Assessee's appeal allowed for statistical purposes, matter remanded to CIT(A) for fresh consideration of section 69B addition regarding construction valuation difference

ITAT Amritsar allowed the appeal for statistical purposes and remanded the matter to CIT(A) regarding addition under section 69B for difference in construction valuation of Rs. 7,37,200/-. The tribunal held that CIT(A) failed to dispose of assessee's objections on DVO's valuation report and did not consider documentary evidence or address jurisdictional challenges against DVO. The order violated principles of natural justice by not adjudicating on merits despite assessee's submissions and supporting documents. CIT(A) was directed to re-examine the construction valuation issue afresh after considering all relevant submissions and documents.

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Issues Involved:
1. Jurisdiction of the DVO.
2. Validity of the Valuation Report by the DVO.
3. Consideration of objections raised by the Assessee on the Valuation Report.

Summary:

Jurisdiction of the DVO:
The counsel for the assessee argued that the DVO did not have jurisdiction over the case, making the valuation report and the consequential assessment order void ab initio, illegal, and bad in law. The contention was based on the abolition of Wealth Tax from 01.04.2015, which allegedly removed the DVO's powers under the Income Tax Act. However, the Tribunal rejected this argument, citing the Punjab and Haryana High Court judgment in "Krishan Kumar Jhamb vs. Income-tax Officer," which upheld the DVO's jurisdiction to ascertain the fair market value under section 55A of the Act.

Validity of the Valuation Report by the DVO:
The Tribunal noted that the CIT(A) had dismissed the appeal based on the discrepancies between the valuation reports of the assessee and the DVO. The DVO's report was deemed more reliable as it followed prescribed norms, while the assessee's report lacked supporting evidence for various deductions claimed. The Tribunal upheld the CIT(A)'s decision to rely on the DVO's valuation, emphasizing that the assessee failed to provide any substantial evidence to counter the DVO's findings.

Consideration of Objections Raised by the Assessee:
The Tribunal found merit in the assessee's argument that the CIT(A) failed to address the objections raised on the DVO's valuation report. The CIT(A) should have sent the assessee's valuation report to the DVO for comments instead of summarily rejecting it. Citing the Supreme Court's ruling in "Assistant Commissioner of Income-tax vs. Balmiki Prasad Singh," the Tribunal emphasized the importance of considering all relevant materials and objections before making a decision. The Tribunal concluded that the CIT(A)'s failure to do so amounted to a violation of natural justice principles.

Conclusion:
The Tribunal remanded the matter back to the CIT(A) to adjudicate afresh, considering the submissions and relevant documents provided by the assessee. The appeal was allowed for statistical purposes, and the CIT(A) was directed to decide the issue of the valuation of investment in construction in accordance with the law. The assessee was also instructed to cooperate in the fresh proceedings.

Order Pronounced:
The order was pronounced in the open court on 21/06/2023.

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