The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the ex parte assessment order passed without considering the Valuation report under Section 12A of the Income Tax Act, 1961.
The single-member bench of Laliet Kumar (Judicial Member) rendered the above decision after examining the submissions of Sandhya, Assessee Representative (AR), and Rohit Mujumdar, Department Representative (DR).
In this case, the assessee Khairunnisa sold her house for a consideration of Rs. 9,11,000. However, the market value of the said property was Rs. 32,78,400. However, the Department noticed that the assessee had not filed the return of income for A.Y. 2009-10 admitting the capital gains. Therefore, the AO issued a notice under Section 148 of the Income Tax Act, 1961.
As there was no response from the assessee, again notices u/s 142(1) of the Act were issued from time to time. As the assessment was getting barred by the limitation of time by 31.12.2016 and due to the assessee’s non-compliance, the Assessing Officer finally completed the assessment ex parte and passed the order.
Aggrieved by the order, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee. Thereafter, the assessee filed an appeal before the tribunal.
During the adjudication, counsel for the assessee argued that the assessing officer wrongly determined the market price of the property. Although the assessee in the proceedings before the Assessing Officer and before the ld.CIT(A) has requested for referring the matter to the Assistant Valuation Officer. Accordingly, the AVO issued a notice for calling records. However, the assessee already submitted the documents during the appeal proceedings. Despite that, the AVO has not given any report about the valuation of the property.
Counsel for revenue supported the orders of the lower authority. The tribunal observed that the Revenue had referred the matter to the AVO for determining the correct Fair Market Value of the assessee’s property. Unfortunately, the AVO has not given any report agreeing or disagreeing with the contentions of the assessee that the value of the property was not Rs. 32,78,400 and it was Rs. 9,11,000 only or otherwise.
Accordingly, the bench held that since the action of CIT(A) while passing the appellate order is not based on the valuation report as per Section 142A of the Act, the order of CIT(A) cannot be sustainable. Thus, the bench quashed the ex parte assessment order passed without considering the Valuation report under Section 12A of the Income Tax Act, and the appeal of the assessee is remanded back to the file of the CIT(A) to call for the remand report from the AVO and estimate the correct value of the property.
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