ASHOKKUMAR PREMCHAND JAIN,MUMBAI V. DCIT CIRCLE 23(1), MUMBAI

ITA 5972/MUM/2024

AI Insights

The case involves Ashokkumar Premchand Jain, who appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the assessment order adding a substantial amount to his income due to undervaluation of a property purchased in an auction. The property, 'Mody Building', was purchased for Rs. 60 lakhs, whereas the Stamp Duty Authority valued it at Rs. 4,16,22,500. The Assessing Officer (AO) referred the matter to the DVO, which revalued the property at Rs. 2,52,61,000, leading to an addition of Rs. 1,92,61,000 to the assessee's income. The Tribunal considered the assessee's argument that the valuation should be as of the date the earnest money was paid in 2017, not the date of the assessment in 2022, and decided to remit the matter back to the AO for a reassessment based on the property's value as of December 2017.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474472 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Laws Referred To: Income-tax Act, 1961, Wealth-tax Act, 1957
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: B.G. SAKARIA
• Keywords: Opportunity of being heard; Valuation report
• Section: 250; 55A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.5972/Mum/2024 (Assessment Year: 2020-12) Ashokkumar Premchand Jain Ground Floor, 65/51, Shamseth Street, Zaveri Bazar, Mumbai- 400 002 PAN : AAJPJ5912B vs DCIT, Circle 23(1), Mumbai Piramal chambers Lalbaug, Parel, Mumbai-400 012 APPELLANT RESPONDENT Assessee by : Shri B.G. Sakaria Respondent by : Shri Ram Krishn Kedia (SR DR) Date of hearing : 06/02/2025 Date of pronouncement : 06/02/2025 O R D E R PER ANIKESH BANERJEE: Instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi *for brevity, ‘Ld.CIT(A)’) passed under section 250 of the Income-tax Act, 1961 (for brevity, ‘the Act’), date of order 27/09/2024 for A.Y. 2020-21. The impugned order was emanated from the order of the Assessment Unit, Income-tax Department passed under section 143(3)readwith section 144B of the Act, date of order 24/08/2022. 2 ITA No.5972/Mum/2024 Ashokkumar Premchand Jain 2. The brief facts of the case are that the assessee has filed the return of income in the individual capacity. The assessee’s case was selected for limited scrutiny for verifying the issue of purchase of property which is shown to have been less than the value of the Stamp Duty Authority. During the impugned assessment year, the assessee purchased a property named as ‘Mody Building’ situated at C.S.No.1245, Bhuleshwar Division, C-Ward at 31-33-35, Shamseth Street, Mumbai, admeasuring about 233 sq.yds. During the assessment proceedings, the Ld.AO observed that the conveyance deed of the building dated 20/03/2020 revealed that the said property is duly registered with the Joint Sub- Registrar, Mumbai City-3 and the set forth value of the said property was Rs.60 lakhs whereas the Stamp Duty Authority valued the property at Rs. 4,16,22,500/-. In this regard, the assessee has filed the valuation report and the value of the property was determined amount to Rs. 53,60,000/-. The matter was referred to the DVO for valuation under section 55A read with section 16(A)(5) of the Wealth- tax Act, 1957 and the value was determined by the DVO at Rs.2,52,61,000/-. In this regard, the show cause notice was issued, and the assessment was completed with an addition of Rs.1,92,61,000/- {Rs.2,52,61,000/- (-) Rs.60,00,000/-}. The assessee filed an appeal before the Ld. CIT(A) and pleaded that the said property was purchased in auction and as per the valuation of the government approved valuer was Rs.53,60,000/-. So the entire addition will be deleted. But the Ld.CIT(A) upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us. 3. The Ld.AR argued and filed a paper book containing pages 1-316, which are kept in the record. In argument, the Ld.AR submitted that the assessee purchased the property through auction and the government valuation was made 3 ITA No.5972/Mum/2024 Ashokkumar Premchand Jain at Rs.53,60,000/-. Accordingly, the set-forth value was determined at Rs.60 lakhs. The copy of the valuation report by a government approved value, viz. V.P Katkar Engineers & Valuers, is placed in APB pages 75-76. The Ld.AR invited our attention in the valuation report duly passed by the DVO on 30/05/2022, annexed in APB pages 296 to 316, which reveals that the valuation was done as on 20/03/2020 and accordingly, the order was passed on 30/05/2022 by the Valuation Officer-II, Mumbai. The Ld.AR further argued that the assessee had purchased the property in auction; the earnest money was already paid in 2017. The copy of the bank statements which reflect the payment of earnest money amount to Rs.12,75,000/- was duly paid on 3 different dates in the month of December 2017. So, the 1st&2nd provision of section 56(2)(x) is applicable and the determination of the value of the property will be as on 2017. We find thatthe valuation of the property is determined by the Valuation Officer as on 2020. The copy of the bank statement is annexed in APB 168 – 171. 4. The Ld.DR argued and relied on the orders of the revenue authorities. 5. We have considered the arguments presented by both parties and reviewed the documents on record. It is noted that, based on the reference made by the Ld. AO, the Valuation Officer determined the value of the property at Rs.2,52,61,000/- as of March 20, 2020, under Section 55A of the Act. However, since the assessee paid the earnest money in December 2017, the proviso to Section 56(2)(x) applies, requiring the valuation to be determined as of December 2017.Accordingly, we remit the matter back to the Ld. Assessing Officer with instructions to conduct the valuation based on the property's value as of December 2017, in consultation with the DVO. The provisions of Section 56(2)(x) 4 ITA No.5972/Mum/2024 Ashokkumar Premchand Jain of the Act are applicable in this case. Both theLd. AR and the Ld. DR have accepted the Bench’s findings. Therefore, the matter is restored to the Ld. AO for the limited purpose of determining the property's value as of December 2017. The assessee shall be given an adequate opportunity to be heard. At the same time, the assessee is expected to be diligent and cooperative in facilitating the reassessment process. 6. In the result, the appeal of the assessee bearing ITA No.5972/Mum/2024 is allowed for statistical purpose. Order pronounced in the open court on 06th day of February, 2025. Sd/- sd/- (B.R. BASKARAN) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 06/02/2025 Pavanan Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai 5 ITA No.5972/Mum/2024 Ashokkumar Premchand Jain "