NACHIMUTHU SUBRAMANIAN,ERODE vs. ACIT, CIRCLE-1, ERODE

The Assessee raised the following grounds of appeal :

Briefly, the facts of the case are that the appellant is an Individual. The Return of Income for the Assessment Year 2017- 18 was filed on 30.10.2017 disclosing a total income Rs.36,66,170/-. Against the said Return of Income, the assessment was completed by the National Faceless Assessment Centre (hereinafter called ‘AO’) vide order dated 20.09.2021 passed u/s.143(3) r.w.s. 144B of the Income Tax Act, 1961 at a total income of Rs.1,03,81,170/-. While doing so, the Assessing Officer made addition of Rs.62,15,000/- u/s.69B of the Act by estimating the higher cost of construction of building based on the DVO’s Report.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A), contending that the DVO’s Report is not reliable for the reason that the DVO had prepared the report without considering the objections of the assessee. He further submits that the very reference to the DVO is not valid in law without rejecting the books of accounts placing reliance on the following decisions :  CIT Vs. Cholan Roadways Ltd. [2013] 33 taxmann.com 644 (P & H)  CIT Vs. Swaraj Cold Storage Pvt. Ltd [2013] 36 taxmann.com 428 (All)  CIT Vs. Vijayakumar D.Gupta [2014] 50 taxmann.com 94 (Guj)  ITO Vs. JKK Textile Processing Mills [1990] 38 TTJ 178 (Mad)

The ld.CIT(A) had rejected the above contentions and dismissed the appeal.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The Learned AR submits that the very reference made by the Assessing Officer to the DVO for the purpose of ascertaining the cost of construction is illegal as without rejecting the books of accounts regularly maintained by the appellant. He further submits that the DVO’s Report is unreliable as the DVO had not taken into consideration the objections raised by the appellant.

On the other hand, the Learned Sr.DR submits that the ld.CIT(A) passed a very reasoned order after taking into account all the submissions made by the appellant, therefore, no interference by this Tribunal is warranted.

We heard rival submissions and perused the material available on record. The Grounds of Appeal No.1, 2, 3, 4, 6 & 7 challenges the very validity of reference to the DVO by Assessing Officer for estimating the cost of construction of building without rejecting the books of accounts regularly maintained by the appellant. This contention of the appellant cannot be accepted in view of the specific provisions of sub-section 2 of section 142A of the Income Tax Act, which empowers the Assessing Officer to refer the matter of valuation to the DVO whether or not he is satisfied about the correctness or completeness of the accounts of the assessee. The relevant provisions reads as under : “142A. Estimation of value of assets by Valuation Officer.- (1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him.

The judicial precedents relied upon by the learned AR have no application, as these decisions were render before the substitution of the section 142A of the Act w.e.f. 01.10.2014 by Finance Act, 2014. Thus, all these grounds of appeal no.1, 2, 3, 4, 6 and 7 stands dismissed.

The Ground No.5 challenges the correctness of the DVO’s Report on the ground that without taking into account the objections of the assessee and giving an opportunity of being heard to the assessee, the DVO estimated the cost of construction of the building situated at TS No.76, Krishna Street, Moolapatarai, Erode-638003. On mere perusal of the para 5.6 of the ld.CIT(A), it would be evident that the DVO had prepared the report without taking into account the objections filed by the assessee which is untenable in law. Therefore, in our considered opinion, in order to meet the ends of justice, the matter requires a remand to the file of Assessing Officer with a direction to obtain DVO’s Report after taking into account all the objections raised by the assessee. Accordingly, Ground No.5 raised by the assessee is partly allowed for statistical purpose.

In the result, appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 11th August, 2026. (MANU KUMAR GIRI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 11th Aug, 2026. SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

GANGADHARA RAO SALEELA Date: 2026.08.17 17:14:10 +05'30'