The Income Tax Appellate Tribunal (ITAT), Mumbai Bench Addition directs de novo adjudication for non-consideration of report by Department Valuation Officer (DVO) in respect of addition made under Long Term Capital Gain (LTCG).
The assessee being an individual, expired, thereafterHitesh Dhanji, representing as Legal Heir of the original assessee late BhanubenDhanji Shah, filed revised Form no.36, duly introducing himself as a “Legal Heir” of the original assessee. During the year under consideration, the assessee filedreturn of income declaringtotal income of Rs.11,04,646 and also showed income from property, long term capital gains and income from other sources comprising of interest income from Bank, bond interest and interest on loans advanced.
During the course of assessment proceedings, it was observed that under the head “Long Term Capital Gains”, the assessee has shown a sum of Rs.3,10,975. In the Capital Account working filed along with the return of income, it has been claimed that the said property was acquired at a cost of Rs.64,990, on which the assessee incurred cost of improvement of Rs.81,775.
From the copy of agreement filed by the assessee in support of the said sale of asset, the Assessing Officer noticed that the market value has been estimated by the Registration Authority at Rs.12,84,000. Considering the value determined by the Registration Authority as a correct market value, the Assessing Officer, passed under section 143(3) of the Act, determined the long-term capital gains of Rs.11,78,098, and added the same to the income of the assessee. In appeal, the CIT(A), dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before the Tribunal.
The Authorised Representative for the assessee, Vishal Shah submitted that during the pendency of appellate proceedings before the CIT(A), report from Department Valuation Officer regarding the value of the property was sought, which was not taken into consideration by the CIT(A), while dismissing the assessee’s appeal. On the other hand, the Departmental Representative, Smita Nairrelied upon the orders passed by the lower authorities.
The Bench consisting of Om Prakash Kant, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “Since the impugned addition under the head “Long Term Capital Gain”, which was upheld by the CIT(A), has been made on the basis of value determined by the Registration Authority without taking into consideration the report of the Department Valuation Officer, we deem it fit and proper to restore this issue to the file of the Assessing Officer for de novo adjudication.”
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