Registered valuer's report deemed unreliable for agricultural land conversion valuation under section 55A

ITAT Ahmedabad upheld CIT(A)'s decision rejecting assessee's valuation of agricultural land converted to non-agricultural before sale. The tribunal found registered valuer's report unreliable and confirmed AO's reference to DVO for FMV determination under section 55A. Court rejected assessee's method of determining 1981 acquisition cost using reverse formula from current year non-agricultural land rates, ruling that agricultural land's original acquisition cost should be considered, not market value at conversion date. Additional ground raised by assessee was rejected.

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Issues Involved:
1. Confirmation of the assessment order passed under section 143(3) of the Act.
2. Valuation of the property as on 01.04.1981.
3. Disallowance of the cost of improvement claimed by the assessee.
4. Additional grounds concerning the applicability of Section 55A(a) regarding the reference to DVO.

Summary:

Issue 1: Confirmation of Assessment Order
The learned CIT(A) confirmed the assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act. The assessee's appeal against this confirmation was dismissed.

Issue 2: Valuation of Property as on 01.04.1981
The CIT(A) upheld the valuation adopted by the Assessing Officer, which was based on the DVO's report. The DVO computed the cost of acquisition of the property as on 01-04-1981 at Rs. 1,17,865/-, using data from the sub-registrar. The CIT(A) rejected the valuation report submitted by the assessee's valuer, who was not authorized to value agricultural land and had used a reverse indexation method without providing comparative sale instances. The Tribunal found no infirmity in the CIT(A)'s order, agreeing that the valuation method used by the assessee's valuer was misleading and unsupported by evidence. The assessee's additional ground regarding the applicability of Section 55A(a) was also rejected, as the CIT(A) correctly observed that the Assessing Officer was justified in referring the matter to the DVO.

Issue 3: Disallowance of Cost of Improvement
The CIT(A) disallowed the cost of improvement claimed by the assessee, amounting to Rs. 9,00,000/-, due to the lack of supporting evidence. The Tribunal upheld this disallowance, noting that the assessee failed to provide basic details or evidence for the claimed improvement costs. The reliance on the case of ITO vs. Anilkumar was deemed inapplicable as it was based on different facts.

Issue 4: Additional Grounds on Section 55A(a)
The assessee's additional grounds argued that the lower authorities failed to appreciate that Section 55A(a) does not permit the AO/DVO to make a variance if the value determined by the assessee is higher than the FMV. The Tribunal found no merit in this argument, supporting the CIT(A)'s view that the Assessing Officer was correct in referring the matter to the DVO under the given circumstances.

Conclusion:
The appeal of the assessee was dismissed in its entirety. The Tribunal upheld the CIT(A)'s decisions on all grounds, including the confirmation of the assessment order, the valuation of the property, and the disallowance of the cost of improvement. The additional grounds raised by the assessee were also rejected. The order was pronounced in the open court on 10-11-2023.

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