Sh. Yudhishthira Kaur, New Delhi V. ACIT, New Delhi

CO 295/DEL/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6857 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 23-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR SENIOR
• Assessee Lawyers: ADESH KUMAR JAIN
• Keywords: Unexplained investment; Value adopted by valuation officer; Search and seizure; Opportunity of being heard; Fair market value; Valuation report; Block assessment; Onus to prove
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3653/DEL./2010 (ASSESSMENT YEAR : 2004-05) ACIT, CC 5, VS. SHRI YUDHISHTHIRA KAPUR, NEW DELHI. B 34, MALCHA MARG, CHANAKYAPURI, NEW DELHI 110 055. (PAN : AASPK5138K) CO NO.295/DEL/2010 (IN ITA NO.3653/DEL./2010) (ASSESSMENT YEAR : 2004-05) SHRI YUDHISHTHIRA KAPUR, VS. ACIT, CC 5, B 34, MALCHA MARG, NEW DELHI. CHANAKYAPURI, NEW DELHI 110 055. (PAN : AASPK5138K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ADESH KUMAR JAIN, CA REVENUE BY : DR. B.R.R. KUMAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE CIT (APPEALS )-I, NEW DELHI DATED 28.05.2010. THE GROUNDS RAISED IN THE REVENUES AP PEAL READ AS UNDER :- ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 2 1. THE ORDER OF THE LD. CIT (APPEALS) IS NOT CORRE CT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. C IT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.60,79,673/- TOWARDS UNEXPLAINED INVESTMENT IN LA ND AND CONSTRUCTION MADE BY THE A.O. ON THE BASIS OF VALUA TION REPORT OF THE LAND IN AND CONSTRUCTION MADE BY THE A.O. ON THE BASIS OF VALUATION REPORT OF THE DVO IN PURSUANCE OF REFE RENCE U/S 142A WHEREAS THERE IS NO MATERIAL BEFORE THE LD. CI T (A) TO REBUT THE REPORT OF THE DVO ON THE BASIS OF ANY COG ENT EVIDENCE OR MATERIAL. 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE L D. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDIT ION OF RS.60,79,673/- EVEN THOUGH THERE IS NO ADVERSE ADJU DICATION OF VALUATION REFERENCE U/S 142A AND THERE IS NO MATERI AL IN SUPPORT OF THE CLAIM OF THE ASSESSEE TO SUBSTANTIAT E THE VALUATION/ INVESTMENT AS DISCLOSED BEFORE THE A.O. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COUR SE OF THE HEARING OF THE APPEAL. THE GROUND RAISED IN ASSESSEES CROSS OBJECTION REA DS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE RESPONDENTS CASE, THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN LAW IN UPHOLDING VALIDITY OF REF ERENCE TO VALUATION OFFICER UNDER SECTION 142A OF THE INCOME TAX ACT, 1961, TO ESTIMATE THE VALUE OF INVESTMENT MADE ON P URCHASE OF IMMOVABLE PROPERTY. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. Y KAPUR ENTERPRISES WHICH IS ENGAGED IN THE BUSINESS OF MAN UFACTURING AND EXPORTING READYMADE GARMENTS. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT UNDER SECTION 132 OF THE INCOME-TAX ACT AT THE RESIDENTIA L AND BUSINESS PREMISES OF ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 3 THE ASSESSEE ON 14.02.2007. NOTICE UNDER SECTION 1 53A OF THE INCOME-TAX ACT WAS ISSUED ON 11.10.2007. CONSEQUENT UPON NOTICE U /S 153A OF INCOME-TAX ACT, 1961, THE RETURN OF INCOME DECLARING INCOME AT RS.1,01,62,825/- WAS FILED ON 30.07.2008. THE ASSESSMENT WAS FINALIZED AT THE INCOME OF RS.1,62,42,498/-. THE SOLE ADDITION MADE BY THE AS SESSING OFFICER WAS BASED ON DVO REPORT AND SALE DEED AMOUNT FOR PURCHASE OF FARM HOUSE AT VILLAGE MEHRAULI, RAM MANDIR ROAD, NEW DELHI. THE ASSESSEE PURCHASED THIS FARM HOUSE ON 20.11.2003. THE DECLARED CONSIDERATION FO R LAND AND BUILDING AS PER SALE DEED WAS RS.50 LACS. THIS PROPERTY WAS ALSO D ECLARED IN THE WEALTH TAX RETURN FOR ASSESSMENT YEAR 2004-05 AND ALSO IN SUBS EQUENT ASSESSMENT YEARS. NO INCRIMINATING DOCUMENTS IN RESPECT OF THIS FARM HOUSE PROPERTY WERE FOUND OR SEIZED DURING SEARCH OPERATION. ASSESSING OFFICER FELT THAT THE PRICE DECLARED IN THE SALE DEED FOR ACQUIRING THE PROPERT Y WAS ON LOWER SIDE. ASSESSING OFFICER MADE A REFERENCE TO THE DVO U/S 1 42A OF THE INCOME-TAX ACT. NO EVIDENCE HAS BEEN FOUND AND SEIZED DURING THE SEARCH OPERATION IN RESPECT OF THIS PROPERTY WHICH COULD SHOW THAT THE ASSESSEE HAS PAID ANYTHING MORE THAN THE AMOUNT SHOWN IN THE SALE DEED. THE A SSESSING OFFICER WAS OF THE VIEW THAT THIS CLAIM WAS NOT ENOUGH GROUND THAT NO AMOUNT WAS PAID IN ADDITION TO AMOUNT DECLARED IN SALE DEED. HE HAS A LSO OBSERVED THAT IT IS NOT NECESSARY THAT EVERY SINGLE DOCUMENT OR EVERY SINGL E INFORMATION IS FOUND DURING A SEARCH OR THAT THE IMPORTANCE OF IT IS APP RECIATED AT THAT TIME WHEN ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 4 THE DECISION TO SEIZE OR NOT SEIZE A DOCUMENT IS TA KEN. ASSESSING OFFICER ALSO REFERRED TO SECTION 142A WHEREIN IT HAS BEEN CLEARL Y SPELT OUT THAT ASSESSING OFFICER, AFTER GIVING THE ASSESSEE AN OPPORTUNITY O F BEING HEARD IN THIS REGARD MAY USE THE REPORT OF THE VALUATION OFFICER FOR THE PURPOSE OF DETERMINING THE UNEXPLAINED INVESTMENT AND ADDITION CAN BE MADE. 3. CIT (A) GRANTED THE RELIEF BY RELYING ON THE DEC ISION OF ITAT IN THE CASE OF DINESH JAIN VS. DCIT (2009) 34 SOT 444 AN D THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PR EM NATH NAGPAL (2007) 214 CTR 51 (HIGH COURT DELHI) WHEREIN THE RELIEF WAS GRANTED BY HOLDING THAT NO DOCUMENT WAS FOUND INDICATING THE UNDERSTAT EMENT OF PURCHASE PRICE. THERE WAS NO DOCUMENT FOUND WHICH COULD INDICATE UN DERSTATEMENT OF COST OF IMPROVEMENT. NO ASSESSMENT OF UNDISCLOSED INCOME C OULD BE MADE ON ALLEGED UNDERSTATEMENT ON THE BASIS OF DVOS REPORT . IN THE CASE OF CST VS. ASHOK KHETRAPAL 294 ITR 143 (DEL.), THE HON'BLE D ELHI HIGH COURT ALSO HELD THAT DURING THE SEARCH UNDER SECTION 132 NO IN CRIMINATING MATERIAL WAS FOUND INDICATING THAT ASSESSEE HAD MADE HIGHER INVE STMENT IN PROPERTY THAN DISCLOSED. NO UNDISCLOSED INCOME COULD BE ASSESSED ON THE BASIS OF DIFFERENCE BETWEEN INVESTMENT DECLARED IN SALE DEED AND VALUE ESTIMATED IN THE DVOS REPORT. 