Calcutta High Court Declines Intervention in DVO Reference at Premature Stage

The invocation of writ jurisdiction under Article 226 of the Constitution of India is a powerful remedy available to an assessee facing arbitrary or jurisdictionally defective actions by tax authorities. However, the constitutional courts have consistently maintained a cautious approach, generally refraining from interfering in ongoing assessment proceedings or intermediate administrative steps unless a fundamental breach of jurisdiction is evident. This principle was recently reaffirmed by the Calcutta High Court in the case of Amit Roy Vs ITO.

The High Court was tasked with determining whether an Assessing Officer's reference to the Departmental Valuation Officer (DVO) could be challenged via a writ petition before the culmination of the final assessment order. The court ultimately ruled that such a challenge was premature, directing the assessee to seek clarification from the appellate authority whose order formed the basis of the dispute.

This comprehensive analysis delves into the factual matrix, the legal arguments advanced by both the assessee and the Revenue, the judicial precedents cited, and the broader implications of this judgment for tax jurisprudence concerning property valuation and capital gains computation.

Factual Matrix of the Dispute

The controversy stems from the assessment proceedings initiated against the assessee for the Assessment Year (AY) 2014-15. The core issue revolved around the valuation of a specific immovable property located in the state of Jharkhand, which directly impacted the computation of capital gains tax.

The Original Assessment and First Appeal

The initial assessment order for AY 2014-15 was framed by the Assessing Officer on 29th December, 2016. Aggrieved by the additions and the valuation methodology adopted in this order, the assessee escalated the matter by filing an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

The appellate proceedings culminated in an order dated 16th March, 2026. In this appellate order, the CIT(A) addressed the valuation dispute and issued specific directions regarding how the capital gains should be computed. The operative portion of the CIT(A)'s directive explicitly stated:

"The correct approach is to adopt the stamp duty value of Rs.57,92,000/- for computation of capital gains, or alternatively, make a reference to the DVO if the AO believes the stamp duty value does not reflect the fair market value."

The Impugned Action by the Assessing Officer

Following the appellate order, the Assessing Officer opted to exercise the second alternative provided by the CIT(A). On 9th April, 2026, the Assessing Officer issued a letter bearing reference No. ITBA/COM/F/17/2026-26/1088378438(1), thereby making a formal reference to the Departmental Valuation Officer (DVO) to determine the fair market value of the Jharkhand property.

The assessee, perceiving this reference as a violation of the primary directive issued by the CIT(A), communicated their objections to the Assessing Officer via email, asserting the binding nature of the appellate instructions. When the Assessing Officer proceeded with the DVO reference despite these objections, the assessee approached the Calcutta High Court by filing a writ petition (Appeal Number WPO/277/2026).

Submissions Before the High Court

The proceedings before the Calcutta High Court witnessed contrasting arguments regarding the jurisdiction of the Assessing Officer and the maintainability of the writ petition at an intermediate stage of the tax assessment process.