Aerens Infrastructure & Technology Ltd, New Delhi V. DCIT, New Delhi

ITA 1162/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8211 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 27-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT TRIPATHI
• Assessee Lawyers: RAVI GUPTA
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Fair market value; Valuation report; Onus to prove; Capital Gains
• Section: 143(3); 69B; 147; 69; 148

Judgement Text

I.T.A. NO. 1162,1689 /DEL/2009 1/14 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH A BEFORE SHRI K.G.BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 1162 /DEL/2009 (ASSESSMENT YEAR 2003-04) M/S. AERENS INFRASTRUCTURE & VS. DCIT, CC-8, TECHNOLOGY LTD., NEW DELHI. A-15, 1 ST FLOOR, MAIN HAUZ KHAS, NEW DELHI. I.T.A. NO. 1689/DEL/2009 (ASSESSMENT YEAR 2003-04) ACIT, CC-8, VS. M/S. AERENS INFRASTRUCTURE & NEW DELHI TECHNOLOGY LTD., A-15, FIRST FLOOR, ANNEXE, MAIN HAUZ KHAS, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACR1959G ASSESSEE BY: SHRI RAVI GUPTA, ADV., DEPARTMENT BY: SHRI SAMBIT TRIPATHI, SR. DR ORDER PER GEORGE MATHAN, JM: 1. I.T.A. NO. 1162/DEL/2009 IS AN APPEAL BY THE ASS ESSEE AND I.T.A. NO. 1689/DEL/2009 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) II, NEW DEL HI I.T.A. NO. 1162,1689 /DEL/2009 2/14 IN APPEAL NO. DEL/CIT(A)-II/28/64/560 DATED 19.02.2009 FOR THE ASSESSMENT YEAR 2003-04. SHRI SAMBIT TRIPATHI, SR. DR REPRESENTED FOR THE REVENUE AND SHRI RAVI GUPTA, ADVOCATE REPRESENTED FOR THE ASSES SEE. 2. IT WAS THE SUBMISSION BY THE LD. A.R. THAT THE A SSESSEE IS A COMPANY AND IT HAD DURING THE RELEVANT ASSESSM ENT YEAR PURCHASED THE 2 ND FLOOR IN A PROPERTY NO.G-25, GREEN PARK (MAIN) NEW DELHI FOR A CONSIDERATION OF RS.11,84,926/-. IT WAS THE SUBMISSION THAT THE A.O . HAD INVOKED THE PROVISIONS OF SECTION 142A AND HAD SENT THE ISSUE TO THE DVO FOR VALUATION AT THE FAIR MARK ET VALUE OF THE PROPERTY. IT WAS THE SUBMISSION THAT THE PROPERTY PURCHASED BY THE ASSESSEE HAD BEEN SHOWN B Y THE ASSESSEE AS STOCK IN TRADE. IT WAS ALSO THE SUBMISSION THAT THE ASSESSEE HAD SOLD THE PROPERTY DURING THE RELEVANT ASSESSMENT YEAR ITSELF. IT WAS THE SUBMISSION THAT THE DVO HAD VALUED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.60,53,700/- AND CONSEQUENTLY THE A.O. HAD TREATED THE DIFFERENCE BETWEEN THE PURCHASE CONSIDERATION SHOWN BY THE ASSESSEE AND THE FAIR MARKET VALUE AS ON THE DATE O F PURCHASE DETERMINED BY THE DVO AS UNEXPLAINED MONEY PAID BY THE ASSESSEE FOR THE PURCHASE OF THE PROPERTY. IT WAS THE SUBMISSION BY THE LD. A.R. TH AT IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAD POIN TED I.T.A. NO. 1162,1689 /DEL/2009 3/14 OUT VARIOUS DEFECTS IN THE VALUATION REPORT OF THE DVO. HE DREW OUR ATTENTION TO PAGE 19 OF THE PAPER BOOK, WHICH WAS THE COPY OF THE LETTER ADDRESSED TO THE D CIT IN THE COURSE OF ASSESSMENT POINTING OUT THE DEFECT S. IT WAS THE SUBMISSION THAT THESE DEFECTS POINTED OUT B Y THE ASSESSEE HAVE NOT BEEN CONSIDERED BY THE A.O. BUT H AVE BEEN ACCEPTED BY THE LD CIT(A) AND THE LD. CIT(A) H AD CONSEQUENTLY REDUCED THE ADDITION MADE BY THE A.O. BY AN AD-HOC AMOUNT OF RS.10 LACS. IT WAS THE FURTHER SUBMISSION THAT WHEN THE ORIGINAL ASSESSMENT U/S 14 3(3) WAS UNDER PROCESS, THE A.O. HAD REFERRED THE VALUAT ION OF THE FAIR MARKET VALUE TO THE DVO AND AS THE DVO S REPORT HAD NOT COME BY THE TIME THE ORIGINAL ASSESS MENT WAS TO BE COMPLETED, THE SAME HAD BEEN COMPLETED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD WITHO UT MAKING ANY ADDITION. SUBSEQUENTLY THE ASSESSMENT HA D BEEN REOPENED ON THE BASIS OF THE VALUATION REPORT PROVIDED BY THE DVO. HE FURTHER DREW OUR ATTENTION TO PAGE 35 OF THE PAPER BOOK, WHICH WAS THE COPY OF TH E REASONS RECORDED FOR THE PURPOSE OF REOPENING. THE REASONS RECORDED ARE EXTRACTED HEREWITH FOR BETTER APPRECIATION: ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 29.03.2006. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS GATHERED THAT DURING THE PERIOD 1.4.2002 TO 31.3.2003 RELEVANT TO ASSESSMENT YEAR I.T.A. NO. 1162,1689 /DEL/2009 4/14 2003-04, ASSESSEE COMPANY HAD PURCHASED SECOND FLOOR IN PROPERTY NO.G-25, GREEN PARK (MAIN), NEW DELHI. THE ASSESSEE COMPANY DECLARED THE PURCHASE CONSIDERATION OF THIS PROPERTY AT RS.11,84,926/-. BASED ON INFORMATION WIDELY AVAILABLE IN ALL PRINT MEDIAS SUCH AS NEWSPAPERS ETC., ABOUT THE ENHANCED PROPERTY PRICES IN THIS AREA, IT APPEARED THAT THE ASSESSEE HAD NOT TRULY DISCLOSED ITS EXACT QUANTUM OF INVESTMENT IN THE PROPERTY. IN ORDER TO THE VERIFY THE GENUINENESS OF THE QUANTUM OF INVESTMENT MADE BY THE ASSESSEE COMPANY IN THE PURCHASE OF THE SAID PROPERTY, A REFERENCE WAS MADE TO THE DISTRICT VALUATION OFFICER UNDER SECTION U/S 142A OF THE I. T. ACT IN THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE REPORT OF THE DVO WAS NOT RECEIVED UP TO THE DATE OF LIMITATION OF PASSING THE ASSESSMENT ORDER, THE ASSESSMENT WAS PASSED WITH THE OFFICE NOTE THAT APPROPRIATE ACTION BE TAKEN ON RECEIPT OF VALUATION REPORT FROM THE DVO. IN THIS REPORT, THE DVO HAD DETERMINED THE VALUE OF INVESTMENT IN THE SAID PRO9EPRTY AT RS.60,53,700/-. SINCE, THE DIFFERENCE IN THE VALUE DETERMINED BY THE DVO WAS SIGNIFICANTLY HIGHER IN COMPARISON TO THE VALUE DECLARED BY THE ASSESSEE, T HE ASSESSEE COMPANY WAS PROVIDED WITH A COPY OF THE VALUATION REPORT SUBMITTED BY THE DVO WITH THE SHOW CAUSE AS TO WHY ADDITION SHOULD NOT BE MADE ON THE REPORT OF THE VALUATION OFFICER. IN RESPONSE TO TH IS ASSESSEE COMPANY FILED A LETTER WHEREIN THE REPORT OF THE DVO WAS OBJECTED ON VARIOUS COUNTS. SINCE THE REPORT OF THE DVO AS WELL AS THE OBJECTIONS RAISED WERE OF TECHNICAL NATURE, THE OBJECTIONS RAISED WER E FORWARDED TO THE DVO FOR THIS OPINION. NOW, THE DVO HAS FORWARDED HIS REPORT VIDE HIS LETTER DATED 11.12.2006. IN THIS LETTER THE DV O HAS DISMISSED ALL THE OBJECTIONS PUT-FORTH BY THE ASSESSEE IN RESPECT OF HIS VALUATION REPORT IN RESP ECT I.T.A. NO. 1162,1689 /DEL/2009 5/14 OF PROPERTY NO.G-25, GREEN PARK (MAIN), NEW DELHI (SECOND FLOOR). THE ASSESSEE COMPANY HAS SHOWN RS.11,84,926/- AS THE PURCHASE / INVESTMENT IN THE SAID PROPERTY, WHEREAS THE VALUE OF THE PROPERTY HA S BEEN DETERMINED BY THE DVO AT RS.11,84,926/-. AS SUCH, THE DIFFERENCE BETWEEN TWO VALUATIONS IS RS.48,68,774/-. THIS DIFFERENCE REPRESENTS THE UNEXPLAINED INVESTMENT, IN THE SHAPE OF UNEXPLAINED/UNACCOUNTED EXPENDITURE, MADE BY THE ASSESSEE COMPANY ON ACCOUNT OF ACQUIRING OF THE SAID PROPERTY, WHICH IS NOT RECORDED IN THE BOOKS O F ACCOUNTS MAINTAINED BY THE ASSESSEE COMPANY. SINCE, THE SAID AMOUNT IS NOT APPEARING IN THE BOOK S OF ACCOUNTS, THE SAID EXPENDITURE IS MET BY THE ASSESSEE COMPANY BY WAY OF DERIVING INCOME FROM UNDISCLOSED SOURCES. AS SUCH, I AM OF THE OPINION THAT INCOME AT LEAST TO THE EXTENT OF RS.48,68,774/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISIONS OF CLAUSE (C)(I) APPENDED BELOW EXPLANATION 2 TO SECTION 147 READ TOGETHER WITH EXPLANATION 1 OF THE SECTION 147 OF THE I. T. ACT 1 961. TO BRING TO TAX THE INCOME, WHICH HAS ESCAPED ASSESSMENT, NOTICE U/S 148 OF THE I. T. ACT, 1961 I S BEING ISSUED FOR THE ASSESSMENT YEAR 2003-04. SD./- (DR. SANJAY KUMAR LAL) DCIT, CC-8, NEW DELHI. IT WAS THE SUBMISSION THAT FOR THE PURPOSE OF INVOK ING THE PROVISIONS OF SECTION 142A THERE SHOULD HAVE BEEN S OME MATERIAL OR EVIDENCE OR INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE CONSIDERATION SHOWN BY TH E ASSESSEE WAS UNDERSTATED AND THAT ANYTHING ABOVE WH AT WAS DISCLOSED BY THE ASSESSEE HAD ACTUALLY BEEN PAI D I.T.A. NO. 1162,1689 /DEL/2009 6/14 TOWARDS CONSIDERATION. IT WAS THE SUBMISSION THAT READING OF THE REASONS RECORDED CLEARLY SHOWS THAT THERE WA S NO MATERIAL OR EVIDENCE OR INFORMATION IN THE ASSESSEE S CASE. HE FURTHER PLACED RELIANCE ON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF K P VERGHESE REPORTED IN 131 ITR 597 AS ALSO THE DECISION IN THE CASE OF P KALYANSUNDARAM REPORTED IN 294 ITR 49 AS ALSO THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF GULSHAN KUMAR REPORTED IN 257 ITR 703. HE FURTHER PLACED RELIANCE ON THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. RAJESHWAR NATH GUPTA I N I.T.A. NO. 4295/DEL/2005 DATED 09.05.2008 TO SUPPOR T HIS PROPOSITION THAT WITHOUT ANY MATERIAL OR EVIDENCE O R INFORMATION ON THE BASIS OF WHICH IT CAN BE SAID TH AT THE CONSIDERATION SHOWN BY THE ASSESSEE WAS UNDERSTATED , A REFERENCE TO THE DVO BY INVOKING THE PROVISIONS OF SECTION 142A COULD NOT BE MADE. IT WAS THE FURTHER SUBMISSION THAT AGAINST THE AD HOC REDUCTION OF THE ADDITION MADE BY THE A.O. BY AN AMOUNT OF RS.10 LAC S BY THE CIT(A) THE REVENUE HAS FILED