Neither Taxpayer's Nor DVO's Valuation Acceptable Due to Inadequacy and Locational Differences: ITAT Restores Matter for Revised Valuation [Read Order]
Noting that the assessee’s report lacked supporting evidence and DVO’s report had locational differences the tribunal restored the issue for Revised Valuation
ITAT Ahmedabad, Taxpayer, Neither Taxpayer's Nor DVO
ITAT Ahmedabad, Taxpayer, Neither Taxpayer's Nor DVO
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) restored the issue of long-term capital gains addition of ₹2,01,60,785 to the Assessing Officer (AO) for a revised valuation holding that neither the assessee's nor the Departmental Valuation Officer's (DVO) valuation to be acceptable.
Jayeshkumar Baldevbhai Patel (assessee) did not file a return of income for the Assessment Year (AY) 2014-15. On scrutiny of AIR and ITS data, the AO noticed the assessee had sold immovable property for a total sale consideration of ₹7.91 crores in which assessee's share totaled to ₹3.95 crores.
The AO reopened the case under Section 147 of the Income Tax Act, 1961. The assessee filed a return declaring a long-term capital loss of ₹12,03,937 based on a registered valuer's report that fixed the fair market value (FMV) as on 01.04.1981 at ₹300 per sq. mt.
The AO, finding the report lacked supporting data, referred the matter to the DVO, who valued the FMV on 01.04.1981 at only ₹5,17,000. The AO completed the assessment based on the DVO's report, computed the Long Term Capital Gain at ₹2,01,60,785.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)]. The CIT(A) upheld the addition. Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT.
The counsel for the assessee contended that the DVO's valuation report was flawed as it relied on sale instances from Odhav which was a distant locality, rather than Vastral where the land was situated.
The two-member bench comprising Dr. B.R.R. Kumar (Vice-President) and Siddhartha Nautiyal (Judicial Member) rejected the assessee's report as it did not include any comparable sales instances, with the valuer himself stating only "few comparable sale instances are available" but provided no details.
The tribunal found merit in the assessee's contention that the DVO's reliance on remote sale instances from Odhav instead of the land's actual location in Vastral may not result in a fair valuation.
The bench directed the assessee to submit a revised valuation report with clearly specified and relevant comparable sale instances for the property's location. The tribunal instructed the AO to consider the assessee's objections to the DVO's report before passing a reasoned order.
The Tribunal restored the matter to the AO for revised valuation. The appeal was partly allowed for statistical purposes.
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