made in the case of the seller of the property was reinstated as the valuation of the property in case of the buyer i.e., assessee is considered. He submits that the consideration of the buyer and the consideration of the seller while purchasing the property cannot be the same. This is also relevant because, what could be the argument of the seller before the district valuation officer may not be the same arguments of the buyer. 20. He submitted before us several pictures of the building which demonstrates that when the building was sold it has a different view and when the building was purchased by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quare meter considering the tolerance band limit of 10%. The learned district valuation officer without any reason has considered the rate of Rs. 451,490 per square meter. He referred to the report of the DVO it is mentioned that by adjusting the sale instances of the properties with reference to time lag, size, floor, location and situation, the average effective rate considered reasonable for valuation of the said property was taken at Rs. 451,490 per square meter as on the date of 23/6/2016. He submitted that there is no basis in the report of the DVO that how this rate has been arrived at. He therefore submitted that the DVO report not to be considered as it is devoid of any cogent reasoning and without any reasonable basis to consider what is fair market value. 24. He submitted that the district valuation officer has rejected the assessee s valuation without giving any cogent reason and without considering the impact on market valuation of ground realities of the property. 25. The learned authorized representative further referred to the fact that when the learned district valuation officer inspected the property it was fully furnished, with additional expenses incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, it was stated that that the impugned reassessment proceedings where sanction to issue notice under section 148 of the act and order under section 148A (d) of the act has been obtained under section 151 (i) of the act instead of 151 (ii) of the acts was to the root of the matter and the reassessment proceedings deserves to be quashed. 27. Notice under section 148 has been issued by the jurisdictional assessing officer[ JAO], which should have been issued by the faceless assessing officer. He referred to the notice and submitted that such a notice issued by the learned jurisdictional assessing officer is not valid. He relied on the decision of the honourable Bombay High Court in case of Hexaware technologies Ltd versus assistant Commissioner of income tax (2024) 464 ITR 430 (Bombay) dated 3/5/2024. Thus, he submitted that the notice issued is invalid and reassessment order needs to be quashed. 28. He further submitted that that there is merely a change of opinion and without any live linkage of the impugned material with the escapement of income, the reopening has been initiated he submits that the original assessment has been framed under section 143 (3) of the act on 9 Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason that according to section 153 (2) of the act the assessment proceedings was supposed to be completed within 12 months from the end of the financial year in which notice under section 148 was issued. The notice under section 148 was issued on 30 June 2021 under the old regime for reopening of the assessment proceedings. Subsequently to the decision of the honourable Supreme Court in case of assessee were well, the proceedings were converted into a new regime in order under section 148A of the act was passed on 28 July 2022 and notice under section 148 of the act was also issued on the said date. He therefore submitted that notice under section 148 was issued on 28/7/2022 was only on account of applicability of the new regime was the decision of the honourable Supreme Court but that did not extend the time limit for completion of reassessment is which will commence from the date of the first notice issued on 30 June 2021. Accordingly, the time limit to complete the reassessment proceedings would be time but within 12 months from the end of the financial year in which notice has been issued i.e., 12 months from 31st of March 2022. The learned assessing officer has not complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, then the averages rate per square meter comes to Rs. 352,440. He further submitted that the sale instances taken by the learned district valuation officer are of single flats [ not duplex] whereas the flat of the assessee is duplex and if a discount of at least 7.5% is granted coupled with a further discount of 7.5% on account of obstruction in the view than the average sale of the sale instances taken by the learned DVO comes to rate of Rs. 299,574 which is far less than the actual sale consideration of the assessee of Rs. 302,073 per square meter. 