SMT. KALA EASWARAN KUMAR,CHENNAI vs. ITO, NCW-1(2), CHENNAI

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ITA 3191/CHNY/2025Status: DisposedITAT Chennai24 April 2026AY 2016-1710 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) failed to consider the assessee's submissions and evidence, including TDS credit and sale instances. The Tribunal also noted that the reference to the DVO was not completed within the stipulated time.

What were the facts?

The assessee sold an immovable property and claimed nil taxable capital gains by adopting a high Fair Market Value (FMV) as on 01.04.1981, claiming indexation and exemption. The Assessing Officer rejected the FMV and adopted a lower guideline value, leading to a tax demand.

What were the issues?

Whether the CIT(A) properly considered the assessee's evidence and complied with the Tribunal's earlier directions, and whether the DVO reference was validly made and completed within time.

Which sections of the Income-tax Act were involved?

Section 54,Section 142A(6),Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: MS. PADMAVATHY S & SHRI MANU KUMAR GIRI

Hearing: 26.03.2026

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”] dated 30.09.2025 for the Assessment Year 2016–17. 2. The assessee has made the following grounds of appeal as under:

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 2 :: 1. Grounds of Appeal

1.

The Faceless appeal centre (CIT(A)) is not justified in deciding the appeal in a one-sided and prejudiced manner without due regard to the substantive miscarriage of justice in framing the set-aside assessment without following the mandate of Hon'ble ITAT while setting aside the original assessment in ITA No.2637/Chny/2019 dated 3/3/2020 (A Bench). 2. The faceless CIT(A) is not justified in travelling into the merits of the inchoate reassessment and dismissing the appeal without due regard to the beneficial amendment under proviso to Section 251(1)(a) when the ex-parte nature of the assessment framed is writ large in the alleged reassessment order. 3. The faceless CIT(A) is not justified in restricting his remit in a truncated fashion to the factual and legal issues raised in the appeal in terms of para 4.1 at page 7 of its appellate order titled "Points for Determination". 4. The faceless CIT(A) is not justified in ignoring the various responses rendered by the assessee in the set- aside assessment proceedings in terms Section 142(1) vide letter dated 14/09/2021 to paint the appellant in poor light on alleged failure to respond to penultimate show cause notice citing time-barring of assessment by the NFAC. 5. The faceless CIT(A) is not justified in ignoring the written submissions furnished titled "Issues for Consideration" dated 28th June 2025 and duly acknowledged therefrom. 6. The faceless CIT(A) is not justified in ignoring the several documentary evidences furnished online on 28/06/2025 which negates the jaundiced decision rendered in the appellate order to dismiss the appeal. 7. The faceless CIT(A) is not justified in deliberately ignoring ground No.6 raised questioning the illegality of the reference to the valuation cell whereby the alleged reference was unanswered within the time limits set out u/s.142A(6) of the Act. 8. The faceless CIT(A) is not justified in sustaining the original assessment order verbatim citing pragmatism, legal sustenance and procedurally correct approach by

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 3 :: the NFAC to disregard the alleged reference made to the DVO. 9. The faceless CIT(A) failed to comprehend that the absence of the alleged valuation report by the DVO is a non-est document having breached its rendition within time-limits u/s. 142A(6) of the Act. 10. The faceless CIT(A) is not justified in holding that no contemporary's sale deeds or sale instances were furnished by the appellant in utter disregard to the comparative sales instances enclosed to response to notice u/s.250 dated 13/06/2025 vide attachment 8 (Annexure B) duly acknowledged in Ack.No.211763171280625. 11. The faceless CIT(A) has no basis to justify proof of cost of construction of old buildings when it is part and parcel of the valuation report rendered ab-initio and the alleged determination thereof by the eminently appointed DVO in the set-aside assessment proceedings. 12. The faceless CIT(A) is not justified in sustaining the cost of land at Rs.22,000/-per ground based on inchoate material furnished by the SRO bereft of contiguous property details. 13. The faceless CIT(A) is not justified in alleging lack of proof for property held in the hands of the predecessor Settlor when details thereof are ex-facie available in para 4 page 2 of original assessment order dated 19/11/2018. 14. The faceless CIT(A) is not justified in a prejudiced rendition of the period of holding on failure to furnish copy of settlement deed when the same is available before the jurisdictional assessing officer as well as before the DVO prior to inspection of property in January 2022. 15. The faceless CIT(A) is not justified in omitting to grant credit for TDS credit. available to the appellant at Rs.6,49,271/- based on irrelevant information and without due regard to the production of physical copy of challan for remittance of TDS as well as latest Form No.26AS vide acknowledgement No.211877991280625 dated 28/06/2025. 16. The faceless CIT(A) is not justified in abdicating his responsibility to render a fair appellate order and directing the appellant to seek remedy u/s.154 when

