DCIT, New Delhi V. Mr. Abhinav Kumar Mittal, New Delhi

ITA 4460/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61749 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 06-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: VENKATESH MOHAN ARS
• Keywords: Unexplained investment; Capital asset; Opportunity of being heard; Retrospective amendment; Question of law; Fair market value; Valuation report; Onus to prove
• Section: 133A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENC H BEFORE SHRI U.B.S.BEDI, JM & SHRI A.N. PAHUJA, AM ASSESSEE BY MS. RANO JAIN & SHRI VENKATESH MOHAN ARS REVENUE BY SHRI D.K. MISHRA, DR DATE OF HEARING 20-06-2012 DATE OF PRONOUNCEMENT 29-06-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 6 TH OCT. 2010 BY THE REVENUE AGAINST AN ORDER DATED 30 TH JULY, 2010 OF THE LD. CIT(A)-1,NEW DELHI, RAISES T HE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN LA W AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF ` . 59,78,938/- ON ACCOUNT OF DIFFERENCE IN THE INVESTMENT AS SHOWN BY THE ASSESSEE AND AS ASCERTAINED BY DVO ON VALID AND LEG AL REFERENCE MADE BY AO U/S 142A OF INCOME TAX ACT, 1961 WHICH H AS NO REQUIREMENT FOR AO TO BRING RECORD ANY MATERIAL TO JUSTIFY UNDERSTATEMENT OF PURCHASE CONSIDERATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE LD. CIT(A) IS PERVERSE AS IT DISREGARDED LEGAL PROV ISION OF SECTION ITA NO.4460/DEL/2010 ASSESSMENT YEAR:2006-07 DCIT,CENTRAL CIRCLE-20 , ROOM NO. 333,E-2,ARA CENTRE, JHANDEWALAN EXTENSION NEW DELHI V/S . MR. ABHINAV KUMAR MITTAL V-287, RAJOURI GARDEN NEW DELHI [PAN : AAAAH2567C] (APPELLANT) (RESPONDENT) I.T.A. NO.4460/DEL./2010 2 142A WHILE HOLDING THAT AO FAILED TO BRING ON RECOR D ANY MATERIAL TO JUSTIFY UNDERSTATEMENT OF PURCHASE CONSIDERATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF ` .5978938/- ON ACCOUNT OF DIFFERENCE IN THE PURCHASE CONSIDERATION AS SHOWN BY THE ASSESSEE AND AS ASCERTAINED BY DVO WITHOUT HOLD ING SUCH REFERENCES AS VOID OR BEYOND JURISDICTION. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. 2 . FACTS, IN BRIEF, AS PER THE RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` .39,90,410/- WAS FILED BY THE ASSESSEE ON 18 TH JULY, 2006. SUBSEQUENTLY ON 26 TH APRIL, 2007, A SEARCH U/S 132 OF THE INCOME TAX AC T 1961, (HEREINAFTER REFERRED TO AS THE ACT) AND A SURVEY U/S 133A OF TH E ACT WAS CONDUCTED IN THE PREMISES OF M/S A.K. CAPITAL SERVICES LTD AND ITS G ROUP COMPANIES AS ALSO IN THE PREMISES OF DIRECTORS OF THESE COMPANIES AND THEIR RELATIVES. CONSEQUENTLY, A NOTICE U/S 153 C OF THE ACT WAS ISSUED ON 7 TH OCT. 2009 .IN RESPONSE, THE ASSESSEE REPLIED VIDE THEIR LETTER DATED 13 TH OCT. 2009 THAT RETURN ALREADY FILED ON 18 TH JULY 2006 MAY BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 153 C OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER (AO IN SHORT) REFERRED THE VALUATION OF FOLLOWING PREMISE S TO DVO U/S 142 A OF THE ACT :- I. OFFICE PREMISES NO. 101, KAIVANA BUILDING MALKA NS, NEAR POLYTECHNIC AHMEDABAD.; II. OFFICE PREMISES NO. 102, KAIVANA BUILDING, MAL KANS, NEAR POLYTECHNIC, AHMEDABAD; AND III. COMMERCIAL PROPERTY AT CHOWRANGHEE, KOLKATA. 