Case Law Details
Smt. Sarita Satyendra Singh Vs ITO (ITAT Mumbai)
In this case before the Income Tax Appellate Tribunal, the assessee filed an appeal against the order dated 16-10-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2018–19.
The assessee had originally filed her return of income on 31-08-2018. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued. However, there was no compliance by the assessee. A show cause notice dated 30-03-2021 was also issued, but again no response was filed. Consequently, the Assessing Officer proceeded to assess the income by bringing to tax a sum of ₹94,69,000, being the difference between the purchase consideration of three immovable properties and their stamp duty valuation, under Section 56(2)(x) of the Act.
The assessee challenged this before the appellate authority, but the Commissioner (Appeals) upheld the findings of the Assessing Officer, primarily noting lack of supporting evidence and confirming the addition.
During the hearing before the Tribunal, the assessee acknowledged non-compliance during assessment proceedings and attributed it to the Covid-19 pandemic. It was submitted that detailed written submissions had been filed before the Commissioner (Appeals). The assessee explained that one property was located in a remote village in Uttar Pradesh with issues such as water shortage, access problems, and disputes relating to title and ownership proportions, making stamp duty value an inappropriate measure of fair market value.
Regarding the other two properties, it was submitted that they were constructed by MHADA, where there were issues relating to construction quality, maintenance, and ownership of underlying land remaining with MHADA. It was argued that such properties are typically transacted at a discount compared to prevailing rates, and therefore stamp duty valuation was not a proper basis for determining fair market value.
The assessee had requested before the Commissioner (Appeals) that the matter be referred to a Valuation Officer to determine fair market value based on actual conditions, in terms of the proviso to Section 56(2)(x). However, no finding was recorded on this request, and the addition was sustained. It was further submitted that the assessee had now obtained valuation reports for the three properties and filed an application under Rule 29 to admit these as additional evidence, as they go to the root of the matter.
The Departmental Representative relied on the orders of the lower authorities but acknowledged that the assessee had made a request for reference to the Valuation Officer.
Upon consideration, the Tribunal noted that although there was non-compliance during assessment proceedings, the assessee had raised specific objections to the adoption of stamp duty valuation and had requested reference to a Valuation Officer. The Tribunal observed that the Commissioner (Appeals) had not provided any reasoning for rejecting or ignoring this request. It held that where the assessee objects to the stamp duty valuation, such valuation cannot be adopted for the purposes of Section 56(2)(x) without referring the matter to a Valuation Officer.
The Tribunal further found that the valuation reports submitted as additional evidence were relevant and went to the root of the issue. These were admitted as additional evidence. Accordingly, the matter was set aside and remanded to the Assessing Officer with a direction to refer the valuation of the properties to the Valuation Officer and determine the fair market value after providing reasonable opportunity to the assessee.
The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 16-10-2025, pertaining to Assessment Year (AY) 2018-19.
2. Briefly, the facts of the case are that the assessee filed her return of income on 31-08-2018, which was selected for scrutiny and notice u/s. u/s. 143(2) and 142(1) of the Act were issued. However, there was no compliance on the part of the assessee. Thereafter, the AO issued a show cause on 30-03-2021, again there was no compliance to the show cause. Thereafter, the AO proceeded and brought to tax the difference between the purchase value of three immoveable properties purchased by the assessee and the stamp duty valuation thereof and the differential amount of Rs. 94,69,000/- was brought to tax in terms of section 56(2)(x) of the Act. Thereafter, the assessee carried the matter in appeal before the Ld.CIT(A), who has since sustained the order and the findings of the AO and against the said order, the assessee is in appeal before us.