35. He submitted that if the price of the auction is considered, which is the price which should be considered after considering all the adjustments, the addition does not result deserves to be upheld. For this proposition he relied on the decision of the honourable Bombay High Court in case of 135 ITR 177 wherein it has been held that that auction price cannot be found to be tainted at all as it is most transparent price. He further relied upon the decision of the coordinate bench in ITA number 1304/M/2023 dated 27/7/2023 wherein in paragraph number 6 the public auction price was considered as the correct fair market value. Several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed. 41. Ground number 2 of the appeal is with respect to the failure to provide opportunity of being heard, as assessee has been granted an opportunity of being heard, no separate arguments were advanced, therefore, same is dismissed. 42. Ground number 3 9 are on the merits of the addition. Assessee has purchased a property at a consideration of Rs. 130,500,000, the stamp duty value of the same is Rs. 183,100,000, the valuation made by the district valuation officer in case of seller of the property was Rs. 195,000,542. The assessee objected to the valuation report prepared by the district valuation officer as well as the stamp duty rate. Assessee objected and requested the learned AO to refer the matter to the district valuation officer, but the district valuation officer reiterated the valuation made in case of seller of the property stating that there is no point in making once again the reference of the same property which was subject matter of transaction. 43. In case of seller, ages Realtors and developers private limited, report of the registered valuer dated 30/6/2016 was obtained wherein the property was valued at Rs. 130,694,000 as the property was mortgaged. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50 C/ 56 (2) (viia) and Section 43 CA does not provide that valuation made by the DVIO is qua the property , in fact it is qua the assessee. Thus, on this ground itself, when the ld. AO fails to obtain the Report of DVO of the impugned property after giving assessee opportunity of representing before DVO, addition so made is to be deleted. 47. Even otherwise, the valuation report itself says that as on the date of inspection, the premises has partly Italian marble and partly wooden flooring, plastic paint, marble, designer painting and finishing on the walls and marbles on the walls of the toilet and bath, designer false ceiling, doors are of TW/door with lamination, fully glazed vendors with aluminum frames, modular kitchen with granite platform and stainless steel sink and sanitary fittings are of good quality. Naturally, the seller would not have provided this information but only when it is claimed that buyer has made this fitting after purchasing the flat in a bare shell condition. Therefore, if the buyer has incurred this cost, which is duly recorded f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l duplex flat one floor below was sold for Rs. 117,500,000 where the rate per square meter was Rs. 269,805/ . This was an auction by HSBC bank. When there is an auction by a bank, it is more transparent and acceptable. The honourable Bombay High Court hold this as well as the decision of the coordinate benches. Even the reserve price fixed by the bank for auction of the above property was only Rs. 12.42 crores which was sold for a consideration of Rs. 11.65 crores, i.e., which was even less then the auction reserve price fixed by the bank. The sale price per square meter in the same block i.e., Tower C, was only Rs 271,982 per square meter. Therefore, it is a good comparable. Further, it is after six years after the date of the transaction of the impugned property, and in the same block i.e., Tower C. It is stated by the assessee by producing the photographs also that there is a significant downfall in the price of the impugned property i.e., precisely tower C, which is reported in the various newspapers as well as the other property sites because of blockage of the view on account of construction of Lokhandwala Minerva in front of the same tower. The assessee has categorically sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 10% of the tolerance limit of the sale consideration which will come to Rs. 332,280 per square meter, no addition could be made in the hands of the assessee despite many infirmities in the procedure as well as on factual aspects. 53. Accordingly on the merits, we direct the learned assessing officer to delete the addition of Rs. 4,96,31,000/ on account of provisions of section 56 (2) (vii) of the act. Accordingly ground number 3 9 of the appeal are allowed. 54. The ground number 10 challenges the issue of notice under section 148 of the act dated 20 July 2022 which has been issued manually in contravention of circular number 19 of 2019 dated 14 August 2019, which was not adjudicated by the learned CIT A, and also the learned parties requested to keep it open as the issue is pending before the honourable Supreme Court. 55. Ground number 11 of the appeal shows that the information relied upon by the learned assessing officer does not have any linkage with the appellant and without any tangible material and therefore the reopening of the assessment is invalid. This is also linked to ground number 13 of the appeal wherein the challenges that the reopening is made in absence of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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