Case Law Details
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.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The captioned appeal is filed by the assessee against the order of under section 250 of the Income Tax Act, 1961 (in short “The Act”), passed by the Commissioner of Income Tax (Appeals), Raipur-3, (in short “Ld. CIT(A)”), for the Assessment Year 2016-17 dated 17.10.2024, which in turn arises from the order of Assistant Commissioner of Income Tax, Central Circle, Bilaspur, (in short “Ld. AO”), u/s 154 r.w.s. 153A of the Act, dated 01.06.2022.
2. The grounds of appeal raised by the assessee are as under:
1. On the facts and in the circumstances of case and in the law, Ld. CIT(A) erred in accepting the value of land and building as per the valuation of Departmental Valua-tion Officer (DVO) which valuation is higher than the stamp duty value of the property at which it has been actually purchased by the assessee. The Ld. CIT(A) ought to have appreciated that in the view of clear mandate of 1st proviso to section 56(2)(vii) r.w.s 50C, valuation by DVO cannot exceed the stamp duty valuation of property and accordingly when the value of property recorded by the assessee in his books is as per the stamp duty valuation, no further increase in warranted in the same.
It is prayed that addition of Rs. 2,64,21,740/- made by Ld. AO on account of difference in book value of property (which value is equal to the stamp duty value) and value of same as per DVO valuation report may please be deleted.
2. On the fact and in circumstances of case and in the law and with-out prejudice to the above ground of appeal, the valuation done by the departmental Valuation officer (DVO) vide valuation report dt. 31.01.2022 and relied upon by Ld. AO cannot be treated as a proper valuation as the same has been done based on inappropriate documents and without appre-ciating all the relevant facts. It is prayed that addition of Rs. 2,64,21,740/- made by Ld. AO on the basis of such valuation report may please be deleted.
3. The appellant carves leave to amend, alter add or deleted all or any of the above grounds of appeal.
3. Brief facts of the case, borne from the record are that the assessee is an individual, who was sub-jected to a Search & Seizure Action u/s 132 of the Act, 1961, on the business / residential premises on 19.02.2020. Consequently, case was selected for scrutiny, statutory notice u/s 142 and notice u/s 153A were issued on 30.06.2021 and 14.07.2021. After deliberations, the assessment for the AY 2014-15 to 2019-20 have been completed u/s 153A r.w.s. 143(3) and for AY 2021 u/s 143(3). Under the completed assessment following additions were made:
3.1 In the aforesaid additions, an addition of Rs.6,66,22,641/- was made in the AY 2016-17 regard-ing the valuation of cost of construction of commercial building on a land measuring 5352 Square Feet situated at S. H. Tower, Palasia, Great Kailash Road, Saket Chauraha, Indore. The valuation of the said property was done by the registered Valuer during the course of Search & Seizure proceed-ings, which was higher than the value shown by the assessee in his books of accounts, therefore, a difference of Rs. 6,66,22,641/- was observed. During the course of assessment proceedings, as-sessee was requested to explain the aforesaid variation, in response to which assessee submitted a written reply and also objected to accept the valuation of house and commercial building done by the registered valuer. Accordingly, a reference was made u/s 142A of the Act to District Valuation Officer (in short “DVO”), Bhopal, on 26.08.2021 by the Ld. AO, however, till the time of passing of assessment order, the DVO’s report could not be obtained, therefore, the assessment was complet-ed without referring to the DVO’s report, by making the addition of Rs.6,66,22,641/- in the AY 2016-17 and for Rs.66,32,549/- in the AY 2019-20 on account of cost of furniture, fixture and other times on the basis of valuation done by the registered Valuer.
4. Later on, a report dated 29.03.2022 from DVO, Bhopal was received by the Ld. AO, wherein the cost of commercial building consisting of land + building + construction + furniture, fixture, and other interior work, was determined at Rs.10,24,53,662/-, which includes value of cost of land building at Rs.9,07,21,740/-, whereas the book value of the cost of land and building was 6,43,00,000/-, ac-cordingly, the addition was supposed to be made, following the valuation report of DVO has been arrived at to Rs.2,64,21,740/-(Rs.9,07,21,740- Rs.6,43,00,0000).
5. In backdrop of the valuation done by the DVO, an application for rectification of error u/s 154 of the Act was made by the assessee. Taking cognizance of the said application by the assessee, Ld. AO passed an order u/s 154 by scaling down the original addition made in the assessment order for Rs.6,66,22,641/- to Rs.2,64,21,740/- and the revised income of assessee was calculated at Rs.4,07,60,682/- for the AY 2016-17.
