9911796707
TMI Blog2024 (10) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-Tax (Appeals) National Faceless Appeal Centre [the learned CIT(A)] in relation to the appeal filed against order under section 147 read with 144B of the Act dated & November 2023 passed by The Faceless Assessment Centre (the learned AO) on the following grounds, each of which is without prejudice to and independent of the others 2. On the facts and in circumstances of the case and in law the learned CIT(A)/learned Assessing Officer: General 1. erred in computing the total income of the Appellant at Rs 5,53,44,602 as against the returned income of Rs. 57,55,640; Failure to provide opportunity of being heard through video conference hearing. 2 Failed to grand the Appellant an opportunity of being heard through video-conference hearing in spite of the Appellant requesting the same and thereby, violating the principal of natural justice. Arguments on merits. 3 erred in confirming the addition made under section 50(2)(vi) of the Act amounting to Rs 4,96,31,000 4. erred is not appreciating that the entire purchase consideration has been discharged through banking channels and therefore provisions of section 56(2)(vii) of the Act being anti-abuse pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings. Invalidity of proceedings under section 147 of the Act 11 erred is re-opening the assessment proceedings under section 147 of the Act without appreciating that the information relied upon has no linkage with the Appellant and without any tangible maternal and thereby the proceedings are invalid and bad too. 12 erred in not taking approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General prior to issuance of notice under section 148 of the Act as contained in section 151) of the Act of more than three years have elapsed from the end of the relevant assessment year, whereas the learned AO had taken sanction under section 151) of the Act and hence for want of correct sanction, the entire assessment proceedings should be quashed, 13. erred re-opening the assessment proceedings without appreciating that proceedings are invalid and bad in law in the absence of "information" which suggests that the income chargeable to tax has escaped assessment: 14. ought to have appreciated that, basis Ashish Agarwal (444 ITR 1). Supreme Court has deemed notice issued under section 148 of the Act (und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 180,131,000/-. Therefore, the provisions of section 50C, 56 (2) (viia) (b)/43CA applies. 6. Subsequently the honourable Supreme Court decided the issue in 444 ITR 1 [ Ashish Agarwal's case] pursuant to which assessee received a notice under section 148A (b) of the act on 19/05/2022 which was responded to by the assessee on 7/6/2022 . Assessee raised the contention that this issue has already been considered in assessment proceedings under section 143 (3) of the act. Subsequently notice under section 148 was issued on 28/7/2022 and further in order under section 148A (d) was issued on 28 July 2022. 7. Assessee responded by filing the return of income on 23 August 2022 and also a reply on the same date raising additional objections. Assessee was issued a notice under section 143 (2) on 8 January 2023 and further notice under section 142 (1) on 11/1/2023. Subsequently the assessee was issued a show cause notice on 9/05/2023 that why the addition should not be made of Rs. 49,631,000/- in the hands of the assessee under section 56 (2) (viia) (b) of the act. The assessee responded on 15/5/2023 reiterating his earlier submission as well as the additional submission also raising an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable as there was a difference between the stamp duty valuation and sale consideration of the property which was taxable under section 56 (2) (viia) of the act and thus income had escaped the assessment. Further the assessee has neither submitted before the assessing officer nor before him that the stamp duty value taken by the assessing officer is incorrect. Accordingly, the reopening was held to be valid. iii. With respect to ground number 8 - 13 on the merits of the addition under section 56 (2) of Rs. 49,631,000/-, the learned CIT - A held that the property has been verified by the learned district valuation officer and notice under section 148A (d) of the act was issued on 28/7/2022 with prior approval of the principal Commissioner of income tax. The assessee was provided the opportunity and the information and same are disposed of by speaking order. The reference was made by the assessee officer to the learned district valuation officer who held that the property was valued at Rs. 195,050,452 as per the report in case of the seller. The objection of the assessee with respect to the valuation was also dealt with thus the learned district valuation officer has taken the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case that assessee has purchased a property at a total consideration of Rs. 130,500,000, the stamp duty valuation of the property is Rs. 180,131,000, thus there is a difference in the valuation of the property and the agreed consideration is Rs. 49,631,000/-. The assessee purchased this property from ages Realtors private limited, in the case of the seller, this property was referred to the valuation cell for the purpose of determination of the fair market value of consideration. The learned district valuation officer valued the property in case of seller at Rs. 195,050,452/-. Thus, the only valuation that has been made is the valuation of the property from the perspective of the seller of transacted property where assessee is a buyer. Assessee does not know anything about the valuation mechanism and the factual aspect discussed with DVO by the seller. During the course of reassessment proceedings, assessee objected about the valuation as per the stamp duty authorities and also the valuation report of the DVO. Though the assessee referred the matter to the DVO, he refused to value the property once again stating that when the property is already valued ones in case of the sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of any mala fide , provisions of section 56 (2) of the act cannot be invoked relying on circular number 1 - 2011 dated 6 April 2011 wherein it is mentioned that the provisions of this section were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts, particularly after abolition of the gift tax act. He relied upon the several judicial precedents of the coordinate benches and submitted that that assessee has made a bona fide purchase of the property and therefore as the provisions of section 56 (2) are anti-evasion provisions, same cannot be applied to a bona fide transaction. 19. further valuation report has to be made in the case of the assessee which is the primarily requirement when assessee objected to the stamp duty rate. In case of the assessee despite objection, no fresh valuation is carried out and merely the valuation made in the case of the seller of the property was reinstated as the valuation of the property in case of the buyer i.e., assessee is considered. He submits that the consideration of the buyer and the consideration of the seller while purchasing the property cannot be the same. This is also relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has gone down. 23. He submitted that even if the valuation of the learned district valuation officer is considered, the sale instances provided by him clearly provides the per square meter rates in the range of Rs. 341,668 - Rs. 366,977 which are only marginally higher than the appellant's valuation of Rs. 302,073 per square meter considering the tolerance band limit of 10%. The learned district valuation officer without any reason has considered the rate of Rs. 451,490 per square meter. He referred to the report of the DVO it is mentioned that by adjusting the sale instances of the properties with reference to time lag, size, floor, location and situation, the average effective rate considered reasonable for valuation of the said property was taken at Rs. 451,490 per square meter as on the date of 23/6/2016. He submitted that there is no basis in the report of the DVO that how this rate has been arrived at. He therefore submitted that the DVO report not to be considered as it is devoid of any cogent reasoning and without any reasonable basis to consider what is fair market value. 24. He submitted that the district valuation officer has rejected the assessee's valuation withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 taxmann.com 159 (Bombay) and submitted that such an approval is invalid and renders the reassessment proceedings also invalid. He further relied upon the decision of the honourable Bombay High Court in case of RuthSunil Mantri dated 17 October 2023 and several other decisions of the honourable jurisdictional High Court. Accordingly, it was stated that that the impugned reassessment proceedings where sanction to issue notice under section 148 of the act and order under section 148A (d) of the act has been obtained under section 151 (i) of the act instead of 151 (ii) of the acts was to the root of the matter and the reassessment proceedings deserves to be quashed. 27. Notice under section 148 has been issued by the jurisdictional assessing officer[ JAO], which should have been issued by the faceless assessing officer. He referred to the notice and submitted that such a notice issued by the learned jurisdictional assessing officer is not valid. He relied on the decision of the honourable Bombay High Court in case of Hexaware technologies Ltd versus assistant Commissioner of income tax (2024) 464 ITR 430 (Bombay) dated 3/5/2024. Thus, he submitted that the notice issued is invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the learned assessing officer has lost sight of the statutory provisions like 50C, 43CA and section 56 (2) of the act. For this proposition he relied upon the decision of the honourable Bombay High Court in case of in ICOR Ltd dated 23 July 2018. 32. He further submitted that that the assessment order is barred by limitation for the reason that according to section 153 (2) of the act the assessment proceedings was supposed to be completed within 12 months from the end of the financial year in which notice under section 148 was issued. The notice under section 148 was issued on 30 June 2021 under the old regime for reopening of the assessment proceedings. Subsequently to the decision of the honourable Supreme Court in case of assessee were well, the proceedings were converted into a new regime in order under section 148A of the act was passed on 28 July 2022 and notice under section 148 of the act was also issued on the said date. He therefore submitted that notice under section 148 was issued on 28/7/2022 was only on account of applicability of the new regime was the decision of the honourable Supreme Court but that did not extend the time limit for completion of reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that DVO shows the rate per square meter of Rs. 348,675, the lowest sale instances shown by the learned district valuation officer shows the value of the rate per square feet at Rs. 366,977 and third instances of the learned district valuation officer shows the rate per square meter of Rs. 341,668. If average of all three sale instances are taken, then the averages rate per square meter comes to Rs. 352,440. He further submitted that the sale instances taken by the learned district valuation officer are of single flats [ not duplex] whereas the flat of the assessee is duplex and if a discount of at least 7.5% is granted coupled with a further discount of 7.5% on account of obstruction in the view than the average sale of the sale instances taken by the learned DVO comes to rate of Rs. 299,574 which is far less than the actual sale consideration of the assessee of Rs. 302,073 per square meter. 35. He submitted that if the price of the auction is considered, which is the price which should be considered after considering all the adjustments, the addition does not result deserves to be upheld. For this proposition he relied on the decision of the honourable Bombay High Court in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities and submitted that the addition made by the learned lower authorities deserves to be confirmed. 