Appeal details
Counselvise Citation
[2023] 100 COUNSELVISE.COM (IT) 6582 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-10-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
16-08-2023
Assessment Year
2009-2010
Appeal Filed On
25-04-2022
Judgement Text
आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “A” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos.385&386/CHANDI/2022 Ǔनधा[रण वष[ / Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh 11-A, Gen Chanda Singh Colony, Patiala – 147001, Punjab. बनाम ACIT, Central Circle-2, Chandigarh èथायी लेखा सं./PAN NO: AHJPS3586P अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent आयकर अपील सं./ ITA Nos.387&388/CHANDI/2022 Ǔनधा[रण वष[ / Assessment Years: 2009-10 & 2011-12 Shri Avtar Singh 11-A, Gen Chanda Singh Colony, Patiala – 147001, Punjab. बनाम ACIT, Central Circle-2, Chandigarh èथायी लेखा सं./PAN NO: AMWPS9574K अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Rohit Kapoor, & Shri Virsain Aggarwal, CA’s राजèव कȧ ओर से/ Revenue by : Shri Rohit Sharma, CIT-DR स ु नवाई कȧ तारȣख/Date of Hearing : 17.08.2023 उदघोषणा कȧ तारȣख/Date of Pronouncement : 12.10.2023 आदेश/ORDER Per Sanjay Garg, Judicial Member: The captioned appeals in ITA No.385&386/Chandi/2022 and ITA No.387&388/Chandi/2022 has been preferred by the different assessees ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 2 of 20 against the separate orders all dated 24.02.2022 of the Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. Since the facts and issue involved in the captioned appeals are identical and are relating to same search action, therefore, all the captioned appeals were heard together and are disposed of with this common order. First, we take up the Assessee Shri Kawaljit Singh appeal ITA No.385&386/Chandi/2022. 3. ITA No.385&386/Chandi/2022 for AY 2009-10 & 2011-12: The brief facts of the case, as extracted from the assessment order for A.Y 2009-10, are that a search & seizure operation u/s 132 of the Income Tax Act (hereinafter referred to as “the Act”) was carried out on 25.10.2017 at the properties, business & residential premises of the assessee. During the course of search and seizure operation, several incriminating documents were found and seized from the premises of the assessee, which showed that the assessee had made substantial amount of unexplained investment in purchase as well as on construction/renovation of immovable properties, which has not been shown by the assessee in his accounts/ ITR (Income Tax Returns). Therefore, to determine the quantum of unaccounted income invested in various immovable properties, a reference u/s 132(9D) of the Income tax Act, 1961 was made by the DDIT(Inv.) to the Departmental Valuation Officer (DVO) in respect of the properties pertaining to the assessee and other family members vide letter 15.12.2017. The DVO prepared the valuation report and estimated the value of the ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 3 of 20 properties/investment made in the building etc. in the said properties during the relevant assessment years. Thereafter assessment proceedings were initiated in respect six assessment years preceding the date of search as per the provisions of section 153A of the Act. Besides that, the Assessing Officer, exercising his jurisdiction under fourth proviso read with Explanation 1 & 2 thereof to the Sec 153A(1) of the Act, issued notices under section 153A of the Act calling upon the assessee to file returns of income for AYs 2009-10, 2010-11 and 2011-12 also i.e. the assessment years which fall beyond Six Assessment years, but not later than 10 Assessment years from the end of the Assessment year relevant to the previous year in which search was conducted and the Assessing Officer having in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years. 4. The relevant part of the provisions of Section 153A, for the sake of ready reference, is reproduced as under: “Section 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall- a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 4 of 20 manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b)assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years: ............................................... Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; b)the income referred to in clause (a) or part the thereof has escaped assessment for such year or years; and c)the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.” From the above reproduced provisions, it can gathered that reopening u/s 153A beyond six years but not later than ten years can only be made where the AO has documents/evidence in his possession revealing the escapement of income for relevant assessment years and ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 5 of 20 he is satisfied that income escaped assessment with respect to the relevant assessment year is likely to Rs. 50 lacs or more. 4.1. The satisfaction of escapement of income aggregating to fifty lakhs or more of the “Relevant Assessment Years” as defined under Explanation 1 to fourth proviso to section 153A (1) was drawn by the Assessing Officer on the basis of valuation report furnished by the DVO of the properties jointly owned by the assessee with other persons/family members and thereafter calculating the unexplained investment of the assessee on the basis of share of the assessee in the said properties. Besides that one loose receipt/note dated 27.01.2011 was also seized which had noting of payment to be made to the tune of Rs. 1.80 crores against purchase of House No. 762, Sector-8, Chandigarh. The Assessing Officer calculated the unexplained investment of the assessee in the said property at Rs. 45,00,000/- being 1/4 th share. The summary of the documents/evidence relied upon by the Assessing Officer is tabulated as under: Particulars Amount (Rs) Difference in Valuation SCO-118, Phase-2, Urban Estate, Patiala for the A.Y 2009-10 to 2011-12 ( On the basis of valuation report of DVO) 27,25,127 Difference in valuation of shop at GopalLeelaBhawanChowk, Patiala. ( on the basis of valuation report of DVO) 10,73,229 Unexplained investment in purchase of house property 762, Sector 8B, Chandigarh. ( on the basis of loose sheet) 45,00,000 Total 82,98,356 4.2 The Ld. Assessing Officer, therefore, arrived at the satisfaction that the aggregate of income of the assessee which has escaped for the relevant assessment years was more than 50Lakhs (Rs. 8298356/-), hence he reassessed the income of the assessee u/s 153A for the relevant assessment years as under: ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 6 of 20 a) Addition of Rs. 17,00,349/- for AY 2009-10 in respect of difference in valuation of SCO 118 Urban Estate Patiala and joint shop at Gopal Leela Bhawan Chowk Patiala. b) Addition to the tune of Rs.18,39,475/-for A.Y.2010-11 in respect of difference in valuation of SCO 118 Urban Estate Patiala. c) Addition of Rs. 51,27, 402/- (Rs. 627402/- and Rs. 4500000/-) for AY 2011-12in respect of valuation difference of SCO 118 Phase 2 and amount paid for purchase of joint house no 762 Sector 8B, Chandigarh. 5. That against the said assessment orders of the Ld. AO, the assessee filed appeals with the CIT(A) for relevant assessment years. The Ld. CIT(A) vide impugned orders confirmed the additions to the tune of Rs. 1442099/- for A.Y2009-10 and Rs.4500000/- forA.Y.2010- 11. The summary of addition as made by AO and confirmed by CIT Appeal is asunder:- A.Y Particulars Addition made by the A.O Addition confirmed by the CIT Appeal Reason 2009-10 a. Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In the name of HariGopal) Rs.258250/- 0 Wrong assumption of facts by the AO as the property belonged to father of the assessee Sh. HariGopal. As such, Addition was Deleted b. Difference valuation of Joint Shop at GopalLeelaBhawan, Patiala (Share 14.93%) Rs.1442099/- Rs.1442099/- Difference in DVO report. 2010-11 Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In the name of Rs.1839475/- Wrong assumption of facts as the property belonged to father of the assessee Sh. HariGopal. As such, ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 7 of 20 HariGopal) Addition Deleted 2011-12 Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In the name of HariGopal) Rs.627402/- Wrong assumption of facts as the property belongs to father of the assessee Sh. HariGopal. As such, Addition Deleted H.no.762, Sector 8B, Chandigarh (On Money 16000000/4) Rs.4500000/- Rs4500000/- On the basis of loose sheet found during the search action. Rs.8667226/- Rs.5942099/- 6. The additions of Rs. 258250/-, 1839475/- and Rs.62 7402/- have been deleted by theCIT(A) on the ground the said property belonged to Late Sh. HariGopal Singh (father of the appellant) during AY 2009-10, 2010-11 and 2011-12 and that there was no evidence that the assessee has made any investment in the aforesaid property during the relevant years. The Revenue has not filed any appeal against the said deletion of addition made by the AO, however the assessee has come in appeals before us agitating against the additions confirmed by the CIT(A). 