Amity Land Developers Vs Assessing Officer (ITAT Surat)
Section 50C Addition Made Without DVO Report: ITAT Remands ₹27.22 Lakh Dispute for Fresh Assessment
The Income Tax Appellate Tribunal (ITAT), Surat Bench, remanded a dispute involving an addition of ₹27,22,775 under section 50C after noting that the assessment had been completed without considering the Departmental Valuation Officer’s (DVO) report.
In Amity Land Developers vs. Assessing Officer, the AO had referred the properties for valuation at the assessee’s request. However, since the report had not arrived and the assessment limitation was approaching, the AO completed the assessment using the stamp valuation figures.
The Tribunal directed a fresh assessment, with full opportunity to the assessee and consideration of its submissions without being influenced by the earlier order.
Background of the Case
The assessee, a partnership firm, filed its return for AY 2013-14, declaring nil total income, which was assessed.
Subsequently, the AO received information indicating that the firm had sold immovable properties for consideration lower than the values adopted by the stamp valuation authority. Based on this information, the AO reopened the assessment under section 147.
The reassessment proceedings concerned two property transactions. The AO treated the differences between the declared consideration and stamp valuation as additional income under section 50C.
An assessment order dated 29 March 2022, passed under section 147 read with section 144B, determined total income at ₹27,22,775.
The assessee challenged this assessment before the Commissioner of Income Tax (Appeals), NFAC, but did not obtain relief. It thereafter approached the Tribunal.
Details of the Section 50C Addition
For the first property, bearing Registration No. 259, the declared sale consideration was ₹1,62,000, whereas the stamp valuation authority adopted a value of ₹22,04,081. The resulting difference was ₹20,42,081.
For the second property, bearing Registration No. 244, the declared sale consideration was ₹54,000, against the stamp valuation of ₹7,34,694. The difference for this transaction was ₹6,80,694.
The AO aggregated these differences and made an addition of ₹27,22,775.
The controversy before the Tribunal centred on the valuation process underlying this addition, particularly the fact that a DVO reference had already been made, but its outcome was unavailable when the assessment was completed.
Assessee’s Grounds of Appeal
The assessee challenged the application of section 50C and the failure to consider the valuation adopted by the DVO.
It contended that the lower authorities had erred in sustaining the addition without considering the valuation material. It also disputed the AO’s conclusion that it had capital gains of ₹27,22,775, alleging that the conclusion lacked supporting material.
During the Tribunal hearing, the assessee’s representative drew attention to the DVO report dated 27 October 2022, placed at pages 54 to 62 of the paper book.
The representative requested that the matter be restored to the AO for a fresh assessment after considering the report together with the assessee’s objections and submissions.
Findings Recorded by CIT(A)
The Tribunal reproduced the relevant findings from the CIT(A)’s order.
According to those findings, statutory notices under sections 148, 142(1) and 143(2) had been issued and served. The assessee had responded, and its replies were considered during assessment proceedings.
Importantly, the CIT(A) recorded that the AO had referred the matter to the DVO at the assessee’s own request.
However, the statutory deadline for completing the assessment was 31 March 2022, and the DVO report had not been received. The CIT(A) described the assessment completed in these circumstances as a protective assessment to safeguard the Revenue’s interests.
These recorded facts established that the disputed addition preceded consideration of the valuation report.
Tribunal’s Observations and Directions
After examining the lower authorities’ orders and the material on record, the Tribunal observed that the AO had made the addition without considering the DVO report.
The report subsequently became available and was produced before the Tribunal. The Revenue’s representative agreed to the request for remand.
In these circumstances, the Tribunal restored the matter to the AO for assessment afresh.
It expressly directed the AO to grant the assessee full opportunity and consider all its submissions. The fresh assessment must be made without being influenced by the previous assessment order in any manner.
Outcome and Significance
The appeal was allowed for statistical purposes. The Tribunal did not finally determine the appropriate property values or direct outright deletion of the ₹27,22,775 addition.
The decision provides an opportunity for the valuation dispute to be examined afresh with the DVO report and the assessee’s objections before the AO.
Its significance lies in the specific procedural circumstances: the valuation reference had been made, the assessment was completed before the report arrived, and the report later became available. The final tax treatment remains subject to the fresh assessment.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT SURAT
Feeling aggrieved by the order of first appeal dated 23.09.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 29.03.2022 passed by learned National Faceless Assessment Centre, Delhi [“Ld. AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14, the assessee has filed this appeal.
2. The background facts leading to present appeal are such that the assessee-firm filed its return of AY 2013-14 u/s 139 declaring a total income of Rs. Nil which was assessed. Subsequently, the Ld. AO, acting upon an information in his possession revealing that the assessee sold immovable properties during the relevant year and the actual sale consideration declared was lesser than the stamps authority valuation in terms of section 50C of the Act, re-opened assessee’s case u/s 147. During proceedings, the Ld. AO observed that the assessee sold two properties, namely (i) Registration No. 259 – for Rs. 1,62,000/- whereas the stamps authority valuation was Rs. 22,04,081/-; thus the lesser consideration was Rs. 20,42,081/- and (ii) Registration No. 244 – for Rs 54,000/- whereas the stamps authority valuation was Rs. 7,34,694/-; thus the lesser consideration was Rs. 6,80,694/-. The Ld. AO invoked section 50C and accordingly assessed additional income of Rs. 27,22,775/- [Rs. 20,42,081 + Rs. 6,80,694/-] and determined total income at Rs. 27,22,775/-. Aggrieved, the assessee carried matter before Ld. CIT(A) but did not get success. Now, the assessee has come before us in present appeal.
3. The grounds raised by assessee are as under:
“1. In the facts and circumstances of the case, both the authorities below, have committed the serious error of law in applying provisions of Section 50C of the Act in respect of immovable properties and not considering the valuation adopted by DVO and made an addition which deserves to be deleted in the best interest of justice.
2. The Learned Assessing Officer has misdirected himself in arriving to conclusion that the appellant is having capital gain of Rs. 27,22,775/-without having any material on record.
3. The appellant craves for leave to add or amend or alter any of the grounds of appeal.”
4. We have heard the learned Representatives of both sides and carefully perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn.
5. We re-produce below the Para No. 7.2.2 of impugned order passed by Ld. CIT(A): However, a review of the assessment records indicates that statutory notices under Sections 148, 142(1), and 143(2) of the Income Tax Act were duly issued and served upon the appellant. The appellant responded to these notices, and the replies were duly considered during the course of proceedings. In fact, the AO made a reference to the Departmental Valuation Officer (DVO) upon the appellant’s own request. As the statutory time limit for completing the assessment was expiring on 31.03.2022 and the DVO report had not been received, the AO passed a protective assessment to safeguard the interests of the revenue.
6. Thus, it is clear that the Ld. AO has passed assessment-order and made impugned addition without considering report of DVO. The Ld. AR has drawn us to Pages 54 to 62 of Paper-Book where the DVO report dated 27.10.2022 is placed. Accordingly, Ld. AR prayed to remand this matter back to the file of Ld. AO for a fresh assessment after considering DVO report and assessee’s objections/submissions. Ld. DR for revenue agreed. Faced with this situation, we remand this matter back to the file of Ld. AO for assessment afresh. It is made clear that the Ld. AO shall give full opportunity to assessee and consider assessee’s all submissions without being influenced by his previous order in any manner.
7. In result, this appeal is allowed for statistical purposes.
Order pronounced in open court on 30/10/2026
