KAILASH KRISHNAKUMAR BOTHARE,MUMBAI V. INCOME TAX OFFICER, WD-16(2)(1), MUMBAI, MUMBAI

ITA 846/MUM/2025

AI Insights

In this case, Kailash Krishnakumar Bothare, the appellant, contested the addition of Rs. 66,28,047 to his income under section 56(2)(x)(b) of the Income Tax Act, which pertained to the purchase of an immovable property. The appellant argued that the Assessing Officer (AO) ignored his request to refer the property for valuation to the District Valuation Officer (DVO), despite the property being acquired under distress sale conditions with several locational disadvantages. The Commissioner of Income Tax (Appeals) upheld the AO's decision, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal found procedural lapses in the AO's handling of the valuation request and directed a re-evaluation by the DVO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 112151 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: JAY THAKKAR
• Keywords: Opportunity of being heard; Sale consideration of property below Jantri Value

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “E” Bench, Mumbai. Before Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM) ITA No. 846/MUM/2025 (Assessment Year : 2018-19) Kailash Krishnakumar Bothare Shop No. 4, Palm Springs CHS Ltd., Military Road, Marol Andheri East Mumbai-400 059. Vs. ITO Ward 16(2)(1) Aayakar Bhavan M.K. Road Mumbai-40 0020 PAN : AHGPB9022L Appellant Respondent Assessee by : Shri Jay Thakkar Revenue by : Shri Hemanshu Joshi Date of Hearing : 02/04/2025 Date of pronouncement : 17/04/2025 O R D E R Per Omkareshwar Chidara (AM) :- In this above captioned appeal, the appellant raised a main ground that he requested the Ld. AO to refer the property acquired by him to the DVO for correct valuation, but the Ld. AO ignored and made an addition under section 56(2)(x)(b) of the I.T. Act to the extent of Rs. 66,28,047/-. The following grounds of appeal were raised in this appeal by the appellant :- 1. On and circumstances of the case and in law, Ld. CIT(A) erred in passing the order ex-parte, without allowing adequate opportunity of being heard and without issuing the notice of hearing to the appellant; 2. On and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s 56(2)(x) of Rs.66,28,047/- in respect of purchase of immovable property, on ignoring the appellant's prayer to make a reference to the valuation officer (DVO) on 3rd Proviso to Sec. 56(2)(x) r.w.s 50C(2) of the Act; 3. A humble prayer is made to refer the valuation matter to the valuation officer (DVO) on following the 3rd Proviso to Sec. 56(2)(x) r.w.s 50C(2) of the Act. 4. The Ld.CIT-(A), before confirming the addition u/s 56(2)(x) of Rs.66,28,047/-, erred in not considering the locational disadvantages and several adverse factors to establish that the immovable property had Kailash Krishnakumar Bothare 2 been acquired at an adequate consideration. 2. Thus, the Ld. AR of the appellant argued before the ITAT as follows :- a) The Ld. AO ignored his request of referring the value of immovable property to the DVO and made an addition under section 56(2)(x)(b) of the Act, which is not correct as per the provisions. b) As per section 56(2)(x)(b) of the Act, the appellant is entitled to make a request to the Ld. AO to refer the valuation to DVO and the Ld. AO had to refer the same to arrive at the value and then only the difference can be assessed section 56(2)(x)(b) of the Act. c) A copy of the letter filed by the appellant before the Ld. AO dated 23.2.2021 requesting him to refer the valuation of property to DVO because the property was purchased as “distress sale” from seller as there are certain locational disadvantages to this property like passage, non-availability of water and basic facilities. d) The Ld. CIT(A) dismissed the appeal by observing that the appellant has not produced the “request for reference letter” to DVO and also no written submissions were filed before him. e) The Ld. AR of the appellant filed a paper book before the ITAT stating that the appellant had demonstrated that pages 8 & 9 of paper book shows copy of letter submitted before the Ld. AO requesting him to refer the valuation of property to DVO. It is also not disputed by the Ld. AO and Ld. CIT(A) that the Revenue has not referred the property to DVO for valuation. 3. The Ld. AR relied on the orders of Ld. AO and Ld. CIT(A). 4. After hearing the rival submissions and perusal of the paper book filed by the Ld. AR of the appellant during the hearing before the ITAT, it is decided that the Ld. AO had to refer the property for valuation to DVO when he specially asked for the same and submitted the reasons for valuation of property. The Ld. AO is directed to refer the valuation of property to DVO and give a fair opportunity to the appellant to put forth this arguments/objections to adopt the valuation of property before adopting the value under section 56(2)(x)(b) of the Act. With these directions, the issue is remitted to the file of the Ld. AO. Kailash Krishnakumar Bothare 3 5. The appeal of the appellant is allowed for statistical purposes. Order pronounced in the open Court on 17/04/2025. Sd/- Sd/- (KAVITHA RAJAGOPAL) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 17/04/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "