CHANDRASHEKHAR VISHNU PARANJPE (HUF),PUNE V. ITO WARD 3(1), PUNE

ITA 1587/PUN/2025

AI Insights

The case involves Chandrashekhar Vishnu Paranjape (HUF), who appealed against the order of the CIT(A) / NFAC, Delhi, which upheld the addition of Rs.36,12,651 to the assessee's income as long-term capital gain for the assessment year 2015-16. The dispute centered on the valuation of a property sold, where the assessee claimed a higher cost of acquisition per square meter based on a registered valuer's report, compared to a significantly lower value adopted by the Assessing Officer based on stamp duty valuation. The Tribunal found merit in the assessee's argument that the Assessing Officer should have referred the matter to the DVO before rejecting the valuer's report and adopting a different valuation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829749 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Pune
• Assessment Year: misc
• Appeal Filed On: 30-06-2025
• Other Referred Cases: CIT vs. Daulal Mohta (HUF), Adarsh Kumar Agrawal vs. ACIT, Barjinder Singh Bhatti vs. ITO, Pyare Mohan Mathur (HUF) vs. ITO, Hari Om Garg vs. ITO, ITO vs. Aastha Goel, Dr. Sanjay Chobey HUF vs. ACIT, Ajmal Fragnances & Fashions (P) Ltd. Vs. ACIT, Sunil Kumar Agarwal vs. CIT, K.K. Nag Ltd vs. Addl.CIT, Anil Kumar Jain vs. ITO, Subhash Supnekar vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHAN THIRMANPALLI
• Assessee Lawyers: SUHAS P BORA; PRINTED FROM COUNSELVISE.COM
• Keywords: Opportunity of being heard; Sale consideration of property below Jantri Value; Fair market value; Cost of acquisition; Capital Gains; Principle of natural justice; Valuation report; Procedural lapse
• Section: 142(1); 131; 133(6); 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1587/PUN/2025 Assessment year : 2015-16 Chandrashekhar Vishnu Paranjape (HUF) S No.160/161, Pandurang Colony, Susangat Building, Erandwane, Pune – 411004 Vs. ITO, Ward 3(1), Pune PAN: AADHC3546G (Appellant) (Respondent) Assessee by : Shri Suhas P Bora and Sampada Ingale, CA Department by : Shri Madhan Thirmanpalli, Addl.CIT (through virtual) Date of hearing : 12-01-2026 Date of pronouncement : 14-01-2026 O R D E R PER R.K. PANDA, V.P: This appeal filed by the assessee is directed against the order dated 25.04.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2015-16. 2. Facts of the case, in brief, are that the assessee is an HUF and filed his return of income on 31.08.2015 declaring total income of Rs.26,05,110/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and thereafter the case was selected for limited scrutiny under CASS. Accordingly statutory notice u/s 143(2) of the Act was issued. Subsequently notice u/s 142(1) of the Act along with a questionnaire was issued in response to which Printed from counselvise.com 2 ITA No.1587/PUN/2025 the AR of the assessee filed the requisite details before the Assessing Officer from time to time. 3. During the course of assessment proceedings the Assessing Officer noted from the various details furnished by the assessee that the assessee along with the other co-owners has sold the immovable property for Rs.9,10,73,028/- out of which the share of the assessee was Rs.3,10,00,000/-. The assessee, while computing the long term capital gain, has taken the cost of acquisition at Rs.14,83,000/- for his 30% share as on 01.04.1981 i.e. the base year. This, according to the Assessing Officer translates to Rs.415/- per square meter. Thus, while claiming indexation, the indexed cost of acquisition was taken at Rs.1,51,85,920/-. However, the Assessing Officer did not accept the cost of acquisition as on 01.04.1981 adopted by the assessee on the ground that the same appears to be unreasonably high. On perusal of the valuation report submitted by the assessee he noted certain anomalies. He noted that the valuation report does not explicitly mention the purpose of valuation. The valuer has completely disregard the IGR guidelines. The value of land in 2003 was Rs.790/- per square meter and in 1981 was Rs.415/- per square meter. Thus, according to the Assessing Officer over a period of 23 years the value of the land did not even double and therefore does not appear to be reasonable. Further, he observed that the valuer himself admits that the land was just an agricultural land, was under litigation and did not have a marketable title. However, he has completely ignored these facts and has arbitrarily discounted the current i.e. 2015 market value by Printed from counselvise.com 3 ITA No.1587/PUN/2025 approximately 92% and arrived at a value for 1981. He, therefore, issued summons u/s 131 of the Act to the valuer Shri Avinash R. Pundlik, who appeared before the Assessing Officer and his statement was recorded. The Assessing Officer also issued notice u/s 133(6) of the Act to the co-owners of the said property namely Shri Ramchandra Paranjpe, Mrs. Swati Paranjpe & Mrs. Sumita Datar in order to verify the cost of acquisition adopted by them. From the details furnished by them, he noted that the cost of acquisition adopted by the co-owners is in line with the valuation arrived at as per the instructions of the Sub-Registrar, Haveli-2 i.e. Rs.80/- per square meter. In view of the above, rejecting the various explanations given by the assessee, the Assessing Officer computed the cost of acquisition at Rs.80/- per square meter as on 01.04.1981. He accordingly computed the long term capital gain at Rs.76,53,322/- in the hands of the assessee by observing as under: Printed from counselvise.com 4 ITA No.1587/PUN/2025 4. Since the assessee has already disclosed the long term capital gain of Rs.40,40,671/-, the Assessing Officer made addition of Rs.36,12,651/- to the total income of the assessee as long term capital gain. 5. Before the Ld. CIT(A) / NFAC the assessee challenged the addition made by the Assessing Officer on the ground that the Assessing Officer did not follow the principles of natural justice. Further, the Assessing Officer did not refer the matter to the DVO. It was argued that without considering the various submissions and evidences filed by the assessee from time to time, he replaced the fair market value as on 01.04.1981 at Rs.80/- per square meter as against the fair market value @ Rs.415/- per square meter adopted by the assessee as per the report of a registered valuer. 6. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee and dismissed the appeal filed by the assessee. He further held that the Assessing Officer was justified in not referring the matter to the DVO. Printed from counselvise.com 5 ITA No.1587/PUN/2025 7. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: On facts and in law: 1. The Ld. CIT(A) has erred in upholding the assessment of total income at Rs.62,17,761/- as against the returned income of Rs.26,05,110/-, thereby confirming the addition of Rs.36,12,651/- made by the Assessing Officer (AO) as alleged differential capital gain. 2. Improper rejection of registered valuer's report and incorrect valuation u/s 55A - The CIT(A) erred in disregarding the fair market value (FMV) of Rs.415 per sq. metre determined by a registered valuer without assigning cogent reasons and instead adopted Rs.80 per sq. metre solely based on stamp duty valuation. - The CIT(A) erred in equating stamp duty valuation with FMV under the Income-tax Act, which are distinct concepts governed by different statutory frameworks. - The CIT(A) failed to appreciate that stamp duty is a fiscal mechanism for levying transfer duty and is not a reliable indicator of FMV for the purposes of computation under capital gains provisions, as clarified by various judicial precedents. - The reliance on stamp duty records in substitution of FMV as defined under the Act is contrary to law and unjustified. 3. Failure to refer the matter to the Departmental Valuation Officer (DVO) - The CIT(A) erred in confirming the AO's rejection of the registered valuer's report without directing a reference to the DVO under Section 55A, despite the existence of a dispute regarding FMV. Such reference is mandatory where the AO disagrees with the FMV declared by the assessee. 4. Violation of principle of natural justice (procedural lapses) - The ÇIT(A) has erred and replaced the FMV without any notice or opportunity to the appellant to rebut or cross-examine third-party data information submitted by different parties to the AO u/s 133(6) of the Act which is bas in law and not justified. Printed from counselvise.com 6 ITA No.1587/PUN/2025 5. Absence of proper analysis or contradictory finding by valuer - The CIT(A) upheld the decision of the AO who has erroneously interpreted the statement made by registered valuer (Refer Assessment order Pg. 3 and 4) without any independent application of mind. - Such factual assertions without evidence are arbitrary and unsustainable. The CIT(A) has failed to scrutinize the factual foundation or allow rebuttal which is violation of Principle of Natural Justice. 6. CIT(A) misinterpreted the scope of Section 55A and AO's duties, affecting substantial rights of the appellant. 7. The additions made by CIT(A) were made solely based on the AO's observations without appreciating the facts of the case, the true nature of the transactions, and the surrounding circumstances. 8. The appellant craves leave to add, amend, modify, delete, or alter any of the grounds of appeal at the time of hearing, as may be deemed fit in the interest of justice. 8. The Ld. Counsel for the assessee at the outset referring to various decisions submitted that when the assessee had submitted a report of the registered valuer and the Assessing Officer did not accept the same, he should have referred the matter to the DVO even if the assessee has not made any specific request to refer the matter to the DVO. 9. Referring to the following decisions he submitted that once the assessee produces a valuer’s report, the Assessing Officer cannot substitute his own valuation without obtaining the opinion of the competent valuation officer and failure to do so vitiates the assessment: i) CIT vs. Daulal Mohta (HUF) (2014) 360 ITR 680 (Bom) ii) Adarsh Kumar Agrawal vs. ACIT 66 taxmann.com 44 (ITAT-Lucknow) Printed from counselvise.com 7 ITA No.1587/PUN/2025 iii) Barjinder Singh Bhatti vs. ITO vide ITA No.1101/CHD/2014 iv) Pyare Mohan Mathur (HUF) vs. ITO vide ITA No.471/Agr/2009 10. Referring to the following decisions, he submitted that it is mandatory for the Assessing Officer to refer to the DVO before applying the provisions of section 50C of the Act: i) Hari Om Garg vs. ITO vide ITA No.342/Agra/2017 ii) ITO vs. Aastha Goel vide ITA No.6005/Del/2017 iii) Dr. Sanjay Chobey HUF vs. ACIT vide ITA No.140/Agr/2018 iv) Ajmal Fragnances & Fashions (P) Ltd. Vs. ACIT (2009) 34 SOT 57 (Mumbai) v) Sunil Kumar Agarwal vs. CIT 372 ITR 83 vi) Pune Bench of the Tribunal in the case of K.K. Nag Ltd vs. Addl.CIT vii) Anil Kumar Jain vs. ITO (2013) 7 Taxcorp (A.T.) 32286 (Delhi) 11. Referring to the decision of Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs. CIT reported in 47 taxmann.com 158, he submitted that the Hon’ble High Court in the said decision has held that even where the assessee does not specifically requests, the Assessing Officer has a duty to act fairly and refer the matter to the DVO to avoid miscarriage of justice. 