Reference to DVO can be Made only During Pendency of Income Tax Assessment or Reassessment Proceedings: ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in its recent ruling dismissed the appeal filed by the revenue and upheld the order of the Commissioner of Income Tax (Appeals) ( CIT(A) ) deleting the addition of ₹2,28,41,677, as the reference to the District Valuation Officer (DVO) was made before issuance of notice under Section 148 of the Income Tax Act, 1961.

The case arose from a search under Section 132 of the Income Tax Act 1961, conducted in Aerens Group, where Information was received by the Assessing Officer (AO) from the Investigation Wing that the assessee had transacted into immovable property.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

With a view to ascertain fair market value of the property the AO invoked his powers under Section 142A and made a reference to the DVO. Meanwhile the AO issued notice under Section 148 to the assessee. Pursuant to the notice the AO completed assessment after making an addition of ₹2,28,41,677.

Aggrieved by the said addition, the assessee filed an appeal before the CIT(A), who deleted the addition. The revenue thereafter challenged the order of the CIT(A) by filing the present appeal before the Tribunal.

The bench comprising Vikas Awasthy (Judicial Member) and Amitabh Shukla (Accountant Member) held that there was no merit in the addition made by the AO and dismissed the appeal finding no case for interference with the decision of the CIT(A) in deleting the addition made by the AO.

The tribunal observed that the reference to DVO under section 142A could be made only during the pendency of any assessment or reassessment proceedings. It was noted that due to this statutory condition, a reference to the DVO is only acceptable when the procedures are truly underway, not earlier. In this instance, the referral was made on March 5, 2015, which is earlier than the notice that was issued on April 1, 2015, under section 148 of the Act.

The bench noted that the position has also emanated from the written submissions dated 23.03.2022 of the revenue. It is thus clear that at the time of reference to the DVO there was no pendency of any assessment or reassessment proceedings.

It was further held that the Departmental Representative could not controvert this basic fact and that there was no merit in the addition made by the AO which had its direct relationship with the DVO’s report. Accordingly the appeal was dismissed.

The appellant was represented by Rajeshwar Painuley, while the Department was represented by Om Parkash.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates