DVO Valuation Exceeding Stamp Duty Value: ITAT Upholds Addition Based on DVO’s Report [Read Order]

The Raipur Bench of Income Tax Appellate Tribunal(ITAT) upheld an addition based on the District Valuation Officer’s (DVO) report, which exceeded the stamp duty value.

Syed Hifajat Ali,appellant-assessee, was subjected to a search and seizure operation on February 19, 2020. The case was selected for scrutiny, and notices were issued. Assessments for Assessment Year(AY)s 2014-15 to 2019-20 were completed under Section 153A, while AY 2021 was assessed under Section 143(3) of the Act.

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For AY 2016-17, an addition of ₹6,66,22,641 was made due to a valuation difference in the cost of constructing a commercial building at S. H. Tower, Indore. The registered valuer’s report showed a higher value than the amount recorded in the books. The assessee objected, and the AO referred the matter to the DVO, but the report was not received in time. As a result, the Assessing Officer(AO) relied on the registered valuer’s report and also added ₹66,32,549 for AY 2019-20 for furniture and fixtures.

The DVO’s report, received later, valued the land and building at ₹9,07,21,740, reducing the valuation difference to ₹2,64,21,740. Based on this, the assessee filed a rectification request, which the AO accepted. The addition was reduced from ₹6,66,22,641 to ₹2,64,21,740, and the revised income for AY 2016-17 was recalculated at ₹4,07,60,682.

The assessee appealed against the rectification order, but the Commissioner of Income Tax(Appeals)[CIT(A)] upheld the addition and dismissed the appeal on June 1, 2022.

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The CIT(A) noted that the DVO valued the property at ₹9,07,21,740, while the books recorded it at ₹6,43,00,000, resulting in a difference of ₹2,64,21,740. Since no major defects were found in the DVO’s report, it was considered more reliable than the registered valuer’s assessment.

Dissatisfied with this decision, the assessee filed an appeal before the tribunal.

Read More: Stamp Duty Value Difference Leads to Addition of Rs.1.28 Crore: ITAT Upholds CIT(A)’s Decision

The assessee's counsel requested an adjournment for the January 10, 2025, hearing, which was rescheduled to January 14, 2025. However, no one appeared, and no further adjournment request was made, so the tribunal proceeded under Rule 24.

The Senior revenue counsel stated that the assessee had objected to the valuation of a commercial building assessed by the registered valuer during the search. The AO, relying on this valuation, completed the assessment on September 26, 2022, adding ₹6,66,22,641. Later, the DVO’s report, received on March 29, 2022, showed a lower valuation. Based on this, the AO passed an order under Section 154 on June 1, 2022, reducing the addition by ₹4,02,00,901.

The assessee appealed, arguing that the DVO’s valuation should not be the basis for assessment. The CIT(A) found the DVO’s report more reliable and upheld the modified addition.

The two member bench comprising Ravish Sood (Judicial Member) and Arun Khodpia(Accountant Member) reviewed the submissions and revenue authorities' orders. The assessee challenged the DVO’s valuation as arbitrary but provided no supporting evidence. A reference to Section 56(2)(vii) and Section 50C was also made without any proof, and this claim was not raised before the AO during rectification.

The CIT(A) had already noted that the assessee's claims lacked documentary support, and no new evidence was presented. The tribunal found the DVO’s report valid and saw no reason to interfere with the CIT(A)’s decision. The appeal was dismissed.

To Read the full text of the Order CLICK HERE

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