Bhavnaben Sanjaykumar Mistry Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition under section 56(2)(vii)(b) of the Income Tax Act without referring valuations of property to DVO as per the provisions of sec-50C of the Income Tax Act is liable to be deleted. Accordingly, appeal allowed.
Facts- The return for the year under consideration was filed by the assessee on 20.10.2024 declaring income of Rs.14,08,850/- which was accepted by AO. Subsequently, vide order dated 27.03.2019, the order of AO u/s 143(3) was set aside by Pr. CIT to the file of AO with the directions to complete the assessment de-novo, as Pr. CIT was of the view that AO was failed to apply the provisions of Section 56(2)(vii)(b) of the Act which led to under assessment of income by Rs.21,42,857/-. Subsequently, the assessment was completed u/s 143(3) r.w.s. 263 of the Act on 12.12.2019 making addition of Rs.21,42,857/- u/s 56(2)(vii)(b)(ii) of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee vide letters dated 22.08.2019 and 27.11.2019 had requested to refer the valuations of property to DVO as per the provisions of sec-50C of the Act. The Assessing Officer ought to have appreciated when the assessee objects to said valuation, then the Assessing Officer is bound to refer the valuation to DVO in accordance with provisions of Sec 55A of the Income-tax Act. No evasive approach can be adopted for applying deeming provisions without considering the objections of referring the matter to DVO. The Coordinate Benches of the Tribunal in the case of Amar Shiv Construction Pvt Ltd VS DCIT (Ahmedabad) and Jayshree Kothari V ITO (Hyderabad) held that such action on the part of the Assessing Officer cannot be sustained.