2.1 THE VALUATION REPORT OF THE DVO WAS HANDED OV ER TO THE ASSESSEE ON 14 TH DEC. 2009 IN RESPECT OF AHEMDABAD PROPERTIES AND ON 24 TH DEC. 2009 IN RESPECT OF KOLKATA PROPERTY. IN HIS REPORT, DVO DET ERMINED THE VALUE OF THE PROPERTY AS UNDER: I.T.A. NO.4460/DEL./2010 3 SL.NO. ADDRESS OF THE PROPERTY VALUE DETERMINED BY DVO[IN ` ] VALUE DECLARED BY THE ASSESSEE [IN ` ] DIFFERENCE [IN ` ] I. 101, KAIVANA BUILDING MALKANS, NEAR POLYTECHNIC AHEMADABAD 44,00,600/- 18,00,000 26,00,600 II 102, KAIVANA BUILDING, MALKANS, NEAR POLYTECHNIC, AHEMDABAD 41,57,300/- 17,36,000 24,21,300 III COMMERCIAL PROPERTY CHOWRANGHEE, KOLKATA 43,19,800 32,11,680 11,08,120 2.2 TO A QUERY BY THE AO, SEEKING TO ADD THE AF ORESAID DIFFERENCE IN TERMS OF PROVISIONS OF SEC. 69 OF THE ACT, THE ASSESSEE REPLIED THAT THE COMPARATIVE INSTANCES ADOPTED BY THE DVO IN RESPECT OF AHMEDAB AD PROPERTIES PERTAINED TO THE PERIOD 1999, 2000 AND 2002 WHERE AS THE ASSESSE E PURCHASED THE PROPERTY ON 16 TH FEB. 2006 .MOREOVER, NO EVIDENCE WAS FOUND DURING THE SEARCH THAT THE ASSESSEE PAID MORE THAN THE COST REFLECTED IN PURC HASE DEED. INTER ALIA, THE ASSESSEE FURNISHED A COPY OF REPORT OF REGISTERED V ALUER, DETERMINING FAIR MARKET O THE PROPERTY AT ` 34,89,930/- IN RESPECT OF TWO PROPERTIES AT AHMEDAB AD. AS REGARDS PROPERTY AT KOLKATTA, THE ASSESSEE PLEADED THAT THE VALUATION WAS BASED ON ESTIMATES AND NO DOCUMENT WAS FOUND DURING THE S EARCH, SUGGESTING THAT THE ASSESSEE PAID MORE THAN WHAT IS REFLECTED IN THE DO CUMENT. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT COMPARABLE SALE INSTANCES IN RESPECT OF AHMEDBAD PROPERTIES WERE AP PROPRIATE AND COST OF PROPERTY IN 2006 WAS MORE THAN THE COST IN 1999. AC CORDINGLY, THE AO ADDED THE AFORESAID DIFFERENCE OF ` .50,21,900/- IN RESPECT OF AHMEDABAD PROPERTIES AN D AN AMOUNT OF ` 9,57,038/- IN RESPECT OF KOLKATA PROPERTY U/S 69 O F THE ACT. 3 ON APPEAL, THE LD. CIT(A) DELETED THE AFORESAID A DDITIONS, HOLDING AS UNDER: THE CONTENTIONS RAISED BY THE ASSESSEE AS WELL AS T HE FINDINGS OF THE ASSESSING OFFICER AND THE MATERIAL ON RECORD HA S BEEN CAREFULLY PERUSED. IT IS SEEN THAT THE ASSESSEE HAS PURCHASED TWO PROPERTIES I.T.A. NO.4460/DEL./2010 4 AT AHEMDABAD AS WELL AS THE PROPERTY AT KOLKATA DUR ING THE INSTANT YEAR BY WAY OF REGISTERED SALE DEEDS. IT IS ALSO SE EN THAT THE SOURCE OF DECLARED INVESTMENT IN THESE PROPERTIES HAS BEEN FOUND TO BE FULLY EXPLAINED IN THE HANDS OF THE ASSESSEE. IT IS FURTHER SEEN THAT NO MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEA RCH ON THE BASIS OF WHICH IT COULD BE SAID THAT THE ASSESSEE H AS MADE ANY INVESTMENT OVER AND ABOVE THE AMOUNT DECLARED BY HI M AND AS EVIDENCED BY THE REGISTERED SALE DEEDS. THE ASSESSI NG OFFICER HAS ALSO NOT GIVEN ANY JUSTIFIABLE REASON FOR REFERRING THESE PROPERTIES TO VALUATION U/S 142A OF THE ACT. I HAVE ALSO PERUSED THE ORDER OF JURISDICTIONAL BENCH OF ITAT IN THE CASE OF RAJESHW AR NATH GUPTA (HUF) AND SUNIL KUMAR JAIN AS CITED BY THE A.R. WHE REIN IT HAS BEEN HELD AS UNDER: 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ADDITIO N IN DISPUTE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT MADE BY THE ASSES SEE IN THE PROPERTY WAS MADE BY THE AO ON THE BASIS OF VALUATION REPORT OBTAINED FROM THE DVO BY MAKING A REFERENCE U/S 142A, THE PROVISIONS OF WHICH READ AS UNDER:- '(ESTIMATE BY VALUATION OFFICER IN CERTAIN CASES. 142A.