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 4 :: decisions are rendered in a faceless and wooden fashion by the department. 17. The faceless CIT(A) is not justified in obfuscating his decision on charge of tax at marginal rate by perfunctorily examining the assessment order without due regard to the excessive demand raised in the computation sheet annexed thereto. 18. The faceless CIT(A) is not justified in upholding non- breach of natural justice by citing the solitary instance of show cause close to time bar date when details called for were furnished ab-initio as early as September 2021, 6 months prior thereto. 19.In any event, the order of the faceless CIT(A) is illegal, perfunctory and made deliberately ignoring written submissions dated 28/06/2025 to render the verdict with a jaundiced eye. 20. Your appellant craves the indulgence of the Hon'ble ITAT to furnish additional grounds as well as additional evidence to countenance the ex-parte orders framed by the assessment unit as well as the faceless appellate authority. 21.For these grounds and such other grounds that may be adduced at the time of hearing it is prayed that the relief sought for be granted and the reassessment made be annulled to restore the income returned by the appellant. 3. The assessee has raised elaborate grounds as above, the crux of which are: • Non-compliance with directions of the Tribunal in earlier round • Invalid reference to DVO and absence of valuation report within time Adoption of SRO guideline value instead of fair market value • Wrong indexation base year • • Denial of TDS credit • Charging of tax at incorrect rate • Violation of principles of natural justice in faceless assessment

4.

Brief facts of the case are that the assessee, a senior citizen, held 54% share in an immovable property situated at R.A. Puram, Chennai. The property was sold during the relevant year and the assessee computed Nil taxable capital gains after:

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 5 :: • Adopting FMV as on 01.04.1981 at Rs.5,00,000 per ground • Claiming indexation benefit • Claiming exemption u/s.54 of the Act

The Assessing Officer, in the original assessment u/s 143(3), rejected the FMV and adopted guideline value of Rs.22,000 per ground, recomputed capital gains and raised tax demand. On appeal, the Tribunal earlier set aside the matter [I.T.A.No. 2637/Chny/2019] directing fresh determination of FMV considering relevant factors and permitting reference to DVO, if necessary. The said direction of the Tribunal is as under: 4. Having heard the Ld. Representative for the assessee and the Ld.DR, we also perused the materials available on record including the impugned orders of authorities below. As on 01.04.1981, the fair market value has to be estimated for computing the capital gain. The assessee claims that the fair market value was Rs.5 lakhs per ground. However, the Department claims that the fair market value was Rs.22,000/- per ground. Neither the assessee nor the Department could bring the comparative sale instances in the locality. We have also carefully gone through the Registered Valuers Report. The Registered Valuer without any discussion had simply estimated the fair market value at Rs.5 lakh per ground. For estimating the fair market value of the land, the locality of the land, infrastructure facilities available around the land, potential for future development, access to the infrastructure facilities has to be taken in to consideration. Guideline value is one of the factors to be considered for estimating the fair market value. As on 01.04.1981, if any comparative sale instances in the locality has also to be considered. In this case, neither the registered valuer nor the Assessing Officer has taken in to consideration all these factors. The Assessing Officer has simply taken the guideline value of the property as estimated by the Sub-Registrar. This Tribunal is of the considered opinion that the guideline is not the fair market value. The guideline value is only to guide the Sub- Registrar to ascertain the fair market value. The fair market value may not be a constant figure. It may vary depending upon various factors which was referred above. Moreover, it is for the willing purchaser and willing seller to determine the market value. In those circumstances, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer after considering all the factors referred above. Accordingly the orders of both the authorities below are set aside and the entire issue of valuation is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter, if necessary by referring the same to the Valuation Officer to determine the fair market value as on 01.04.1981. It is also necessary to

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 6 :: ascertain the comparative sale instances if any available before taking any decision by the Assessing Officer. Shri J. Prabhakar, the Ld. Representative for the assessee brought to the notice of this Tribunal that the property was inherited by the assessee from her mother by way of settlement deed. Therefore, the judgment of the Bombay High Court in CIT vs. Manjula J. Shah reported in 355 ITR 474 will come in to operation. This factor is also to be considered by the Assessing Officer whether the property was inherited by settlement deed or otherwise and thereafter the Assessing Officer shall decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. 5. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the court on 3rd March, 2020 at Chennai.

5.

In the set-aside proceedings, the NFAC referred the issue to the DVO but did not receive the valuation report within the stipulated time. As a result, the assessment was finalized under sections 143(3) read with 254 and 144B, with the earlier additions being reiterated. The Commissioner of Income Tax (Appeals) upheld this assessment, observing that the Assessing Officer had substantially complied with the Tribunal’s directions. It was noted that referring the matter to the DVO was discretionary, and completing the assessment without the valuation report was valid.

The CIT(A) further held that the assessee failed to provide credible evidence supporting a higher fair market value, thereby justifying the adoption of the guideline value. Indexation from the financial year 2004-05 was considered appropriate due to the absence of proof of prior ownership. Additionally, TDS credit could not be granted without proper verification. The authority also found no breach of natural justice, as sufficient opportunity had been provided to the assessee. Consequently, the appeal was dismissed.

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 7 :: 6. On further appeal before the Tribunal, the assessee’s counsel argued that the Assessing Officer did not genuinely comply with the Tribunal’s directions. It was contended that the reference to the DVO was made in a routine manner, and no report was received within the prescribed time u/s.142A(6) of the Act. The counsel stressed that, in the absence of the DVO’s report, the earlier assessment should not have been repeated, particularly when the assessee had submitted comparable sale instances and valuation calculations that were disregarded.

It was also argued that indexation ought to have been granted from 01.04.1981 since the property was acquired through settlement or inheritance. The denial of TDS credit amounting to Rs. 6,49,271/- was claimed to be incorrect, as supporting evidence was available. Further, it was submitted that the assessment was completed ex parte without providing adequate opportunity, thereby violating section 144B. On these grounds, the counsel maintained that the entire reassessment was invalid and should be set aside.

7.

The Departmental Representative supported the decisions of the lower authorities, contending that the Tribunal’s directions had been properly followed. It was argued that referring the matter to the DVO is not mandatory, and in the absence of such a report, the Assessing Officer is entitled to proceed based on the available material. The representative further submitted that the assessee failed to establish the fair market value with credible evidence, making the adoption of the guideline value reasonable. It was also pointed out that the assessee did not respond to the show-cause notice, and therefore, there was no breach of the principles of natural justice.

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 8 :: 8. We have carefully considered the rival submissions and perused the material on record. The earlier order of the Tribunal required reconsideration of FMV after examining relevant factors and permitted reference to DVO, if necessary. In the present case, AO made a reference to DVO. However, no valuation report was received. AO proceeded to repeat the earlier assessment without fresh analysis. In our considered view, once the matter is set aside for de novo adjudication, the Assessing Officer is duty bound to independently evaluate the material on record. Mere reiteration of earlier findings defeats the purpose of remand. Thus, the action of the AO in mechanically adopting earlier conclusions is not in consonance with the spirit of the Tribunal’s directions.

9.

We have carefully considered the competing submissions and examined the material available on record. The Tribunal, in its earlier order, had directed a fresh determination of the fair market value after considering relevant factors and had also allowed for a reference to the DVO, if required. In the present case, although the Assessing Officer made such a reference, no valuation report was received. The AO nonetheless proceeded to repeat the earlier assessment without undertaking any fresh analysis.

10.

In our view, when a matter is remanded for de novo adjudication, the Assessing Officer is obligated to independently assess the evidence on record. Simply reiterating earlier conclusions undermines the very purpose of the remand. Therefore, the AO’s action of mechanically adopting the previous findings is not in line with the intent of the Tribunal’s directions. It is settled law that reference to DVO is not mandatory. However, once reference is made and the issue is central to determination, the AO must either

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 9 :: await the report within permissible time, or independently adjudicate based on material available. In the present case, the AO has done neither effectively and has simply relied on earlier order. This approach cannot be sustained.

11.

Considering the totality of facts, the assessment in set-aside proceedings is not in true compliance with Tribunal directions as referred supra. The issue of FMV has not been properly adjudicated • • Several factual aspects require fresh examination

Accordingly, we set aside the orders passed by the lower authorities and remit the matter to the Assessing Officer for fresh adjudication within three months from the date of receipt of this order, after obtaining the valuation report from the DVO. If the DVO’s report is not received within the stipulated period, the Assessing Officer shall proceed to complete the assessment de novo on the basis of the available record, without being influenced by any earlier orders. The assessee is also directed to extend prompt and diligent cooperation to the Assessing Officer and the DVO by furnishing relevant documents, if any. 12. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on the 24th day of April 2026, in Chennai. Sd/- Sd/- (प�ावती एस) (मनु कुमार िग�र) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद%या/ACCOUNTANT MEMBER &या�यक सद%य/JUDICIAL MEMBER

ITA 3191/Chny/2025 (AY 2016-17) Smt. KALA ESWARAN KUMAR Vs ITO Non Corp Ward 1(2) :: 10 :: चे&नई/Chennai, (दनांक/Dated: 24th April, 2026. SNDP, Sr. PS आदेश क� ��त)ल*प अ+े*षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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