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Facts
The assessee, a registered trust, purchased land for a consideration that was more than twice the circle rate. The AO invoked Section 13(2)(e) and 13(1)(c) of the Income Tax Act and made an addition. The CIT(A) partly allowed the assessee's appeal.
Held
The Tribunal held that the Assessing Officer failed to consider the assessee's valuation report and did not refer the matter to the Departmental Valuation Officer (DVO). The CIT(A) had rightly deleted the addition made by the AO.
Key Issues
Whether the AO was justified in making an addition when the assessee provided a valuation report, and whether the AO should have referred the matter to the DVO.
Sections Cited
143(3), 11, 12, 13(2)(e), 13(1)(c), 143(2), 142(1), 12A, 12AA, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR
Respondent by Sh. Rakesh Gupta, Advocate Sh. Somil Agarwal, Agarwal Date of hearing: 08/09/2025 Date of Pronouncement: 28/10/2025 ORDER PER SUDHIR KUMAR, JM:
This appeal by revenue is preferred against the order of National Faceless Appeal (NFAC) Delhi [for short hereinafter referred to as the “(Ld. NFAC”] dated 24.07.2024 arising out of the assessment order of the AO dated 29-12-2019 under section 143(3) of the Income tax Act 1961,(in short “the Act”),for Assessment Year 2017-18.
ACIT(E ) vs. Harpyari Devi Welfare Society Delhi 2 .The revenue has raised the following grounds in appeal:
1. On the facts and in the circumstances of the case and law. Whether the learned CIT(A) erred in allowing the exemption under section 11 and 12 of the Income Tax Act, 1961, by overturning the AO’s decision to invoke section 13(2)( e ) despite clear evidence that the purchase price of the land exceeded twice the circle rate which indicates adequacy of price.
2. On the facts and in the circumstances of the case and law. Whether the learned CIT(A) erred in accepting the valuation report submitted by the assessee without questioning / verifying its accuracy or directing the Ld. AO to conduct an independent inquiry through the Department Valuation Officer (DVO). The valuation report was not substantiated with credible evidence.
3. On the facts and in the circumstances of the case and law. Whether the learned CIT (A) erred in accepting the assesseee’s claim that the land in question was institutional, despite the fact that the AO had rightly classified it as agriculture based on documentary evidence.
4. That the appellant craves leave to alter, amend and substitute any of the above mentioned ground and add any further ground before or at the time of hearing of the appeal.
The brief facts of the case are that assessee is a registered trust u/s 12A /12 AA of the Act. It is also registered u/s 80 G of the Act.
ACIT(E ) vs. Harpyari Devi Welfare Society Delhi The assessee filed its return of income declaring Nil for the A.Y. 2017-18 on 30-10-2017. Subsequently the case of the assessee was selected for limited scrutiny under CASS and notice u/s 143(2) of the Act was issued on 18-09-2018. Thereafter notice u/s 142(1) of the Act along with questionnaire were issued. The large investment was made by the assessee in the property and assessee had purchased two lands at village Bajri and Pali for a total consideration of Rs. 7,11,90,860/-. According to the AO, the assessee had purchased the agriculture land for the consideration which is more than twice the circle rate and assessed the income of the assessee at Rs12,91,20,480/- by invoking the provision of section 13(2) € and 13(1) (c) of the Act. Aggrieved the order of the Assessing officer the assessee, preferred the appeal before the Ld. NFAC who vide his order dated 24-07-2024 partly allowed the appeal against which the revenue is in appeal before the Tribunal.
The Ld. Departmental representative (DR) submitted that the agriculture land was purchased more than the twice circle rate. The Assessing Officer has compared the 24 sale deed to decide the value of the purchased property which was summoned from the Sub registrar office. He further submitted that no person has purchased the agriculture land twice the circle land in the last five years.
Learned Counsel for the assessee has submitted that the assessee during the assessment proceedings. The assessee had purchased the institutional land because the adjacent land of the purchased property is using for the educational institution and college is running in this building. The Assessing officer should have accepted the report submitted by the assessee in the absence of the any valuation cell report. In the valuation report submitted by the assessee, the value of land had been provided at Rs. 3 ACIT(E ) vs. Harpyari Devi Welfare Society Delhi 9,43,32,480/- and the land in question was purchased at Rs. 7,11,90,860/- which show, that the transaction value of the question of land is much higher than the circle rate. He further submitted that the appeal of the assessee was rightly allowed. In. In the instant case the Assessing Officer has relied the summoned sale deed for calculating the value of the purchased property while the assessee, has filed the valuation report of the registered valuer. In the absence of the any material the Assessing Officer either should accepted the valuation report or called the report from the DVO. In the case of the of Commissioner of Wealth-tax v. Raghunath Singh Thakur [2008]304 the Hon’ble Himachal High Court held that where assessee’s valuation figures are supported by valuation report of registered valuer and WTO has not made a reference to valuation cell, then assessee’s figures are required to accepted. In the case of Commissioner of Income –tax -12 v. Raman Kumar Suri [2013] 29 taxmann.com 231 (Bombay) the Hon’ble High Court held that valuation done by an empaneled registered valuer of Income –Tax department would certainly take precedence over any Guide to House Tax.
We, have heard the parties and perused the material available on record. In the instant case the Assessing Officer has relied the summoned sale deed from the office of the Sub registrar for calculating the value of the purchased property while the assessee, has filed the valuation report of the registered valuer. In the absence of the any material the Assessing Officer either should accepted the valuation report or called the report from the Departmental Valuation Officer (DAO). In this case the ld. Assessing Officer did not referred the matter to the DVO, the Assessing Officer has to