5. IN THE CROSS OBJECTION, THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF REFERENCE TO THE VALUATION OFFICER U/S 142A OF THE INCOME-TAX ACT TO ESTIMATE ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 5 THE VALUE OF THE INVESTMENT IN THE PURCHASE OF THE PROPERTY. SINCE ASSESSEE HAD CHALLENGED THE VERY BASIS OF REFERENCE TO THE D VO WHICH GOES TO THE ROOT OF DISPUTE, THEREFORE, WE WILL FIRST DECIDE THE CRO SS OBJECTION OF THE ASSESSEE. THE LEARNED AR SUBMITTED THAT IT IS AN ADMITTED FAC T THAT NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED DURING THE COURSE O F SEARCH OPERATION WITH REGARD TO THE PURCHASE OF FARM HOUSE. THERE WAS NO EVIDENCE BEFORE THE ASSESSING OFFICER PRIOR TO REFERRING TO DVO THAT TH E VALUE OF THE PROPERTY WAS UNDER-STATED IN SALE DEED. IT WAS ONLY THE ASSESSI NG OFFICER HIMSELF WHO FELT THAT THE PRICE OF THE ACQUISITION WAS ON THE LOWER SIDE. THIS FACT CLEARLY SHOWS THAT IT WAS ONLY A FEELING OF THE ASSESSING OFFICER WHICH WAS NOT BASED ON ANY DOCUMENT OR EVIDENCE. THERE WAS NO DOCUMENT WHICH COULD SHOW OR SUGGEST THAT THE VALUE WAS UNDER-STATED IN THE REGISTERED D OCUMENT. THE PROVISIONS OF SECTION 69B UNDER WHICH THE ADDITION CAN BE MADE IN RESPECT OF THE AMOUNT OF INVESTMENT NOT FULLY DISCLOSED IN THE BOOKS OF ACCO UNT PROVIDES THAT WHEN THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPANDED ON SUCH INVESTMENT OR IN ACQUIRING SUCH INVESTMENT EXCEEDS THE AMOUNT RECORD ED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE FROM ANY SOURCE OF INCOME AND ASSESSEE OFFERS NO EXPLANATION OR THE EXPLANATION OFFERED IS NOT SATISFACTORY THEN THE EXCESS AMOUNT IS DEEMED TO BE THE INCOME OF THE ASS ESSEE IN THAT PARTICULAR YEAR. IN THE ASSESSEES CASE, THERE WAS NO EVIDENC E FOUND IN SEARCH ON WHICH THE ASSESSING OFFICER CAN FIND THAT THE INVESTMENT WAS NOT FULLY DISCLOSED IN ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 6 THE BOOKS OF ACCOUNT. THUS, THE SITUATION, AS STAT ED IN SECTION 69B, WAS NOT IN EXISTENCE IN ASSESSEES CASE. THERE IS NO EVIDENCE OR NO DOCUMENT ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD FIND THA T THE AMOUNT OF INVESTMENT EXCEEDED THE AMOUNT RECORDED IN THE REGISTERED SALE DEED IN RESPECT OF THE PROPERTY. FURTHER, THE ASSESSING OFFICER HAS NOT I NQUIRED INTO NOR PUT UP A QUESTION PRIOR TO REFERRING TO THE DVO THAT THE CON SIDERATION WAS INADEQUATE AND THE ASSESSEE HAS FAILED TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED IS NOT FOUND SATISFACTORY. IN VIEW OF THESE FACTS, THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE A REFERENCE UNDER SEC TION 142A OF INCOME-TAX ACT. HE ALSO PLEADED THAT PROVISIONS OF SECTION 142A OF THE INCOME-TAX ACT, 1961 DOES NOT CONFER ANY UNFETTERED DISCRETION ON T HE ASSESSING OFFICER TO MAKE A REFERENCE FOR THE SOLE REASON THAT THE ASSES SEE HAS SHOWN INVESTMENT IN A PROPERTY. THE BASIC AND FUNDAMENTAL PRINCIPLE OF LAW REQUIRES THAT WHILE EXERCISING THE POWERS BY ASSESSING OFFICER, THERE M UST BE EXISTENCE OF CERTAIN PRE-CONDITIONS WHICH ARE NECESSARY FOR JUDICIOUS AP PLICATION OF THE PROVISIONS OF LAW. THE ASSESSING OFFICER CANNOT MAKE A REFERE NCE U/S 142A FOR MAKING ROVING AND FISHING ENQUIRES. HE ALSO RELIED ON THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF PRATAP SINGH AM RO SINGH VS. RAJENDER SINGH & DEEPAK KUMAR REPORTED IN 200 ITR 788 WHEREI N THE HON'BLE HIGH COURT HAS EMPHASIZED THAT WITHOUT REJECTING THE BOO KS IN WHICH COST OF CONSTRUCTION HAS BEEN RECORDED AS DEFECTIVE, UNTRUE AND WRONG, IT IS NOT ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 7 PERMISSIBLE TO MAKE A REFERENCE. THUS, JUDICIOUS A PPLICATION OF MIND IS SINE QUA NON FOR A VALID REFERENCE AND THIS ACTION DOES NOT PERMIT ROVING AND FISHING ENQUIRIES. THIS PRINCIPLE HAS BEEN ENUNCIA TED IN THE CASES OF SRI HAR SARUP COLD STORAGE & GENERAL MILLS VS. ITO 27 ITD 1 (DELHI) (TM), ACIT VS. SMT. P. APPAYAMMA 66 TAXMAN 104 (MAG.)