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2013 (7) TMI 219 - AT - Income TaxReferring the matter to the DVO u/s 55A - Rejection of valuation report given by Registered Government Approved Valuer in respect of the property sold by the appellant - assessment of income of the assessee at Rs.17,20,920/- instead of Rs. 2,54,740/- as declared by the appellant - Held that -Refering to Sarala N. Sakaraney v/s ITO 2010 (7) TMI 832 - ITAT MUMBAI the conditions as enumerated in clause (a) of section 55A are also not satisfied in the present case as AO has not formed any opinion that value declared by the assessee on the basis of registered valuer s report is not correct or less than FMV. Thus, the reference to the DVO itself was unwarranted in terms of section 55A. - Decided in favour of assessee.
Issues Involved:
1. Confirmation of the assessment order by the Commissioner of Income Tax (Appeals). 2. Rejection of the valuation report by the Registered Government Approved Valuer. 3. Legality of the reference to the Departmental Valuation Officer (DVO) under section 55A of the Income Tax Act, 1961. 4. Adherence to judicial precedents. Detailed Analysis: Issue 1: Confirmation of the Assessment Order The Assessee challenged the assessment order where the income was assessed at Rs. 17,20,920 instead of Rs. 2,54,740 as declared in the return. The Commissioner (Appeals) upheld the assessment, rejecting the Assessee's contentions regarding the valuation and the reference to the DVO. The Tribunal, however, found that the conditions for invoking section 55A were not satisfied, leading to the conclusion that the reference to the DVO was unwarranted. Therefore, the Tribunal set aside the impugned order, allowing the Assessee's appeal. Issue 2: Rejection of the Valuation Report The Assessee's valuation report, prepared by a Registered Government Approved Valuer, was rejected by the Assessing Officer, who instead referred the valuation to the DVO. The Tribunal noted that the Assessing Officer did not provide any reason for rejecting the registered valuer's report. The Tribunal emphasized that unless the Assessing Officer forms an opinion that the value claimed by the Assessee is less than the fair market value, a reference to the DVO is not justified. Consequently, the Tribunal found the rejection of the valuation report and the subsequent reference to the DVO to be improper. Issue 3: Legality of the Reference to the DVO under Section 55A The core issue was whether the reference to the DVO under section 55A was legal. The Tribunal referred to several judicial precedents, including decisions from the Hon'ble Bombay High Court and the ITAT, which held that section 55A could only be invoked if the Assessing Officer believed that the value declared by the Assessee was less than the fair market value. Since the Assessing Officer in this case believed the value declared was more, the reference was deemed invalid. The Tribunal, therefore, concluded that the reference to the DVO was unwarranted and set aside the order of the Commissioner (Appeals). Issue 4: Adherence to Judicial Precedents The Tribunal highlighted various judicial precedents, including: - Ms. Rubab M. Kazerani v/s JCIT - ITO v/s Lalitaben B. Kapadia - Hiraben Jayantilal Shah v/s ITO - CIT v/s Daulal Mohta (HUF) These cases consistently held that an Assessing Officer could not refer a valuation to the DVO if the value claimed by the Assessee was not less than the fair market value. The Tribunal found that the Commissioner (Appeals) did not appropriately consider these precedents and thus erred in upholding the assessment order. Conclusion The Tribunal concluded that the reference to the DVO was invalid as it did not meet the conditions stipulated under section 55A. The assessment order was set aside, and the Assessee's appeal was allowed. This judgment underscores the necessity for the Assessing Officer to adhere to statutory provisions and judicial precedents when making references to the DVO.
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