39. We have carefully considered the rival contention and perused the orders of the learned lower authorities. Facts are not reiterated. 40. Ground number 1 of the appeal is general in nature, no separate arguments were advanced, therefore it is dismissed. 41. Ground number 2 of the appeal is with respect to the failure to provide opportunity of being heard, as assessee has been granted an opportunity of being heard, no separate arguments were advanced, therefore, same is dismissed. 42. Ground number 3 - 9 are on the merits of the addition. Assessee has purchased a property at a consideration of Rs. 130,500,000, the stamp duty value of the same is Rs. 183,100,000, the valuation made by the district valuation officer in case of seller of the property was Rs. 195,000,542. The assessee objected to the valuation report prepared by the district valuation officer as well as the stamp duty rate. Assessee objected and requested the learned AO to refer the matter to the district valuation officer, but the district valuation officer reiterated the valuation made in case of sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the seller would also be applicable in case of a buyer, this is so because if the seller does not represent anything before the learned district valuation officer, it will go against the buyer which is not permitted. Therefore, if the two parties to the same transaction, objects to the valuation, there perspective and reasons may be different than the others. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50 C/ 56 (2) (viia) and Section 43 CA does not provide that valuation made by the DVIO is qua the property , in fact it is qua the assessee. Thus, on this ground itself, when the ld. AO fails to obtain the Report of DVO of the impugned property after giving assessee opportunity of representing before DVO, addition so made is to be deleted. 47. Even otherwise, the valuation report itself says that as on the date of inspection, the premises has partly Italian marble and partly wooden flooring, plastic paint, marble, designer painting and finishing on the walls and marbles on the walls of the toilet and bath, designer false ceiling, doors are of TW/door with lamination, fully glazed vendors with alum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er property sold by the assessee in subsequent year also did not get the prize which is stated by the learned district valuation officer. Thus, the average of all three sale instances noted by the learned district valuation officer would give rate of Rs. 352,440/- per square meter. Compared to this, the assessee submitted a comparable sale on 9 March 2022 wherein identical duplex flat one floor below was sold for Rs. 117,500,000 where the rate per square meter was Rs. 269,805/-. This was an auction by HSBC bank. When there is an auction by a bank, it is more transparent and acceptable. The honourable Bombay High Court hold this as well as the decision of the coordinate benches. Even the reserve price fixed by the bank for auction of the above property was only Rs. 12.42 crores which was sold for a consideration of Rs. 11.65 crores, i.e., which was even less then the auction reserve price fixed by the bank. The sale price per square meter in the same block i.e., Tower C, was only Rs 271,982 per square meter. Therefore, it is a good comparable. Further, it is after six years after the date of the transaction of the impugned property, and in the same block i.e., Tower C. It is stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction where the property website and economic on the basis of reports shows 30% down fall in the price, if we consider only 7.5% downfall in the average sale price considered by the learned District valuation officer in its report of Rs. 352,440/- per square meter, the average square meter rates would be Rs. 325,000 per square meter. If the assessee is granted benefit of the 10% of the tolerance limit of the sale consideration which will come to Rs. 332,280 per square meter, no addition could be made in the hands of the assessee despite many infirmities in the procedure as well as on factual aspects. 53. Accordingly on the merits, we direct the learned assessing officer to delete the addition of Rs. 4,96,31,000/- on account of provisions of section 56 (2) (vii) of the act. Accordingly ground number 3 - 9 of the appeal are allowed. 54. The ground number 10 challenges the issue of notice under section 148 of the act dated 20 July 2022 which has been issued manually in contravention of circular number 19 of 2019 dated 14 August 2019, which was not adjudicated by the learned CIT - A, and also the learned parties requested to keep it open as the issue is pending before the honou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of income tax,/principal director general of income tax, chief Commissioner of income tax/director general of income tax and not by principal Commissioner of income tax as obtained in the case of the assessee. This issue is squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in case of Siemens financial services private limited (2023) 154 taxmann.com 159 (Bombay) wherein it has been held that when the approval is required to be taken by a prescribed authority, it has to be done in the same manner. However, in view of the decision of the honourable Supreme Court in case of Union of India and Ors. (UOI) Vs. Rajeev Bansal : MANU/SC/1078/2024 the above decision of the honourable Bombay High Court has been reversed; therefore, ground number 12 of appeal is dismissed. 58. Further, ground number 14 and ground number 15 are also with respect to the reopening of the assessment in old regime versus New regime which has now been settled by the above decision of the honourable Supreme Court therefore both these at serial number 14 and 15 are dismissed. 59. In view of the above facts, appeal of the assessee is partly allowed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
