Assessee entitled to challenge correctness of DVO’s valuation before CIT(A)

Lovy Ranka Vs DCIT (ITAT Ahmedabad)

The assessee before us is an individual. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has sold a bungalow for Rs 1,15,00,000 but the stamp duty valuation of the said bungalow, as evident from the sale deed, was Rs 1,40,00,000. The assessee, however, contended that the fair market price of the property was much less than the stamp duty valuation, and, accordingly, a reference was made to the Departmental Valuation Officer under section 50C(2). The valuation as per DVO was Rs 1,27,12,402. The assessee made elaborate submissions on incorrectness of this valuation, and submitted that the objections taken by him before the DVO were not properly dealt with. The Assessing Officer was of the view that the valuation done by the DVO binds him and it is his duty to pass an order in conformity with the DVO’s report. He referred to, and relied upon, various judicial precedents in support of this proposition. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) observed that “Section 50C of the Act is a deeming provision” and “a deeming provision is to be strictly applied without enlarging its scope”. Learned CIT(A) was of the view that “considering the provisions of Section 50C, the value taken by the AO is correct” and no interference is thus called for. The assessee is not satisfied and is in further appeal before us. He is once again challenging the correctness of the DVO’s report, is pointing out, what he perceives as, glaring errors in the methodology adopted by the DVO and is submitting that the CIT(A) fell in error in not adjudicating upon the same on merits.

In view of our analysis of the legal provisions earlier in this order, the assessee is indeed correct, even though somewhat serendipitously  that the CIT(A) ought to have examined the matter on merits. Of course, before doing so, the CIT(A) was under a statutory obligation to serve notice of hearing to the DVO and thus afford him an opportunity of hearing. Clearly, learned CIT(A) took too narrow and somewhat superficial a view of his powers under the scheme of the law, and the assessee did not point out the specific legal provisions to him either. Be that as it may, the fact remains that correctness of the DVO’s report is to be examined on merits and there is no adjudication, on that aspect, by the CIT(A). In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the CIT(A) for adjudication on merits in accordance with the scheme of the law, after giving a due and reasonable opportunity of hearing to the assessee as also to the DVO, and by way of a speaking order. We further direct the CIT(A) to dispose of the remanded proceedings within three months of receiving this order, and, in case the DVO does not avail the opportunity of hearing, on the basis of material on record and submissions of the assessee. Ordered, accordingly.

FULL TEXT OF THE ITAT JUDGEMENT

1. This is an appeal filed by the assessee and is directed against the order dated 12^thJune 2017, passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2013-14

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