Sunitha Malu Vs ITO (ITAT Hyderabad)
In this case , the ITAT Hyderabad dealt with improper determination of capital gains where the AO ignored the valuation report obtained from the DVO.
The assessee had sold a property jointly and declared modest capital gains. However:
- AO adopted market value from stamp portal (₹24,242/sq ft) and computed LTCG at ₹90.20 lakh
- A reference was made to the DVO, but the report was not available at the time of assessment
- The AO passed the order subject to receipt of DVO report, but later failed to revise the computation
The Tribunal observed:
- DVO report (dated 30.09.2021) determined FMV at ₹2.50 crore, significantly lower than AO’s adopted value
- Once a valuation reference is made, DVO value must be considered
- Failure to adopt DVO valuation despite receipt is not justified
- CIT(A) also erred by dismissing appeal ex-parte without examining merits
Accordingly, the ITAT:
- Set aside the matter to the AO
- Directed to recompute LTCG based on DVO valuation
- Emphasized proper application of valuation provisions
Key takeaway:
Once DVO valuation is obtained, AO cannot ignore it-capital gains must align with valuation report.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 14/08/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) of the Income Tax Act, 1961 (for short, “the Act”), dated 22/04/2021. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:
“1) The order of the learned CIT (A) is erroneous both on facts and in law;
2) The learned CIT (A) erred in deciding the appeal ex-parte without providing proper opportunity to the appellant herein,
3) The learned CIT (A) ought to have decided the issue about the legality of the assessment made and also should have taken into consideration the valuation report of the valuer,
4) The learned CIT (A) erred in confirming the action of the Assessing Officer in making addition u/s 50C of the 1.T.Act when the assessment is selected for limited scrutiny of allowability of deduction u/s 57 of the I.T.Act;
5) The learned CIT (A) ought to have held that the addition of Rs.90,20,615/- made towards capital gain is not justified particularly in view of the valuation report;
6) The learned CIT (A) erred in determining the share of the sale price in the property at Rs.1,53,43,915/- when the entire property being valued at Rs.2,50,00,000/- and the appellant’s share is 1/5 only.
7) The learned CIT (A) ought to have considered the fact that the provisions of Sec. 50C of the L.T.Act are not applicable as the value fixed by the valuation cell is less than the amount admitted in the return of income filed by the appellant herein;
8) The learned CIT (A) ought to have held that the expenditure claimed under other sources of Rs.5,68,390/- is an allowable deduction;
9) Any other ground/grounds that may be urged at the time of hearing;”
2. At the outset, on perusal of the record, we find that there is a delay of 14 days in filing the present appeal before the Tribunal. With respect to the belated filing of the appeal, the Learned Authorized Representative (for short, “Ld. AR”) had drawn our attention to the petition requesting for condonation delay along with an affidavit, dated16/02/2026 filed by the assessee, wherein it is submitted that during the relevant period the assessee suffered with severe throat infection coupled with fever and, therefore, was advised bed rest. In support of the above, the assessee also enclosed medical prescriptions along with the affidavit. It was further submitted that due to the ill health of the assessee, though the appeal papers were prepared, but the same could not be uploaded for want of digital signature of the assessee. The Ld. AR submitted that because of the aforementioned reasons, the appeal could not be filed within the prescribed time limit and there was a delay of 14 days. The Ld.AR submitted that since the delay of 14 days was caused due to bona fide reasons and not on account of any lackadaisical conduct of the assessee, the same may be condoned and the appeal may be admitted for adjudication on merits.
