Nalin Kumar Rastogi Vs ITO (ITAT Delhi)
Delhi ITAT dealt with a dispute concerning computation of long-term capital gains arising from the sale of property.
Assessee had relied on a registered valuer’s report which valued the cost of construction as on 01.04.1981 at ₹1,90,000/- per floor, citing superior work & better quality of construction. However, the Assessing Officer rejected this valuation outright & substituted his own estimate, without making a reference to the Departmental Valuation Officer (DVO). He accordingly reworked the indexed cost of acquisition & made additions under long-term capital gains.
CIT(A) confirmed the assessment order, dismissing Assessee’s contentions that-
- AO had no jurisdiction to reject the valuer’s report without DVO reference.
- CBDT Instruction dated 29.12.2015 mandated issue of show-cause notice before disturbing the declared value, which was not followed.
- The validity of notice u/s 143(2) itself was questionable.
CIT(A) brushed aside these arguments, holding that no cogent evidence of higher construction cost had been produced & upheld the AO’s findings.
ITAT, however, found merit in Assessee’s plea. It observed that:
- AO, before discarding a registered valuer’s report, was legally bound to make a reference to the DVO, which was not done in this case.
- CIT(A) had failed to address material legal issues including service & validity of notice, mandatory DVO procedure, & compliance with CBDT instructions.
- Even in cases of non-appearance by the assessee, the appellate authority is duty-bound to deal with questions of law based on the record.
Given these lapses, ITAT held that CIT(A)’s order could not be sustained. The matter was therefore remanded back to CIT(A) with directions to issue proper notice, grant adequate opportunity to Assessee, & decide afresh strictly in accordance with law. The appeal was thus allowed for statistical purposes.