(1) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VAL UE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE REFERRED TO IN SECTION 69A OR SECTION 69B IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION O FFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO H IM. (2) THE VALUATION OFFICER TO WHOM A REFERENCE IS MADE UNDE R SUB SECTION (1) SHALL, FOR THE PURPOSES OF DEALING WITH SUCH REFERENCE, HAVE ALL THE POWERS THAT HE HAS UNDER SECTION 3 8A OF THE WEALTH TAX ACT, 1957 (27 OF 1957). (3) ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER , THE ASSESSING OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD TAKE INTO ACCOUNT SUCH REPORT IN MAKING SUCH ASSESSMENT OR REASSESSMENT: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APP LY IN RESPECT OF AN ASSESSMENT MADE ON OR BEFORE THE 30TH DAY OF SEPTEMBER 2004 AND WHERE SUCH ASSESSMENT BECOME FINAL AND CONCLUSIVE ON OR BEFORE THAT DATE, EXCEPT IN CASES WHERE A REASSESSMENT IS REQUIRED TO BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. I.T.A. NO.4460/DEL./2010 5 EXPLANATION - IN THIS SECTION, 'VALUATION OFFICER' HAS TH E SAME MEANING AS IN CLAUSE OF SECTION 2 OF THE WEALTH TAX ACT 1957 (27 OF 1957.)' A PERUSAL OF THE AFORESAID PROVISIONS SHOWS THAT SE CTION 142A IS ATTRACTED, INTER ALIA, WHERE THE ASSESSEE IS FOUND TO HAVE MAD E INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTS 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 TH AT THE ASSESSEE IN FIRST PLACE HAS MADE SUCH INVESTMENT OUTSIDE THE BO OKS 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 INVESTM ENT MADE CAN BE ASCERTAINED BY THE ASSESSING OFFICER BY MAKING REFE RENCE 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 B Y THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR RS.15 LAKHS AND TH E AMOUNT OF THE SAID CONSIDERATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACCEPTED EVEN BY THE ASSESSING OFFICER IN THE REASSESSMENT. A PERUSA L OF THE ASSESSMENT ORDER, HOWEVER, SHOWS THAT THERE WAS NO REFERENCE W HATSOEVER MADE BY THE ASSESSING OFFICER TO ANY MATERIAL/EVIDENCE/INFO RMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID CONSIDERATI ON SHOWN BY THE ASSESSEE WAS UNDERSTATED AND THAT ANYTHING ABOVE WH AT WAS DISCLOSED BY THE ASSESSEE HAD ACTUALLY BEEN PAID AS CONSIDERATIO N. THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE DVO BY INVO KING THE PROVISIONS OF SECTION 142A THUS WAS NOT SATISFIED IN THE PRESENT CASE AND NEITHER THE SAID REFERENCE NOR THE ADDITION MADE ON THE BASIS O F REPORT OBTAINED FROM THE DVO IN RESPONSE TO THE SAID REFERENCE, IN OUR O PINION, WAS SUSTAINABLE IN LAW AS RIGHTLY HELD BY THE LEARNED CIT(A). IN TH E CASE OF SUBHASH CHAND CHOPRA VS. ACIT-92 TT J 1087, THIS BENCH OF THE TRI BUNAL HAS HELD THAT NO MATERIAL OR EVIDENCE HAVING BEEN RECOVERED DURING T HE COURSE OF SEARCH SHOWING INVESTMENT IN CONSTRUCTION, THE AO WAS NOT COMPETENT TO MAKE A REFERENCE TO THE DVO U/S 142A AND TO MAKE ADDITION ON THAT BASIS. RESPECTFULLY FOLLOWING THE INTERPRETATION OF PRINCI PLES OF LAW IN THOSE CASES, IT IS HELD THAT THE PROVISIONS OF SECTION 14 2A OF THE ACT CAN BE INVOKED ONLY WHERE THE ASSESSEE IS FIRST FOUND T O HAVE MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTS OR WHERE A NY SUCH INVESTMENT MADE BY HIM IS NOT FULLY DISCLOSED IN TH E BOOKS OF ACCOUNTS. IT IS ONLY ONCE THIS CONDITION IS SATISFI ED, THEN THE ASSESSING OFFICER IS ENTITLED TO MAKE A REFERENCE U /S 142A TO ASCERTAIN THE QUANTUM OF SUCH INVESTMENT FOR MAKING THE ADDITION U/S 69 OR 69B OF THE ACT. IN THE INSTANT CASE HOWEV ER, A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT NO REFERENCE WHATSO EVER HAS I.T.A. NO.4460/DEL./2010 6 BEEN MADE BY THE ASSESSING OFFICER TO ANY MATERIAL/EVIDENCE/INFORMATION ON THE BASIS