THE APPEAL AND THE ASSESSEE HAS CHALLENGED THE NON-DELETION OF THE ADD ITION IN TOTO. IT WAS THE SUBMISSION THAT THE COMPARATIVE C ASE AS TAKEN BY THE DVO WAS OF A MUCH EARLIER PERIOD AND O F A BETTER LOCATED PROPERTY. IT WAS THE FURTHER SUBMIS SION THAT THE ASSESSEE HAD ALSO GIVEN TWO COMPARABLE CASES IN THE I.T.A. NO. 1162,1689 /DEL/2009 7/14 SAME LOCATION AND WHICH WAS ALSO DURING THE PERIOD 2002- 03 & 2003-04 WHEREAS THE COMPARABLE CASE CONSIDERED BY THE DVO WAS OF THE PERIOD 2000-01 AND OF A MUCH BET TER LOCATION. IT WAS THE SUBMISSION THAT AT THE OUTSET THE REFERENCE TO THE DVO ITSELF WAS WRONG AND THE CIT(A ) HIMSELF HAD ACCEPTED THAT THERE WERE DEFECTS IN VAL UATION AS DONE BY THE DVO, THE SAME COULD NOT HAVE BEEN SUSTAINED PARTLY EVEN ON MERITS. IT WAS THE SUBMISS ION THAT THE ADDITION CONFIRMED BY THE CIT(A) IS LIABLE TO B E DELETED. 3. IN REPLY, THE LD. D.R. SUBMITTED THAT THE REFERE NCE TO THE DVO HAD BEEN MADE U/S 142A AS THE A.O. WAS OF THE OPINION THAT THE PURCHASE PRICE AS DECLARED BY THE ASSESSEE WAS LOW ON THE BASIS OF INFORMATION AVAILA BLE IN THE PRINT MEDIA SUCH AS NEWSPAPERS ABOUT THE ENHANCED PRICES OF THE PROPERTY IN THE AREA WHERE T HE ASSESSEE HAD PURCHASED THE PROPERTY. IT WAS THE SUBMISSION THAT THE CIT(A) HAD UPHELD THE COMPARATI VE CASE METHOD FOR THE PURPOSE OF COMPUTATION OF THE F AIR MARKET VALUE OF THE PROPERTY AND CONSEQUENTLY THE A D HOC REDUCTION OF RS.10 LACS GIVEN BY THE CIT(A) WAS LIABLE TO BE DELETED AND THE ORDER OF THE A.O. REST ORED. HE VEHEMENTLY SUPPORTED THE ORDER OF THE A.O. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUS AL OF THE PROVISIONS OF SECTION 142A SHOWS THAT FOR THE I.T.A. NO. 1162,1689 /DEL/2009 8/14 PURPOSE OF ASSESSMENT OR REASSESSMENT WHERE AN ESTIMATION OF THE VALUE OF ANY INVESTMENT IN BULLIO N, JEWELLERY AND OTHER VALUABLE ARTICLES REFERS TO SEC TION 69, 69A, 69B WAS REQUIRED TO BE MADE THE A.O. MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE S UCH VALUE AND REPORT THE SAME TO HIM. FOR THE PURPOSE OF SECTION 69, THE INVESTMENT IS OF ONE WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT S IF ANY MAINTAINED BY THE ASSESSEE AND FOR SECTION 69A, IT RELATES TO MONEY, BULLION, JEWELLERY AND OTHER VALU ABLE ARTICLES AND SUCH MONEY, BULLION, JEWELLERY OR VALU ABLE ARTICLES IS NOT RECORDED OR SHOWN IN THE BOOKS OF ACCOUNTS MAINTAINED IF ANY BY THE ASSESSEE. BUT FO R THE PURPOSE OF SECTION 69B, IF THE ASSESSEE HAS MADE AN Y INVESTMENT OR IS FOUND TO BE THE OWNER OF ANY BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLES AND THE A.O. F INDS THAT THE AMOUNT INCURRED ON MAKING SUCH INVESTMENT OR ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES EXCEEDED THE AMOUNT RECORDED IN THIS BEHAL F IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AN D IF THE ASSESSEE DOES NOT OFFER ANY EXPLANATION ABOUT S UCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE A.O. ACCEPTABLE, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESS EE FOR SUCH FINANCIAL YEAR. HERE, IT IS NOTICED THAT THE I.T.A. NO. 1162,1689 /DEL/2009 9/14 ASSESSEE HAS PURCHASED THE PROPERTY AND HAS SHOWN T HE PURCHASE CONSIDERATION IN HIS BOOKS OF ACCOUNTS. T HUS, IT IS THE PROVISIONS OF SECTION 69B, WHICH HAVE TO BE CONSIDERED IN THE PRESENT CASE. A READING OF THE PROVISIONS OF SECTION 69B SHOWS THAT THE A.O. SHOUL D FIND THAT THE AMOUNT INCURRED ON MAKING SUCH INVESTMENT OR IN ACQUIRING SUCH BULLION, JEWELLERY AND OTHER VALUABLE ARTICLES EXCEEDED THE AMOUNT RECORDE D IN THIS BEHALF IF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THUS, WHAT IS REQUIRED IS A POSITIVE ACT OF A FINDING BY THE A.O. THUS, THE A.O. MUST FIRST ARRI VE AT A FINDING THAT THERE IS AN EXCESS EXPENDITURE INCURRE D BY THE ASSESSEE IN ACQUIRING THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES. IT IS AFTER SUCH A FINDING THAT THE NEXT STAGE OF INVOKING THE PROVISIONS OF SECTION 142A WO ULD COME INTO PLAY TO DETERMINE AS TO WHAT IS THE ACTUA L EXPENDITURE THAT HAS BEEN INCURRED. IT IS FOR THE PURPOSE OF ESTIMATING SUCH EXPENDITURE THAT THE VALUATION I S REFERRED O THE DVO. A PERUSAL OF THE REASONS RECORDED CLEARLY SHOWS THA T THERE IS NO FINDING BY THE A.O. THAT THE ASSESSEE H AS INCURRED ANY EXPENDITURE IN EXCESS AND WHAT HAS BEE N DECLARED. IN FACT A PERUSAL OF THE REASONS RECORDE D SHOWS THAT HE HAS REFERRED THE ISSUE OF VALUATION T O THE DVO ONLY ON THE BASIS OF SPECULATION ALLEGING I.T.A. NO. 1162,1689 /DEL/2009 10/14 INFORMATION IN THE FORM OF NEWSPAPER REPORT ABOUT ENHANCED PROPERTY PRICES IN THE AREA. HERE ALSO TH E INFORMATION IS LACKING CLARITY IN SO FAR AS WHAT DO ES THE NEWSPAPER REPORT TALKS OF. DOES IT REFER TO THE ASSESSEES CASE AND DOES IT TALK OF EARLIER RATES A ND THE NEW RATES. DOES THE REPORT RELATE TO THE PERIOD DU RING WHICH THE ASSESSEE PURCHASED THE PROPERTY. ONE SHO ULD KEEP IN MIND HERE THAT THE ASSESSEE HAD PURCHASED A ND SOLD THE SAME PROPERTY DURING THE RELEVANT ASSESSME NT YEAR ITSELF AND HAD DECLARED THE INCOME FROM THE BUSINESS OF PURCHASE AND SALE OF THE PROPERTY ALSO DURING THE RELEVANT ASSESSMENT YEAR ITSELF. THIS V IEW OF OURS FINDS SUPPORT FROM THE DECISION OF COORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF RAJESHWAR NAT H GUPTA REFERRED TO SUPRA WHEREIN THE COORDINATE BENC H OF THIS TRIBUNAL HAS HELD AS FOLLOWS: A PERUSAL OF THE AFORESAID PROVISIONS SHOWS THAT SECTION 142A IS ATTRACTED, INTER-ALIA, WHERE THE ASSESSEE IS FOUND TO HAVE MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNT OR WHERE ANY SUCH INVESTMENT MADE BY HIM IS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. THE CONDITION PRECEDENT FOR MAKING THE REFERENCE BY INVOKING THE PROVISIONS OF SECTION 142A THUS IS THAT THERE SHOULD BE SOMETHING ON RECORD TO SHOW THAT THE ASSESSEE IN FIRST PLACE HAS MADE SUCH INVESTMENT OUTSIDE THE BOOKS OR THE INVESTMENT SO MADE BY HIM IS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT AND ONCE THIS CONDITION IS SATISFIED, THE QUANTUM OF SUCH INVESTMENT MADE CAN I.T.A. NO. 1162,1689 /DEL/2009 11/14 BE ASCERTAINED BY THE A.O. BY MAKING A REFERENCE U/ S 142A IN ORDER TO MAKE THE ADDITION U/S 69 OR 69B, WHICHEVER IS APPLICABLE. IN THE PRESENT CASE, THE RELEVANT PROPERTY WAS PURCHASED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR RS.15 LACS AND THE AMOUNT OF THE SAID CONSIDERATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACCEPTED EVEN BY TH E A.O. IN THE REASSESSMENT. A PERUSAL OF THE ASSESSMENT ORDER, HOWEVER, SHOWS THAT THERE WAS NO REFERENCE WHATSOEVER MADE BY THE A.O. TO ANY MATERIAL/EVIDENCE/INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID CONSIDERATION SHOWN BY THE ASSESSEE WAS UNDERSTATED AND THAT ANYTHING ABOV E WHAT WAS DISCLOSED BY THE ASSESSEE HAD ACTUALLY BEE N PAID AS CONSIDERATION. THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE DVO BY INVOKING THE PROVISIONS OF SECTION 142A THUS WAS NOT SATISFIED I N THE PRESENT CASE AND NEITHER THE SAID REFERENCE NOR THE ADDITION MADE ON THE BASIS OF REPORT OBTAINED FORM THE DVO IN RESPONSE TO THE SAID REFERENCE, IN OUR OPINION, WAS SUSTAINABLE IN LAW AS RIGHTLY HELD BY THE LD. CIT(A). IN THE CASE OF SUBHASH CHAND CHOPRA VS ACIT- 92 TTJ 1087, THIS BENCH OF THE TRIBUNAL HAS HELD THAT NO MATERIAL OR EVIDENCE HAVING BEEN RECOVERED DURING THE COURSE OF SEARCH SHOWING INVESTMENT IN CONSTRUCTION, THE A.O. WAS NOT COMPETENT TO MAKE A REFERENCE TO THE DVO U/S 142A AND TO MAKE ADDITION ON THAT BASIS. IN THE CASE OF K.P. VERGHESE (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, HON'BLE SUPREME COURT HAD AN OCCASION TO CONSIDER A SIMILAR ASPECT IN THE CONTEXT OF COMPUTATION OF CAPITAL GAINS AND IT WAS HELD BY THEIR LORDSHIPS THAT THE BURDEN TO PROVE TH AT THE CONSIDERATION FOR THE TRANSFER OF A CAPITAL ASS ET HAS BEEN UNDERSTATED BY THE ASSESSEE OR IN OTHER WORDS THE FULL VALUE OF CONSIDERATION IN RESPECT OF THE TRANSFER IS SHOWN AT A LESSER FIGURE TAN THAT ACTUA LLY I.T.A. NO. 1162,1689 /DEL/2009 12/14 RECEIVED BY THE ASSESSEE AS ALLEGED, IS ON THE REVENUE. FOLLOWING THE SAID DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K.P. VERGHESE (SUPRA), HON'BLE HIGH COURT OF DELHI HAS HELD IN THE CASE OF GULSHAN KUMAR (SUPRA) THAT THERE BEING NO MATERIAL ON RECORD TO SHOW THAT THE SALE CONSIDERATION WAS UNDERSTATED OR THAT THE ASSESSEE HAD RECEIVED ANYTHING DIRECTLY OR INDIRECTLY OVER AND ABOVE THE DECLARED VALUE OF THE SHARES, THE ADDITION MADE ON ACCOUNT OF DEEMED CAPITAL GAINS WAS NOT SUSTAINABLE. IN THESE CIRCUMSTANCES, THE REFERENCE MADE BY THE A .O. BY INVOKING THE PROVISIONS OF SECTION 142A IS FOUND TO BE WITHOUT JUSTIFICATION AND CONSEQUENTLY NO ADDITION CAN BE MADE ON THE BASIS