SYED HIFAJAT ALI,INDORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, BILASPUR

On the facts and in the circumstances of case and in the law, Ld. CIT(A) erred in accepting the value of land and building as per the valuation of Departmental Valuation Officer (DVO) which valuation is higher than the stamp duty value of the property at which it has been actually purchased by the assessee. The Ld. CIT(A) ought to have appreciated that in the view of clear mandate of 1st proviso to section 56(2)(vii) r.w.s 50C, valuation by DVO cannot exceed the stamp duty valuation of property and accordingly when the value of property recorded by the assessee in his books is as per the stamp duty valuation, no further increase in warranted in the same.

On the fact and in circumstances of case and in the law and without prejudice to the above ground of appeal, the valuation done by the departmental Valuation officer (DVO) vide valuation report dt. 31.01.2022 and relied upon by Ld. AO cannot be treated as a proper valuation as the same has been done based on inappropriate documents and without appreciating all the relevant facts. It is prayed that addition of Rs. 2,64,21,740/- made by Ld. AO on the basis of such valuation report may please be deleted.

Brief facts of the case, borne from the record are that the assessee is an individual, who was subjected to a Search & Seizure Action u/s 132 of the Act, 1961, on the business / residential premises on 19.02.2020.

Later on, a report dated 29.03.2022 from DVO, Bhopal was received by the Ld. AO, wherein the cost of commercial building consisting of land + building + construction + furniture, fixture, and other interior work, was determined at Rs.10,24,53,662/-, which includes value of cost of land building at Rs.9,07,21,740/-, whereas the book value of the cost of land and building was 6,43,00,000/-, accordingly, the addition was supposed to be made, following the valuation report of DVO has been arrived at to Rs.2,64,21,740/- (Rs.9,07,21,740- Rs.6,43,00,0000).

Aggrieved with the aforesaid rectification order u/s 154, assessee preferred an appeal before the Ld. CIT(A), however the contention of assessee could not find favour before the Ld. CIT(A), who had confirmed the rectified addition vide the order u/s 154 dated 01.06.2022 passed by the Ld. AO and dismissed the appeal of the assessee, with the following observations: During the appellate proceedings, the appellant has furnished documentary evidence. The documentary evidence kept on record. On examination of all these documents, that the appellant has duly filed the DVO report, the examine the DVO report the valuation of cost of commercial building has been done by the District Valuation Officer, Bhopal situated at S.H.Tower, Palasia, Great Kailash Road, Saket Chauraha Indore and the DVO has valued cost of land and building at Rs. 9,07,21,740/- whereas the assessee has shown the same in his books at Rs. 6,43,00,000/-. Thus, the difference come to Rs. 2,64,21,740/- in the books of accounts and valuation report made by the DVO. The DVO has reached to a reasonable rate of the said land. The DVO has mentioned the location of land and also given importance to it's commercial value and high demand. He has also given a comparable rates of Saket Nagar and old Palasia in his report. The appellant has Syed Hifajat Ali vs ACIT, Bilaspur not pointed out any real defect in the valuation report of DVO. Hence, I find the report of DVO is a valid and reasonable than the report of registered valuer. Therefore, I find that the Ld. AO justified the making addition of Rs.2,64,21,740/-, is hereby confirmed. Therefore, appeal on these grounds No. (i) & (ii) is dismissed.

Dissatisfied with the aforesaid order of Ld. CIT(A), assessee is in appeal before us in the present appeal.

At the threshold of the hearing, it is noticed that the present case was fixed for hearing on 10.01.2025, but Ld. Counsel of the assessee had filed an application seeking adjournment of the matter to prepare and file the paper book. The matter, therefore, was adjourned to 14.01.2025. However, there was no representation on behalf of the assessee on the next date of hearing i.e., 14.01.2025, also no application requesting for adjournment has been placed before us. Under such circumstances, it is deemed appropriate to take up the matter for hearing and to dispose of the appeal as per Rule, 24 of the Appellate Tribunal Rule, 1963, based on submissions by the Ld. Sr. DR representing the revenue and material available on records inter alia orders of the revenue authorities.

At the outset, Ld. Sr. DR reiterated the facts of the case and submitted that the assessee in the present case had objected to the valuation of commercial building including furniture, fixture and other interior work done by the registered valuer during Search & Seizure Action by the department. In Syed Hifajat Ali vs ACIT, Bilaspur order to meet out the requirement of law considering the objections of the assessee, the matter was referred to DVO, however, before receipt of the DVO’s report, the assessment u/s 153A was completed on 26.09.2022, by the Ld. AO on the basis of valuation done by the registered valuer and an addition of Rs.6,66,22,641/- was made, being the difference in value worked out by the registered valuer as compared to the cost of subject asset in the books of the assessee. Subsequently, the report from DVO dated 29.03.2022 was received by the AO, wherein the valuation arrived at by the DVO was less than the value adopted by the registered valuer, accordingly, as requested by the assessee an order u/s 154 was passed on 01.06.2022 and the addition was dropped down to the extent the DVO has reduced the valuation i.e., by Rs.4,02,00,901/- . In view of such facts there was no error in the order of Ld. AO passed u/s 154 granting relief to the assessee, however, assessee assailed the said order before the Ld. CIT(A) challenging the issue that the value adopted by DVO cannot be the basis for Assessment, as the valuation is more than the stamp duty value of the property. Ld. CIT(A) had dealt with the issue on merits, discussing facts involved therein and has very justifiably concluded that the modified addition after reduction of the same vide order u/s 154 by the Ld. AO, contemplating upon the issue that the report of DVO is a valid and reasonable report than the report of registered valuer. There is no further explanation on

We have considered the submissions of Ld. Sr. DR, perused the orders of revenue authorities and contentions raised by the assessee through the grounds of appeal. On perusal of the order of Ld. CIT(A), we observed that the assessee has challenged the basis of valuation by the DVO, stating that the same is highly arbitrary and have no legal or other basis, however, there was no whisper about any corroborative support to substantiate that the report of DVO was arbitrary or unreasonable. Regarding, assessee’s reference to 1st proviso of section 56(2)(vii) r.w.s. 50C and its applicability in the present case, nothing has been submitted before us to support such claim, in terms of corroborative evidence, also apparently no such claim was made before the Ld. AO while seeking rectification u/s 154, therefore, we are unable to consider and to persuade with such contention of the assessee under the grounds of appeal in the present case. As described by the Ld. CIT(A), the allegations by the assessee are only averments with no cogent documentary support. Before us also the assessee has not placed any documentary evidence, so as to dislodge the decisions taken by the revenue authorities. Considering aforesaid facts and circumstances, we find substance in the decision of Ld. CIT(A) that the appellant has not pointed out any real defect in the valuation report of DVO, hence the report of DVO is valid and reasonable as against the report of Syed Hifajat Ali vs ACIT, Bilaspur registered valuer, we, thus, are of the considered view that there was no error in the findings of Ld. CIT(A) which needs our indulgence to correct the same. In result, the sole controversy raised by the assessee in his grounds of appeal are disposed of in terms of our aforesaid observations.