Reassessment cannot rest solely on a co-owner’s DVO report without independent valuation inquiry.

The petitions challenged notices dated 27 August 2024 issued under Section 148 of the Income-tax Act, 1961, and corresponding orders under Section 148A(d), seeking to reopen assessments for A.Y. 2018–19.

In SCA No. 8342 of 2025, the assessee, Kamlaben Ramanbhai Patel, had died on 27 June 2020; nevertheless, the Section 148A(b) notice, Section 148A(d) order and Section 148 notice were issued in her name.

In SCA No. 8993 of 2025, the Assessing Officer alleged escapement of income of ₹1,01,35,652 by rejecting the registered valuer’s report relied upon by the assessee and adopting the DVO’s valuation of ₹8,30,000 as on 1 April 2001, determined in the case of a co-owner.

The DVO had relied upon sale instances from Tandalja village, whereas the assessee’s property was situated at Sevasi, Vadodara.

Whether reassessment proceedings initiated by issuing notices in the name of an assessee who had died before the initiation of proceedings were legally valid under the Income-tax Act?

Whether, for the extended limitation period under Section 149(1)(b)(i), capital gains arising from the sale of land and the subsequent deposit of sale proceeds could constitute income represented in the form of an “asset”?

Whether reassessment could be initiated solely on the basis of a DVO report prepared in the case of a co-owner, without an independent valuation, further inquiry or application of mind by the Assessing Officer?

Section 159(2)(b) of the Income-tax Act governs assessment and reassessment proceedings concerning the income of a deceased person and does not validate proceedings initiated against a dead assessee in the circumstances present here.

Section 149(1)(b)(i), read with its Explanation, permits issuance of a notice after three years but within ten years where the escaped income chargeable to tax, represented in the form of an asset—including land, buildings, shares, securities, loans, advances or bank deposits—amounts to or is likely to amount to ₹50 lakh or more.

The Court held that sale proceeds of land deposited in a bank account retain the requisite nexus with the asset and may fall within the Explanation to Section 149(1)(b)(i).

However, reassessment cannot be founded mechanically or exclusively on a DVO’s report; the Assessing Officer must independently apply his mind and conduct further inquiry to form a reasoned belief that income has escaped assessment. This principle was drawn from Dhariya Construction Co., Munir Ismail Voraji v. Income-tax Officer, Pr. CIT v. J. Upendra Construction (P) Ltd. and Aavkar Infrastructure Co.

Where the fair market value is disputed, the Assessing Officer must obtain an appropriate valuation in the assessee’s own case, including by resort to Section 55A where applicable.

In SCA No. 8342 of 2025, the assessee had died several years before the issuance of the impugned notices. Since the proceedings were initiated in the name of the deceased person and the Revenue did not dispute the death certificate, the notices and consequential order were invalid.

In SCA No. 8993 of 2025, the Court rejected the assessee’s narrow interpretation of “asset” under Section 149(1)(b)(i), holding that the land, its sale proceeds deposited in a bank account and the resulting capital gains had a sufficient nexus with the statutory concept of an asset.

Nevertheless, the reassessment failed on the separate and decisive ground that the Assessing Officer had relied exclusively on the DVO’s report prepared for the co-owner.

The report used sale instances from another village and did not establish the fair market value of the assessee’s property at Sevasi.

The Assessing Officer neither obtained a valuation report in the assessee’s own case nor conducted any independent inquiry or recorded a reasoned finding rejecting the registered valuer’s report.

The co-owner’s acceptance of the valuation could not substitute for independent application of mind in the assessee’s case.

In SCA No. 8342 of 2025, it quashed the Section 148A(d) order and Section 148 notice because they had been issued in the name of a deceased assessee.

In SCA No. 8993 of 2025, although the Court held that the alleged capital gains could fall within the “asset” requirement of Section 149(1)(b)(i), it quashed the impugned Section 148A(d) order and Section 148 notice because the reassessment was based solely on the co-owner’s DVO report, without a proper valuation or independent inquiry concerning the assessee’s property.

No order as to costs was made.