2022 (11) TMI 1290 - AT - Income Tax

Validity of valuation by the DVO u/s 142A - Estimation of value of assets by Valuation Officer - Applicability of provisions of section 142A(6) - CIT-A allowed the appeal of the assessee - HELD THAT - The valuation officer shall send a copy of the valuation report to the AO within the period of six months from the end of the month in which reference was made under sub section (1) of section 142A - in this case, the DVO has submitted his report on 14.06.2018 based on the reference made by the AO on 12.09.2017. The due date of the report of the valuation officer is ending on March 2018. But the DVO has submitted the report with the delay of 3 months, beyond the due date prescribed under the Act. The Ld.DR also could not contest the argument of the AR that the DVO s valuation report is non-est in the eyes of law, since it is submitted beyond the prescribed due date u/s 142A(6) There is no material placed before us regarding any stay being granted on the operation of the order of the Hon ble ITAT. In the absence of the same pending disposal of the appeal by decision of Hon ble ITAT in 2019 (9) TMI 628 - ITAT VISAKHAPATNAM is valid in law as on date. We are therefore, in concurrence with the CIT(A). We are of the considered view that the CIT(A) has rightly considered the provisions of the Act, hence, no interference is required in the order of the Ld.CIT(A). Accordingly, the appeal of the revenue is dismissed.

Summary

Issues:
1. Validity of valuation report submitted by the Departmental Valuation Officer (DVO) under section 142A(6) of the Income Tax Act.
2. Assessment of total income based on the valuation report.
3. Appeal by the revenue against the order of the Commissioner of Income Tax(Appeals) [CIT(A)].
4. Arguments presented by both parties before the Appellate Tribunal.

Issue 1: Validity of Valuation Report under Section 142A(6):
The case involved a dispute regarding the validity of the valuation report submitted by the DVO under section 142A(6) of the Income Tax Act. The AO referred the case to the DVO for estimating the cost of construction of a building owned by the assessee. The DVO submitted the report beyond the prescribed time limit, raising concerns about its legal validity. The Appellate Tribunal noted that the report was submitted three months after the due date, rendering it non-est in the eyes of the law. The Tribunal observed that the revenue failed to contest this argument, and the AO's rejection of the submissions was based on a separate appeal pending before the High Court. Since no stay was granted on the Tribunal's decision, it remained valid. Consequently, the Tribunal upheld the CIT(A)'s decision in favor of the assessee.

Issue 2: Assessment of Total Income:
The AO, based on the DVO's report, assessed the total income of the assessee. However, the CIT(A) allowed the appeal of the assessee, considering the provisions of section 142A of the Act. The revenue appealed this decision, arguing that the AO correctly considered the valuation report. The Appellate Tribunal, after hearing both parties and examining the records, concluded that the CIT(A) acted in accordance with the law. Therefore, the Tribunal dismissed the revenue's appeal, upholding the decision of the CIT(A).

Issue 3: Appeal by the Revenue:
The revenue appealed against the CIT(A)'s decision, contending that the AO's assessment based on the valuation report should be upheld. The revenue, represented by the Ld.DR, failed to counter the legal provisions cited by the CIT(A in allowing the appeal. On the other hand, the Ld.AR representing the assessee supported the CIT(A)'s decision. After considering the arguments from both sides, the Tribunal found in favor of the assessee, dismissing the revenue's appeal.

Issue 4: Arguments before the Appellate Tribunal:
During the proceedings before the Appellate Tribunal, the revenue argued for upholding the AO's assessment based on the valuation report. The Ld.DR emphasized the correctness of the valuation report. In contrast, the Ld.AR supported the CIT(A)'s decision, asserting that it was in compliance with the law. After hearing both parties and reviewing the evidence, the Tribunal concurred with the CIT(A) and dismissed the revenue's appeal.

The Appellate Tribunal, in the case involving the validity of a valuation report submitted by the DVO under section 142A(6) of the Income Tax Act, upheld the decision of the CIT(A) in favor of the assessee. The Tribunal found the DVO's delayed report to be non-est in the eyes of the law, as it was submitted beyond the prescribed time limit. Consequently, the Tribunal dismissed the revenue's appeal and affirmed the CIT(A)'s decision, emphasizing compliance with legal provisions and the absence of a stay on the Tribunal's order.