SEL RESOURCES LTD,HYDERABAD V. ITO., WARD-3(1), HYDERABAD

ITA 679/HYD/2025

AI Insights

SEL Resources Ltd appealed against the order of the Commissioner of Income-Tax (Appeals), which confirmed the A.O.'s decision to treat the stamp duty value of a sold property as the sale consideration for tax purposes, leading to a higher short-term capital gain tax. The A.O. had initially referred the matter to a Valuation Officer to determine the fair market value but completed the assessment before receiving the report, adopting the stamp duty value instead. The Tribunal found that the A.O. did not adhere to the statutory timeline for receiving the valuation report and directed a re-evaluation based on the report's findings, if received within the prescribed period.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716506 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Appeal Filed On: 18-04-2025
• Other Referred Cases: Wenceslaus Josoph D'Souza, ITA No. 4732/Mum/2017, Krithika Lingappan, ITA No.2959/Chny/2018, Hari Om Gupta [2017] 82 taxmann.com 398, Krishi Utpanna Bazar Samittee, ITA No.2043/PN/2012, Southern Steel Ltd., ITA No. 1220/Hyd/2016, Sunil Kumar Agarwal [2014] 47 taxmann.com 158, Smt. Kamlesh Tiwari, ITA No. 587/JP/2013, Appadurai Vijayaraghavan vs. JCIT [2014] 49 taxmann.com 513, Anil Kumar Jain vs. ITO (2013) 34 taxmann.com 258, Zulfi Revudjee Vs. ACIT, Circle 14(1), Hyderabad, ITA No. 2415/Hyd/2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital asset; Opportunity of being heard; Sale consideration of property below Jantri Value; Fair market value; Period of limitation; Capital Gains; Principle of natural justice; Search and seizure; Valuation report
• Section: 147; 148; 143(3); 154; 153A; 50C

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad “B” Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.679/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2017-18) SEL Resources Ltd, Hyderabad. PAN : AAOCS1517P. Vs. The Income Tax Officer, Ward –3(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri Phaneendra Nag, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Dr. Sachin Kumar, Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 06.08.2025 घोर्णध की तधरीख/ Date of Pronouncement : 20.08.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income- Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, Printed from counselvise.com 2 ITA No.679/Hyd/2025 SEL Resources Ltd dated 18.02.2025, which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) under Section 147 r.w.s. 144 of the Income Tax Act, 1961 (for short “the Act”) dated 29.03.2022 for A.Y. 2017-18. The assessee company has assailed the impugned order on the following grounds of appeal before us: “1. In the facts and circumstances of the case and in law the Id. CIT (A) has erred in confirming the action of the Id. AO in completing the assessment u/s 147 of Income Tax Act, 1961. The action of Id. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire assessment order which is passed in gross violation of natural justice. 2. (a) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in taxing a sum of Rs.1,84,99,000/- as Short Term Capital Gain in the hands of the assessee. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs.1,82,40,172/-. (b) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO and adopting the market value of Rs.3,20,20,000/-. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition being illegal and without following the prescribed procedure of law. (c) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in applying the provisions of section 50C of the IT Act 1961, and adopting the sale consideration (stamp duty value) at Rs.3,20,20,000/- against the actual sale consideration of Rs.2,14,73,862/-. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the sale consideration at Rs.2,14,73,862/-. 3. AO erred in adding this income though the documentary evidence for sale of the property is for Rs.2,14,73,862 has been submitted during the scrutiny proceedings. Further Appellant has also requested the AO to refer the matter to valuation officer in order to obtain the fair value of the property on the plea of the property was lying closed for several years and was in very bad condition at the time of sale. AO erred in Printed from counselvise.com 3 ITA No.679/Hyd/2025 SEL Resources Ltd completing the assessment stating, the valuation report was not received till the date. 4. The AO for the same property assessed the value (cost) as Rs.1,98,09,900 in the AY2014-15 and issued the assessment order for which also the appellant is preferring an appeal. AO erred in arriving at the addition amount of capital gain also. 5. The AO ought to have appreciated that the Appellant's request of referring the matter to valuation officer and would have completed the assessment upon receiving the fair value as per valuation officer. 6. The AO failed to appreciate that this was a case of distress sale wherein the sale consideration was pre-decided and was not as per the wishes of the seller and thus section 50C cannot be applied in such a scenario, 7. The Appellant submits that Section 50C cannot be applied in an automatic manner. Section 50C was introduced on to the statute to curb the inflow of cash on sale of any immovable property over and above the amount mentioned in the sale deed. However, wherein the surrounding circumstances are such that it could be established that there is no chance of assessee receiving any consideration in cash, as in the present case, then there cannot be applicability of Section 50C. In this regard, reliance is placed on the below mentioned judicial pronouncements: - 1. Wenceslaus Josoph D'Souza, ITA No. 4732/Mum/2017 [Mumbai - 1- 7 ITAT] 2. KrithikaLingappan, ITA No. ITA No.2959/Chny/2018 [Chennai 8-20 ITAT] 3. Hari Om Gupta [2017] 82 taxmann.com 398 (Lucknow - Trib.) 21-27 4. KrishiUtpanna Bazar Samittee, ITA No.2043/PN/2012 [Pune - 28-37 ITAT] 5. Southern Steel Ltd., ITA No. 1220/Hyd/2016 [Hyd - ITAT] 38-46 Even otherwise, A specific request was made to the lower authorities, during the course of assessment proceedings, to refer the case for valuation to DVO as prescribed in u/s 50C (2) of the Income Tax Act, 1961. 8. However, Id. AO though referred it to the DVO but completed the assessment even before receiving the report from the DVO stating that the case was getting barred by time. 9. Thereafter Id. AO calculated the capital gain by taking the sale consideration (stamp duty value) as Rs.3,20,20,000/-. Printed from counselvise.com 4 ITA No.679/Hyd/2025 SEL Resources Ltd 10. Ld. AO has referred the case to the valuation officer, Ld. AO, discharging the quasi-judicial function, was duty bound to refer the matter to the valuation officer u/s 50C(2) based on the claim made by the assessee Reliance is placed on the Order of the Hon'ble Calcutta High Court in the case of Sunil Kumar Agarwal [2014] 47 taxmann.com 158 (Calcutta) in which it was held that \".... 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....\" 11. Hon'ble ITAT Jaipur Bench in the case of Smt. Kamlesh Tiwari, ITA No. 587/JP/2013 followed the rational laid down by the Hon'ble Calcutta High Court in the case of Sunil Kumar Agarwal (Supra) and held that even though the assessee simply challenged the sale consideration on the basis of the Stamp Valuation Authority but had not requested to refer this issue to the Valuation Officer, the Assessing Officer should have referred the matter to the Valuation Officer. 12. Further reliance is also placed on the following judicial pronouncements the extracts of which have been set out for the sake of convenience: - 12.1 AppaduraiVijayaraghavan vs. JCIT [2014] 49 taxmann.com 513 (Madras) \"...Head Notes - Section 50C of the Income-tax Act, 1961 Capital gains - Special provision for computation of full value consideration (Reference to Valuation Officer) Assessment year 2007-08-Whether where assessee made an objection with regard to adoption of market value under section 50C(1), Assessing Officer should have referred valuation of capital asset to Valuation Officer under section 50C(2) - Held, yes 12.2. Anil Kumar Jain vs. ITO (2013) 34 taxmann.com 258 (Delhi - Trib.) Value \"..Head Notes Section 50C of the Income-tax Act, 1961 Capital gains -Special provision for computation of full value of consideration in certain cases [Reference to Valuation Officer) Assessment year 2009-10 Printed from counselvise.com 5 ITA No.679/Hyd/2025 SEL Resources Ltd Assessee earned short term capital gain on sale of property- Assessee made a claim before Assessing Officer that value adopted or assessed by stamp valuation authority was higher than fair market value adopted by stamp valuation authority had not ever been disputed by assessee in any appeal or revision or otherwise to any other authority or Court as referred to in section 50C(2) Whether it was incumbent upon Assessing Officer to refer matter for valuation to a Valuation Officer as provided in section 50C(2) - Held, yes.