OF WHICH HE COULD HAVE FOUND THAT THE CONSIDERATION SHOWN BY THE ASSESSEE WAS LESS THAN THE AMOUNT ACTUALLY PAID BY HIM. THUS IN MY CONSIDE RED OPINION THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE D VO IS NOT SATISFIED IN THE INSTANT CASE. IN VIEW OF ABOVE FAC TS AND CIRCUMSTANCES THE CONTENTION OF THE A.R. THAT THE R EFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO ITSELF IS WHOLL Y WRONG, IS ACCEPTED AND UPHELD. I ALSO AGREE WITH THE A.R. THA T FOR INVOKING PROVISIONS OF SECTION 69 OF THE ACT BURDEN IS ON TH E REVENUE TO PROVE THAT THE REAL INVESTMENT EXCEEDS THE INVESTME NT SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IN THIS CASE SUCH BURDEN HAS NOT BEEN DISCHARGED. IT IS SEEN THAT THERE IS N O POSITIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAS PAID ANY AMO UNT OVER AND ABOVE THE DECLARED CONSIDERATION. NO SUCH MATERIAL WAS FOUND EVEN DURING THE COURSE OF SEARCH AND THE A.O. HAS A LSO FAILED TO BRING ON RECORD ANY SUCH MATERIAL WHICH COULD HAVE ENABLED HIM TO INVOKE THE PROVISIONS OF SECTION 69 AND THEN TO MA KE A REFERENCE U/S 142A OF THE ACT. IN MY CONSIDERED VIEW THE CONS IDERATION DECLARED BY THE ASSESSEE IS VE'RIFIABLE FROM THE RE GISTERED SALE DOCUMENTS AND IN THE ABSENCE OF ANY CONTRARY MATERI AL, THE ASSESSING OFFICER HAS ERRED IN MAKING THE IMPUGNED ADDITIONS U/S 69 OF THE ACT. I HAVE ALSO GONE THROUGH THE VALUATI ON REPORT SUBMITTED BY THE DVO AND APART FROM MY FINDING THAT THESE REPORTS CANNOT BE ADMITTED AS AN EVIDENCE IN VIEW OF THE FA CT THAT THE REFERENCE MADE U/S 142A OF THE ACT ITSELF IS WHOLLY WRONG AND UNTENABLE IN LAW, IT IS ALSO SEEN THAT THE SAME ARE BASED ON WHOLLY INCOMPARABLE SALES INSTANCES WHICH ARE NEITHER PROX IMATE IN TIME NOR PROXIMATE IN CHARACTERISTICS. IT IS A SETTLED P RINCIPLE OF LAW THAT ONLY LIKES CAN BE COMPARED WITH LIKES AND IN THIS C ASE IT IS FOUND THAT THE DVO AT KOLKATA AS WELL AS AHEMDABAD HAVE E STIMATED THE FAIR MARKET VALUE OF THE PROPERTY OF THE ASSESSEE O N THE BASIS OF INCOMPARABLE SALES INSTANCE AND THEREFORE ALSO THES E VALUATION REPORTS CANNOT BE CONSIDERED RELIABLE. IT IS ALSO S EEN THAT THE ASSESSING OFFICER HAS FAILED TO TAKE INTO ACCOUNT T HE VALUATION REPORT SUBMITTED BY THE ASSESSEE FROM A REGISTERED VALUER, WHO HAS GIVEN VARIOUS SALES INSTANCES WHICH ARE PROXIMATE B OTH IN TIME AS WELL IN CHARACTERISTICS WITH THE PROPERTY OF THE AS SESSEE. THE LEARNED ASSESSING OFFICER HAS NOT GIVEN ANY BASIS F OR NOT ACCEPTING SUCH SALES INSTANCE AND THE VALUATION REPORT OF THE REGISTERED VALUER. ON THESE FACTS AND CIRCUMSTANCES THE ADDITI ON AS MADE BY THE A.O. WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT ANY INVESTMENT OVER AND ABOVE THE AMOUNT DECLARED BY TH E ASSESSEE HAS ACTUALLY BEEN PAID BY THE ASSESSEE, THE ADDITIO N AS MADE OF ` .50,21,900/- IN RESPECT OF AHEMDABAD PROPERTY AND ` .9,57,038/- IN I.T.A. NO.4460/DEL./2010 7 RESPECT OF KOLKATA PROPERTY U/S 69 OF THE ACT CANNO T BE SUSTAINED AND IS DELETED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD.. CIT(A). THE LD. DR WHILE CARRYING US THROU GH THE ASSESSMENT ORDER AND FINDINGS OF THE LD.CIT(A) ARGUED THAT EVEN THOUGH N O INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THE AO WAS COMPE TENT TO MAKE A REFERENCE U/S 142A OF THE ACT. WHILE SUPPORTING THE COMPARABL E INSTANCES ADOPTED BY THE DVO IN HIS REPORT ,THE LD. DR ARGUED THAT NOTHING P REVENTED THE LD.CIT(A) TO ASCERTAIN COMPARABLE INSTANCES WHEN HE FELT THAT T HE INSTANCES REFERRED TO BY THE DVO IN HIS REPORT, WERE NOT APPROPRIATE. INTER ALIA, THE LD. DR RELIED UPON DECISIONS CIT VS. OM PRAKASH BAGRIA, HUF, 155 TAXM AN 427( MP) & CIT VS. MRS. ACHAMMA CHACKO, 326 ITR 258 (KERALA) . 