DCIT, Central Circle-29, New Delh v. M/s Dharampal Premchand, ITA No.7114/DEL/2018, ITAT Delhi
The Income Tax Appellate Tribunal (ITAT) Delhi ruled that an assessment order passed beyond the prescribed time limit is invalid if the Assessing Officer’s claim of an extension based on a DVO reference is unsupported by a valid valuation report.
Key Facts of the Case
• A search and seizure operation was conducted on 27.11.2014.
• The AO issued a notice under Section 153C on 18.06.2015, and the assessee filed its return declaring a loss of ₹42,52,242.
• The AO made multiple additions, including:
• ₹13 crore under Section 68 (cash credits).
• ₹51.65 lakh disallowed as interest expenses.
• The CIT(A) quashed the assessment order, ruling that the additions were not based on incriminating material.
Key Issue: Limitation Period for Assessment
• As per the AO’s records, the deadline for completing the assessment was 31.12.2016.
• The AO claimed an extension of the limitation period by referring the property valuation to the DVO Delhi on 23.12.2016.
• However, no valuation report was ever received from the DVO.
Key Observations by ITAT
1. Extension of Limitation Requires Receipt of DVO Report
• ITAT noted that under Explanation (iii) to Section 153B(3), the assessment deadline can be extended only if a DVO report is actually received.
• Since no report was received, the AO’s claim for an extension was unjustified.
2. Maximum Extension Period Capped at Six Months
• Even if a DVO report had been received, ITAT emphasized that the extension period cannot exceed six months as per Section 142A(6).
3. Procedural Lapse Renders Order Invalid
• ITAT held that the absence of a DVO report invalidated the AO’s claim for an extended timeline. Consequently, the assessment order passed on 28.08.2017 was deemed time-barred.
Final Verdict
• ITAT ruled that the assessment order was barred by limitation and therefore quashed it.
• With the assessment order declared void, the other grounds of appeal became academic and were not adjudicated.
Key Takeaway for Taxpayers
If your assessment is claimed to be extended due to a DVO reference, ensure that:
✔️ A DVO report was actually received.
✔️ The extended timeline does not exceed six months.
This ruling emphasizes that procedural lapses and unjustified extensions can successfully be challenged to invalidate an assessment order.