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This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short 'the CIT(A)'), dated 05.01.2024 for the Assessment Year 2017-18.

2. The brief facts of the case are that the return of income for A.Y. 2017-18 was filed on 30.03.2018 declaring income of Rs.20,89,430/-. The case selected for limited scrutiny to examine the capital gain/loss on sale of property and cash deposits made during demonetization period. In the course of assessment, the Parikh, HUF vs. ACIT] A.Y. 2017-18 -2- AO found that the assessee had sold agricultural land along with his two brothers, on which capital gain was disclosed in the return. It was found that the cost of acquisition of the land was worked out by the assessee @ Rs.70/- per sq. mtr. as on 01.04.1981 on the basis of report of the approved valuer. The AO rejected the report of the valuer and worked out the cost of the property as on 01.04.1981 @ 6.20 per sq. mtr. Further, the assessee had claimed deduction of Rs.2.51 Crore under Section 54F of the Income Tax Act, 1961 (in short 'the Act') in respect of residential house purchased during the year. It was found by the AO that the actual construction on the purchased land was confined to the area of 27 sq. mtr. onl y on total land area of 840.70 sq. mtr. The AO, therefore, held that the assessee had purchased land and not a residential house. According to the AO, in order to make construction on area of 27 sq. mtr., land of 60 sq. mtr. only was required as per the approved municipal bye- laws. Accordingly, the AO restricted the deduction u/s.54F of the Act in respect of land area of 60 sq. mtrs. only and the proportionate value of remaining 780 sq.mtrs. of land amounting to Rs.2,33,07,140/- was not considered as eligible for deduction u/s.54F of the Act. After taking into account the cost of the land as adopted by the AO and the disallowance u/s.54F of the Act, the long term capital gain was computed at Rs.4,40,34,860/- in the assessment order. As regarding cash deposits in the bank account, the AO found that the total cash deposit during the year was Rs.24,48,000/-, which was explained to be out of agricultural income. The AO was not satisfied with the explanation of the assessee in this regard and the entire cash deposit was treated as unexplained and added to the income. Accordingly, the Parikh, HUF vs. ACIT] A.Y. 2017-18 -3- assessment was completed u/s 143(3) on 14/12/2019 at total income of Rs.4,86,05,340/-.

5. The learned CIT(A) NFAC has erred in denying opportunity of being hear d thr ough videoconferencing, therefore, the order is issued without foll owing prescribed by CBDT, therefore, may please be set aside. "

5. The first ground taken by the assessee is against the adoption of cost of acquisition of the property sold by the assessee during the year. Shri Rajendera K. Shah, the Ld. AR appearing for the assessee explained that the agricultural land sold by the assessee was ancestral land and the assessee had filed a report from the approved valuer in respect of the cost of the property as on 01.04.1981. He explained that the valuer had worked out the value of land by four alternate methods as per which the value of land varied between Rs.76/- per sq.mtr. to Rs.366/- per sq.mtr. The assessee had adopted the cost of the land on a conservative basis @ Rs.70/- per sq.mtr. only. The Ld. AR contended that in view of the four alternate methods adopted by the approved valuer and the value of the property as on 01.04.1981 as taken by the assessee, the AO was not correct in rejecting the same without any cogent reason. He submitted that if AO was not satisfied with the report of the approved valuer then the matter should have been referred to the DVO to determine the value of the property as on 01.04.1981. According to the Ld. AR, the AO was not competent to determine the value of the property suo motto. He further submitted that the value of the property as on 01.04.1981 as adopted by the assessee was correct, considering the various sale instances as considered by the approved valuer.

Parikh, HUF vs. ACIT] A.Y. 2017-18 -5-

6. Per contra, Shri Rignesh Das, ld. Sr. DR supported the orders of the AO & the Ld. CIT(A). He submitted that the wide variation in the rate in the four methods between Rs.76/- per sq.mtr. to Rs.366/- per sq.mtr, as worked out by the approved valuer, itself indicated that the report of the approved valuer was not reliable. Therefore, the value of the property as adopted by the assessee was also doubtful and not correct.

7. We have carefully considered the rival submissions. There is no dispute to the fact that the agricultural land sold by the assessee was an ancestral property. Therefore, the assessee was entitled to take the cost of land as per the value of the property as on 01.04.1981. The assessee had filed a valuation report of the approved valuer in respect of the value of the property in which the value of land was worked out by four alternate methods. As rightly pointed out by the Revenue there was a wide variation in the rate as per the four methods adopted by the approved valuer, which made his report unreliable. The assessee had adopted a conservative rate of Rs.70/- per sq.mtr. as on 01.04.1981, which was less than the minimum value determined by the approved valuer. If the AO was not satisfied with the report of the approved valuer and the rate as adopted by the assessee, he should have referred the matter to the DVO to find out the correct value of the property as on 01.04.1981. The AO being not an expert, his suo motto adopting the value of the property at Rs.6.20/- per sq.mtr. cannot be held as correct. In the interest of justice, the matter is, therefore, set aside to the file of the Jurisdictional AO with a direction to refer the matter to the DVO to find out the correct market value of the property as on 01.04.1981. The report Parikh, HUF vs. ACIT] A.Y. 2017-18 -6- of the DVO should be confronted to the assessee and the objection, if any, of the assessee in this respect should also be taken into account, before arriving at the correct value of the property as on 01.04.1981. The ground taken by the assessee is allowed for statistical purposes.