12. Referring to the following decisions, he submitted that the ready-reckoner or circle rates fixed for stamp duty purposes are administrative instruments designed for revenue collection and they do not represent the actual market value of individuals properties: Printed from counselvise.com 8 ITA No.1587/PUN/2025 i) ITO vs. Ravikant (2009) 110 TTJ 297 (Delhi) ii) CIT vs. Smt. Rajkumari Vimladevi (2005) 279 ITR 360 (MP) iii) Jawajee Naganatham vs. RDO (1994) 4 SCC 595 (SC) iv) CIT vs. Chandni Bhuchar (2010) 323 ITR 510 (P&H) v) ITO vs. Fitwell Logic Systems (P) Ltd. (2010) 1 ITR (Trib.) 286 (Del) 13. Referring to the decision of the Pune Bench of the Tribunal in the case of Subhash Supnekar vs. ITO vide ITA Nos.1672/PN/2012 and ITA No.152/PN/2012, he submitted that the Tribunal in the said decision has held that information obtained from the Joint Sub-Registrar, Haveli for estimating 1981 value cannot be used to substitute fair market value determined by an approved valuer. He accordingly submitted that he has no objection if the matter is restored to the file of the Assessing Officer with a direction to refer the matter to the DVO and determine the long term capital gain. 14. The Ld. DR on the other hand strongly supported the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that since the Assessing Officer after obtaining information from the District Sub-Registrar and other co-owners has adopted the fair market value as on 01.04.1981 at Rs.80/-, the same should be upheld and the grounds raised by the assessee be dismissed. 15. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book Printed from counselvise.com 9 ITA No.1587/PUN/2025 filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has received an amount of Rs.3,10,00,000/- out of total sale consideration of Rs.9,10,73,028/- towards his share. After considering the cost of acquisition as on 01.04.1981 at Rs.14,83,000/- which gives an effective rate of Rs.415/- per square meter, the assessee computed the indexed cost of acquisition at Rs.1,51,85,920/- and declared the long term capital gain at Rs.40,40,671/-. We find the Assessing Officer, after obtaining the report from the DSR and after considering the value adopted by the other co- owners, adopted the cost of acquisition as on 01.04.1981 @ Rs.80/- per square meter and thus he determined the cost of acquisition of the land as on 01.04.1981 at Rs.2,85,600/-. Thus, according to the Assessing Officer, the indexed cost of acquisition was Rs.29,24,500/-. After deducting the same from the net sale consideration of Rs.2,89,00,000/-, the Assessing Officer determined the long term capital gain in the hands of the assessee at Rs.76,53,322/-. Considering the capital gain already declared by the assessee at Rs.40,40,671/-, the Assessing Officer made addition of Rs.76,53,322/-. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that without referring the matter to the DVO, the Assessing Officer should not have made the addition and the Ld. CIT(A) / NFAC should not have sustained the long term capital gain determined by the Assessing Officer. 16. We find some force in the above arguments of the Ld. Counsel for the assessee. We find under somewhat identical circumstances the Hon’ble Calcutta Printed from counselvise.com 10 ITA No.1587/PUN/2025 High Court in the case of Sunil Kumar Agarwal vs. CIT (supra) has held that even where the assessee does not specifically requests, the Assessing Officer has a duty to act fairly and refer the matter to the DVO to avoid miscarriage of justice. The relevant observations of the Hon’ble High Court read as under: “For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. For the aforesaid reasons, the order under challenge is set.” 17. We find the Delhi Bench of the Tribunal in the case of ITO vs. Aastha Goel (supra) has held that when the assessee during the course of assessment proceedings has filed the valuation report from a registered valuer, the Assessing Officer should have referred the matter to the DVO before making addition on the basis of difference in the purchase price and the value adopted by the stamp valuation authorities. The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that it is mandatory for the Assessing Officer to refer the matter to the DVO before applying the provisions of section 50C of the Act where the assessee has filed a copy of valuation done by a registered valuer. Printed from counselvise.com 11 ITA No.1587/PUN/2025 18. In view of the above discussion and respectfully following the decisions cited (supra), we deem it proper to restore the issue to the file of the Assessing Officer with a direction to refer the matter to the DVO for determination of the fair market value of the property as on 01.04.1981 and thereafter determine the long term capital gain in the hands of the assessee. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 19. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 14th January, 2026. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 14th January, 2026 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 12 ITA No.1587/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 12.01.2026 Sr. PS/PS 2 Draft placed before author 13.01.2026 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Office Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "