ITAT Ahmedabad Cancels Order Related to Time Limit Offence U/S 153(1)

A Division Bench of the Income Tax Appellate Tribunal (ITAT), Ahmedabad quashed the assessment order issues for the breach of the time limit under Section 153(1) of the Income Tax Act, 1961.

The taxpayer, Smt. Rashidaben Taher would be the individual and the non-resident Indian. For the assessment year 2015-16, the taxpayer has furnished the income tax return which shows the total income at Rs 16 lakhs. For the scrutiny assessment, the return opted. The taxpayer has sold the immovable property in the form of the office premises and indeed parallel Terrance portion for the acknowledgement of Rs 1.5 cr.

The assessing officer (AO) directed the transaction to the Valuation Officer to determine the property’s value on the sale date. The property stamp value as of the sale date was Rs 2.21 cr. The valuation officer provided his report and valued the value of the fair market of the property at Rs 1.80 cr.

AO as per the valuation report provided a show-cause notice for the reason that the mentioned value according to the valuation report that amounts to Rs 1.80 cr must not be acknowledged as the fair market value of the specified immovable property on the sale date. Post providing the answer the taxpayer chose an appeal prior to the CIT(A).

Taxpayer, AO refers the case to DVO under section 50C of the act therefore there is no extension that would be allotted under section 153(1) of the income tax act.

The AO furnished his answer vide saying that the case was directed to DVO under section 142A of the Act and not under section 50C of the Act therefore under the Explanation-1 to Section 153(1) extended duration is available to AO for the finish of assessment proceedings.

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The Bench consisting of Waseem Ahmed, Accountant Member, and T.R. Senthil Kumar, Judicial Member sees “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.”