7. We have heard the rival contentions and gone through the record. At the outset, the ld. Counsel for the assessee has submitted that no incriminating material except the loose sheet relating to the unaccounted investment of Rs.45,00,000/- (1/4 share of assessee out of total investment of Rs.16000000/-) in House No.762, Sector 8B, Chandigarh relevant to A.Y 2011-12, which amount was less than the prescribed limit of Rs.50,00,000/- as provided under 4 th Proviso to section 153A(1) of the Act. He has contended that no other ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 8 of 20 incriminating document or evidence was available to the A.O showing the escapement of income for the ‘relevant assessment years’ as defined in Explanation 1 to 4 th Proviso to section 153A(1) of the Act. He has contended that the evidence referred to in the Explanation 1 should be tangible evidence and the report obtained of the DVO after the search action, would not fall in the definition of evidence under 4 th Proviso to section 153A(1). He has further relied upon various case laws to stress the point that even in the absence of any corroborating evidence, the addition solely on the basis of the report of the DVO cannot be made even in the normal course or even in case of abated assessment years on the date of search. He has further submitted that the report of the DVO was a mere estimation of investment and would not constitute as conclusive evidence of investment. That even the value of investment estimated by the DVO was highly disputed and cannot be formed basis for reopening of the assessment beyond six years from the date of search. He in this respect has submitted that the DVO has adopted Central Public Works Department (CPWD) rates, whereas, the property in question is situated in the State of Punjab and the DVO, otherwise was supposed to take the State Public Works Department (PWD) rates and that the State PWD rates were more than 25% lesser than the CPWD rates. That even the DVO has added a sum of Rs.4,90,600/- on account of Builder’s Effort, whereas, no evidence that the assessee has given any contract of the construction/renovation of the property to any builder. That even as per the DVO, the properties in question were improved/renovated during difference assessment years. He has further submitted that rather the A.O should have given the deduction of 10% to 15% on the value estimated by the DVO on account of self-supervision and self- purchasing of material. He has further invited our attention to the ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 9 of 20 page 143-148 of the paper-book to submit that in respect of the shop at GopalLeelaBhawanChowk, Patiala, the DVO has given the abstract of cost of investment as under: OUTLET AT LEELA BHAWAN CHOWK, PATIALA FINAN CIAL YEAR Particulars Structure Amount Grand Total Page No. 1993-94 Running business premises in the front Structure-1 Basement 4,86,237/- 18,83,083/- 148 Structure-1 Ground Floor 6,32,416/- Structure-1 First Floor 7,64,430/- 2002-03 Running business premises in the front Structure-2 Second Floor 12,64,240/- 12,64,240/- 148 1996-97 Backside running workshop Structure-3 basement floor 17,44,369/- 57,52,250/- 148 Structure-3 first floor 8,01,738/- Structure-3 second floor 9,02,171 Structure-3 third floor 11,58,704/- 2008-09 Additional items not covered under par 74,53,755/- 74,53,755/- 148 Builders effort 4,90,600/- 4,90,600/- 148 Total 1,63,43,900 /- 8. The ld. Counsel pointing out to the above table has submitted that the DVO has himself noted that the construction has been made from F.Y 1993-94 to 1996-97 and that only on account of additional ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 10 of 20 items/accessories a sum of Rs.7453755/- has been estimated. The ld. Counsel has further invited our attention to the relevant part of the DVO’s report that even out of the additional items Rs.250000/- have been added on account of unforeseen items/work. The ld. Counsel has submitted that the A.O in calculating the difference on valuation has taken the entire figure of Rs.16843900/-, whereas, as noted above the DVO had covered only Rs.7453755/- for the financial year 2008-09 and that the amount of investment of the earlier years cannot be taken for calculating the difference. The ld. Counsel, therefore, has