Vishnuram Joshi Vs ITO (ITAT Agra)
Circle Rate Cannot End the Valuation Debate: ITAT Orders Fresh Examination of ₹13.24 Lakh Property Addition
A Property Purchase Becomes a Tax Dispute
A substantial difference between the purchase price of a property and its stamp duty value may invite a tax addition. But when the purchaser disputes the valuation and requests a reference to the Departmental Valuation Officer, can that request be ignored and the circle rate adopted without further examination?
The Agra Tribunal addressed this issue in a case involving an addition of ₹13,24,500 under Section 56(2)(vii)(b). The Assessing Officer had not made the requested valuation reference, while the Commissioner (Appeals) refused to entertain the purchaser’s approved valuer’s report.
The Tribunal admitted that report as additional evidence and restored the matter to the Assessing Officer for a DVO reference and fresh adjudication.
Purchase Price Was Nearly Half the Stamp Value
The assessee had not originally filed his return for assessment year 2014–15. The Revenue received information that he had purchased an immovable property for ₹13,12,500, whereas the stamp valuation authority had adopted a value of ₹26,37,000.
After obtaining approval from the competent authority, the Assessing Officer issued a notice under Section 148 on 30 March 2021. In response, the assessee filed his return on 17 February 2022, declaring income of ₹1,62,630.
Notices under Sections 143(2) and 142(1) followed, seeking particulars of the property purchase. Although the assessee furnished a reply, the Assessing Officer was not satisfied with his explanation.
The Entire Difference Was Added to Income
The Assessing Officer treated the difference of ₹13,24,500 between the stamp duty value and the purchase consideration as income from other sources under Section 56(2)(vii)(b).
He also disallowed the assessee’s deduction claim of ₹80,706 under Section 80C. The reassessment order dated 28 March 2022 determined total income at ₹15,67,836.
The assessee challenged the assessment before the Commissioner (Appeals), NFAC. However, the appeal was dismissed by an order dated 20 July 2026, leading to the appeal before the Tribunal.
The controversy examined by the Tribunal centred on the property valuation addition and the failure to consider the valuation material.
The Purchaser Had Requested a DVO Reference
Before the Tribunal, the assessee contended that the Assessing Officer had adopted the circle-rate value despite his request for a reference to the DVO under Section 50C(2).
His grievance was that the property’s actual fair market value required examination rather than automatic acceptance of the stamp valuation. He maintained that its fair market value did not exceed the consideration paid.
To support that contention, the assessee relied on a report dated 11 November 2024, prepared by an approved valuer. He sought admission of the report and requested that the assessment be reconsidered after obtaining a departmental valuation.
The Revenue supported the appellate order and opposed the assessee’s challenge.
CIT(A) Refused to Entertain the Valuer’s Report
The approved valuer’s report had been submitted during the first appellate proceedings. However, the Commissioner (Appeals) declined to entertain it because the assessee had not explained why it was not furnished before the Assessing Officer.
The result was that neither valuation route had been examined. The Assessing Officer had not referred the property to the DVO despite the assessee’s request, and the Commissioner (Appeals) had not considered the approved valuer’s report.
The Tribunal specifically noticed these circumstances. The valuation dispute had therefore remained unresolved while the addition based on the stamp duty value continued to stand.
Tribunal Admits Evidence and Directs Fresh Valuation
The Tribunal considered it just and appropriate to restore the matter to the Assessing Officer.
It expressly admitted the approved valuer’s report dated 11 November 2024 as additional evidence. The report formed part of the assessee’s paper book at pages 6 to 17.
The Assessing Officer was directed to refer the matter to the DVO and thereafter pass a fresh order in accordance with law. In doing so, he must consider both valuation reports and provide the assessee an adequate opportunity of hearing.
The appeal was consequently allowed for statistical purposes. The Tribunal did not determine the property’s fair market value or finally delete the ₹13,24,500 addition on merits. The order also contains no separate substantive finding allowing the Section 80C deduction.
Author’s Comments
The decision highlights the importance of addressing a specific valuation objection before sustaining a property-related addition. Here, the purchaser had requested a departmental valuation and subsequently produced an approved valuer’s report. Neither received the required examination at the earlier stages.
The relief is nevertheless procedural, with the merits left open. Admission of the private valuation report does not mean that its conclusion has been accepted. The Assessing Officer must obtain the DVO’s report, consider both reports and decide the matter afresh.
For taxpayers disputing stamp duty values, the practical lesson is to make a clear valuation objection, request the appropriate reference and support the objection with relevant material. A valuation dispute deserves examination; its final outcome depends on the evidence.
FULL TEXT OF THE ORDER OF ITAT AGRA
This appeal is directed against the impugned order dated 20.07.2026 passed in appeal No NFAC/2013-14/10146637 by the ld. Commissioner of Income Tax/ NFAC (DELHI) [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2014-15, wherein ld CIT(A) has dismissed assessee’s appeal, determining the total income of the assessee at Rs. 15,67,836/-, vide assessment order dated 28.03.2022 passed u/s 147 of the Act.
2. Briefly stating, the assessee did not file return of income for A.Y. 2014-15. It came to the notice of the revenue that an immovable property was purchased by the assessee for the consideration of Rs. 13,12,500/- whereas the fair market value decided by the stamp valuation authority was Rs. 26,37,000/-. After obtaining approval from the competent authority, assessee’s case was reopened u/s 147, by issuance of notice u/s 148 of the Act, dated 30.03.2021. The assessee filed return in response thereof on 17.02.2022, declaring income of Rs. 1,62,630/-. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee, seeking details in respect of the purchase of aforesaid immovable property. Assessee filed his reply, however, the ld Assessing Officer was not satisfied. The assessment proceedings were completed by treating the difference between the fair market value of property (Rs. 26,37,000/-) and the actual sale consideration (Rs. 13,12,500/-) i.e. Rs. 13,24,500/-, as income from other sources u/s 56(2)(vii)(b) of the Act. Ld Assessing Officer, further disallowed assessee’s claim of Rs. 80,706/- u/s 80C of the Act and determined the total income of the assessee as Rs. 15,67,836-/, vide assessment order dated 28.03.2022 passed u/s 147 of the Act.
3. Aggrieved, assessee preferred an appeal before the ld CIT(A), who dismissed assessee’s appeal.
4. Assessee has preferred this second appeal on the following grounds:
“1. That, NFAC has erred on facts and in law, while sustaining the addition made invoking of sec 56(2)VII of Income tax Act. No addition is liable to made, addition made by AO, sustained by NFAC is liable to be deleted.
2. That, while sustaining the addition the NFAC has completely ignored that the AO, ignoring the assessees request and procedure of sec 50C(2), has without obtaining the opinion of DVO in respect of fair market value of property has adopted the value as per cirole rates, addition made, adopting the value as per circle rates is against the provisions of sec 50C(2)addition sustained is liable to be deleted.
3. That, NFAC has erred on facts and in law while not admitted the additional evidences (valuation report of approved valuer) directly related with the root cause of addition made, liable to be admitted addition sustained on this score is liable to be deleted.
4. That, the fair market of the property (under consideration) is not more then that of the value on which the property is actually purchased, no addition, invoking the provisions of sec 56(2) VII(b) could be made, addition sustained on this score is liable to be deleted.
5. That, after taking into consideration the explanation/facts of the case, no addition is liable to be made, addition sustained on this score is liable to be deleted.”
5. Perused the records. Heard ld representative for the appellant assessee and ld Sr (DR) for the respondent revenue.
6. Ld representative for the assessee has submitted that the addition of Rs. 13,24,500/- made u/s 56(2)(vii)(b) of the Act has been sustained by the ld CIT(A) adopting the purchase value as per circle rates without taking into consideration the valuation report dated 11.11.2024 prepared by the approved valuer. It is further submitted that during assessment proceedings, assessee’s request for the reference to the departmental valuation officer for determining the fair market value of the property was declined by the ld Assessing Officer. Ld CIT(A) did neither admit nor consider the valuation report of registered valuer during the first appellate stage. Ld AR thus prays to admit the same and remand the matter back to the file of ld assessing officer for making reference to the departmental valuation officer and to decide the matter fresh after considering the same along with valuation report already submitted by the approved valuer.
7. Ld Sr (DR) supports the impugned order.
8. It appears from the perusal of records that the addition of Rs. 13,24,500/- u/s 56(2)(vii)(b) of the Act, has been made on account of difference in stamp duty value of Rs. 26,37,000/- and sale consideration of Rs. 13,12,500/-. The assessing officer did not refer the matter for departmental valuation officer as provided u/s 50C(2) of the Act. Ld CIT(A) has observed in para 6.4 of the impugned order that the reliance of appellant on the report of the approved valuer at this stage cannot be entertained as no reason has been given by the assessee for non furnishing the same before the assessing officer.
9. It is thus clear that neither the Assessing Officer referred the matter to DVO u/s 50C(2) of the Act despite assessee’s request nor ld CIT(A) considered the approved valuer’s report dated 11.11.2024 submitted on behalf of assessee during the first appellate proceedings. In such circumstances, we deem it just and appropriate to restore the matter back to the file of ld Assessing Officer. The valuation report dated 11.11.2024 submitted on behalf of assessee and which is part of assessee’s paper book at page 6 to 17, stands admitted as additional evidence. The assessing officer is directed to refer the matter to the departmental valuation officer and thereafter pass order a fresh in accordance with law after considering both valuation reports and after affording adequate opportunity of hearing to the assessee. The appeal is thus liable to be allowed for statistical purposes.
10. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on – 30.09.2026
