Undisclosed payment and DVO valuation in property purchases: burden on Revenue to prove concealment; appeal dismissed.

Undisclosed payment allegations arising from property investments were assessed with reference to a DVO valuation; the legal basis required the Revenue to first discharge the primary burden of proving understatement or concealment before relying on DVO figures, and no incriminating evidence from search proceedings or any statement under the search provisions was produced to show payments beyond the registered consideration, nor was any corresponding adjustment made against the seller, resulting in the challenge failing for want of substantive proof and the appeal being dismissed.

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Issues: Whether the addition made by the Assessing Officer on account of undisclosed investment in immovable property, based principally on the report of the Departmental Valuation Officer (DVO) and without independent corroborative material or rejection of books of account, is sustainable; and whether valuation should have taken into account that the property was tenanted.

Analysis: The primary burden to prove understatement or concealment of income rests on the Revenue; only after discharge of that burden may reliance be placed on the DVO's valuation. The DVO's opinion alone does not constitute 'information' permitting reopening under section 147, nor is it a substitute for rejecting the assessee's books of account. In the present facts, no incriminating material was recovered during search, no corroborative evidence exists to support payment over the registered consideration, and the Assessing Officer/DVO failed to consider the material fact of tenancy diminishing market value. Further, no corresponding adjustment was made in the hands of the vendor; the books were not shown to have been rejected; and the tribunal's finding that additions lacked corroboration and proper reasons was supported by authority holding that a DVO report cannot be the sole basis for addition or reopening.

Conclusion: The addition based solely on the DVO report, without corroborative evidence or rejection of books and without accounting for tenancy, is unsustainable; decision is in favour of the assessee and the additions are deleted.

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