submitted that if the amount taken by the DVO of Rs.7453755/- for F.Y 2008-09 is taken then the difference will be of Rs.40150/- only. The ld. AR in this respect has furnished the following chart of calculation of difference: Calculation as per AO Total valuation Amount as per books of accounts for FY 2008-09 in books of Gopal Sweets Pvt. Ltd. Difference Appellant Share 1,68,43,900/- 71,84,834/- 96,59,066/- 14.60% 14,10,017/- Correct Calculation Amount as per books of accounts for FY 2008-09 in books of Gopal Sweets Pvt. Ltd. Difference Appellant Share 74,53,755/- 71,84,834/- 2,68,921/- 14.93% 40,150/- ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 11 of 20 9. The ld. Counsel has submitted that the difference of amount of investment in the said property at Gopal Leela Bhawan Chowk, Patiala even as per the DVO’s report is a meagre figure Rs.40,150/- which is less than 10% and is liable to be ignored. The ld. Counsel has further submitted that if the difference of valuation on account of 25% less State PWD rates, 10% to 15% saving on account of self- supervision/self-purchase of material is taken and further Rs.250000/- on account of unforeseen expenditure is to be deducted then the resultant figure will be minus. Further that the property situated at SCO 118, Phase II, Urban Estate, Patiala since was owned by the father of the assessee namely Shri Hari Gopal, hence the said property could not have been taken into account by the AO and that the ld. CIT(A) has also deleted the addition in respect of the said property. The ld. Counsel, therefore, has submitted that the total amount for which the AO could have taken note of was Rs.45,00,000/- only, which was less than the prescribed limit of Rs.50,00,000/- as provided under 4 th Proviso to section 153A(1) of the Act. 10. The ld. Counsel has further relied upon the decision of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. Civil Appeal No.6580 of 2021 dated 24.04.2023 reported in [2023] 149 taxmann.com 399 (SC) wherein the Hon’ble Supreme Court has held that in respect of completed/unabated assessments, no addition can be made by the AO in an assessment carried out u/s 153A of the Income Tax Act in the absence of any incriminating material found during the search action. He has further relied upon various case laws ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 12 of 20 to contend that the report of the DVO cannot be construed as an incriminating material found during the course of search and further that addition cannot be made on account of unexplained investment in a property solely on the basis of DVO report without any other corroborating evidence or incriminating evidence found in support of such addition. The relevant part of the case laws/ submissions of the ld. Counsel for the assessee in this respect is reproduced as under: “(i) [2021] 126 taxmann.com 158 (Kolkata - Trib.) IN THE ITAT KOLKATA BENCH 'A' Assistant Commissioner of Income Tax, Central Circle-1(3), Kolkata v. Narula Educational Trust* Section 153A of the Income-tax Act, 1961 -Search and seizure - Assessment in case of (Incriminating material)- Assessment year 2008-09 - A search and seizure operation under section 132 was conducted at office/residence of assessee - Pursuant to search, DDIT (Investigation) made a reference to DVO in respect of valuation of immovable properties held by assessee - DVO furnished valuation report showing value of properties at higher amount than what was shown by assessee - Thus, Assessing Officer invoked assessment for six assessment years 2008-09 to 2012-13 under section 153A and, further, passed an assessment order making addition on account of difference in valuation of properties as submitted by DVO Assessee contended that in absence of any incriminating material found in course of search at premises of assessee, invocation of assessments of assessee under section 153A which were unabated on date of search was unjustified It was noted that on date of search admittedly assessments for said six assessment years 2008-09 to 2012-13 of assessee were not pending before Assessing Officer - Further, there was no whisper/mention of any incriminating material seized during search to justify addition in these unabated assessments valuation report of DVO could not be held to be incriminating material as it was not a fall out of any incriminating material un-earthed during search to suggest any investment in immovable property which was over and above investment