Syed Hifajat Ali Vs ACIT (ITAT Raipur)
Conclusion: Addition based on the District Valuation Officer’s (DVO) report, which exceeded the stamp duty value was upheld as assessee challenged to DVO’s valuation was arbitrary without any supporting evidence.
Held: Assessee, was subjected to a search and seizure operation. The case was selected for scrutiny, and notices were issued. Assessments for Assessment Year(AY)s 2014-15 to 2019-20 were completed under Section 153A, while AY 2021 was assessed under Section 143(3). For AY 2016-17, an addition of ₹6,66,22,641 was made due to a valuation difference in the cost of constructing a commercial building at S. H. Tower, Indore. The registered valuer’s report showed a higher value than the amount recorded in the books. Assessee objected, and AO referred the matter to DVO, but the report was not received in time. As a result, AO relied on the registered valuer’s report and also added ₹66,32,549 for AY 2019-20 for furniture and fixtures. The DVO’s report, received later, valued the land and building at ₹9,07,21,740, reducing the valuation difference to ₹2,64,21,740. Based on this, assessee filed a rectification request, which AO accepted. The addition was reduced from ₹6,66,22,641 to ₹2,64,21,740, and the revised income for AY 2016-17 was recalculated at ₹4,07,60,682. Assessee appealed against the rectification order, but CIT(A) upheld the addition and dismissed the appeal on June 1, 2022. CIT(A) noted that the DVO valued the property at ₹9,07,21,740, while the books recorded it at ₹6,43,00,000, resulting in a difference of ₹2,64,21,740. Since no major defects were found in the DVO’s report, it was considered more reliable than the registered valuer’s assessment. Dissatisfied with this decision, assessee filed an appeal before Tribunal. Assessee had requested an adjournment for the January 10, 2025, hearing, which was re-scheduled to January 14, 2025. However, no one appeared, and no further adjournment request was made, so Tribunal proceeded under Rule 24. Assessee had objected to the valuation of a commercial building assessed by the registered valuer during the search. AO, relying on this valuation, completed the assessment on September 26, 2022, adding ₹6,66,22,641. Later, the DVO’s report, received on March 29, 2022, showed a lower valuation. Based on this, AO passed an order under Section 154 on June 1, 2022, reducing the addition by ₹4,02,00,901. Assessee argued that DVO’s valuation should not be the basis for assessment. CIT(A) found the DVO’s report more reliable and upheld the modified addition. It was held that assessee challenged the DVO’s valuation as arbitrary but provided no supporting evidence. A reference to Section 56(2)(vii) and Section 50C was also made without any proof, and this claim was not raised before AO during rectification. CIT(A) had already noted that assessee’s claims lacked documentary support, and no new evidence was presented. Tribunal found the DVO’s report valid and saw no reason to interfere with the CIT(A)’s decision.