OF VALUATION MADE BY THE DVO. 5. IN RESPECT OF THE MERITS OF THE ADDITION, WHICH HAS A BEARING TO THE REVENUES APPEAL, IT IS NOTICED THAT THE ASSESSEE DID REPRESENT BEFORE THE A.O. THAT THE VAL UATION REPORT OF THE DVO CONTAINS VARIOUS DEFECTS. THIS W AS DONE BY A LETTER-DATED 17.11.2006. A PERUSAL OF TH E ASSESSMENT ORDER SHOWS THAT THE A.O. HAS NOT CONSIDERED THE OBJECTION FILED BY THE ASSESSEE. IT IS FURTHER NOTICED THAT THE CIT(A) HAS CONSIDERED THE OBJECTION AND HAS FOUND WEIGHT IN THE OBJECTION AND HAD CONSEQUENTLY MADE AN AD HOC REDUCTION OF RS.10 LACS FROM THE ADDITION MADE BY THE A.O. WHICH WAS ON THE BASIS OF THE DIFFERENCE BETWEEN THE VALUE AS DECLAR ED BY THE ASSESSEE AND THE VALUE AS ESTIMATED BY THE DVO. I.T.A. NO. 1162,1689 /DEL/2009 13/14 THE CIT(A) HAS FURTHER REJECTED THE COMPARATIVE CAS ES GIVEN BY THE ASSESSEE WHICH RELATES TO SALE OF PROP ERTY EXECUTED IN 2001 TO 2003 ON THE GROUND THAT DURING THIS PERIOD THERE WAS NO CIRCLE RATES FIXED FOR VALUATIO N OF THE STAMP DUTY ON THE SALE OF THE PROPERTY. HOWEVE R, IT IS NOTICED THAT IN THE DVOS REPORT THE DVO HAS CONSIDERED A PROPERTY, WHICH WAS SOLD IN MAY 1999. WHERE THERE WAS NO CIRCLE RATES DURING THE YEAR 2001 - 2003 THERE COULD BE NO CIRCLE RATES FOR THE YEAR 19 99. A PERUSAL OF THE ORDER OF THE CIT(A) ALSO CLEARLY SHO WS THAT THE CIT(A) HAS GIVEN REDUCTION TAKING INTO CONSIDERATION THE LOCATION OF THE PROPERTY ON THE 2 ND FLOOR AS AGAINST 1 ST FLOOR TAKEN IN THE COMPARATIVE SALE INSTANCES. A PERUSAL OF THE COMPARATIVE CASE TAKEN BY THE DVO SHOWS THAT THE COMPARATIVE CASE TAKEN IS AL SO OF THE FRONT PORTION AND 1 ST FLOOR PROPERTY WHEREAS THE ASSESSEES PROPERTY IS OF A SIDE ROAD PROPERTY AND ON THE 2 ND FLOOR. IN THESE CIRCUMSTANCES, ONCE THE LD. CIT(A ) HAS ACCEPTED THAT THERE IS A DIFFERENCE BETWEEN THE COMPARATIVE CASE TAKEN BY THE DVO WITH THAT OF THE ASSESSEE OBVIOUSLY THERE CANNOT BE ANY CORRECTION T HAT CAN BE MADE BY THE CIT(A) TO SUCH VALUATION. IN TH ESE CIRCUMSTANCES, THE AD HOC REDUCTION AS GIVEN BY THE CIT(A) ITSELF IS WRONG AS THERE IS NO BASIS OR MET HOD FOR THE REDUCTION. IN FACT, THE DEFECT HAVING BEEN I.T.A. NO. 1162,1689 /DEL/2009 14/14 ACCEPTED THE VALUATION REPORT ITSELF WAS NO MORE A RELIABLE DOCUMENT FOR THE PURPOSE OF MAKING ANY ADDITION AND THE ADDITION ITSELF, WHICH HAS BEEN MA DE ON THE BASIS OF SUCH REPORT IS LIABLE TO BE DELETED IN TOTO AND WE DO SO. IN THESE CIRCUMSTANCES, THE APPEAL OF TH E ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE I S DISMISSED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IN I.T. A. NO. 1162/DEL/2009 IS ALLOWED AND REVENUES APPEAL IN I.T.A. NO. 1689/DEL/2009 IS DISMISSED. 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 05 TH FEB., 2010. SD./- SD./- (K.G. BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:05 TH FEB., 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI