DVO Report not sufficient information for reopening assessment u/s 147

DVO Report based on mere estimate not sufficient information for the purpose of reopening assessment u/s 147. ITAT deleted addition u/s 69

ABCAUS Case Law Citation:
ABCAUS 2675 (2018) (12) ITAT

Important Case Laws Cited/relied upon:
ACIT vs. Dhariya Construction Co. (2010) 328 ITR 515 (SC)
ITO vs. Santosh Kumar Dalmia (1994) 208 ITR 337
Akshar Infrastructure P. Ltd., vs. ITO (2017) 393 ITR 658
CIT vs. P. Nithilan (2018) 403 ITR 154
CIT vs. Smt. Meena Devi Mansighka (2008) 303 ITR 351

This appeal by the assessee was directed against the Order of the CIT(A).

During the course of assessment proceedings, it was found that assessee had constructed a building. The assessee has declared investment in a sum of approx Rs. 17 lakhs in assessment year under appeal.

To ascertain the actual cost of the construction, this case was referred to Departmental Valuation Officer (DVO).

As per Valuation Report of DVO, the cost of construction was estimated at Rs. 25 lakhs. Therefore in view of the difference between value as per valuation officer report and the value as declared by the assessee, the Assessing Officer recorded reasons for initiating proceedings U/s 147 of the Income-tax, Act, 1961.

The assessee in compliance to the notice U/s 148 of the I.T. Act, submitted that return originally filed may be treated as return filed in response to notice u/s 148 of the I.T. Act. The AO treated the said difference as unexplained investment under section 69 of the Act and made the addition in re-assessment order under section 143(3) r.w.s. 147/148 of the Act.

The CIT(A) gave part relief to the assessee.

Before the Tribunal, the assessee challenged the reopening of the assessment under section 147 of the Act and addition on merit.

It was submitted that the issue is covered in favour of assessee by the Judgment of Hon’ble Supreme Court in which it was held that opinion of the DVO per se is not sufficient information for the purposes of reopening of the assessment under section 147 of the Act.

The assessee also relied upon number of judgments of various High Courts.

The Tribunal opined that the reopening of the assessment was bad in law as the AO merely on the basis of the report of Valuation Officer recorded reasons for reopening of the assessment.

The Valuation Report was based on mere estimate and as such the same per se was not sufficient information for the purpose of reopening of the assessment under section 147 of the Act.

The Tribunal also noted that the issue is covered by the various Judgments relied upon by the assessee. Following the same, the ITAT set aside the Orders of the authorities below and quashed the reopening of the assessment.

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