5. ON THE OTHER HAND, THE LD. AR WHILE SUPPORTING THE FINDINGS OF THE LD..CIT(A) RELIED UPON DECISIONS IN CIT VS. MAHESH KUMAR,196 T AXMAN 415(DELHI);. CIT VS. SMT. SHAKUNTALA DEVI,316 ITR 46(DELHI); SHRI DE VINDER KUMAR VS. DCIT, IN ITA NO.1141 & 1142/DEL./2008; ITO VS. M/S RAJESHWAR NATH GUPTA, HUFIN ITA NO.4295/DEL./2005; SMT. SEEMA GUPTA VS. DCIT, IN IT A NO. 1619/DEL./2008;DCIT VS. SMT. BALESHWARI DEVI IN ITA NOS. 1618&1775/DEL. /2008; DCIT VS. SHRI MAHESH KUMAR IN ITA NOS. 1042 &1785/DEL./2008 &; CI T VS. RAJENDRA SECLEASE LTD. IN ITA NO.791/2009 DATED 25.11.2011. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPON BY BOTH SI DES. THE ISSUE BEFORE US IS AS TO WHETHER REFERENCE MADE BY THE AO TO DVO U/S 142 A OF THE ACT IS VALID REFERENCE AND WHETHER THE AO WAS JUSTIFIED IN MAKIN G ADDITION ON THE BASIS OF REPORT OF THE DVO. PRIOR TO INSERTION OF SEC. 142A BY FINANCE (NO.2) ACT, 2004 WITH RETROSPECTIVE EFFECT FROM 15 TH NOV. 1972, A REFERENCE TO DVO IN ASSESSMENT PROCEEDINGS OTHER THAN AS PERMISSIBLE UNDER S. 55A WAS HELD TO BE INVALID AS HELD BY HON'BLE APEX COURT IN SMT. AMIYA BALA PAUL VS. CIT, 262 ITR 407 (SC). UNDER SEC. 142A, A REFERENCE CAN BE MADE FOR ASSES SMENT OR REASSESSMENT WHERE AN ESTIMATE OF VALUE OF ANY INVESTMENT REFERR ED TO IN S. 69 OR S. 69B OR THE I.T.A. NO.4460/DEL./2010 8 VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE A RTICLES REFERRED IN S. 69A OR 69B IS REQUIRED TO BE MADE. THE AO MAY REQUIRE THE DVO TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. IN THE INSTA NT CASE,. THERE IS NOTHING TO SUGGEST THAT ANY INCRIMINATING DOCUMENT WAS FOUND A ND SEIZED DURING THE COURSE OF SEARCH OR SURVEY ON 26-04-2007 IN THE PREMISES O F THE AFORESAID GROUP. IN THE ORIGINAL RETURN FILED, THE ASSESSEE DECLARED INCOM E FROM SALARY AND HOUSE PROPERTY. A MERE GLANCE AT THE ASSESSMENT ORDER REV EALS THAT THERE IS NO REFERENCE TO ANY MATERIAL/EVIDENCE/INFORMATION ON T HE BASIS OF WHICH IT COULD BE SAID THAT THE COST OF CONSTRUCTION SHOWN BY ASSESS EE WAS UNDERSTATED OR ANYTHING ABOVE WHAT WAS DISCLOSED BY ASSESSEE . IN TERMS OF PROVISIONS OF SEC.142A OF THE ACT, REFERENCE TO DVO CAN BE MADE O NLY WHEN A REQUIREMENT IS FELT BY THE AO FOR MAKING SUCH REFERENCE AND SUCH A REQUIREMENT WOULD ARISE OR COULD BE FELT ONLY WHEN THERE IS SOME MATERIAL WITH THE AO TO SHOW THAT WHATEVER ESTIMATE ASSESSEE HAS SHOWN IS NOT CORRECT OR NOT R ELIABLE. THE USE OF WORD 'REQUIRE' IS NOT SUPERFLUOUS BUT SIGNIFIES A DEFINI TE MEANING WHEREBY SOME PRELIMINARY FORMATION OF MIND ON OBJECTIVE BASIS BY THE AO IS NECESSARY, WHICH REQUIRES HIM TO MAKE A REFERENCE TO THE DVO U/S 142 A. THE BURDEN IS ON THE REVENUE TO PROVE THAT THE REAL INVESTMENT EXCEEDS T HE INVESTMENT SHOWN BY THE ASSESSEE AND THAT BURDEN HAS TO BE DISCHARGED OBJE CTIVELY. THERE IS NOTHING IN THE ASSESSMENT ORDER NOR THE LD. DR BROUGHT TO OUR NOTICE ANY MATERIAL, SUGGESTING THAT THE ASSESSEE PAID ANY AMOUNT OVER AND ABOVE THE DECLARED CONSIDERATION. NO SUCH MATERIAL WAS FOUND EVEN DURI NG THE COURSE OF SEARCH WHILE THE A.O. HAS ALSO FAILED TO BRING ON RECORD A NY SUCH MATERIAL WHICH COULD HAVE ENABLED HIM TO INVOKE THE PROVISIONS OF SECTI ON 69 AND THEN TO MAKE A REFERENCE