Parveen Gupta Vs ACIT (ITAT Delhi)
DVO reference held factually wrong; variation only 1.71%; AO & JCIT found non-applicative of mind; 153A assessment quashed; addition u/s 69 deleted in full
These two connected appeals concerned co-owners Parveen Gupta & Gautam Gupta, who jointly purchased a residential property (BP-22, West Patel Nagar, New Delhi) for ₹9.90 crore vide sale deed dated 12.09.2019, each having 50% share. Circle rate value, as shown in page 1 & page 4 images of the file, was ₹9,70,06,834/-, meaning the property was purchased above stamp-duty value. Assessment u/s 153A r.w.s. 143(3) nevertheless added ₹8,49,500/- in each case u/s 69 based solely on a DVO valuation of ₹10,06,99,100/-, leading to a difference of ₹16,99,100/- (1.71%).
Tribunal noted that AO’s very premise for referring the matter to DVO was factually wrong. As seen in para 6 of the assessment reasoning reproduced in the order (page 11–12), AO assumed the co-owners had sold the property below market value. This assumption persisted throughout the assessment order, despite the assessees repeatedly informing AO—through letters dated 20.12.2021, 02.02.2022, 23.01.2022 & 25.02.2022 (summarised around page 10 & page 11)—that they had purchased, not sold, the property. Documentary evidence including sale deed, bank statements, home-loan sanction letter & agreement to sell was on record (page 37–94).
AO later issued a corrigendum on 18.05.2022 correcting the word “sold” to “purchased”, but Tribunal observed that this only confirmed total non-application of mind at both AO & JCIT (approving u/s 153D) levels. The draft order was approved without even noticing the fundamental factual error—jurisdictional approval was held to be mechanical & invalid, relying on Delhi High Court in Anuj Bansal & subsequent SLP dismissal.
On merits, Tribunal held that DVO reference itself was unjustified because circle-rate value was lower than actual purchase price, meaning AO had no material indicating undervaluation. Reference was made merely on suspicion, contrary to Delhi High Court rulings in Aerens Infrastructure, Abhinav Mittal, & Ambience Developers.
Further, Tribunal applied the principle from Ambience Developers (page 14–15 extract), which holds that minor valuation variations (here 1.71%) do not justify additions, especially when no incriminating material was found in search & no evidence existed showing extra consideration.
Tribunal concluded that:
