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Income Tax Appellate Tribunal, DEHRADUN CIRCUIT BENCH, DEHRADUN
Before: SHRI SAKTIJIT DEY, VICE- & SHRI M. BALAGANESH
Assessment Year: 2013-14 DCIT, Central Circle, Versus Graphic Era Educational Dehradun Society, 566/6, Bell Road, Clement Town, Dehradun. PAN: AAAAG0566E (Appellant) (Respondent) Assessee by : Sh. Virendra Kalra, CA Revenue by : Sh. N.S. Jangpangi, CIT DR Date of hearing : 20.06.2023 Date of pronouncement: 23.06.2023 ORDER This is an appeal by the Revenue against order dated 21.12.2017 of learned Commissioner of Income-tax (Appeals)-IV, Kanpur, pertaining to the assessment year 2013-14.
The dispute in the present appeal is confined to deletion of addition made of Rs.2,76,28,270/- on account of difference in the valuation of property as declared by the assessee and as determined by the Departmental Valuation Officer (DVO).
Briefly, the facts are, the assessee is a registered society having status of association of persons (AOP). For the assessment year under dispute, the assessee filed its return of income on 29.09.2013 declaring nil income. A search and seizure operation u/s. 132 of the Act was carried out on the assessee on 21.11.2013. In pursuance to the search and seizure operation, proceeding under section 153A of the Act was initiated against the assessee. In course of assessment proceedings for the impugned assessment year, the Assessing Officer, while examining audited balance sheet of the assessee, noticed that the assessee has shown investment in purchase/construction of various immovable properties. After calling for necessary details of investment and source of investments, the Assessing Officer made a reference to the DVO for determining the value of the properties. After obtaining the report of the DVO, the Assessing Officer noticed that there is difference of Rs.2,76,28,269/- between the investments in the properties shown by the assessee and the value of the property as determined by the DVO. Thus, based on the value of property determined by the DVO, the Assessing Officer called upon the assessee to explain why the value determined by the DVO should not be adopted and the differential amount should not be added to the income of the assessee. Though, the assessee objected to the proposed addition, however, rejecting the assessee’s submissions, the Assessing Officer added the differential amount of Rs.2,76,28,269/- to the income of the assessee by invoking provisions of section 69 of the Act. The assessee contested the aforesaid addition before learned Commissioner (Appeals). Finding substantial merit in the submissions of the assessee, learned Commissioner (Appeals) deleted the addition.
We have considered rival submissions and perused the materials on record. Undisputedly, the addition made by the Assessing Officer is based on the difference in valuation of various immovable properties held by the assessee. While the assessee had declared the cost of construction/investment in the properties at Rs.65,45,62,150/-, the DVO has determined the value of the properties at Rs.68,21,90,419/-. Thus, the value determined by the DVO is higher by Rs.2,76,28,269/-. As rightly observed by learned Commissioner (Appeals), the Assessing Officer has not pointed out any specific defect or deficiency in the valuation of the assessee.
Merely because the DVO has arrived at a higher value figure, the Assessing Officer has adopted it. It is fairly well known that valuation of property involves some amount of estimation and guess work.
Therefore, no valuation can be accurate and there is bound to be a difference between two valuations. From the facts on record, it is observed that the difference between the value shown by the assessee and determined by the DVO is only 2.87%, which by any reasonable standards, is negligible. It is relevant to observe, in some of the provisions of the Act, such as, section 50C, Section 43CA, 56(2)(viib), though the fair market value of the property as determined by stamp valuation authority is to be deemed to be the sale consideration received by the assessee, however, recognising the fact that value of property is based on estimation, margin of 10% to 20% variance has been provided. Thus, in our view, keeping in perspective the acceptability of such variance of 10% to 20% between the declared value and the value determined by the DVO or stamp valuation authority, the difference of 2.87% in the present case has to be ignored. Since, the Revenue was unable to controvert the factual findings recorded by learned Commissioner (Appeals), we do not find any valid reason to interfere with the decision of learned first appellate authority. Accordingly, we uphold the same by dismissing the grounds raised.
In the result, appeal is dismissed.
Order pronounced in the open court on 23/06/2023.