\" 13. Without prejudice to the foregoing, the Appellant submits that as per explanation (iia) to section 153B of the Income Tax Act, 1961, in computing the period of limitation of assessment u/s 153A the following period shall be excluded: \"The period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer\" Hence, the contention of the Assessing Officer that the assessment proceedings will become time barred due to reference being made to Valuation Officer was not valid in law. 14. AO erred in not appreciating the various documents and submissions made by the Appellant. 15. The Appellant therefore prays that the Hon'ble ITAT may be pleased to Quash the Assessment Order dated 29/03/2022 in its entirety as the same is against the principles of natural justice. 16. The Appellant craves leave to add to and/or/amend/or/alter any of the grounds taken in appeal.” 2. Succinctly stated, the A.O. observed that though the assessee company had during the subject year sold immovable property for a consideration of Rs. 2,14,73,862/-, but had failed to file its return of income, initiated proceedings under Section 147 of the Act. Notice under Section 148 of the Act, dated 30.03.2021, was issued to the assessee company. During the course of assessment proceedings, the A.O. observed that the Printed from counselvise.com 6 ITA No.679/Hyd/2025 SEL Resources Ltd assessee company had, during the subject year, not carried out any commercial activities. The A.O. observed that the assessee company had, during the year under consideration, sold an immovable property i.e. Office no.1410, at 14th floor, in Dalamal Tower situated at 211, Nariman Point, Mumbai on 24.11.2016 for a consideration of Rs.2,14,73,862/-. On a perusal of the record, the A.O. observed that the said property was purchased by the assessee company on 06.12.2013. 3. The A.O. observed that the fair market value of the subject property as on the date of transfer was Rs. 3,20,20,000/-. The assessee company, on being confronted with the aforesaid fact, submitted vide its reply dated 17.03.2022 that as the subject property had remained closed and was in a very bad condition at the time of sale, therefore, the stamp duty value fixed by the Valuation Authority for the said property was very high as compared to its actual realizable market price. The assessee company requested the A.O. to make a reference to the Valuation Officer to determine the fair market value of the subject property, keeping in view its condition. Printed from counselvise.com 7 ITA No.679/Hyd/2025 SEL Resources Ltd 4. The AO acted upon the aforesaid request of the assessee company and made a reference to the Technical Unit (TU) for determining the fair market value of the subject property on the date of sale i.e. on 24-11-2016. 5. As the valuation report from the valuation cell was not received by the A.O. prior to culmination, therefore, he, as per Section 50C of the Act, adopted the stamp duty value of the subject property, i.e., Rs. 3.20 crore (supra), as the deemed sale consideration with a specific observation that as and when the valuation report is received after the completion of the assessment proceedings, then the value so reported would be revised and consequential amendment/rectification/revision will be made as per the provisions of Section 154 of the Act. Accordingly, the A.O., based on his aforesaid observation, after inter alia, taking the deemed sale consideration of the subject property at Rs. 3.20 crore (as against the actual consideration of Rs.2,14,73,862/-) worked out the short-term capital gain on the same at Rs. 1,82,40,172/-. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee, despite having been afforded Printed from counselvise.com 8 ITA No.679/Hyd/2025 SEL Resources Ltd sufficient opportunity failed to participate in the proceedings before the CIT(A), therefore, the latter, finding no infirmity in the view taken by the A.O., dismissed the appeal vide an ex parte order. 7. The assessee company, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 8. We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities and the material available on record. 9. Shri Phaneendra Nag, the learned Authorized Representative (for short “Ld.AR”) for the assessee company, at the threshold of hearing of the appeal, submitted that the A.O. had grossly erred in law and on facts of the case in substituting the actual sale consideration of the subject property by the amount of the deemed sale consideration of Rs. 3,20,20,000/-. Elaborating on his contention, the Ld. DR submitted that as the A.O. had made a reference to the Valuation Cell for determining the fair market value of the property, therefore, the value reported by Valuation Cell ought to have been adopted as the sale consideration for Printed from counselvise.com 9 ITA No.679/Hyd/2025 SEL Resources Ltd determining the short-term capital gain on the sale of the subject property. The Ld. AR submitted that though the A.O., vide his order dated 28.03.2022, had made a reference to the Valuation Cell, but till date the report of the Valuation Officer has not been received. The Ld. AR submitted that Section 142A(6) of the Act provides that the Valuation Officer shall send a copy of the report under sub-section (5), as the case may be, both to the A.O. and the assessee, within a period of six months from the end of the month in which a reference was made under sub-section (1) of the Act. The Ld. AR submitted that as the A.O., despite the lapse of a period much beyond six months from the date of the reference made by him to the Valuation Cell on 28.03.2022, had not substituted the stamp duty value/segment rate that was adopted by him for computing the short-term capital gain on the sale of the subject property under Section 50C of the Act, therefore, it could safely be inferred that the Valuation Officer had failed to send the report, as was mandatorily required within a period of six months from the end of the month in which the reference was made, i.e. latest by 30.09.2022. The Ld. AR submitted that in the backdrop of the aforesaid facts, which are in clear contravention Printed from counselvise.com 10 ITA No.679/Hyd/2025 SEL Resources Ltd of the settled position of law, the determination of the short-term capital gain on the sale of the subject property by the A.O. by adopting the segment value/stamp duty value, as the deemed sale consideration, cannot be sustained, and is liable to be struck down. 10. Dr. Sachin Kumar, the learned Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of lower authorities. However, the Ld. DR on being queried about the status of the report of the Valuation Officer, based on the reference that was made by the A.O. in the course of the assessment proceedings on 28.03.2022, expressed his unawareness about the same. 11. We have thoughtfully considered the issue in hand in the backdrop of the facts involved in the present case before us. 12. Admittedly, it is a matter of fact, discernible from the record, that the A.O. had made a reference to the Valuation Cell for determining the fair market value of the subject property for determining the deemed capital gain on the sale of the subject property as per Section 50C of the Act. We find substance in the Printed from counselvise.com 11 ITA No.679/Hyd/2025 SEL Resources Ltd Ld. AR’s claim that as per Section 142A(6) of the Act, the Valuation Officer is statutorily obligated to send a copy of the report estimating the value of the property both to the A.O. and the assessee within a period of six months from the end of the month in which the reference is made. As brought to our notice, no such valuation report, despite the lapse of a period of more than three years had been received by the assessee company. Also, we find that nothing has been placed on our record which would reveal that, in compliance of the aforesaid statutory obligation the Valuation Officer had forwarded his report within the prescribed time period of six months. Although, it is the claim of the Ld. DR that the value of the subject property as per the valuation report of the Valuation Officer might have remained the same as was adopted by the A.O. based on the stamp duty value/segment rate, we are unable to persuade ourselves to concur with the said claim so raised by him in thin air. We, say so, for the reason that in case if the Valuation Officer would have forwarded his report within the prescribed time period of six months, then a copy of the same would have been produced before us, which, we are afraid, is not the case. Apart from that, Printed from counselvise.com 12 ITA No.679/Hyd/2025 SEL Resources Ltd the fact that the assessee company had not received any such valuation report as was statutorily required under Section 142A(6) of the Act further fortifies the factual position canvassed before us by the Ld. AR that no such valuation report had been forwarded by the Valuation Officer within the prescribed period. 13. We find that a similar issue had come up before this Tribunal in the case of Zulfi Revudjee Vs. ACIT, Circle 14(1), Hyderabad, ITA No. 2415/Hyd/2018, dated 05.09.2019, wherein it was observed that the Valuation Officer remains under a statutory obligation to furnish the valuation report within a period of six months from the end of the month in which reference was made by the A.O. For the sake of clarity, the observations of the Tribunal are culled out as under : “7. Having regard to the rival contentions and the material on record, we find that the relevant A.Y before us is A.Y 2013-14 and the return of income was filed on 30.09.2013. Therefore, 21 months from such date would expire on 31.3.2016. Thus, the assessment order u/s 143(3) was required to be passed by 31.03.2016 but since the AO has made a reference to the valuation officer u/s 142A of the Act, vide letter dated 19.02.2016, and the valuation report was filed on 20.7.2017, the said period will have to be excluded for determining the time limit. However, the question before us is the period allowed to the DVO to submit the report. U/s 142A of the Act, the valuation report has to be submitted within six months from the date of the receipt of the reference. Admittedly, in the case before us, the valuation officer has submitted the report beyond a period of 15 months. Whether this period can be enlarged or condoned is to be seen. As rightly pointed by the learned Counsel for the assessee, the word used in sub-section 6 of section Printed from counselvise.com 13 ITA No.679/Hyd/2025 SEL Resources Ltd 142A is \"shall\" and in other sub sections, the word used is \"may\". The Hon'ble Delhi High Court in the case of B.K. Khanna & Co. vs Union Of India And Others on 14 September, 1984 (Supra) has clearly held that where the words \"may\" and \"shall\" are used in various provisions of same sections, then both of them contain different meaning and the word \"shall\" shall mean \"mandatory\". As argued by the learned Counsel for the assessee, the AO was required to call for a report from the valuation officer within six months from the date of the reference and the valuation officer was bound to give such a report with such prescribed period. Further, as seen from the assessment order, the AO had directed the valuation officer to give the valuation of the property as on 8.2.2010, whereas the valuation officer has given the report as on the date of the execution of the sale deed. Therefore, the DVO has clearly not followed the directions of the AO and also not followed the timeline fixed under the Act. When it is mandatory for an officer to follow the timeline prescribed under the Act, such delay cannot be condoned. Therefore, we agree with the contentions of the learned Counsel for the assessee that the report of the Valuation Officer has to be filed within the time given u/s 142A(vi) of the Act and therefore, the assessment order passed on the basis of such report of Valuation Officer beyond the time limit is not sustainable. Therefore, we allow the assessee’s appeal and the assessment order is set aside.” 14. We thus, in the backdrop of the facts involved in the case before us, are of the considered view that the matter, in all fairness, requires to be set aside to the file of the A.O. with specific directions. The A.O. is directed to verify as to whether or not the report of the Valuation Officer, based on the reference made by him in the course of the assessment proceedings (through the Technical Unit) on 28.03.2022, was received within the prescribed time period of six months from the end of the month in which such reference was made, i.e., latest by 30.09.2022. In case the valuation report is available on record, Printed from counselvise.com 14 ITA No.679/Hyd/2025 SEL Resources Ltd the A.O. shall, after affording the assessee company an opportunity of being heard, take into account such report in making the necessary valuation/rectification for determining the short-term capital gain on the transfer of the subject property during the year under consideration. In case, the A.O. has not received any report from the Valuation Officer within the statutory period of six months from the end of the month in which the reference was made, i.e., latest by 30.09.2022, then he shall substitute the segment/stamp duty value of Rs. 3,20,00,000/- that was adopted by him as the deemed sale consideration for computing the short-term capital gain on the transfer of the said property by the amount of actual sale consideration of Rs. 2,14,73,862/- disclosed by the assessee company in its return of income. Printed from counselvise.com 15 ITA No.679/Hyd/2025 SEL Resources Ltd 15. Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 20th August, 2025. Sd/- (श्री मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 20.08.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : SEL Resources Ltd, Plot No.26, Amar Society, Kavuri Hills, Jubilee Hills, S.O. Shaikpet, Hyderabad. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 3(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "