A Division Bench of the Income Tax Appellate Tribunal (ITAT), Ahmedabad quashed assessment order passed in violation of time limit under Section 153(1) of the Income Tax Act, 1961.
The assessee, Smt. Rashidaben Taher is an individual and non-resident Indian. For the Assessment Year2015-16, the assessee filed her Return of Income declaring total income at Rupees sixteen lakhs. The return was taken for scrutiny assessment. The assessee sold immovable property in the form of office premises and also adjacent Terrance portion for a consideration of Rs. 1.5 crores.
The Assessing Officer (A.O) referred the transaction to the Valuation Officerto ascertain the property value as on the date of sale. The stamp value of the property as on the date of sale was Rs 2.21 crores. The Valuation Officer submitted his report and valued the Fair Market Value of the property at Rs. 1.80 crores.
The A.O. based on the Valuation Report issued a show cause notice as to why the said value as per the Valuation Report amounting to Rs 1.80 crores should not be considered as Fair Market Value of the said immovable property on the date of sale. After submitting reply, the assessee preferred an appeal before the CIT(A).
The assessee contended that the A.O. has referred the matter to DVO under section 50C of the Act hence no extension is granted under section 153(1) of the Income Tax Act. The CIT(A) called for a report from the Assessing Officer whether the assessment order is time barred or not.
The AO filed his reply videstating that the case was referred to DVO under section 142A of the Act and not under section 50C of the Act hence as per Explanation-1 to Section 153(1) extended period is available to AO for completion of assessment proceedings.
The Bench consisting of Waseem Ahmed, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that “The AO has wrongly referred the valuation of the immovable property under section 142A of the Act which is not provided under the provisions of the Income Tax Act. However, after receipt of the Valuation Report from the DVO, the A.O. passed the assessment order which is clearly barred by limitation which is not sustainable in law.”
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