U/S 142A OF THE ACT. THE LD. CIT(A) ALSO FOUND THAT REPORT OF THE DVO WAS BASED ON WHOLLY INCOMPARABLE SALES INSTANCES WH ICH WERE NEITHER PROXIMATE IN TIME NOR PROXIMATE IN CHARACTERISTICS. THE AO DID NOT ADDUCE ANY REASONS AS TO WHY THE REPORT OF REGISTERED VALUER SUBMITTED BY THE ASSESSEE WAS FAULTY NOR EVEN CARED TO ANALYSE THE SAID REPORT VIS--VIS RE PORT OF THE DVO. IN THESE CIRCUMSTANCES, THERE IS NO APPARENT BASIS TO NEGAT E THE FINDINGS OF THE LD. CIT(A).A CO-ORDINATE BENCH IN THE CASE OF ITO VS. RAJESHWAR NATH GUPTA IN THEIR I.T.A. NO.4460/DEL./2010 9 DECISION DATED 4.5.2008 IN ITA NO. 4295/DEL./2005, IN THE CONTEXT OF PROVISIONS OF SEC. 142A OF THE ACT, HELD AS FOLLOWS: '15. A PERUSAL OF THE AFORESAID PROVISIONS SHOWS TH AT SECTION 142A IS ATTRACTED, INTER ALIA, WHERE THE ASSESSEE IS FOUND TO HAVE MADE INVE STMENT 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 SHOUL D BE SOMETHING ON RECORD TO SHOW THAT THE ASSESSEE IN THE FIRST PLACE HAS MADE SUCH INVESTMENT OUTSIDE THE BOOKS OR THE INVESTMENT SO MADE BY HIM IS NOT FULLY DISCLOSE D IN THE BOOKS OF ACCOUNT AND ONCE THIS CONDITION IS SATISFIED, THE QUANTUM OF SUCH IN VESTMENT MADE CAN BE ASCERTAINED BY THE ASSESSING OFFICER BY MAKING A REFERENCE UNDE R SECTION 142A IN ORDER TO MAKE THE ADDITION UNDER SECTION 69 OR 69B, WHICHEVER IS APPLICABLE. IN THE PRESENT CASE, THE RELEVANT PROPERTY WAS PURCHASED BY THE ASSESSEE DUR ING THE YEAR UNDER CONSIDERATION FOR RS. 15 LAKHS AND THE AMOUNT OF THE SAID CONSIDE RATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACCEPTED EVEN BY THE ASSESSING OFFICER IN THE REASSESSMENT. A PERUSAL OF THE ASSESSMENT ORDER, HOWEVER, SHOWS THA T THERE WAS NO REFERENCE WHATSOEVER MADE BY THE ASSESSING OFFICER TO ANY MAT ERIAL/EVIDENCE/ INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID C ONSIDERATION SHOWN BY THE ASSESSEE WAS UNDERSTATED AND THAT ANYTHING ABOVE WHAT WAS DI SCLOSED BY THE ASSESSEE HAD ACTUALLY BEEN PAID AS CONSIDERATION. THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE DVO BY INVOKING THE PROVISIONS OF SECTION 14 2A THUS WAS NOT SATISFIED IN THE PRESENT CASE AND NEITHER THE SAID REFERENCE NOR THE ADDITION MADE ON THE BASIS OF REPORT OBTAINED FROM THE DVO IN RESPONSE TO THE SAI D REFERENCE, IN OUR OPINION, WAS SUSTAINABLE IN LAW AS RIGHTLY HELD BY THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS). IN THE CASE OF SUBHASH CHAND CHOPRA V. A SST. CIT [2005] 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 C ONSTRUCTION, THE ASSESSING OFFICER WAS NOT COMPETENT TO MAKE A REFERENCE TO THE DVO UN DER SECTION 142A AND TO MAKE ADDITION ON THAT BASIS. IN THE CASE OF K.P. VARGHESE V. ITO [1981] 131 ITR 597 CITED BY LEARNED COUNSEL FOR THE ASSESSEE, THE 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 THAT THE CONSIDERATION FOR THE TRANSFER OF A CAPITAL ASSET HAS BEEN UNDERSTATED BY THE ASSESSEE OR IN OTHER WORDS THE F ULL VALUE OF CONSIDERATION IN RESPECT OF THE TRANSFER IS SHOWN AT A LESSER FIGURE THAN THAT ACTUALLY RECEIVED BY THE ASSESSEE AS ALLEGED, IS ON THE REVENUE. FOLLOWING T HE SAID DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V. ITO [ 1981] 131 ITR 597 , THE HON'BLE HIGH COURT OF DELHI HAS HELD IN THE CASE OF CIT V. GULSHAN KUMAR [2002] 257 ITR 703 THAT THERE BEING NO MATERIAL ON RECORD TO SHOW THAT THE SALE CONSIDERATION WAS UNDERSTATED OR THAT THE ASSESSEE HAD RECEIVED ANYTH ING DIRECTLY OR INDIRECTLY OVER AND ABOVE THE