(HYD.), ITO VS. DR. K. RAMI REDDY 48 ITD 377 (HYD.), SRI VENKETRAJU MODERN BO ILED & RAW RICE MILL VS. ACIT 57 TTJ 493 AND M. SELVARAJ VS. ITO 258 ITR 82 (CHENNAI). HE ALSO PLEADED THAT FIRST STEP IS THE CONSIDERATION O F THE BOOKS OF ACCOUNT, THE SECOND STEP FOR RESORTING TO AN ESTIMATE COMES ONLY WHEN THE BOOKS OF ACCOUNT ARE REJECTED AND WITHOUT FULFILLING THE FIR ST STEP, THE ASSESSING OFFICER HAS NO POWER TO STRAIGHTAWAY JUMP TO THE NEXT STEP OF MAKING AN ESTIMATE. IT IS NOT JUSTIFIED TO FIRST OBTAIN A REPORT FROM THE VALUATION CELL AND THEN INFORM THE ASSESSEE THAT THE ADMITTED COST OR INVESTMENT I S ON LOWER SIDE AND THE DIFFERENCE WILL BE TREATED AS UNEXPLAINED INVESTMEN T. WITHOUT ANY MATERIAL, THE ASSESSING OFFICER CANNOT MAKE A REFERENCE TO TH E DVO. THE PROVISIONS OF SECTION 69B MAKE IT CLEAR THAT THE ADDITION CAN ONL Y BE MADE WHEN THE ASSESSING OFFICER FINDS THAT THE INVESTMENT HAS BEE N UNDER-STATED AND THE BOOKS OF ACCOUNTS ARE NOT RELIABLE. FOR THIS PROPO SITION, HE RELIED ON THE FOLLOWING DECISIONS :- (I) SUBHASH CHAND CHOPRA VS. ACIT 92 TTJ (DELHI) 1087; (II) ITO VS. VIJETRA EDUCATIONAL SOCIETY 118 IT R 382; ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 8 (III) MODERN CONSTRUCTION DEVELOPMENT AND PROJECT PROMOTI ON VS. ACIT 63 ITD 235 (ITAT CALCUTTA) (IV) CIT VS. LAXMI NARAYAN SAHARAN (HIGH COURT OF RAJAST HAN AT JODHPUR) HE FURTHER SUBMITTED THAT THE PROPERTY HAS BEEN DEC LARED IN THE BOOKS OF ACCOUNT AND WEALTH TAX RETURN WAS ALSO FILED DECLAR ING THE PROPERTY AND ASSESSING OFFICER NEVER DOUBTED THE CORRECTNESS AND ACCURACY AND RELIABILITY OF THE BOOKS OF ACCOUNT AND DID NOT REJECT THE SAME . HENCE, THE REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT OF T HE ASSESSEE AND THE ADDITION MADE ON THE BASIS OF SUCH VALUATION REPORT IS BAD IN LAW. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS : - (I) CIT VS. LAKHPAT FILM EXCHANGE 124 TAXMAN 807 (HIG H COURT RAJASTHAN) (II) ASSISTANT COMMISSIONER OF INCOME TAX V C SUB BA REDDY 2005 TAX LR 373 (MAD.) (III) BIRMINGHAM PROPERTIES LIMITED V ASSISTANT C OMMISSIONER OF INCOME TAX [2006] 154 TAXMAN 199 (KOL) (MAG) (IV) ASSISTANT COMMISSIONER OF INCOME TAX V J J S OLVEX PRIVATE LIMITED [2004] 1 SOT 304 (ITAT CHANDIGARH) (V) PRAVEEN KUMAR V INCOME TAX OFFICER [2003] SOT 196 (ASR) (VI) COMMISSIONER OF INCOME TAX V HOTEL JOSHI [20 00] 242 ITR 478 (RAJASTHAN) (VII) INCOME TAX OFFICER V DR V K BANSAL [2003] 7 9 TTJ (ITAT CHANDIGARH) 12 / 131 TAXMAN 186 (MAG) (VIII) KASAT TEXTILES PRIVATE LIMITED V ASSISTANT COMMISSIONER OF INCOME TAX [1998] 66 ITD 510 (IX) SELVARAJ V INCOME TAX OFFICER [2002] 258 ITR (AT) 82 (MAD) ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 9 FINALLY, HE ALSO RELIED ON THE DECISION OF ITAT, DE LHI BENCH A IN THE CASE OF ACIT, CENTRAL CIRCLE 16, NEW DELHI VS. AMBIENCE DEV ELOPERS & INFRASTRUCTURE (P.) LTD. (2011) 13 TAXMAN 150 (DE LHI TRIB). HE ALSO PLEADED THAT IT IS THE PRIMARY DUTY OF THE ASSESSIN G OFFICER PRIOR TO REFERRING TO THE DVO TO PROVE THAT THERE IS UNDER-STATEMENT / CONCEALMENT OF INCOME AND ONLY AFTER THIS BURDEN, WHICH LIES ON THE REVEN UE, IS COMPLETED, ADDITION CAN BE MADE ON THE BASIS OF DVOS REPORT. FOR THIS PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS :- (I) CIT VS. RAMESH KAKKAR ITA 1550 /2010 (II) CIT VS. MADAN LAL DAWAR ITA 1554/2010 (III) CIT VS. BHAGIRATH AGGARWAL ITA 1551 /2010 & 1555 / 2010 (IV) CIT VS. MANOJ JAIN (2006) 287 ITR 285 (DEL. ) (V) CIT VS. SHAKUNTALA DEVI (2009) 316 ITR 46 (D EL.) (IV) CIT VS. BAJRANG LAL BANSAL (2011) 335 ITR 5 72 (DEL.) (VI) CIT VS. MAHESH KUMAR (2011) 196 TAXMAN 415 (DEL.) 6. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH THE SIDES AT LENGTH. IT IS U NDISPUTED FACT THAT NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED IN TH E SEARCH OPERATION WITH REGARD TO THE INVESTMENT IN THE PROPERTY, I.E., FAR M HOUSE AT RAM MANDIR ROAD, VILLAGE MEHRAULI, NEW DELHI. THE CIT (A) DIS POSED OF THE GROUND NO.2 IN WHICH THIS CONTENTION WAS RAISED BY THE ASS ESSEE IN PARA 7 OF HIS ORDER AS UNDER :- ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 10 7. I HAVE CONSIDERED THE DOCUMENTS, FACTS AND EXPL ANATION SUBMITTED BY THE APPELLANT AGAINST THE REFERENCE MA DE UNDER SECTION 142A OF THE INCOME TAX ACT, 1961 BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT SUB MITTED THAT THE REFERENCE MADE BY THE AO IS BAD IN LAW AS THE A O MADE REFERENCE FOR VALUATION OF THE SAID PROPERTY UNDER SECTION 142A OF THE INCOME TAX ACT, 1961 TO THE VO WITHOUT JUDIC IOUS APPLICATION OF MIND AND IN ROUTINE MANNER WITHOUT R EJECTING THE BOOKS OF ACCOUNTS AND ALSO WITHOUT POINTING OUT DEF ECTS IN SUCH BOOKS OF ACCOUNTS BEFORE MAKING REFERENCE. THE APPE LLANT ALSO SUBMITTED THAT AO HAS ALSO FAILED TO BRING IN ANY M ATERIAL OR EVIDENCE ON THE BASIS OF WHICH THE LEARNED ASSESSIN G OFFICER FELT REQUIREMENT OF REFERENCE THE SAID PROPERTY TO VALUA TION BY VO UNDER SECTION 142A OF THE INCOME TAX ACT, 1961 WITH OUT GIVING ANY OPPORTUNITY OF BEING HEARD BEFORE MAKING SUCH R EFERENCE. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER OF THE AO. ON PERUSAL OF ASSESSMENT ORDER IT IS QUITE EVIDENT THA T THE AO HIMSELF ACCEPTED THE FACT THAT HE HAS NOT FELT REQU IREMENT FOR REFERENCE ON ANY OBJECTIVE BASIS AND THE OPINION FO RMED FOR MAKING REFERENCE IS MERELY SUBJECTIVE SATISFACTION OF THE AO. HE HAS NO EVIDENCE WITH HIM WHICH SUGGESTS THE APPELLA NT HAS PAID PRICE OVER AND ABOVE WHICH HAS BEEN PAID BY THE APP ELLANT FOR PURCHASE OF PROPERTY OR ANY SALE DEED WHICH SUGGEST THAT THE PROPERTY IN THE VICINITY HAS BEEN SOLD IN HIGHER PR ICE. THE APPELLANT ALSO SUBMITTED THAT THE AO HAS MADE REFER ENCE BEFORE HE HAS ASKED FOR ANY EXPLANATION IN RESPECT OF INVE STMENT IN THE PROPERTY MADE BY THE APPELLANT IN THE SAID PROPERTY . KEEPING IN VIEW OF THE FACTS AND CASES CITED BY THE APPELLANT, IN MY OPINION THE AO HAS NOT FOLLOWED THE BASIC STEPS FOR MAKING REFERENCE FOR MAKING VALUATION UNDER SECTION 142A AND THE REFEREN CE IS MADE WITHOUT ANY OBJECTIVE BASIS AND ALSO WITHOUT ANY MA TERIAL ON RECORD, HENCE REFERENCE FOR VALUATION MADE BY THE A O TO THE VO IS BAD IN LAW. HOWEVER, SINCE THE APPELLANT GETS RE LIEF IN THE GROUND NO 1, THIS GROUND OF APPEAL BECOMES ACADEMIC IN NATURE, HENCE DOES NOT REQUIRE ANY COMMENTS. THUS, THE CIT (A) GRANTED THE RELIEF ON THIS GROUND ALSO BY HOLDING THAT THE ASSESSING OFFICER HAS NOT FOLLOWED THE BASIC STEPS FOR MAKING THE REFERENCE U/S 142A AND THE REFERENCE WAS MADE WITHOUT ANY OBJ ECTIVE BASIS AND ALSO ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 11 WITHOUT ANY MATERIAL ON RECORD. HENCE, THE REFEREN CE MADE BY THE ASSESSING OFFICER TO THE DVO IS BAD IN LAW. HOWEVER, THE CIT (A) HELD THAT SINCE HE HAS ALLOWED THE RELIEF ON GROUND NO.1, THEREFORE, T HE SAME IS ACADEMIC IN NATURE. IT IS ALSO A FACT THAT BOOKS OF ACCOUNT OR THE DOCUMENTS IN WHICH THE INVESTMENT HAS BEEN SHOWN BY THE ASSESSEE HAS NOT B EEN REJECTED. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. PRATAPSINGH AMROSINGH RAJENDRA SINGH HELD AS UNDER :- IN RESPECT OF INVESTMENT MADE IN PROPERTY, THERE CAN BE ONLY TWO METHODS TO FIND OUT THE CORRECT POSITION (I) EXAMINATION OF BOOKS OF ACCOUNT WHICH HAVE BEEN MAI NTAINED PROPERLY AND (II) VALUATION REPORT. IF THE ASSESSE E HAS MAINTAINED PROPER BOOKS OF ACCOUNT AND ALL DETAILS ARE MENTION ED IN SUCH BOOKS OF ACCOUNT, WHICH ARE DULY SUPPORTED BY VOUCH ERS AND NO DEFECTS ARE POINTED OUT AND THE BOOKS ARE NOT REJEC TED, THE FIGURES SHOWN THEREIN HAVE TO BE FOLLOWED. THE VALUATION R EPORT CAN BE TAKEN INTO CONSIDERATION ONLY WHEN THE BOOKS OF ACC OUNT ARE NOT RELIABLE OR ARE NOT SUPPORTED BY PROPER VOUCHERS OR THE INCOME- TAX OFFICER IS OF THE OPINION THAT NO RELIANCE CAN BE PLACED ON SUCH BOOKS OF ACCOUNT. IT IS TRUE THAT THE INCOME- TAX OFFICER HAS NO OPTION BUT TO RELY ON THE VALUATION REPORT WHICH IS A DOCUMENT PREPARED BY AN EXPERT AND IS ADMISSIBLE, BUT THERE MUST BE A FINDING BY THE INCOME-TAX OFFICER THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ARE DEFECTIVE OR ARE NOT RELIABLE. THERE MAY BE A MARGINAL DIFFERENCE IN THE ACTUAL IN VESTMENT AND THE REPORT OF THE VALUATION OFFICER FOR A NUMBER OF REASONS AS THE VALUATION REPORT IS PREPARED ON THE BASIS OF NORMS PRESCRIBED BY THE C.P.W.D. FOR THE CONSTRUCTION OF BUILDINGS AND THE DIFFERENCE MAY BE WITH REGARD TO QUALITY OF THE MATERIALS, ETC . .. HELD, THAT THERE WAS NO DISPUTE THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND THE SAME HAD BEEN ACCEPTED IN THE PAST AND NO DEFECTS WERE POINTED OU T IN THE BOOKS. THE EXPENSES WERE FULLY SUPPORTED BY VOUCHE RS. FULL ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 12 DETAILS WERE ALSO MENTIONED IN RESPECT OF EACH ITEM IN THE BOOKS. SIMPLY BECAUSE THE VALUATION REPORT WAS OF A HIGHER AMOUNT, THE BOOKS COULD NOT BE SAID TO BE UNRELIABLE. THE TRIB UNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION OF RS .55,780/-. SIMILARLY, THE HON'BLE JURISDICTIONAL HIGH COURT IN VARIOUS DECISIONS HAS CONSISTENTLY HELD THAT THE PRIMARY BURDEN TO PROVE THE UNDER-STATEMENT OF INCOME IS ON THE REVENUE. IT IS A FACT THAT PRIOR TO THE REFERENCE TO THE DVO, THE ASSESSING OFFICER WAS NOT HAVING ANY INCRIMINAT ING DOCUMENT OR INFORMATION WHICH COULD SHOW THAT INVESTMENT DECLAR ED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WAS NOT CORRECT. THUS, IN OUR CON SIDERED VIEW, REVENUE HAS FAILED TO DISCHARGE THE BURDEN. AS HELD BY THE HON 'BLE JURISDICTIONAL HIGH COURT IN VARIOUS CASES, CITED SUPRA, IT WAS NOT PER MISSIBLE TO RELY UPON THE VALUATION GIVEN BY THE DVO, PER SE, WAS NOT AN INFO RMATION WHICH COULD BE RELIED UPON WHEN THE BOOKS OF ACCOUNT WERE NOT REJE CTED. MOREOVER, THERE WAS NO EVIDENCE FOUND AS A RESULT OF SEARCH TO SUGG EST THAT ASSESSEE HAS MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION MENTIO NED IN THE SALE DEED. IN THE CASE OF CIT VS. BAJRANG LAL BANSAL, HON'BLE HIG H COURT OF DELHI HELD AS UNDER :- A SEARCH WAS CONDUCTED AT THE ASSESSEES RESIDENC E BY THE DEPARTMENT AND UNEXPLAINED CASH AND FIXED DEPOSIT R ECEIPTS WERE FOUND. DURING THE SEARCH, NO EVIDENCE WAS FOU ND SUGGESTING A HIGHER VALUATION FOR THE PROPERTY. HO WEVER, THE ASSESSING OFFICER SOLELY ON THE BASIS OF THE REPORT OF THE DISTRICT VALUATION OFFICER MADE AN ADDITION OF RS.99,33,000/ - UNDER SECTION 69B OF THE INCOME-TAX ACT, 1961 ON ACCOUNT OF UNDISCLOSED INVESTMENT. THE COMMISSIONER (APPEALS ) DELETED THE ADDITION. THE TRIBUNAL UPHELD THIS DECISION. ON APPEAL : ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 13 HELD, DISMISSING THE APPEAL, THAT THE PRIMARY BURD EN TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT IS ONLY WHEN SUCH BURDEN WAS DISCHAR GED THAT IT WOULD BE PERMISSIBLE TO RELY UPON THE VALUATION GIV EN BY THE DISTRICT VALUATION OFFICER. THE OPINION OF THE DIS TRICT VALUATION OFFICER, PER SE, WAS NOT AN INFORMATION AND COULD NOT BE RELIED UPON WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED WH ICH HAD NOT BEEN DONE IN THE ASSESSEES CASE. MOREOVER, THERE W AS NO EVIDENCE FOUND AS A RESULT OF THE SEARCH TO SUGGEST THAT THE ASSESSEE HAD MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE RETURN OF THE RESPON DENT- ASSESSEE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAHESH KUMAR HELD AS UNDER :- UNEXPLAINED INVESTMENTS ASSESSMENT YEAR 2004-05 ASSESSEE HAD PURCHASED TWO PLOTS FOR RS.2 LAKHS AND RS.3 LAKHS, RESPECTIVELY A SEARCH OPERATION WAS CONDUC TED ON ASSESSEES PREMISES NO INCRIMINATING DOCUMENT OR MATERIAL WAS FOUND OR SEIZED DURING SEARCH OPERATION IN RESP ECT OF AFORESAID TWO PLOTS PURCHASED BY ASSESSEE HOWEVER , ASSESSING OFFICER REFERRED THOSE TWO PLOTS FOR VALU ATION UNDER SECTION 142A ON BASIS OF VALUATION REPORT SUBMITT ED BY DVO, ASSESSING OFFICER MADE CERTAIN ADDITION TO ASS ESSEES INCOME ON APPEAL, COMMISSIONER (APPEALS) DELETED A PART OF THAT ADDITION ON SECOND APPEAL, TRIBUNAL FINDING THAT INSTANCES OF SALE TAKEN INTO ACCOUNT BY VALUATION O FFICER WERE NOT COMPARABLE AS THEY WERE SITUATED FAR AWAY FROM LOCATION OF PLOTS PURCHASED BY ASSESSEE, DELETED ENTIRE ADDITIO N WHETHER PRIMARY BURDEN OF PROOF REGARDING UNDER-STATEMENT O R CONCEALMENT OF INCOME IS ON REVENUE AND IT IS ONLY WHEN SUCH A BURDEN IS DISCHARGED THAT IT WOULD BE PERMISSIBLE TO RELY UPON VALUATION GIVEN BY DVO HELD, YES WHETHER S INCE, IN INSTANT CASE, NO EVIDENCE, MUCH LESS INCRIMINATING EVIDENCE, WAS FOUND AS A RESULT OF SEARCH TO SUGGEST THAT ASS ESSEE HAD MADE ANY PAYMENT OVER AND ABOVE CONSIDERATION MENTI ONED IN REGISTERED SALE DEEDS, TRIBUNAL WAS JUSTIFIED IN DE LETING ENTIRE ADDITION HELD, YES. ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 14 IN THE CASE OF CIT VS. RAMESH KAKKAR, HON'BLE HIGH COURT OF DELHI HELD AS UNDER :- 2. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS MADE AN ADDITION IN THE RESPONDENT-ASSESSEES INCOME SOLELY ON THE BASIS OF DVOS REPORT. HOWEVER, IN COMMISSIONER OF INCOME TAX VS. SHRI BAJRANG LAL BANSAL, ITA NO. 182/2010 DECIDED ON 20TH AUGUST, 2010, THIS COURT HAS HELD THAT IT I S SETTLED LAW THAT THE PRIMARY BURDEN OF PROOF TO PROVE UNDER-STA TEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT IS O NLY WHEN SUCH BURDEN IS DISCHARGED THAT IT WOULD BE PERMISSI BLE TO RELY UPON THE VALUATION GIVEN BY THE DVO. IT HAS BEEN FU RTHER HELD THAT IN ANY EVENT, THE OPINION OF THE DVO, PER SE, IS NOT AN INFORMATION AND CANNOT BE RELIED UPON WITHOUT THE B OOKS OF ACCOUNT BEING REJECTED. IN THE CASE OF CIT VS. MANOJ JAIN, HON'BLE DELHI H IGH COURT HELD AS UNDER :- A SEARCH WAS CARRIED OUT IN THE PREMISES OF THE A SSESSEE. A BLOCK ASSESSMENT WAS MADE AND THE ASSESSING OFFIC ER MADE ADDITIONS ON THE BASIS OF THE REPORT OF THE VALUATI ON OFFICER IN REGARD TO TWO OF THE PROPERTIES PURCHASED BY THE AS SESSEE. THE TRIBUNAL DELETED THE ADDITIONS HOLDING THAT NO EVID ENCE OF CONCEALMENT OF INCOME HAD BEEN DISCOVERED AS A RESU LT OF THE SEARCH, THAT THE ASSESSING OFFICER HIMSELF WAS NOT AN EXPERT; THAT THE VALUATION OF THE PROPERTY WAS A TECHNICAL MATTER AND THAT THE ASSESSING OFFICER WAS NOT ENTITLED TO MAKE STATEMENTS ON TECHNICAL MATTERS FOR WHICH THERE WAS NO MATERIA L ON RECORD, PARTICULARLY WHEN NO EVIDENCE WAS FOUND AS A RESULT OF ACTION UNDER SECTION 132(1) OF THE INCOME-TAX ACT, 1961. ON APPEAL TO THE HIGH COURT : HELD, THAT THE ADDITIONS WERE NOT JUSTIFIED. ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 15 IN OUR CONSIDERED VIEW, THE ISSUE IS COVERED IN FAV OUR OF ASSESSEE BY VARIOUS DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT. IN VIEW OF THESE FACTS, WE ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 8. IN THE REVENUES APPEAL, THE ONLY ISSUE INVOLVED IS DELETING THE ADDITION OF RS.60,79,673/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT IN LAND AND CONSTRUCTION ON THE BASIS OF VALUATION REPORT OF THE DVO. 9. THE CIT (A) HAS ALLOWED THE APPEAL OF THE ASSESS EE BY HOLDING AS UNDER:- I HAVE CONSIDERED THE DOCUMENTS FILED BY THE APPEL LANT BEFORE THE A.O. AND PLACED ON THE RECORDS. ON PERUSAL OF THE SUBMI SSION MADE BEFORE ME, IT IS QUITE EVIDENCE THAT THE LEARNED ASSESSING OFFICER HAS NOT CONSIDERED SOME OBJECTIONS PUT FORTH IN THE REPLY F URNISHED BY THE APPELLANT IN RESPECT OF VALUATION OF THE PROPERTY. I HAVE ALSO PERUSED THE DETAILS OF WORKING COMPARING HEAD-WISE INVESTMENT A S PER VALUATION REPORT OF VO AND VALUATION REPORT OF REGISTERED VAL UER FILED BY THE APPELLANT AND PLACED AT PAGE NO 220 OF THE PAPER BO OK. ON PERUSAL, IT IS QUITE EVIDENT THAT THE APPELLANT AGREED WITH THE ESTIMATION MADE BY VO ALMOST UNDER ALL THE HEADS EX CEPT VALUATION IN RESPECT OF LAND, CONSTRUCTION EXPENSES OF BUILDING - 2, BOUNDARY WALL, SUPERIOR FITTINGS IN BUILDING - 1, ARCHITECTS FEES @ 2%, DEDUCTION OF 10% ON ACCOUNT OF DISPUTED PROPERTY, DEDUCTION OF 10% O N ACCOUNT OF SELF - SUPERVISION, DISCOUNT OF 50% ON ACCOUNT OF MARBLE F LOORINGS AS INCLUDED IN PLINTH AREA RATE, COST OF TOILET AS INCLUDED IN THE PLINTH AREA RATE, ARCHITECT FEE @ 2% ON HORTICULTURE AND COST OF HORT ICULTURE. THE AO HAS CONSIDERED THE CONTENTION OF THE APPELLA NT IN RESPECT OF HORTICULTURE IN TOTALITY AND IN RESPECT OF COST OF LAND AND BOUNDARY WALL PARTIALLY. THE AO HAS DENIED THE CONTENTIONS OF APP ELLANT IN RESPECT CONSTRUCTION EXPENSES OF BUILDING -2 AND SUPERIOR F ITTINGS IN BUILDING - 1. THE AO HAS NOT CONSIDERED THE CONTENTION IN RESPECT OF ARCHITECTS FEES @ 2%, DEDUCTION OF 10% ON ACCOUNT OF SELF -SUPERVISIO N, DISCOUNT OF 50% ON ACCOUNT OF MARBLE FLOORINGS AS INCLUDED IN PLINT H AREA RATE, COST OF TOILET AS INCLUDED IN THE PLINTH AREA RATE AND ARCH ITECT FEE @ 2% ON HORTICULTURE. 