Sneh Quality Spices Pvt Ltd Vs DCIT (ITAT Delhi)
AO Cannot Pick Wrong Valuation- Revised DVO Report Accepted: ITAT Deletes 9.87 Cr Building Addition- Rejects AO’s 69B Additions
Tribunal decided cross appeals arising out of additions made u/s 69B towards alleged unexplained investment in cold storage building & machinery. AO had reopened assessment after receiving DVO reports, but adopted the first valuation report, rejecting the revised DVO report even though the revised report was prepared after addressing Assessee’s objections, correcting glaring factual mistakes, segregating non-cold-storage blocks, removing double-counted items & re-inspecting the property.
CIT(A) found the revised valuation scientifically prepared, noted that the difference between revised valuation & Assessee’s declared cost was less than 1%, & relying on Ambience Developers, Agile Properties & K.P. Varghese, deleted the addition of Rs. 9.87 crore relating to building. Tribunal held that AO gave no valid reason for rejecting the corrected valuation & upheld CIT(A)’s finding that the revised report was the only reliable estimate.
On plant & machinery, CIT(A) noted that VO had wrongly included machinery capitalised in the subsequent year amounting to Rs. 76.92 lakh, though the valuation was only for FY 2013-14. After excluding this, CIT(A) upheld only the differential of Rs. 48.38 lakh as unexplained. Tribunal found no error in CIT(A)’s reasoning, holding that valuation based on physical inspection & invoices was more reliable than Assessee’s offer letter which did not match actual supply.
