DULU MAHATO,DHANBAD vs. DCIT/ACIT CIRCLE-1, DHANBAD

Shri Devesh Poddar, ld. AR appeared on behalf of the assessee. Shri Khubchand T. Pandya, Sr.DR appeared on behalf of the revenue.

It was submitted by the ld AR that the assessee along with his four brothers jointly owned the ancestral property at Chitahi Village, Tundoo, Baghmara, Dhanbad. It was the submission that the AO estimated the cost of construction/cost of renovation of the said property at Rs.55 lakhs and apportioned the said estimated cost between two years at Rs.27.5 lakhs each. It was the submission that the house property originally belonged to the assessee’s father and on his demise, it is jointly owned by the assessee & 75/Ran/23 and his three brothers. It was the submission that it is fairly agreed that there has been renovation in the property. It was the submission that all the brothers are also replied to the notices issued u/s.133(6) of the Act by the AO that the renovation were done jointly out of their incomes. It was the submission that the estimation of Rs.55 lakhs itself is not done by the DVO but by the AO himself, who is not competent person to make such estimation. It was the submission that the AO in his assessment order in page 3 also records that the properties is an ancestral property. He also records that being ancestral property, the investment should have been made in the return of HUF. It was found that the HUF has not filed any return, insofar as the HUF has no source of income. It was the submission that the addition made in the hands of the assessee in his individual capacity itself is unwarranted.

In reply, ld. Sr. DR submitted that the assessee has admitted that there is renovation done to the property. The assessee ought to have shown the said investment in its return. The assessee having not shown the investment, the addition as made by the AO and as confirmed by the ld. CIT(A) is liable to be upheld.

We have considered the rival submissions. At the outset, it is an accepted fact that the property is belonged to the late father of the assessee. It is also an admitted fact that the assessee along with his three brothers jointly owned the property. This is evident from the fact that the notice u/s.133(6) of the Act have been issued to the brothers of the assessee. It is also accepted that the brothers of the assessee have & 75/Ran/23 responded saying that they have also invested in the property for renovation. This being so, admittedly, the investment, if any, in the house property would have been considered in all the four hands and not that of the assessee alone. On this ground alone, the addition made by the AO and confirmed by the ld. CIT(A) for both the years under consideration should be deleted and we do so.

Even otherwise, the AO is not competent authority for valuation of a property. If the AO doubted the valuation or wanted the property to be valued, he ought to have referred the valuation to the DVO. This, admittedly, has not been done. Consequently, as the valuation itself is erroneous and is unsubstantiated and made by a person not competent to do the valuation, on this ground also, the addition made by the AO and confirmed by the ld. CIT(A) for both the years under consideration is liable to be deleted and we do so.

In the result, both appeals of the assessee are allowed. Order dictated and pronounced in the open court on 10/10/2025.