6. Aggrieved with the aforesaid rectification order u/s 154, assessee preferred an appeal before the Ld. CIT(A), however the contention of assessee could not find favour before the Ld. CIT(A), who had confirmed the rectified addition vide the order u/s 154 dated 01.06.2022 passed by the Ld. AO and dismissed the appeal of the assessee, with the following observations:
During the appellate proceedings, the appellant has furnished documentary evidence. The documentary evidence kept on record. On examination of all these doc-uments, that the appellant has duly filed the DVO report, the examine the DVO report the valuation of cost of commercial building has been done by the District Valuation Officer, Bhopal situated at S.H.Tower, Palasia, Great Kailash Road, Saket Chauraha Indore and the DVO has valued cost of land and building at Rs. 9,07,21,740/- whereas the assessee has shown the same in his books at Rs. 6,43,00,000/-. Thus, the difference come to Rs. 2,64,21,740/- in the books of accounts and valua-tion report made by the DVO. The DVO has reached to a reasonable rate of the said land. The DVO has mentioned the location of land and also given importance to it’s commercial value and high de-mand. He has also given a comparable rates of Saket Nagar and old Palasia in his report. The appel-lant has not pointed out any real defect in the valuation report of DVO. Hence, I find the report of DVO is a valid and reasonable than the report of registered valuer. Therefore, I find that the Ld. AO justified the making addition of Rs.2,64,21,740/-, is hereby confirmed. Therefore, appeal on these grounds No. (i) & (ii) is dismissed.
7. Dissatisfied with the aforesaid order of Ld. CIT(A), assessee is in appeal before us in the present appeal.
8. At the threshold of the hearing, it is noticed that the present case was fixed for hearing on 10.01.2025, but Ld. Counsel of the assessee had filed an application seeking adjournment of the matter to prepare and file the paper book. The matter, therefore, was adjourned to 14.01.2025. However, there was no representation on behalf of the assessee on the next date of hearing i.e., 14.01.2025, also no application requesting for adjournment has been placed before us. Under such circumstances, it is deemed appropriate to take up the matter for hearing and to dispose of the ap-peal as per Rule, 24 of the Appellate Tribunal Rule, 1963, based on submissions by the Ld. Sr. DR rep-resenting the revenue and material available on records inter alia orders of the revenue authorities.
9. At the outset, Ld. Sr. DR reiterated the facts of the case and submitted that the assessee in the pre-sent case had objected to the valuation of commercial building including furniture, fixture and other interior work done by the registered valuer during Search & Seizure Action by the department. In order to meet out the requirement of law considering the objections of the assessee, the matter was referred to DVO, however, before receipt of the DVO’s report, the assessment u/s 153A was completed on 26.09.2022, by the Ld. AO on the basis of valuation done by the registered valuer and an addition of Rs.6,66,22,641/- was made, being the difference in value worked out by the regis-tered valuer as compared to the cost of subject asset in the books of the assessee. Subsequently, the report from DVO dated 29.03.2022 was received by the AO, wherein the valuation arrived at by the DVO was less than the value adopted by the registered valuer, accordingly, as requested by the as-sessee an order u/s 154 was passed on 01.06.2022 and the addition was dropped down to the ex-tent the DVO has reduced the valuation i.e., by Rs.4,02,00,901/-. In view of such facts there was no error in the order of Ld. AO passed u/s 154 granting relief to the assessee, however, assessee as-sailed the said order before the Ld. CIT(A) challenging the issue that the value adopted by DVO can-not be the basis for Assessment, as the valuation is more than the stamp duty value of the property. Ld. CIT(A) had dealt with the issue on merits, discussing facts involved therein and has very justifi-ably concluded that the modified addition after reduction of the same vide order u/s 154 by the Ld. AO, contemplating upon the issue that the report of DVO is a valid and reasonable report than the report of registered valuer. There is no further explanation on behalf of the assessee on the issue, therefore, the decision of Ld. CIT(A) deserves to be sustained.
10. We have considered the submissions of Ld. Sr. DR, perused the orders of revenue authorities and contentions raised by the assessee through the grounds of appeal. On perusal of the order of Ld. CIT(A), we observed that the assessee has challenged the basis of valuation by the DVO, stating that the same is highly arbitrary and have no legal or other basis, however, there was no whisper about any corroborative support to substantiate that the report of DVO was arbitrary or unreasonable. Regarding, assessee’s reference to 1st proviso of section 56(2)(vii) r.w.s. 50C and its applicability in the present case, nothing has been submitted before us to support such claim, in terms of corrobo-rative evidence, also apparently no such claim was made before the Ld. AO while seeking rectification u/s 154, therefore, we are unable to consider and to persuade with such contention of the assessee under the grounds of appeal in the present case. As described by the Ld. CIT(A), the allegations by the assessee are only averments with no cogent documentary support. Before us also the assessee has not placed any documentary evidence, so as to dislodge the decisions taken by the revenue au-thorities. Considering aforesaid facts and circumstances, we find substance in the decision of Ld. CIT(A) that the appellant has not pointed out any real defect in the valuation report of DVO, hence the report of DVO is valid and reasonable as against the report of registered valuer, we, thus, are of the considered view that there was no error in the findings of Ld. CIT(A) which needs our indulgence to correct the same. In result, the sole controversy raised by the assessee in his grounds of appeal are disposed of in terms of our aforesaid observations.
11. In result, the appeal of assessee in ITA No. 527/RPR/2024, stands dismissed.
Order pronounced in the open court on 20/01/2025.
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