Case Law Details
Nikhil Pratap Mokashi Vs ITO (ITAT Pune)
The appeal was filed by the assessee before the Income Tax Appellate Tribunal (ITAT), Pune against the order dated 11.09.2025 passed by the National Faceless Appeal Centre (NFAC) under Section 250 of the Income Tax Act, 1961 for Assessment Year 2020-21, arising from the assessment order dated 24.09.2022 passed under Sections 143(3) read with 144B of the Act.
At the outset, the Tribunal considered a delay of 52 days in filing the appeal. The assessee filed an affidavit explaining the reasons for the delay. After examining the explanation, the Tribunal found that a reasonable cause had prevented the assessee from filing the appeal within the prescribed period, held that the delay was not intentional, condoned the delay, and admitted the appeal for adjudication.
The assessee challenged the addition made towards capital gains, contending that the Divisional Valuation Officer (DVO) compared the property with properties situated outside the Defence Department’s Red Zone, failed to consider sale instances of properties in the same society, ignored the objections raised against the draft valuation report, and that the CIT(A) rejected the additional evidence and accepted the DVO’s report without considering its defects.
The assessee had filed the return of income for Assessment Year 2020-21 on 15.10.2020 declaring income of ₹2,68,410. The case was selected for limited scrutiny to examine whether the sale consideration of immovable property disclosed in the return was lower than the value adopted by the stamp valuation authority. During the year, the assessee entered into an agreement to sell an immovable property on 10.06.2019, disclosed a sale consideration of ₹65,00,000 and computed taxable capital gains of ₹16,65,486. The Assessing Officer noted that the stamp duty value of the property was ₹1,66,12,500.
The assessee submitted that he held only a 50% share in the property and that the DVO had valued his share at ₹88,59,300. Based on the difference between the DVO’s valuation and the declared sale consideration, the Assessing Officer added ₹11,79,650, being 50% of the difference, to the assessee’s income.
During assessment proceedings, the assessee contended that the property was situated within 500 yards of the outer parapet wall of the High Energy Material Research Laboratory (HEMRL), Ministry of Defence, Government of India. According to the assessee, the property was subject to development restrictions, no construction activity was permitted, and therefore its fair market value was significantly lower than comparable plots in the area. The Assessing Officer did not accept these submissions and completed the assessment at a total income of ₹14,48,060.
Before the CIT(A), the assessee submitted that the DVO had failed to provide a reasonable opportunity of hearing and had not considered that the property was located within 500 yards of HEMRL. The CIT(A) dismissed the appeal, observing that the assessee had not produced any communication addressed to the DVO seeking time to submit evidence or explanations.
Before the Tribunal, the assessee relied upon a paper book containing the DVO’s report, the valuation report of a Government Registered Valuer, sale instances of other properties in the same society, the Ministry of Defence notification, the Unified Development Control and Promotion Regulations for Maharashtra, and a letter issued by the Pune Municipal Corporation regarding removal of construction. It was submitted that the Government Registered Valuer had taken into account all factors affecting the market value and had valued the property at ₹47,06,875, which was lower than the declared sale consideration of ₹65,00,000. The Revenue supported the order of the CIT(A).
The Tribunal observed that the dispute related solely to the valuation of the immovable property. It noted that the assessee had consistently maintained that the property was situated within 500 yards of HEMRL, was located in a notified No Development Zone, and therefore could not be marketed on the same basis as other urban properties.
The Tribunal further noted that the DVO himself had recorded that the property was accessible through a motorable kachha road, was situated in an agricultural and No Development Zone, fell within the Hill Top Hill Slope (HTHS) Zone as well as the Red Zone earmarked for the Armed Forces, and that HEMRL had issued notices prohibiting construction activity because of the property’s location. Although the DVO adopted a value lower than the stamp valuation authority, the Tribunal observed that the DVO had not considered that similar properties in the same society had been sold at substantially lower rates and that there were several other factors reducing the property’s market value.
The Tribunal examined the valuation report of the Government Registered Valuer, who had valued the property at ₹47,06,875 after considering the property’s location within 500 yards of HEMRL, notices issued by HEMRL and the Pune Municipal Corporation regarding removal of construction, geographical disadvantages, and the non-availability of public and civil utilities. After examining the valuation report and the supporting documents, the Tribunal held that the Government Registered Valuer had arrived at the correct fair market value after considering all the constraints affecting the property.
Since the value determined by the Government Registered Valuer was lower than the declared sale consideration of ₹65,00,000, the Tribunal held that there was no requirement to invoke Section 50C of the Income Tax Act. Accordingly, it accepted the capital gains declared by the assessee, set aside the findings of the CIT(A), deleted the addition of ₹11,79,650, allowed the grounds of appeal on merits, and allowed the assessee’s appeal.
Cases Discussed
1. Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors.– (1987) 2 SCC 107.
2. Inder Singh Vs. State of Madhya Pradesh– Judgment dated 21.03.2025 (2025 INSC 382).
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 11.09.2025 framed by National Faceless Appeal Centre, Delhi passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) arising out of Assessment Order dated 24.09.2022 passed u/s.143(3) r.w.s.144B of the Act.
2. Registry has pointed out that the appeal is barred by limitation as the assessee has filed the appeal before this Tribunal with a delay of 52 days. Assessee has filed an affidavit explaining the reasons which led to delay. On due consideration of the said reasons, I find that ‘reasonable cause’ prevented the assessee from filing the appeal within the stipulated time limit. I find that the delay is not intentional and therefore placing reliance on the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 52 days in filing the appeal before this Tribunal and admit the appeal for adjudication.
3. Assessee has raised following grounds of appeal :
“The following grounds are taken without prejudice to each other – On facts and in law.
1) The CIT(A) passed the order without considering the fact that the Ld. DVO had compared the property with the one which was outside the Red Zone. Value of Property in declared Red Zone by Defence department cannot be compared with the property which is freehold, freely marketable and outside the Red Zone.
2) The Ld. CIT(A) had not considered the instances of sale of properties in the same society. The appellate order is passed rejecting the additional evidences submitted by the appellant during the appeal hearing.
3) The Ld. CIT(A) accepted the DVO’s report. The DVO’s report is binding upon the AO and not on the CIT(A). The Ld. CIT(A) had not considered various defects in DVO’s report pointed out in written submission.
4) The Ld. DVO erred in issuing the report without considering the objections raised by the appellant on the draft valuation report. The valuation report by registered valuer is totally The valuation report submitted by the learned DVO without adjudicating the objections raised by the appellant may please be rejected.
5) The Ld. AO erred in mechanically accepting the DVO’ report and without considering the facts, various judicial decisions and objection raised by the appellant on the valuation report. Such addition based on conjecture and surmise may please be
6) The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal and/or to lay the additional evidences at the time of hearing.
4. Brief facts of the case are that the assessee is an individual and filed the return of income for A.Y. 2020-21 on 15.10.2020 declaring income of Rs.2,68,410/-.Case selected for Limited Scrutiny to examine the issue namely; sale consideration of property shown in income tax return is less than the value as per Stamp Valuing authority (as per return) (Business ITR). Ld. Assessing Officer observed that during the year assessee entered into an Agreement to sale of immovable property on 10.06.2019 and has shown the taxable capital gain at Rs.16,65,486/- and total sale consideration is shown at Rs.65,00,000/-. Assessing Officer noted that the stamp duty value of the said property is Rs.1,66,12,500/-. When the assessee was confronted with this fact, it was firstly submitted that the share of the assessee in this property is 50%; secondly the Divisional Valuation Officer (DVO) has valued assessee’s share at Rs.88,59,300/-. Accordingly, the difference between the valuation of DVO at Rs.88,59,300/- and sale consideration declared by the assessee at Rs.65,00,000/- amounted to Rs.23,59,300/- and 50% of the same being assessee’s share comes to Rs.11,79,650/- has been added by the Assessing Officer to the income declared by the assessee. It has been contended by the assessee during the course of assessment proceedings that the immovable property sold by the assessee was falling within the area of 500 yards from the outer parapet wall of High Energy Material Research Laboratory (in short ‘HEMRL’), Ministry of Defence, Government of India and there were various restrictions on the development in such notified area and no construction activity was allowed. Due to this reason the Fair Market Value of the property is 50% of the general market rate of the plot situated 500 yards from HEMRL. However, ld. Assessing Officer was not satisfied with the submissions and assessed income at Rs.14,48,060/-.
5. Aggrieved assessee preferred appeal before ld.CIT(A) and appeared before ld.CIT(A) and stated that DVO failed to provide reasonable opportunity of hearing and that the location of the assessee’s property within the vicinity of 500 yards from HERML has not been considered by the DVO as a result of which higher valuation has been made. However, ld.CIT(A) was not satisfied because the appellant could not furnish any communication addressed to the DVO seeking time to submit the evidence for explanation. Accordingly, the appeal of the assessee was dismissed. Now the assessee is in appeal before this Tribunal.
6. Counsel for the assessee reiterated the submissions filed before the lower authorities and also made reference to the paper book containing 119 pages which apart from the submissions filed before the lower authorities, copy of DVO’s report, also contains the valuation report by the Government Registered Valuer, copies of Index II of the properties sold in the same society by other sellers, copy of Notification issued by Ministry of Defence, copy of Unified Development Control and Promotion Regulations for Maharashtra and letter from Pune Municipal Corporation for removal of construction. He concluded his arguments stating that Government Registered Value has taken into consideration all the aspects giving rise to the lower market value of the immovable property and has valued it at Rs.47,06,875/- which is lower than the sale consideration declared by the assessee in the income tax return and therefore the impugned addition deserves to be deleted.
7. On the other hand, ld. DR supported the order of CIT(A).
8. I have heard the rival contentions and perused the record placed The only issue for my consideration is that whether ld.CIT(A) erred in confirming the action of the Assessing Officer making addition for capital gain at Rs.11,79,650/- made on account of difference in the value of the immovable property sold by the assessee computed by DVO at Rs.88,59,300/- and the total sale consideration at Rs.65,00,000/- declared by the assessee in the income tax return. Admittedly, share of assessee is only 50%. I note that the controversy only relates to the valuation of immovable property. Assessee has been contending since the assessment proceedings that the immovable property in question is situated near the High Explosive Research Laboratory and is within 500 yards from its boundaries and which has been declared as ‘No Development Zone’ and therefore no construction activity is possible on the said plot and therefore the plot was not marketable at par with other properties situated in the said urban area. Divisional Valuation Officer has himself made observations namely; that the property is accessible through Motorable Kachha road (means no proper access through a Tar Road). It is situated in Agricultural and ‘No Development Zone’ plot is situated in Hill Top Hill Slop (HTHS) Zone as well as Red Zone earmarked for Armed Forces, Government of India. High Energy Material Research Laboratory issued notice to the society for ‘no construction activity’ as land is situated at Hill Top. Even though the DVO has valued the property at less than the valuation adopted by the stamp value authority however, DVO has not considered the fact that similar type of properties in the same society have been sold at much lower rate. There were various other reasons which also decrease the market value of the property.
9. I further note that the assessee has furnished the copy of valuation report by Government Registered Valuer placed at pages 73 to 100 of the paper book where the property is valued at Rs.47,06,875/- and the Government Valuer has taken into consideration all the points including the location of the property within 500 yards from HERML and also the notice issued by High Energy Material Research Laboratory and Pune Municipal Corporation for removal of construction for various other plot holders, geographical disadvantages, non availability of public and civil utilities for arriving at the Fair Market Value at Rs.47,06,875/-.I have gone through the report of the Government Registered Valuer and also gone through the other documents filed in the paper book and of the considered view that considering the constraints which have collectively devalued the immovable property in question, I find that the Government Registered Valuer has arrived at the correct Fair Market Value on consideration of various reasons mentioned by the assessee at various Further, since the value adopted by the Government Registered Valuer at Rs.47,06,875/- is less than the sale consideration declared by the assessee at Rs.65,00,000/-, therefore, there is no requirement for invocation of section 50C of the Act and thus the capital gain declared by the assessee in the income tax return deserves to be accepted. Finding of ld.CIT(A) is set aside. Impugned addition of RS.11,79,650/- is deleted. Grounds of appeal raised by the assessee on merits are allowed.
10. In the result, the appeal of the assessee is
Order pronounced on this 15th day of May, 2026.
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