shown by assessee in its audited books - Whether, on facts, impugned invocation of proceedings under section 153A followed by an addition were unjustified - Held, yes [Para 28] [In favour of assessee] [Para 28] ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 13 of 20 (ii) [2017] 82 taxmann.com 243 (Ahmedabad - Trib.) IN THE ITAT AHMEDABAD BENCH 'A' Champaklal S. Kasat v. Deputy Commissioner of Income-tax, Cent. Cir. 1(3), Ahmedabad* Section 69 of the Income-tax Act, 1961 - Unexplained investments (Immovable property) - Assessment year 2004-05 - Addition made on account of unexplained investment in respect of property on strength of DVO's report was not justified when during search no incriminating material was found to support such addition [In favour of assessee][Para 4] (iii) 2023 (8) TMI 431 - ITAT DELHl KAY JAY PROJECTS PVT. LTD. VERSUS DCIT, CENTRAL CIRCLE, NOIDA Assessment u/s 153A - Addition towards the cost of construction of the building - Reference made to ld. DVO u/s 142A - HELD THAT:- Admittedly, no incriminating material has been found during the course of search qua this addition towards cost of construction. This fact is evident from the perusal of the orders of the lower authorities. [Refer para 13] Sole basis of the addition is only the valuation report furnished by the DVO which has been obtained by the ld. AO during the course of search assessment proceedings. Then, the said report cannot constitute incriminating material found during the course of search. Hence, we have no hesitation to hold that no addition could be made by placing reliance on the said valuation report while framing the assessment u/s 153A of the Act in the hands of the assessee. This issue is now well settled by the recent decision of Sargam Cinema vs. (2009 (10) TMI 569 – SC ORDER] and in the case of CIT Vs. Nirmal Kumar Aggarwal (2018 (10) TMI 2002- SC ORDER] as referred to supra in the contentions of the ld. AR. (iv) 2022 (5) TMI 1376 - ITAT CHANDIGARH THE DCIT, CENTRAL CIRCLE-1 LUDHIANA VERSUS M/S RAJAN ENTERPRISES AND VICE- VERSA Addition on account of difference in cost of construction as per the books of account and as per the report of the DVO - As it is an undisputed fact on record that no incriminating material or evidence was found during the course of search which could indicate that the assessee had made investment towards cost of construction outside the regular books of account. We also note that the Ld. CIT(A) had deleted the addition in this year by following the order of the Ld. CIT(A) for the immediately preceding assessment year. ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 14 of 20 Since no material was found in the search and seizure operations which could justify the Assessing Officer's action in referring the matter to the DVO for his opinion on valuation of the said properties, then the valuation arrived at by the DVO would be of no consequence. Accordingly, in view of the above cited judicial precedents as well as the factual finding recorded by the Ld. CIT(A) in assessment year 2016- 17, which, in our opinion, is both sound as well as logical, we have no hesitation in upholding the same. Accordingly, the ground raised by the Department on this issue also stands dismissed.[Para 8.3] (v) 2013 (1) TMI 629 - DELHI HIGH COURT Other Citation: (2013] 351 ITR 20 COMMISSIONER OF INCOME TAX VERSUS ABHINAV KUMAR MITTAL Additions u/s 69 - search conducted u/s 132 - notice u/s 153C - valuation of properties referred to District Valuation Officer (DVO) - ITAT deleted the addition - Held that:- No reason to differ from the view taken by the Tribunal as no material was found in the search and seizure operations, which would justify the A0's action in referring the matter to the DVO for his opinion on valuation of the said properties. If that be the case, then the valuation arrived at by the DVO would be of no consequence. In any event, the Tribunal has also, on facts, held that the DVO's valuation was based on incomparable sales, which is not permissible in law - in favour of assessee. [Para 5] (vi) 2021 (10) TMI 1150 - ITAT CHANDIGARH SMT. JATINDER KAUR, SMT. HARBHAJAN KAUR VERSUS THE DCIT CC-1, LUDHIANA Assessment u/s 153A - Undisclosed investment in the residential buildup house - difference in values as declared by the assessee and as opined by the DVO, - Whether no incriminating evidence was found during the course of search relating to the part additions as confirmed by the Worthy CIT(A)? - Tribunal in the second appeal reversed the findings of the Ld. CIT(A) and deleted the addition holding that since no material was found during the search to justify the reference to the DVO, the action was not in accordance with law - HELD THAT:- As in the present case, the authorities below have not pointed out any corroborative evidence to show that the assessee had made investment in question more than the amount declared by the her during assessment proceedings. Hence respectfully following the judgment of Abhinav Kumar Mittal [2013 (1) TMI 629 - DELHI HIGH COURT] we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A).[Para 6& 7] ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 15 of 20 (vii) 2021 (7) TMI 671 - ITAT KOLKATA ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1 (3), KOLKATA VERSUS M/S. JIS FOUNDATION AND (VICE-VERSA) Assessment u/s 153A - Unexplained investment u/s. 69 - valuation report of the District Valuation Officer (DVO) - Estimation of value of assets by Valuation Officer - HELD THAT:- As relying on M/S. NARULA EDUCATIONAL TRUST AND M/S. NARULA EDUCATIONAL TRUST VERSUS DEPUTY COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1 (3), KOLKATA [2021 (2) TMI 459 - |TAT KOLKATA] From the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. - Decided in favour of assessee. [Para 15] (viii) 2013 (5) TMI 637 - ITAT DELHI ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-11, NEVW DELHI VERSUS MS. ASHA KATARIA Addition made upon the valuation done by the DVO - value of the property in this case as reflected in the registered sale deed was Rs. 33,00,000/-. Reference u/s. 142A was made to the DVO who determined the value of the property at Rs.63,74,700/- as against Rs. 33,00,000/- shown by the assessee. Hence, there was difference of Rs. 30,74,700/-. This was added to the income of the assessee. CIT(A) deleted the addition as there was no evidence of adverse material regarding payment of under hand consideration - Held that:- As no other incriminating material was found during the course of search CIT(A) is correct in this regard. Addition in this case has been made pursuant to search on the basis of Valuation Report of the DVO. It has been settled that in case of search in the absence of any incriminating material found during search, no addition can be made on the basis of Report of the DVO. See K.P. Varghese vs. ITO, Ernakulam&Anr. [1981 (9) TMI 1-SUPREME Court],C.I.T. vs. Abhinav Kumar Mittal [2013 (1) TMI 629 - DELHI HIGH COURT], C.I.T. Vs. Mahesh Kumar [2010 (8) TMI 64 - DELHI HIGH COURT]. Thus in the absence of any evidence that the assessee has invested more than value declared in the registered sale deed of property purchased, the addition in this regard on the basis of Valuation Report by the DVO is not sustainable. [Para 50] ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 16 of 20 (ix) 2015 (3) TMI 156 - DELHI HIGH COURTCOMMISSIONER OF INCOME TAX VERSUS NISHI MEHRA, ARUN MEHRA, SUSHIL MEHRA, SUBHASH MEHRA, SURBHI MEHRA, MANJU MEHRA Scope, power and jurisdiction of AO in block assessment proceedings and the term "undisclosed income - AO concluded a comparison between declared value and the value determined by the DVO disclosed serious discrepancy and added the difference and brought them to tax in the block assessment orders – ITAT concluded that the A0 could not have brought to tax the amounts that he ultimately did merely based upon the DVO's report in the absence of any material pointing to under valuation - Held that:- As decided on CIT Versus. Naveen Gera (2010 (8) TMI 194 - Delhi High Court] it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an understatement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO. As apparent from the factual narrative, the materials collected in the search operations impelled the A0 to complete the block assessment in this case. Conspicuously, however, there was no material in the course of the search or collected during the proceedings post search, pointing to under valuation of the assessees' properties which were ultimately held to have been the subject of under valuation. Again, significantly the assessees had at relevant time when the actual purchases were effected disclosed the transactional value of those assets; the A0 has then unreservedly accepted them. Wealth Tax authorities too had accepted the valuation. - Decided in favour of assessee. (x) (2008] 166 Taxman 75 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax, Delhi-VII, New