AO Adds Rs. 2.37 Crore u/s 56(2)(vii)(b) for Valuation Discrepancy in Agricultural Land Purchase: ITAT directs to obtain DVO report [Read Order]

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer (AO) to obtain the District Valuation Officer (DVO) report, as the AO added Rs. 2.37 under section 56(2)(vii)(b) of the Income Tax Act, 1961 for valuation discrepancy in the purchase of agricultural land. 

Dhansukhbhai Thakorbhai Patel (assessee) engaged in selling Milk and also engaged in agricultural activities. The assessee sold agricultural land for a consideration of Rs.1,00,00,000 crore and registration of the land was valued at Rs. 2.65 crores by the Stamp Valuation Authority. The assessee also purchased agricultural land for Rs. 26.51 lakh and it was valued at Rs. 2.39 crores. 

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The Assessing Officer (AO) made an addition of Rs. 2.37 crores under section 56(2)(vii)(b) of the Income Tax Act to the income of the assessee. Aggrieved by the order of AO, the assessee filed an appeal before the Commissioner of Income Tax [appeals] [CIT(A)]. 

The CIT(A) confirmed additions made by AO and passed an Ex-Parte order. Aggrieved by the order of CIT(A), the assessee filed an appeal before ITAT. 

The counsel for the assessee submitted that the notice was issued through the wrong email ID which resulted in non-compliance. The counsel for the assessee sought to restore matters to AO to avoid a long-drawn process and also sought to direct AO to obtain a report from the District Valuation officer (DVO).

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On the other hand, the counsel for revenue relied on the orders of lower authorities and stated that there were several opportunities given to the assessee. However, the assessee failed to comply with the notices issued by the Assessing Officer as well as by the CIT(A). 

The two-member bench comprising Pawan Singh (Judicial Member) and Bijayananda Pruseth (Accountant Member) heard both sides' arguments and directed the assessing officer to pass a fresh assessment order after giving sufficient opportunity to the assessee. 

The tribunal further directed to obtain a DVO report about the cost of the agricultural land. The appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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