2014 (9) TMI 731 - HC - Income Tax

Non-speaking order by Tribunal DVO report u/s 55A - Held that - The reasoning given in the order dated 28.03.2002 was completely obliterated and the remand made by the AO cannot be sustained - The entire premise and foundation of the order dated 28.03.2002 passed by the Tribunal was on the assumption that the Departmental Valuation Officer s report was u/s 55A of the Act thus, the matter is remitted back to the Tribunal for fresh consideration Decided in favour of assessee.

Summary

Issues:
Assessment of property value for tax purposes under Income Tax Act, 1961.

Analysis:
The judgment involves two appeals related to the assessment year 1994-95 concerning the valuation of a property jointly purchased by the appellants and another party. The primary question of law admitted for hearing was whether the Income-Tax Appellate Tribunal was justified in setting aside the assessment order without providing reasons. The property in question was purchased for Rs. 16 lacs, with individual shares of the appellants being 50%, 25%, and 25% respectively. During the assessment proceedings, the Assessing Officer referred the valuation to the Departmental Valuation Officer, who valued the property at Rs. 24,94,900. The appellants objected to the valuation report on various grounds, including discrepancies in depreciation and property type considerations.

The Assessing Officer, however, did not accept the challenges raised by the appellants and made additions to their income based on his reasoning. The Commissioner of Income Tax (Appeals) later deleted the additions, highlighting flaws in the valuation process conducted by the Departmental Valuation Officer. The Tribunal, in its order, emphasized the binding nature of the Valuation Cell's report on the Assessing Officer and directed a fresh assessment in accordance with the law. The appellants then filed for rectification before the Tribunal, which partly allowed the application, leading to a subsequent appeal.

Upon review, the High Court found that the reasoning behind the Tribunal's order was flawed as it was based on the assumption that the Valuation Officer's report was under a different section of the Income Tax Act. Consequently, the Court ruled in favor of the appellants, directing a remand to the Tribunal for a fresh decision on the revenue's appeals. The Court ordered the parties to appear before the Tribunal for a new hearing, aiming to expedite the process. The judgment concluded by disposing of the appeals without costs.