3. During the course of hearing, the Ld.AR submitted that admittedly, the assessee could not respond to the notices issued during the course of assessment proceedings. It was submitted that it was during Covid-19 pandemic that notices were issued and the assessment proceedings were undertaken resulting in non-compliance. At the same time, it was submitted that the assessee has submitted detailed written submissions before the Ld.CIT(A) and it was also submitted that the first property is located in a remote village of Uttar Pradesh, where there is a perennial water shortage, the land has access problem as well as there is dispute as to title and proportion in which the land is owned and given all these adverse factors, the stamp duty value cannot be considered as the Fair Market Value of the property and the same can be ascertained only by making site visit and making local enquiries. As far as second and third properties are concerned, it was submitted that these properties are built by the Government Organisation, MHADA and it is well known that there is construction quality deficit in these buildings as also there are lot of maintenance issues in these colonies built by the Government organization. Further, the title of underlying land is not with the assessee and MHADA continues to be owner of the land and going forward structural changes/redevelopment normally becomes very difficult. It was accordingly submitted that in view of all these factors, these MHADA properties gets transacted at discount price to standard rate in the concerned area. Therefore, the stamp duty value is not the right basis to consider the Fair Market Value of these properties. It was accordingly submitted before the Ld.CIT(A) that the matter may be referred to the Valuation Officer to ascertain and determine the value on the basis of factual position and the ground reality rather than following general stamp duty valuation in terms of the proviso to section 56(2)(x) of the Act. However, the Ld.CIT(A) has simply stated that the assessee has made a general statement about the poor quality of construction of MHADA properties and title issues in respect of the other property and the assessee has not submitted any supporting evidences and basis that the findings of the AO have been confirmed. It was submitted that there is no finding recorded by the Ld.CIT(A) as to the request made by the assessee to refer the matter to the Valuation Officer. It was submitted that once the assessee objects to the valuation as per the stamp duty authority, the matter ought to have been referred to the Valuation Officer which has not happened in the instant case. Regarding the findings of the Ld.CIT(A) that the assessee has neither submitted price of properties sold in the same locality/area nor has submitted any valuation report from any Government approved valuer. It was submitted that the said information was never called for by the Ld.CIT(A), however, the assessee has since obtained the valuation report in respect of these three properties under consideration and the assessee has also moved an application under Rule 29 to submit these valuation reports by way of additional evidences. It was submitted that these valuation reports goes to the root of the matter and would help demonstrate the case of the assessee as to why stamp duty valuation could not be taken as the appropriate basis for working out the Fair Market Value of the properties under consideration. It was accordingly submitted that the additional evidence by way of the valuation report of the three properties may be admitted and the matter may be remitted to the file of the AO with a direction to refer the matter to the file of the Valuation Officer where the Valuation Officer can also examine the valuation reports submitted by the assessee.
4. Per contra, the Ld.DR is heard, who has relied on the orders passed by the lower authorities. It was submitted that the assessee has failed to make any compliance to various notices issued during the course of assessment proceedings. At the same time, it was fairly submitted that the assessee did make a request before the Ld.CIT(A) for referring the matter to the Valuation Officer. It was accordingly submitted that where the Bench so decide, the matter may be referred to the AO/DVO to work out the Fair Market Value of the properties under consideration.
5. We have heard the rival contentions and perused the material available on record. Admittedly, there has been non-compliance on the part of the assessee during the course of assessment proceedings. However, during the course of appellate proceedings, the assessee explained the reasons for differential amount between the agreed purchase consideration and the stamp duty valuation and has also made a request to refer the matter to the Valuation Officer. However, the Ld.CIT(A) has not given any finding as to why the matter could not be referred to the Valuation Officer. Given that the assessee has specifically objected to the adoption of the stamp duty valuation, we believe that in such a scenario, without making a reference to the Valuation Officer, the stamp duty valuation cannot be adopted for the purpose of invocation of section 56(2)(x) of the Act. Further, the assessee has also filed copy of the valuation report in respect of the three properties under consideration by way of additional evidences which we find goes to the root of the matter. The additional evidences by way of valuation reports are hereby admitted and we deem it appropriate to set aside the matter to the file of the AO with a direction to refer the same to the Valuation Officer for determination of Fair Market Value of the properties under consideration, after providing reasonable opportunity to the assessee.
6. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23-03-2026
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