Delhi v. Ashok Khetrapal* Section 158B of the Income-tax Act, 1961 - Block assessment in search cases Undisclosed income - Assessment year 1999-2000- Whether where no incriminating material whatsoever was found during search that might show that assessee had made more investment in properties than their declared value, addition could not be made by treating investment as undisclosed on basis of any DVO's report - Held, yes (xi) (2014] 44 taxmann.com 30 (Karnataka) HIGH COURT OF KARNATAKA Commissioner of Income-tax, Central Circle v. Vasudev Construction* Section 158BB of the income-tax Act, 1961 - Block assessment in search cases - Undisclosed income, computation of (DVO report) - Block ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 17 of 20 period 1-4-1989 to 28-1-2000 - Assessee-firm was engaged in business of construction of building and development of properties - During search, certain documents like bills of materials purchased, labour charges paid, cheques relating to assessee-firm were found and seized - Notice was issued under section 158BD calling upon assessee to file return of undisclosed income for block period 1-4-1989 to 28-1-2000 - Thereafter, valuation of cost of construction of buildings constructed by assessee-firm was referred to DVO, for valuation under section 133(6) - Assessing Officer added difference in valuation of cost of construction adopted by assessee-firm and DVO as undisclosed income - Whether since no material was found during search to indicate that assessee had not recorded expenses incurred on construction in books of account, in absence of any seized materials and solely on basis of DVO's report addition of undisclosed income under section 158BB could not be made - Held, yes [Para 10] [In favour of assessee] 11.1 It has further been held by Hon'ble Delhi High Court and Hon'ble Gujarat High Court that report of the DVO is not binding and no addition can be made in the basis of the standalone valuation report. a) [2013] 35 taxmann.com 296 (Gujarat) HIGH COURT OF GUJARAT Commissioner of Income-tax -| v. Berry Plastics (P.) Ltd.* AKIL KURESHI AND MS. SONIA GOKAN, JJ.TAX APPEAL NO. 340 OF 2013t APRIL 25, 2013 Section 69B, read with section 142A of the Income-tax Act, 1961 – Undisclosed investments [Investment in land and buildings] - Assessment year 2006-07 – During relevant year, assessee made some investment in land and building – Assessing Officer referred matter to DVO who valued land and building at a higher amount - In view of difference between disclosed investment of assessee in purchase of property and DVO's estimation of its fair market value, Assessing Officer added Certain amount to taxable income of assessee under section 69B – Commissioner (Appeals) deleted addition holding that valuation report of DVO could not be a conclusive evidence and there had to be some clinching evidence in form of proof to show that additional consideration had passed between buyer and seller - Tribunal confirmed order of Commissioner (Appeals) - Whether DVO's report may be a useful tool in hands of Assessing Officer, nevertheless it is an estimation and without there being anything more, cannot form basis for addition under section 69B - Held, yes - Whether, therefore, in absence of any other material on record, impugned addition was correctly deleted - Held, yes [Para 9] [ln favour of assessee] b) (2014] 41 taxmann.com 148 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax – VIII v. National Co-operative Consumers Federation of India Ltd.* ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 18 of 20 Section 48 of the Income-tax Act, 1961 - Capital gain - Computation of [Full value of consideration] - Assessment year 2002-03 - Assessee was owner of lease hold land allotted by Delhi Development authority - Assessee entered into an agreement with builder for construction of a building and it was decided that on completion 50 per cent of building was to be handed over to assessee - In addition, builder paid Rs. 30 lakhs to assessee - Assessee submitted valuation report showing cost of its 50 per cent share as Rs. 1.14 crore - While value determined by DVO was Rs.2.13 crore - In builder's books of account, it was Rs. 1.39 crore - Tribunal had accepted figure given in books of account of builder as most authentic figure as that was actual amount which was spent on construction - No discrepancies were found in books of account of builder - Whether DVO's Valuation report per se have an element of discretion and are a matter of opinion and sale consideration received on transfer could be computed at figure shown in books of account of builder - Held, yes (Para 7] [In favour of assessee]” 12. The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 13. In view of the facts on the file coupled with the above submissions of the ld. Counsel for the assessee, it is revealed that the AO has taken into account three properties i.e. one at Leela Bhawan Chowk, Patiala, second at Urban Estate, Patiala and third the loose sheet of payment relating to House No.762, Sector 8B, Chandigarh. Out of the said properties, the second property i.e Urban Estate, Patiala was not owned by the assessee. The conveyance deed of the said property was in the name of Shri Hari Gopal, father of the assessee. The ld. CIT(A) has also categorically held so and deleted the additions made by the AO in respect of investment in the said property and this fact has not been disputed by the revenue in appeal. In respect of first property as discussed above, there is no noticeable difference in the value estimated by the DVO as compared to the investment shown by the assessee in his books of account. The only evidence available to the AO was relating to the loose sheet whereby ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 19 of 20 the unexplained investment of the assessee has been taken by the AO at Rs.45,00,000/-. The provisions of section 153A are in itself is separate code. After the search action u/s 132 of the Act, the assessment/reassessment is reopened for the six years preceding the date of search. However, as laid down by the Hon’ble Supreme Court of PCIT vs. Abhisar Buildwell P Ltd. (supra) no addition can be made in respect of completed/unabated assessment years in assessments carried out u/s 153A in the absence of any incriminating material found during the search action. The assessment years beyond six years but not more than ten years can be reopened u/s 153A of the Act only if the AO is in possession of evidence depicting the escapement of income of aggregating Rs.50,00,000/- or more in such relevant assessment years beyond six years from the date of search. These provisions extending the assessment beyond six years and upto ten years put a stringent condition of possession of evidence with the AO of escapement of income of Rs.50,00,000/- or more. Such provisions extending the scope of assessment beyond six years from the date of search has to be construed strictly and the evidence relied upon by the AO in such assessments of extended period must be a tangible evidence. As noted above, it has been held time and again by various courts of law that the DVO’s report on standalone basis without any corroborating material cannot be construed as incriminating material and hence the additions solely on the basis of the DVO’s report are not sustainable. In the case of the assessee, even there is no difference found out between the investment disclosed by the assessee in the books of account as compared to the DVO’s report in respect of property at Leela Bhawan Chowk, Patiala. Under the circumstances, since the evidence relating to the undisclosed investments in respect of “relevant assessment years” as defined in ITA Nos.385&386/CHANDI/2022 & ITA Nos.387&388/CHANDI/2022 Assessment Years: 2009-10 & 2011-12 Shri Kawaljit Singh & Shri Avtar Singh Page 20 of 20 Explanation 1 to 4 th Proviso of section 153A(1) was less than Rs.50,00,000/-, therefore, the reopening of the assessment of the “relevant years” was bad in law and the same is hereby quashed. 14. In the result, all the these appeals of the assessee stand allowed. 15. ITA No.387&388/Chandi/2022 in the case of Shri Avtar Singh- The facts and issue involved in these appeal are exactly identical, Shri Avtar Singh, being partner in the said property in the same ratio as Shri Kawaljit Singh, therefore, our findings given above in the cases of Shri Kawaljit Singh will mutatis mutandis apply to these appeals also and accordingly the impugned assessments relating to these appeals are also hereby quashed. 16. In the result, all the captioned appeals of the assessee stand allowed. Order pronounced in the Open Court on 12 th October, 2023. Sd/- ( VIKRAM SINGH YADAV) लेखा सदèय/ Accountant Member Sd/- ( SANJAY GARG) ÛयाǓयक सदèय/ Judicial Member Dated: 12.10.2023. RS आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar
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