Aries Export Private Limited Vs ITO (ITAT Mumbai)
Mumbai ITAT: DVO Reference Mandatory When Buyer Disputes Stamp Duty Value under Section 56(2)(x)
The Mumbai ITAT held that where an assessee disputes the stamp duty value adopted for taxing a property purchase under section 56(2)(x) and specifically seeks a reference to the District Valuation Officer (DVO), the Revenue authorities cannot ignore the request and mechanically adopt the stamp duty value. In the present case, the assessee purchased an immovable property for ₹14.45 crore against a stamp duty value of ₹17.67 crore, resulting in an addition of ₹3.22 crore under section 56(2)(x). The assessee had objected to the adoption of the stamp duty value and had also furnished a Registered Valuer’s report valuing the property at around ₹14 crore, broadly matching the actual purchase consideration.
The Tribunal observed that both the Assessing Officer and the CIT(A) failed to consider the assessee’s repeated request for a DVO reference, despite the valuation report and specific objections being on record. Holding that the valuation dispute required examination by the statutory valuation authority, the Tribunal restored the matter to the Assessing Officer with a direction to refer the property to the DVO, obtain the valuation report, and thereafter complete the assessment afresh after granting the assessee an adequate opportunity of being heard.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of NFAC, Delhi [for brevity “Ld. CIT(A)], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2018-19, date of order 10.03.2026. The impugned order emanated from the order of the National E-Assessment Centre, Delhi (for brevity ‘Ld. AO’), order passed under section 143(3) r.w.s. 144B of the Act, date of order 26.04.2021.
2. The brief facts of the case are that the assessee is a private limited company and carrying on business of export of sugar mill machinery, agricultural implements, tea processing machinery, sugar chemicals and other allied activities. During the year, the assessee purchase an immovable property amount to Rs.14,44,50,000/- whereas stamp duty value of the said property was Rs.17,66,55,000/-. The assessee’s case was selected for complete scrutiny related to the compliance with TDS provision, on payment of outside India, duty drawback and investment in immovable property. Related to the purchase of the alleged immovable property the difference in between the agreement value and value as per the stamp duty authority which comes to Rs. 3,22,05,000/-. During the assessment proceeding the assessee filed objection for not to decide the matter with out referring the District Valuation Officer (DVO) as per provision of section 50C(2) of the Act. But without considering the assessee’s plea, the Ld. AO confirmed the addition amount to Rs.3,22,05,000/-without referring the valuation to DVO. The aggrieved assessee filed an appeal before the Ld. CIT(A). But without considering the assessee’s objection the Ld. CIT(A) rejected the appeal of the assessee and uphold the impugned addition. Being aggrieved assessee filed an appeal before us.
3. The Ld. AR filed a paper book comprising pages 1 to 120, which has been taken on record. The Ld. AR submitted that, during the assessment proceedings, the assessee had furnished all the relevant documents and specifically requested the Ld. AO to refer the valuation of the property to the DVO. However, without considering the assessee’s request, the Ld. AO invoked the provisions of section 56(2)(x) of the Act and made an addition of Rs. 3,22,05,000/-, being the difference between the purchase consideration and the stamp duty value of the property. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee furnished a valuation report dated 09.02.2023 issued by a Registered Valuer, which is placed at pages 76 to 98 of the APB. The Ld. AR also invited our attention to the e-Proceedings Response Acknowledgement, placed at pages 99 to 100 of the APB, to demonstrate that the assessee had specifically requested the Ld. CIT(A) to direct a reference of the property to the DVO and had simultaneously furnished the valuation report of the Registered Valuer. The said valuation report determined the fair market value of the impugned property at Rs. 14 crore, which was substantially in line with the actual purchase consideration. The Ld. AR further submitted that the aforesaid submissions and the assessee’s request for a reference to the DVO were duly taken note of by the Ld. CIT(A) in the impugned appellate order. The relevant extract from page 4 of the impugned appellate order is reproduced below:
“The appellant had objected against the show cause notice and had requested the assessing officer to not add the difference between the stamp duty value and purchase value of the property and treat the same as income u/s 56(2)(x).
Ignoring the objection of the appellant the learned AO decided not to refer the matter to District Valuation Officer (DVO) as referred in section 50C (2) which is bad in law.
We have also obtained a valuation certificate of the property received from the government registered valuer wherein the property is valued at Rs. 14,00,00,000/- which is below the agreement value.
We are attaching the valuation certificate of the property received from the government registered valuer certifying the fair market value of the property for your reference.
On the basis of the said certificate it is evident that the appellant has transacted at the fair market value.
In the absence of any reference to the DVO the learned AD concluded that the stamp duty value is the market value and added the difference to the Income of the appellant which is against the legal provisions as enumerated under the income tax act 1961.”
The Ld. AR has prayed to restore the appeal to the file of Ld. AO with direction for reference to the DVO for valuation of the alleged property.
4. The Ld. DR relied upon and supported the orders of the revenue authorities. However, the Ld. DR did not controvert the submissions advanced by the Ld. AR by placing any contrary facts or material on record.
5. We have heard the rival submissions and carefully considered the documents available on record. The assessee filed its return of income under section 139 of the Act, and the case was selected for scrutiny. During the assessment proceedings, the Ld. AO observed that the assessee had purchased an immovable property for a consideration of Rs. 14,44,50,000/-, whereas the stamp duty value of the property was Rs. 17,66,55,000/-. Accordingly, the difference in valuation was brought to tax by invoking the provisions of section 56(2)(x) of the Act. The Ld. AR submitted that, both during the assessment proceedings and the appellate proceedings, the assessee had specifically objected to the adoption of the stamp duty value and had requested that the matter be referred to the DVO for determination of the fair market value of the property. It was further submitted that the assessee had also furnished a valuation report of a Registered Valuer, wherein the fair market value of the property was determined at approximately Rs. 14 crore, which substantially matched the actual purchase consideration. Despite these submissions, neither of the revenue authorities considered the assessee’s request for a reference to the DVO. The record further reveals that the assessee had filed the Registered Valuer’s report before the Ld. CIT(A) through the e-proceeding response acknowledgement dated 06.02.2023. On perusal of the impugned appellate order, we find that the Ld. CIT(A) has duly recorded this factual position.
However, while adjudicating the appeal, the request of the assessee for reference to the DVO was not dealt with or decided. Considering the above facts, we are of the considered view that both the revenue authorities were not justified in finalising the assessment without referring the valuation of the property to the DVO, despite the specific objection raised by the assessee and the valuation report furnished by the Registered Valuer. Accordingly, in the interest of justice, we restore the matter to the file of the Ld. AO with a direction to consider the assessee’s objection and make a reference to the DVO for determination of the fair market value of the impugned property in accordance with law. Thereafter, the Ld. AO shall complete the reassessment afresh after considering the DVO’s valuation report and after granting the assessee an adequate opportunity of being heard.
Needless to say, the assessee shall be afforded a reasonable opportunity of being heard during the set-aside assessment proceedings. The assessee is also directed to extend full cooperation to the Ld. AO and avoid seeking unnecessary adjournments so as to facilitate the expeditious completion of the reassessment proceedings.
6. In the result, the appeal of the assessee bearing ITA No.4019/Mum/2026is allowed for statistical purpose with the terms indicated above.
Order pronounced in the open court on 31st day of July 2026
