Hari & Co. Owners Vs ITO (ITAT Chandigarh)
DVO’s Estimate Is a Measuring Tape, Not an Unexplained-Investment Detector—₹2.12-Crore Addition u/s 69 Deleted
Summary:
The Construction-Cost Dispute
The Assessee constructed godowns & related structures at France Wala Road, Kaithal. The disclosed cost of construction was ₹10.66 crore.
During the original assessment proceedings u/s 143(3), the AO referred the matter to the Departmental Valuation Officer on 21.03.2016. The DVO estimated the construction cost at ₹12.78 crore, resulting in a difference of ₹2,12,09,000.
To tax this differential amount, the assessment was reopened & an order u/s 143(3) r.w.s. 147 was passed on 31.12.2019. However, while completing reassessment, the AO failed to take cognizance of the DVO’s report & made no addition.
The PCIT consequently invoked section 263 on 08.03.2022 & set aside the reassessment order. The Assessee’s challenge to the revision was dismissed by the Chandigarh ITAT through a common order dated 31.07.2024.
Thus, the validity of the section 263 proceedings stood concluded. The present appeal concerned only the merits of the valuation addition made in the consequential assessment.
Haryana PWD Rates Versus DVO’s Rates
During the fresh assessment, the Assessee furnished a report from its registered valuer, Shri Harjinder Singh Bhatia. The valuer estimated construction cost by applying Haryana PWD rates, which were stated to be appropriate for a property situated in Kaithal.
