Valuation report of the valuer cannot be taken as yardstick for unaccounted investment

The Income Tax Appellate Tribunal ruled that a valuation report obtained by the Assessing Officer (AO) after the assessment proceedings were completed cannot be used as the sole basis for additions related to unaccounted investments. The tribunal considered whether the CIT (Appeals) had erred in restricting a significant addition based on such a report. The assessee also raised grounds regarding the validity of reopening the assessment and the reliance on a valuation report received post-assessment.

IN THE INCOME TAX APPELLATE TRIBUNAL
 DELHI BENCH: ‘B’ NEW DELHI

BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND

MS. SUCHITRA KAMBLE, JUDICIAL MEMBER
(THROUGH VIDEO CONFERENCING)
ITA. 2724/DEL/2015 (A.Y 2008-09) [By Department]

ACIT
Circle-45 (1)
New Delhi.
(APPELLANTS)

Vs.

M/s. K. S. Chawla & Sons
[HUF]
C–4, Rajouri Garden,
New Delhi – 110 027.
PIN : ASDHK7622M
(RESPONDENTS)

A N D
C. O. No. 456/Del/2015 [By Assessee]
[ in ITA. 2724/DEL/2015 (A.Y 2008-09)

M/s. K. S. Chawla & Sons [HUF]
C–4, Rajouri Garden,
New Delhi – 110 027.
PIN : ASDHK7622M
(APPELLANTS)

Vs.
ACIT
Circle-45 (1)
New Delhi.
(RESPONDENTS) 

Assessee by : Shri Rajesh Arora, C.A.;
Department by: Shri Mahesh Thakur, Sr.DR

Date of Hearing 4.05.2021
Date of Pronouncement 18.05.2021

O R D E R

PER SUCHITRA KAMBLE, JM :

The I.T. Appeal is filed by the Department and the Cross Objection is filed by the assessee against the order dated 3/02/2015 passed by CIT (Appeals)-15, New Delhi, for assessment year 2008-09. These were heard together and are being disposed of, for the sake of convenience, by this consolidated order. 

ITA. 2724/DEL/2015 (A.Y 2008-09) [By Department]

2. The only ground of appeal raised is as under :-

“ Whether on the facts and circumstances of the case and in law Ld. CIT (Appeals) has erred in restricting addition of Rs.2,18,88,000/- to Rs.8,02,993/- based on the valuation report received in the AO’s office on 8.07.2013 after completion of assessment proceedings without calling for AO’s comments on such report? “

C. O. No. 456/Del/2015 [By Assessee]

3. The grounds of appeal raised in the Cross Objection are as under :-

1. The Ld. CIT(A) has erred both in law and facts of the case in holding the reopening of assessment proceedings under section 147 r.w.s. 148 of the Income Tax Act, 1961 ("the Act") as valid and fiirther erred in rejecting the submissions of the appellant HUF against the said reopening by holding them to be academic in nature which is highly arbitrary, unjustified, unlawfid and against the principles of natural justice.

2. The Ld. CIT(A) has erred in law and facts of the case in sustaining the legality of assessment proceedings under section 147 r.w.s 148 of the Act, which was completed by the Ld. A.O without passing any speaking order, which is against the principles for disposal of objections to reopening assessment as laid down by the Hon'ble Apex Court in GKN Driveshafis (India) Ltd. vs. DCIT: 259ITR 19 (SC).

3. The Ld. CIT(A) has erred in law and facts of the case in holding the sales consideration of property of the appellant HUF as Rs. 85,52,993 under section 50C of the Act as against Rs. 77,50,000 declared by the appellant HUF and further erred in sustaining the above difference of Rs. 8,02,993 as alleged onmoney for the purpose of computing capital gains in the hands of the appellant HUF which is highly arbitrary, uncalled for, unjustified and bad in law.

4. The Ld. CIT(A) has erred in law and facts of the case in confirming the action of the Ld. Assessing Officer to make reference for valuation under section 55A of the Act for the purposes of making addition on account of alleged undisclosed income under section 69A of the Act, which is highly arbitrary, unjustified and bad in law.

4.1 The Ld. CIT(A) has erred in law and facts of the case in relying upon the valuation report under section 55A of the Act which was received after the completion of reassessment proceedings, which is highly arbitrary, unjustified and bad in law.

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