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2016 (2) TMI 295 - ITAT DELHI

2016 (2) TMI 295 - ITAT DELHI - TMI - Reopening of assessment - basis of the valuation report received from the office of the DVO - Held that:- As decided in ACIT Vs Dhariya Construction Company [2010 (2) TMI 612 - Supreme Court of India ] the opinion of the DVO per se is not an information for the purposes of reopening assessment under section 147 of the Income-tax Act, 1961. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon. In the .....

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appeal reads as under: Whether the Ld. CIT(A) was justified in holding that AO was not correct on facts and in law while initiating and completing the re-assessment proceedings u/s 147/148 of the Act purely on the basis of the DVO s report and consequently holding the reassessment proceedings initiated by the AO was invalid. 3. Facts of the case in brief are that the assessee filed his return of income on 31.07.2007 declaring an income of ₹ 15,07,093/- which was assessed u/s 143(3) of the .....

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the passing of the assessment order. Subsequently, the case was reopened u/s 147 of the Act on the basis of the valuation report received from DVO. The AO after reopening the assessment, reassessed the income of the assessee at ₹ 68,75,736/- vide order dated 23.12.2010. 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the reopening u/s 147 of the Act. The ld. CIT(A) by following the judgment of the Hon ble Apex Court in the case of ACIT Vs Dhariya Constr .....

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er and the fair market value in no manner can substitute the full consideration in the sale of property. Similar view was also taken in case of Gwalior Rayon Silk Mfg. & Weaving i Co. Ltd. Vs V. Raghvan 150 ITR 12 (Bombay), CIT vs. Equitable Investment Co. Pvt. Ltd. 174 ITR 714 (Cal) and CIT vs. Aggarwal Bros. 189 ITR 786 (Pat). In the case of Asst. Commissioner of Income-tax vs. Tej Pratap Singh (2008) 22 SOT 156 (Del.) it was held that assessment cannot be reopened for taxing capital gains .....

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of the valuation report obtained by the Assessing Officer u/s 55A, after that assessment was completed. 5.2 It is a well settled law, that any challenge for initiation of re-assessment proceedings are to be tested primarily on the basis of the reasons recorded by the Assessing Officer. During the course of the original assessment proceedings, the appellant filed copies of the sale deeds in respect of both the properties in question showing the full purchase value and sale consideration. The Ass .....

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brought on record to suggest that the income has escaped assessment. It is a well settled law that the Valuation Report of the DVO would not be conclusive, and is merely an opinion. Therefore, such an abstract estimation, cannot be taken as basis to substitute the full value of consideration of the properties for the purpose of section 148 of the Act as has been held by the Apex Court in the case of ACIT vs. Dhariya Construction Co. Civil Appeal no.9468 of 2003. 5.4 I also find it important to .....

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rder. It is for this reason, that the Division Bench of Madras High Court in Commissioner of Incometax vs. V.T. Rajendran (2007) 288 ITR 312 (Mad) has held that purely on the basis of DVO's report reassessment order cannot be passed. This Court is in full agreement with the law cited by the assessee in Commissioner of Income-tax Vs V.T. Rajendran (2007) 288 ITR 312 (Mad) and holds that re-assessment order cannot be passed purely on the basis of DVO s report. 5.5 In view the facts of the case .....

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trongly supported the order of the AO and further submitted that since the income of the assessee escaped the assessment, therefore, the AO was justified in reopening the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act and the ld. CIT(A) was not justified in quashing the reassessment framed by the AO. 6. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the ld. CIT(A) and strongly supported the impugned order. It was further state .....

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