5. IN MY OPINION, AO ERRED ON RELYING UPON VALUATI ON REPORT OF VO IN RESPECT OF ESTIMATION OF LAND COST @ RS 32,98,28 6/- PER ACRE ON THE ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 16 BASIS OF ONLY ONE SALE DEED WHICH WAS CLEARED BY TH E APPROPRIATE AUTHORITY. IN MY OPINION THE VALUE OF LAND DETERMIN ED ON THE BASIS OF SINGLE SALE DEED OF A DISTANT PLACE COULD NOT BE A COMPARABLE LAND INSTEAD OF THREE SALE INSTANCES OF LAND IN THE VICINITY REF ERRED BY THE REGISTERED VALUER. IT IS A FACT THAT SINGLE SALE INSTANCE CANN OT BE PROPER INDICATOR OF VALUE OF LAND IN LIEU OF THREE SALE INSTANCES REFER RED BY REGISTERED VALUER FOR VALUATION OF LAND OF THE APPELLANT. THE AO HIMS ELF FOUND THAT THE LAND CONSIDERED FOR ESTIMATION OF VALUE OF LAND BY THE V O IS SITUATED AT OTHER PLACE THAN THAT OF THE LAND OF THE APPELLANT. THE S ALE INSTANCES CLEARED BY APPROPRIATE AUTHORITY CANNOT BE CONSIDERED AS VALID INDICATOR AS THE APPELLANT PURCHASED THE SAID PROPERTY IN NOVEMBER, 2003 AND THE SAID CHAPTER XXC OF THE INCOME TAX ACT, 1961 DEALING WIT H PURCHASE OF PROPERTY BY CENTRAL GOVERNMENT IS NOT APPLICABLE ON AND AFTER 01.07.2002. ALSO THE PURPOSE OF VALUATION FOR CHAPT ER XXC IS ALTOGETHER DIFFERENT FROM VALUATION FOR THE PURPOSE OF SECTION 142A OF THE INCOME TAX ACT, 1961 AS THE FIRST IS FOR THE PURPOSE OF PU RCHASE OF PROPERTY BY THE CENTRAL GOVERNMENT TO CURB TAX EVASION AND BLACK MO NEY. SO, THE SINGLE SALE INSTANCE CLEARED BY APPROPRIATE AUTHORITY CANN OT BE BASIS OF ESTIMATION OF VALUE OF LAND. ON THE OTHER HAND, I F IND FORCE IN THE SUBMISSION MADE BY THE APPELLANT THAT THE VALUATION OF LAND AS PER THE REGISTERED VALUER IS MORE PROPER, RELIABLE AND SCIE NTIFIC AS HE HAS CONSIDERED THREE SALE INSTANCES OF THE SIMILAR LOCA LITY AND THEN FURTHER APPRECIATED AND DEPRECIATED THE VALUE OF LAND AS PE R THE NORMS OF VALUATION FOR TIME GAP AND LOCATION ADVANTAGE AND T HEN TAKEN AVERAGE MEAN RATE FOR THE PURPOSE OF VALUATION OF LAND OF T HE APPELLANT. THE VO HAS ALSO FAILED TO APPRECIATE AND DEPRECIATE THE VA LUE OF LAND AS PER THE NORMS OF VALUATION FOR TIME GAP AND LOCATION ADVANT AGE. I HEREBY RELY ON THE VALUATION OF LAND ESTIMATED BY THE REGISTERED V ALUER AS JUST, REASONABLE AND SCIENTIFIC AND GRANT RELIEF THE APPELLANT OF RS 45,99,803/- BEING DIFFERENCE OF ESTIMATION OF COST OF CONSTRUCTION ES TIMATED BY THE REGISTERED VALUER AND VO AFTER ADJUSTMENTS MADE BY THE AO IN RESPECT COST OF LAND. IN MY OPINION, THE AO ERRED IN DENYING THE EXPLANAT ION FURNISHED BY THE APPELLANT IN RESPECT OF COST OF CONSTRUCTION OF BUI LDING - 2 WITHOUT ANY BASIS AND ONLY ON THE PRESUMPTION AND ASSUMPTION TH AT THE BUILDING - 2 WAS EXISTED IN THE SAME CONDITION AT THE TIME OF PU RCHASE OF THE SAID PROPERTY AS FOUND BY THE VO AT THE TIME OF INSPECTI ON. THE APPELLANT ALSO FURNISHED THAT THE HE HAS MADE INVESTMENT OF RS 34. 25 LACS APPROXIMATELY ON DISMANTLING OF EXISTING FIRST FLOOR ROOF SLAB, C HASE CUTTING OF WALLS AND ERECTING OF NEW COLUMNS AND BEAMS AND PI LAYING OF RCC CALS AT FIRST FLOOR AS PER EXISTING AND NEW COLUMNS FROM GROUND F LOOR AND LAYING OF RCC SLOPING ROOF SLAB ETC. HE ALSO SUBMITTED BILLS OF CONTRACTORS, MATERIAL SUPPLIERS AND PHOTOGRAPHS OF OLD STRUCTURE OF BUILDING - 2 BEFORE THE VO AND AO AT THE TIME OF PROCEEDINGS BEFORE THE M. SINCE, THE VO HAS ESTIMATED THE VALUE AS PER THE NEWLY RENOVATED SUPERIOR QUALITY OF STRUCTURE OF BUILDING - 2, INSPECTED BY HIM AND NEV ER INSPECTED THE OLD BUILDING, THE ESTIMATION CONSIDERING THE BUILDING - 2 AS FULLY CONSTRUCTED STRUCTURE AT THE TIME OF PURCHASE WITHOUT GIVING AN Y CREDIT FOR THE ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 17 EXPENSES INCURRED LATER ON IN THE FINANCIAL YEARS 2 008 -09 AND 2009 - 10 IS FACTUALLY INCORRECT. I HEREBY RELY ON THE VALUATION OF BUILDING-2 ESTIMATED BY THE REGISTERED VALUER AS JUST AND REASONABLE AND GRANT RELIEF THE APPELLANT OF RS 5,17,756/- BEING DIFFERENCE OF ESTI MATION OF COST OF CONSTRUCTION ESTIMATED BY THE REGISTERED VALUER AND VO IN RESPECT COST OF CONSTRUCTION OF BUILDING - 2. THE AO HAS NOT CONSID ERED THE EXPLANATION FURNISHED BY THE APPELLANT IN RESPECT OF DEDUCTION OF 10% ON ACCOUNT OF SELF - SUPERVISION, DISCOUNT OF 50% ON ACCOUNT OF M ARBLE FLOORINGS AS INCLUDED IN PLINTH AREA RATE, COST OF TOILET AS INC LUDED IN THE PLINTH AREA RATE AND ARCHITECT FEE @ 2% ON HORTICULTURE AND SIM PLY IGNORED THE SUBMISSION MADE WITHOUT PASSING ANY SPEAKING ORDER OR MENTIONING ANY REASONS AS TO WHY THE CONTENTIONS OF THE APPELLANT IS NOT TENABLE. SINCE THE AO HAS NOT REASONED FOR SUCH ADDITION, I HEREBY GRANT RELIEF OF RS 10% OF COST OF CONSTRUCTION ON ACCOUNT OF SELF SUPE RVISION, RS 59133/- ON ACCOUNT OF MARBLE FLOORING AS INCLUDED IN PLINTH AR EA RATE, RS 43,600/-ON ACCOUNT OF TOILET AS INCLUDED IN PLINTH AREA RATE A ND RS.2,993/- ON ACCOUNT OF ARCHITECT FEE ON HORTICULTURE AS THE AO HAS ALRE ADY NOT CONSIDERED THE VALUE OF HORTICULTURE IN MAKING ASSESSMENT. THE AO HAS HIMSELF ESTIMATED COST OF CONSTRUCTION OF BOUNDARY WALL AS HE FOUND THAT ESTIMATE OF COST OF BOUNDARY WALL MADE BY THE VO IS NOT REAS ONABLE. SINCE, THE AO HIMSELF DOUBTED THE CORRECTNESS OF REPORT OF VO, I HEREBY RELY ON THE VALUATION OF BOUNDARY WALL ESTIMATED BY THE REGISTE RED VALUER AS JUST AND REASONABLE AND GRANT RELIEF THE APPELLANT OF RS 2,9 3,540/- BEING DIFFERENCE OF ESTIMATION OF COST OF CONSTRUCTION ESTIMATED BY THE REGISTERED VALUER AND VO IN RESPECT COST OF CONSTRUCTION OF BOUNDARY WALL. I HAVE CONSIDERED THE RIVAL POSITION CAREFULLY. IN THE CASE OF DINESH JAIN V DCIT [2009] 34 SOT 444 (ITAT DELHI) THE JURISDICTIO NAL IT AT (DELHI) HELD AS UNDER: 'WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM T HE RECORD, WE FOUND THAT ON THE BASIS OF SALE DEED FOUND DURING THE CO URSE OF SEARCH IN RESPECT OF PURCHASE OF VARIOUS PROPERTIES, THE ASSESSING OF FICER FOUND THAT ASSESSEE WAS IN RECEIPT OF RENTAL INCOME IN RESPECT OF THESE PROPERTIES. AS PER ASSESSING OFFICER, THE DISPROPORTIONATE YIELD O F INCOME FROM THESE PROPERTIES INDICATES THAT THE AMOUNT INVESTED HAS B EEN SUPPRESSED. ACCORDINGLY, HE APPLIED PROVISIONS OF RULE 3 OF PAR T (B) OF THE 3RD SCHEDULE TO THE WEALTH-TAX RULES FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE OF THESE PROPERTIES. THE ASSESSING OFF ICER ALSO MADE A REFERENCE TO THE DVO, AS THE REFERENCE WAS MADE ONE DAY PRIOR TO THE FRAMING OF ASSESSMENT, HE WAS NOT IN RECEIPT OF ANY DVO'S REPORT. IT IS UNDISPUTED FACT THAT DEPARTMENT HAS NOT REFERRED AN Y INCRIMINATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEA RCH AND INVESTIGATION MADE THEREAFTER WHICH INDICATE THAT ASSESSEE HAD PA ID ANYTHING MORE THAN WHAT HAS BEEN STATED IN THE SALE DEEDS. IT WAS ALSO NOT THE ALLEGATION OF THE DEPARTMENT THAT THERE WAS ANY DIFFERENCE IN THE VALUE OF THE PROPERTY AS ACCEPTED BY THE SUB-REGISTRAR FOR THE PURPOSE OF STAMP DUTY VALUATION. IN VIEW OF THE FACT THAT NO MATERIAL WAS FOUND INDI CATING ANYTHING PAID ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 18 OVER AND ABOVE THE REGISTERED SALE PRICE OF THE PRO PERTY SO ACQUIRED, KEEPING IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CELEBRATED JUDGMENT OF K.P. VARGHESE'S CASE (SUPRA) WHEREIN IT WAS HELD THAT ONUS LIES ON THE DEPARTMENT TO PROVE THAT SOME CONSIDERATION OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED HAVE BEEN INVESTED, NO ADDITION CAN BE MADE ON PRESUMPTIONS AND SUSPICIONS . IN THE LATEST CASE OF CIT V. SMT. SHAKUNTALA DEVI [IT APPEAL NO. 345 ( DELHI) OF2001], HON'BLE DELHI HIGH COURT HELD 'IT MAY BE RELEVANT T O NOTE THAT A DIVISION BENCH OF THE COURT COMPRISING DR. ARIJIT PASAYAT AN D JUSTICE D.K JAIN, AS THEIR LORDSHIPS THEN WERE REITERATE THAT THERE MUST BE A FINDING OF THE REVENUE THAT THE ASSESSEE HAD RECEIVED AMOUNTS OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED, FOLLOWING TH E RATIO OF KP. VARGHESE'S CASE (SUPRA). KP. VARGHESE'S CASE (SUPRA ) HAS ALSO BEEN FOLLOWED AND APPLIED BY THE SUPREME COURT IN CIT V. GODAVARI CORPN. LTD. [1993] 200 ITR 567. THE DIVISION BENCH OF HON' BLE DELHI HIGH COURT IN CIT V. ASHOK KHETRAPAL [2007} 294 ITR 143 OBSERVED THAT BY REFERRING TO THE REPORT OF VALUATION OFFICER IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF A SE ARCH NO ADDITION COULD BE MADE BY TREATING INVESTMENT AS UNDISCLOSED ON THE BASIS OF ANY DVO'S REPORT. THE DECISION IN CIT V MANO} JAIN [200 6} 287 ITR 285 (DELHI) IS ALSO TO THE SAME EFFECT. IN CIT V SHIVAK AMI CO. (P.) LTD. [L986} 159 ITR 71 (SC), THEIR LORDSHIPS HAVE ONCE AGAIN RE TREATED THAT ONUS WHETHER THE ASSESSEE HAD RECEIVED MORE CONSIDERATIO N THAN WHAT WAS STATED IN THE DOCUMENTS OF TRANSFER, RESTED ON THE REVENUE AND IN THE ABSENCE OF THAT BURDEN HAVING BEEN BEING DISCHARGED , IT WOULD BE LEGALLY IMPERMISSIBLE TO MAKE ANY INFERENCES AGAINST THE AS SESSEE. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HEAD 'UNEXP LAINED INVESTMENT' ON ACCOUNT OF VARIOUS PROPERTIES PURCHASED BY THE A SSESSEE DURING THE BLOCK PERIOD ON THE BASIS OF FAIR MARKET VALUE AS E STIMATED BY THE ASSESSING OFFICER. ALL THESE ADDITIONS ARE DIRECTED TO BE DELETED. ' MOREOVER, THE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASES OF COMMISSIONER OF INCOME TAX V PREM NATH NAGPAL [2007 ] 214 CTR 51 (HIGH COURT - DELHI), HAS BEEN HELD THAT DURING THE SEARCH SOME PAPERS INDICATING OWNERSHIP OF CERTAIN PROPERTY WERE FOUND . NO DOCUMENT WAS FOUND INDICATING UNDERSTATEMENT OF PURCHASE PRICE. THERE WAS NO DOCUMENT FOUND WHICH COULD INDICATE UNDERSTATEMENT OF COST OF IMPROVEMENT. NO ASSESSMENT OF UNDISCLOSED INCOME CO ULD BE MADE ON ALLEGED UNDERSTATEMENT, ON THE BASIS OF DVO'S REPOR T AND COMMISSIONER OF INCOME TAX V ASHOK KHETRAPAL [2007] 294 ITR 143 (HIGH COURT - DELHI) ALSO HELD THAT DURING THE SEARCH UNDER SECTI ON 132 NO INCRIMINATING MATERIAL WAS FOUND INDICATING THAT ASSESSEE HAD MAD E HIGHER INVESTMENT IN PROPERTY THAN DISCLOSED. NO UNDISCLOSED INCOME C OULD BE ASSESSED ON THE BASIS OF DIFFERENCE BETWEEN INVESTMENT DECLARED AND THAT DETERMINED IN D VO 'S REPORT. THE ABOVE RATIO ARE SQUARELY APP LICABLE IN THE CASE OF THE APPELLANT. I FIND MERIT IN THE CONTENTIONS OF T HE APPELLANT THAT THE AO FAILED TO BRING IN ANY COGENT EVIDENCE ON RECORD TH AT THE APPELLANT HAS ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 19 PAID ANY SUM OVER AND ABOVE WHICH HAS BEEN SHOWN IN THE SALE DEED. THE AO ALSO FAILED TO BRING IN ANY INCRIMINATING DOCUME NT WHICH HAD BEEN FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERA TION, WHICH SUGGESTS THAT THE APPELLANT HAS MADE INVESTMENT OTHER THAN W HAT HAS BEEN SHOWN IN HIS WEALTH TAX RETURN. I ALSO FOUND THAT THE AO HAS RELIED UPON THE ESTIMATE OF VALUATION MADE BY THE VO FOR MAKING ADD ITION, WHILE HE HIMSELF ACKNOWLEDGED THAT THE VALUATION REPORT OF V O IS ERRONEOUS. HENCE, THE ADDITION MADE BY THE AO IS NOT TENABLE I N LAW AND FACTS. THEREFORE ADDITION MADE ON ACCOUNT OF INVESTMENT IN PROPERTY IS LIABLE TO BE DELETED. 10. WE HAVE ALREADY ALLOWED THE RELIEF WHILE DECIDI NG THE CROSS OBJECTION OF ASSESSEE, HOWEVER, WE OBSERVE AS UNDER ON REVENU ES APPEAL :- WE HAVE HEARD BOTH THE SIDES ON THE ISSUE IN DETAI L. THE CIT (A) HAS GRANTED THE RELIEF ON THE BASIS OF RELYING ON THE D ECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AS HOK KHETRAPAL 294 ITR 143, CIT VS. PREM NATH NAGPAL 214 CTR 51 AND DINE SH JAIN VS. DCIT 34 SOT 444. AS FAR AS THE VALUATION OF LAND BY THE DV O, WE ARE OF THE VIEW THAT THE DVO HAS MADE THE VALUATION ONLY ON THE BASIS OF ONE SALE INSTANCE WHICH WAS CLEARED BY THE APPROPRIATE AUTHORITY BY NOT PAS SING ORDER UNDER SECTION 269(1) OF THE INCOME-TAX ACT. THE VALUATION OFFICE R WHO HAS PREPARED VALUATION ON ASSESSEES STANCE HAS TAKEN AVERAGE OF THREE SALE INSTANCES OF THE NEARBY LOCALITY. THERE IS NO EVIDENCE AGAINST THES E SALES INSTANCES THAT THESE WERE AT DEPRESSED RATE. AVERAGE OF THREE SALE INST ANCES SHALL BE MORE RELIABLE OR SAY NEAR TO ACCURACY THEN ONLY ONE SALE INSTANCE . THEREFORE, WE HOLD THAT THE DVO REPORT WAS NOT RELIABLE AND ACCURATE FOR VA LUING THE LAND. THE ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 20 VALUATION REPORT PREPARED BY THE VALUATION OFFICER WAS MORE ACCURATE AND RELIABLE FOR VALUING THE LAND VALUE. AS FAR AS THE VALUATION OF THE BUILDING IS CONCERN ED, DURING THE HEARING, WE OBSERVED THAT IN THE SALE DEED, THE DESCRIPTION OF THE BUILDING WHICH HAS BEEN PURCHASED BY ASSESSEE IS GIVEN AT PAGE NO.9 OF SALE DEED. THE DETAILS OF THE PROPERTY PURCHASED BY THE ASSESSEE AS GIVEN IN SALE DEED ARE AS UNDER : AND WHEREAS THE VENDOR FOR HER BONAFIDE NEEDS AND REQUIREMENTS HAS AGREED TO SELL AND THE VENDEES HAVE AGREED TO P URCHASE THE SAID PROPERTY I.E. AGRICULTURAL LAND MEASURING 13 BIGHAS , BEARING MUSTAIL NO.20, KILA NO.8(2 10), MUSTAIL NO.101, KILLA NOS .1/1(6 5) 2(1 1 ) AND 3 (3 4) WITH BOUNDARY WALL, TUBE-WELL, ELECTR IC CONNECTION, FARM HOUSE AND OTHER FITTINGS AND FIXTURES SITUATED IN V ILLAGE MEHRAULI, TEHSIL HAUZ KHAS, NEW DELHI FOR A TOTAL CONSIDERATION OF R S.50,00,000/- (RUPEES FIFTY LAKHS ONLY). THE VALUATION REPORT SUBMITTED BY THE DVO AS WELL A S BY THE VO STATES THE CONSTRUCTED AREA AS UNDER :- (I) MAIN BUILDING 238.25 SQM. @ RS.5443/- SQM. (II) GEN. ROOM, CATERING, RAW RESIDENTIAL UNITS (COWSHED) 320.99 SQM @ R.35 69 SQM. (III) STAFF QRTS DOUBLE STOREYED 95.76 SQM. @ RS. 4750/- PAGE 75 OF THE PAPER BOOK PARA 12 OF THE SALE DEED ALSO MENTIONS THAT THERE I S NO POULTRY FARM, WARE HOUSE, CATTLE, LIVE STOCK, RAISING OR GRASS ON THE SAID PROPERTY AND THE SAID PROPERTY IS AN AGRICULTURAL LAND. ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 21 THE COMPLETION CERTIFICATE PLACED AT PAGE 30 OF PA PER BOOK IS DATED 10.06.1996 AND THE DESCRIPTION OF THE CONSTRUCTION AS PER THIS CERTIFICATE IS AS UNDER :- 1. DINING ONE 2. BED ROOM ONE 3. FAMILY LOUNGE ONE 4. KITCHEN ONE 5. TOILET ONE THERE IS ALSO A RECEIPT FOR PAYMENT OF REGULARIZATI ON FEE PLACED AT PAGE 83 OF PAPER BOOK DATED 23.01.2000 WHICH SHOWS THAT ASSESS EE HAS PAID REGULARIZATION OF RS.24,500/- FOR EXTRA CONSTRUCTIO N. SINCE WE HAVE GRANTED RELIEF TO THE ASSESSEE RATHER WE HAVE AFFIRMED THE RELIEF GRANTED BY CIT (A) ON THE ISSUE OF REFERENCE TO THE DISTRICT VALUATION OF FICER, THEREFORE, THE ISSUES RAISED IN REVENUES APPEAL ARE OF ACADEMIC IN NATUR E, THEREFORE, WE DISMISS REVENUES APPEAL. 12. TO SUM UP : THE APPEAL OF THE REVENUE IS DISMIS SED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 6 TH DAY OF JANUARY, 2012. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 6 TH DAY OF JANUARY, 2012 TS ITA NO.3653/DEL./2010 CO NO.295/DEL/2010 22 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.