HITESH JAYESH DHAKAN , MUMBAI V. ADDITIONAL /JOINT/DEPUTY/ASSISTAANT COMM. OF INCOME TAX/ITO/NFAC, MUMBAI

ITA 1846/MUM/2023

AI Insights

The case involves Hitesh Jayesh Dhakan, who jointly purchased a property with his father, which was subject to scrutiny under section 143(3) of the Income Tax Act. The Assessing Officer (AO) noted a discrepancy between the purchase price and the stamp duty valuation, leading to an addition of Rs. 3,97,250 to the assessee's income. The CIT(A) upheld this addition, prompting the assessee to appeal to the Income Tax Appellate Tribunal. The Tribunal considered the valuation by the DVO of a similar property and found the addition to be unjustified, thus partly allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130156 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 03-09-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 22-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH KISHINCHANDANI
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Fair market value
• Section: 143(3); 56(2); 55A

Judgement Text

P a g e | 1 ITA No.1846/Mum/2023 Hitesh Jayesh Dhakan Vs. ITO, NFAC IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1846/Mum/2023 (A.Y. 2018-19) Hitesh Jayesh Dhakan 202, Hill View, Padmanagar-1, Link Road, Shimpoli, Chikuwadi, Borivali (West), Mumbai – 400092 Vs. ITO, NFAC, New Delhi 110001 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: CLJPD6491C Appellant .. Respondent [ Appellant by : Ravikant Pathak Respondent by : Prakash Kishinchandani Date of Hearing 04.09.2023 Date of Pronouncement 26.09.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 21.03.2023 for A.Y. 2018-19. The assesse has raised the following grounds before us: “1. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [hereinafter referred as CIT(A)] erred in confirming the action of the AO in making the addition of Rs. 3,97,250/- by invoking section 56(2) of the Income Tax Act, 1961 (Act). 2. The CII(A) erred in upholding the action of the AO in not making reference to valuation Officer u/s 142A of the Act for determining the value of immovable property bought by the Appellant. P a g e | 2 ITA No.1846/Mum/2023 Hitesh Jayesh Dhakan Vs. ITO, NFAC 3. The CIT(A) erred in holding that making reference of valuation to the valuation officer is discretion of the AO. 4. The CIT(A) erred in upholding the action of the AO in not considering the value of flat on immediate next floor to consider the value of the property bought by the Appellant. The Appellant craves leave to add, amend, modify the above grounds of appeal.” 2. Fact in brief is that the case of the assessee was subject to scrutiny assessment u/s 143(3) of the Act. During the course of assessment the assessing officer noticed that assessee has purchased a flat situated at E-building, B- Wing, Gawade Nagar, S.N. Dube Road, Dahisar East, Mumbai jointly with his father Mr. Jayesh Keshavlal Dhakan. The assessing officer further noticed that consideration of Rs.40 lac was paid for the purchase of said property whereas the stamp duty value of the property was Rs.47,94,500/-. On query regarding the differences of Rs.7,94,500/- the assessee explained that the building was old and in dilapidated condition, however, the assessing officer has not agreed with the submission of the assessee and added half of this amount of Rs.7,94,500/- to the amount of Rs.397,250/- (being share of the assessee in the joint property). 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before me the ld. Counsel submitted that the impugned property was jointly held by the assessee along with his father and referred copies of document filed before lower authorities as placed in the paper book pertaining to valuation made by the District Valuation Officer of the similar flat in the same building in the case of relative Hetal Ashok Dhakan in whose case the DVO has valued the same property at Rs.41 lac. The ld. Counsel also referred the copy of assessment order made in the case of Hetal P a g e | 3 ITA No.1846/Mum/2023 Hitesh Jayesh Dhakan Vs. ITO, NFAC Ashok Dhakan for the same assessment year 2018-19 wherein stated that the property was in a dilapidated condition. On the other hand, the ld. D.R supported the order of CIT(A). 5. Heard both the sides and perused the material on record. The assessee has purchased immovable property as referred above in this order jointly with his father for Rs.40 lac as against the value determined by the stamp duty valuation authority of Rs.47,94,500/-. The assesse has also explained that AO has not referred his case to the DVO for determining the fair value of immovable property u/s 55A/50C(2) of the Act. During the course of assessment proceeding the assessee has referred the BMC notice that building was in dilapidated conditions and dangerous for living therefore said property had already gone for redevelopment. The assessee vide submission dated 12/02/2021 before the AO also stated the facts of valuation made by the DVO on the similar property occupied by his relative Ms. Hetal Ashok Dhakan wherein the DVO had determined fair market value of the property at Rs. 4,13,39,30/-. The AO has not brought on record any material contrary to the submission made by the assessee. The assessee has also submitted the relevant supporting documents showing that in the case of his relative on the similar flat in the same building the DVO has valued the property at Rs.41,33,930/- u/s 55A of the Act similar to the case of the assessee after taking into consideration the DVO report for valuation made in the case of similar property in the same building at Rs.41,33,930/- as discussed above, the difference remained is only of Rs.1,33,930/- (share of assessee comes to Rs.66,965/-) after reducing agreement value of Rs. 40 lac. Looking to the marginal difference in the fair market value determined by the DVO or assessable by stamp valuation authority therefore, considering the provision of section 50C(1) of the Act. I find that decision of ld. CIT(A) in sustaining P a g e | 4 ITA No.1846/Mum/2023 Hitesh Jayesh Dhakan Vs. ITO, NFAC the addition is not justified, therefore, appeal of the assesse is allowed. Since I have allowed ground no. 1 & 4 therefore, other ground no. 2 & 3 of the assessee become infructuous and not required any adjudication. 6. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 26.09.2023 Sd/- (Amarjit Singh) Accountant Member Place: Mumbai Date 26.09.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.