DECLARED VALUE OF THE SHARES, THE ADDITIO N MADE ON ACCOUNT OF DEEMED CAPITAL GAINS WAS NOT SUSTAINABLE.' I.T.A. NO.4460/DEL./2010 10 6.1 FOLLOWING THE AFORESAID DECISION, A SIMILAR VI EW WAS TAKEN IN SEEMA GUPTA(SUPRA) & MAHESH KUMAR(SUPRA).ANOTHER CO-ORDIN ATE BENCH IN THEIR DECISION DATED 28.1.2011 IN DEVINDER KUMAR IN ITA NO.1141/DEL./2011 HELD THAT A REFERENCE U/S 142A OF THE ACT IS INVALID IN THE A BSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. IT WAS HELD BY THE BEN CH AS UNDER: 29. IN VIEW OF THE PRECEDING DISCUSSION, THE LD. C IT(A) HAS CLEARLY ERRED IN HOLDING THAT THE AO WAS WITHIN HIS JURISDICTION TO INVOKE T HE PROVISIONS OF SECTION 142A OF THE ACTIIN THIS CASE. THERE IS NO DENYING THE FACT THAT THE AO CAN SEEK THE HELP OF A SPECIALIST TO DETERMINE THE CORRECT VALUE. HOWEVER, AS DISCUSSED HEREINBEFORE, THE PRIMARY CONDITION OF SECTION 69B NEEDS TO BE MET FI RST, SO AS TO ENABLE THE INVOCATION OF SECTION 142A OF THEACT. TO REITERATE, THE AO CAN MAKE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER, FOR THE PURPOSE OF MAKING ASSESSMENT OR REASSESSMENTONLY WHERE THE ASSESSEE HAS MADE INVE STMENT WHICH ARE NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. SANS THE FULFIL LMENT OF THIS CONDITION OF SECTION 69B, SECTION 142A CANNOT BE TAKEN RECOURSE TO, PART ICULARLY WHEN AFTER THE PHRASE FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSES SMENT UNDER THIS ACT, IT HAS BEEN ENACTED THAT WHERE AN ESTIMATE OF THE VALUE O F ANY INVESTMENT REFERRED TO IN SECTION 69B.IS REQUIRED TO BE MADE. SINCE SECTI ON 69B ENVISAGES ONLY VALUE OF INVESTMENT NOT FULLY RECORDED IN THEBOOKS OF ACCOUN T TO BE DEEMED TO BE THE ASSESSEES INCOME, WHERE THERE IS NO FINDING THAT T HE INVESTMENT MADE BY THE ASSESSEE DOES NOT STAND FULLY RECORDED IN THE BOOKS OF ACCOUNT, OBVIOUSLY, THE VALUE OF SUCH INVESTMENT WOULD NOT REQUIRE TO BE ESTIMATE D, AS SUCH VALUE CANNOT BE DEEMED TO BE THE INCOME OF THE ASSESSEE AND IT IS, THEREFORE, THAT THE PROVISIONS OF SECTION 142A CANNOT BE INVOKED IN SUCH A CASE. 30. THE LD. CIT(A) HAS FURTHER ERRED IN OBSERVING T O THE EFFECT THAT SINCE SECTION 142A ONLY REFERS TO FOR THE PURPOSE OF MAKING ASSESSMEN T OR REASSESSMENT, THE AO CAN REQUISITION THE DEPARTMENTAL VALUATION OFFICER TO E STIMATE THE VALUE OF THE PROPERTY AND HENCE, BEFORE MAKING SUCH A REFERENCE, UNDERSTA TEMENT OF PURCHASE CONSIDERATION IS NOT REQUIRED TO BE ESTABLISHED. TH ERE IS NO QUESTION OF THE UNDERSTATEMENT OF PURCHASE CONSIDERATION REQUIRING TO BE ESTABLISHED BEFORE MAKING THE REFERENCE. RATHER, THE REQUIREMENT IS THAT THE AO BE IN POSSESSION OF SOME MATERIAL SHOWING THAT THE INVESTMENT WAS NOT FULLY DISCLOSED IN THE BOOKS. AS HELD IN M/S. RAJESHWAR NATH GUPTA, HUF (SUPRA), IT IS ONL Y THEN THAT THE QUESTION OF ASCERTAINING SUCH INVESTMENT BY MAKING A REFERENCE U/S 142 A, WOULD CROP UP. MOREOVER, IT CANNOT BE GAINSAID THAT K.P.VARGHESE (SUPRA), STILL HOLDS THE FIELD AND THE ONUS OF THE DEPARTMENT TO PROVE UNDERSTATEMENT OF SALE CONSIDERATION, HAS NOT BEEN DISCHARGED IN THIS CASE. I.T.A. NO.4460/DEL./2010 11 6.2 IT IS WELL SETTLED THAT THE PRIMARY BURDEN OF PROO F TO PROVE THE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE R EVENUE AND IT IS ONLY WHEN SUCH BURDEN IS DISCHARGED THAT IT WOULD BE PERMISSI BLE TO RELY UPON THE VALUATION GIVEN BY THE DVO. [K.P. VARGHESE V. ITO,131 ITR 597 (SC) AND CIT V. SMT. SHAKUNTALA DEVI, 316 ITR 46 (DELHI)]. HONBLE JURI SDICTIONAL HIGH COURT WHILE ADJUDICATING AN IDENTICAL ISSUE IN MAHESH KUMAR(SUP RA) HELD AS UNDER: 10 . MOREOVER, IN THE PRESENT CASE, NO EVIDENCE MUCH LE SS INCRIMINATING EVIDENCE WAS FOUND AS A RESULT OF THE SEARCH TO SUGGEST THAT THE ASSESSEE HAD MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE REGIST ERED SALE DEEDS. IN ANY EVENT, THE FINAL FACT-FINDING AUTHORITY, NAMELY, THE TRIBUNAL HAS ARRIVED AT A FINDING THAT THE INSTANCES OF THE SALE TAKEN INTO ACCOUNT BY THE VAL UATION OFFICER WERE NOT COMPARABLE AS THEY WERE SITUATED FAR AWAY FROM THE LOCATION OF TH E PLOTS PURCHASED BY THE RESPONDENT- ASSESSEE. CONSEQUENTLY, WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THESE TWO APPEALS WHICH, BEREFT OF MERIT, ARE DISMISSED IN LI MINE . 6.3 AS REGARDS DECISIONS RELIED UPON BY THE LD D R, IN OM PRAKASH BAGRIA,HUF(SUPRA) , THE ISSUE WAS AS TO WHETHER T HE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE AOHAD NO JURISDICTION TO TAKE INTO ACCOUNT AND RELY UPON THE VALUATION SUBMITTED BY THE VALUATION OFFICER IN RES PECT OF THE HOUSE PROPERTY BELONGING TO THE ASSESSEE.HONBLE HIGH COURT HELD T HAT THE ASSESSMENT HAVING NOT BECOME FINAL AND CONCLUSIVE ON OR BEFORE SEPTEM BER 30, 2004, PARTICULARLY WHEN THE VERY ISSUE WITH REGARD TO VALUATION OF THE INVESTMENT MADE ON CONSTRUCTION OF BAGRIA TOWERS FOR THE PURPOSE OF SE CTION 69 OF THE ACT AND FOR THE PURPOSE OF ASSESSMENT IS STILL PENDING BEFORE THE H IGH COURT,, THE AO HAD THE JURISDICTION U/S 142A TO MAKE THE REFERENCE TO THE VALUATION OFFICER TO DETERMINE THE ESTIMATE OF THE VALUE OF THE CONSTRUCTION OF BA GRIA TOWERS. IN MRS. ACHAMMA CHACKO(SUPRA), HONBLE HIGH COURT HELD THAT INTRODU CTION OF SECTION 142A WITH RETROSPECTIVE EFFECT MAY VALIDATE THE REFERENCE BY THE AO FOR VALUATION, NO MATTER WHETHER THE ASSESSMENT WAS PENDING AFTER REMAND BY THE CIT (APPEALS) OR NOT. APPARENTLY, THE ISSUES IN THESE TWO CASES WERE QUIT E DIFFERENT AND THUS, THESE DECISIONS,IN OUR OPINION, ARE NOT RELEVANT TO THE ISSUES IN THE INSTANT APPEAL BEFORE US. EVEN OTHERWISE, THE LD. DR DID NOT DEMON STRATE BEFORE US AS TO HOW THESE DECISIONS ARE RELEVANT IN THE INSTANT CASE. I N THESE CIRCUMSTANCES, WE ARE I.T.A. NO.4460/DEL./2010 12 OF THE OPINION THAT THE AFORESAID DECISIONS RELIED UPON BY THE LD. DR ARE NOT OF ANY ASSISTANCE TO THE REVENUE. 6.4 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIO NS REFERRED TO IN PARA 6 TO 6.2, ESPECIALLY WHEN THE LD. DR DID NOT PLACE BEFOR E US ANY MATERIAL CONTROVERTING THE AFORESAID FINDINGS OF THE LD. CIT(A) SO AS TO E NABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE OF THE OPINION THAT, THE REFE RENCE MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 142A IS WITHOUT JUSTIFICATION AND CONSEQUENTLY, NO ADDITION CAN BE MADE ON THE BASIS OF VALUATION M ADE BY THE DVO. THEREFORE, GROUND NOS. 2 TO 4 IN THE APPEAL ARE DISMISSED. 7. .GROUND NO. 1 IN THE APPEAL BEING GENERAL IN NATURE , DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HA VING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO. 5 IN THE APPEAL. ACCO RDINGLY, BOTH THESE GROUNDS ARE DISMISSED. 8. NO OTHER PLEA OR ARGUMENT WAS RAISED BEFORE US . 9. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (U.B.S.BEDI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. DCIT,CENTRAL CIRCLE-20 , NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-1 NEW DELHI 5. DR, ITAT,A BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT