SHASHIKANT DAMODAR PATIL,MUMBAI V. ITO, 32(3)(4), MUMBAI, MUMBAI

ITA 2973/MUM/2025

AI Insights

The case involves an appeal by Shashikant Damodar Patil against the order of the National Faceless Appeal Centre (NFAC), which confirmed the addition of Rs. 3,29,02,269 as long-term capital gain on the sale of land. The land, originally agreed to be sold by the appellant's father in 1981, was transferred posthumously to the appellant and his brother in 2011 for the originally agreed price, despite a significantly higher market value assessed by the stamp valuation authority. The appellant contested the valuation, arguing that the AO should have referred the matter to the DVO under Section 50C(2) of the Income Tax Act, 1961, which was not done, leading to a miscarriage of justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714764 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: KAVITA P. KAUSHIK
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Set aside; Opportunity of being heard; Sale consideration of property below Jantri Value; Fair market value; Capital Gains
• Section: 147; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP AND SHRI NARENDRA KUMAR BILLAIYA, AM ITA No.2973/Mum/2025 (Assessment Year: 2012-13) Shashikant Damodar Patil, Bhagirathi Chaya, Waman Bhoir Road, Kandarpada, Dahisar (W), Mumbai-400068 Vs. Income Tax Officer, Ward- 32(3)(4), Mumbai-400051 (Appellant) : (Respondent) PAN NO. AACPP 6866D Appellant by : Shri Subodh Ratnaparkhi Respondent by : Ms. Kavita P. Kaushik, Sr. DR (Appellant) (Respondent) Date of Hearing : 05.08.2025 Date of Pronouncement : 07.08.2025 O R D E R Per Saktijit Dey, VP: This is an appeal by the assessee against order dated 25.02.2025 passed by National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year (AY) 2012-13. 2. The grounds raised by the assessee are as under:- “1. The Hon CIT(A) erred in confirming the addition of Rs. 3,29,02,269/- as long-term capital gain arising on sale of share in land at village Dahisar, Taluka Borivali, Dist. Mumbai, not appreciating that the said land was transferred by the father of the appellant under agreement dt. 06.09.1981 and therefore capital gains on sale of land did not arise in the year under appeal. The addition of Rs.3,29,02,269/- as long-term capital gains is not warranted by facts and in law and hence may kindly be deleted. 2. The Hon CIT(A) erred in confirming the addition of Rs. 3,29,02,269/- as long term capital gain in the hands of the appellant, not appreciating that Printed from counselvise.com 2 ITA No.2973 /Mum/2025 Shashikant Damodar Patil v. ITO in the year under appeal, the appellant alongwith his brother as heirs of their father have only passed to the purchaser the legal title to the land earlier agreed to be sold by their father and therefore the action of the Id AO in holding the capital gains on sale of share in the said land to arise in the year under appeal is not appropriate. 3. The Hon CIT(A) erred in confirming the addition of Rs. 3,29,02,269/- as long term capital gain arising on sale of share in land at village Dahisar, as per section 50C of the I.T. Act, adopting the value as per stamp valuation authorities, not appreciating the earlier agreements by late father of the appellant as well as other defects, due to which the actual fair market value was substantially lower than the market value as per stamp valuation authorities and therefore application of sec. 50C was not justified unless the asset in question was valued by the valuation officer (DVO) as provided in section 50C(2) of the I.T. Act, 1961. 4. The Hon CIT(A) erred in upholding the computation of long-term capital gains by adopting the fair market value of the land as on 01.04.1981 as per section 55(2)(b)(ii) at Rs.2,39,422/- (Rs. 80/- per sq. mtrs) which is not appropriate and substantially lower than the actual fair market value of the said land and due to which the long-term capital gains of Rs.3,29,02,269/- have been incorrectly determined. 5. The appellant craves leave to add, alter, amend and/or vary any of the above grounds of appeal at any time before the decision of the appeal.” 3. As could be seen from the grounds raised, the solitary dispute arising for consideration is with reference to addition made of Rs.3,29,02,269/- on account of long-term capital gain on sale of immovable property. 4. Briefly the facts are, the assessee is a resident individual. As stated by the Assessing Officer (AO), for the assessment year under dispute, assessee did not file any return of income in terms with Section 139(1) of the Income Tax Act, 1961 (hereinafter called the ‘Act’). Subsequently, information was received by the AO indicating that in the previous year corresponding to the assessment year under dispute the assessee along with his brother had sold/transferred immovable property Printed from counselvise.com 3 ITA No.2973 /Mum/2025 Shashikant Damodar Patil v. ITO at Dahisar for a sale consideration of Rs.50,00,000/- as against the market value of Rs.6,76,84,000/-. Based on such information, the AO reopened the assessment u/s. 147 of the Act. In course of assessment proceeding, when the AO called upon the assessee to explain the huge difference between the sale consideration and the market value of the property, the assessee submitted that actually his deceased father had entered into an agreement of sale on 06.09.1981, which was subsequently modified through deed of modification dated 04.06.1983 for sale of the subject property. However, the property could not be transferred to the buyer because of pending litigation. It was submitted, in the meanwhile, assessee’s father died on 01.11.1989 and conveyance of the property to the buyer could not be completed. After the death of assessee’s father, the property devolved upon the assessee and his brother and the deed of conveyance was executed in favour of the buyer on 12.05.2011 for the sale consideration of Rs.50,00,000/- as was agreed upon at the time of execution of agreement of sale between assessee’s father and the buyer. The AO, however, did not accept assessee’s contention. Relying upon the value determined by the stamp valuation authority, the AO invoked the provisions of sub- Section (1) of Section 50C of the Act and added back an amount of Rs.3,29,02,269/- , being assessee’s 50% share in the capital gain. Though, the assessee contested the addition in appeal before First Appellate Authority, however, he was unsuccessful. 5. Before us, learned counsel appearing for the assessee reiterated the stand taken before the Departmental Authorities (DR). Further, he submitted that when the assessee objected to the value determined by the stamp valuation authority, the AO Printed from counselvise.com 4 ITA No.2973 /Mum/2025 Shashikant Damodar Patil v. ITO was required to refer the valuation of the property to the Departmental Valuation Officer (DVO). Both the AO and the First Appellate Authority having failed to do so, there is valuation of statutory provision. 6. The learned Departmental Representative (DR) relied upon the observations of the AO and First Appellate Authority. 7. We have considered rival submissions and perused the materials on record. It is a fact on record that the assessee jointly with his brother owned immovable property at Dahisar, which was transferred in the year under consideration for sale consideration of Rs.50,00,000/- as per the conveyance deed. However, the stamp valuation authority has determined the value of property at Rs. 6,76,84,000/-. Adopting the value determined by the Stamp Valuation Authority as the deemed sale consideration in terms with Section 50C(1) of the Act, the AO has determined the capital gain. On perusal of record, it is evident, before the Departmental Authorities, the assessee has objected to the adoption of value determined by the stamp valuation authority. That being the case, the AO was duty bound to make a reference to the DVO for determining the value of the property in terms with Section 50C(2) of the Act. Neither the AO, nor the First Appellate Authority having done so, there is failure on their part to fully implement the statutory provisions. Therefore, due to non-implementation of provisions of Section 50C of the Act to its fullest extent there is miscarriage of justice. 8. In view of the aforesaid, we are inclined to set aside the impugned order of the First Appellate Authority with a direction the AO to re-adjudicate all the issues Printed from counselvise.com 5 ITA No.2973 /Mum/2025 Shashikant Damodar Patil v. ITO raised in the present appeal. He is also directed to make a reference to the DVO to determine the value of the subject property. Needless to mention, before deciding the issue, the assessee must be given a fair opportunity of being heard. 9. In the result, appeal is allowed for statistical purposes. Order pronounced in the open court on 07/08/2025. Sd/- Sd/- (N.K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 07 /08/2025 Aks/- Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "