Declared Sale Consideration Cannot Be Replaced by Estimated Value Absent Evidence of Extra Payment

Declared sale consideration cannot be substituted by an estimated market value for capital gains in the absence of material showing extra consideration, so the assessee's declared value for the Ashok Vihar property was accepted. A reference under section 55A is confined to capital gains computation and cannot be used to support an addition as unexplained investment under section 69, so the reference for the New Rohtak Road property was invalid. A valuation report obtained on such an invalid reference had no evidentiary value, and the addition based on the higher valuation was unsustainable. The properties were therefore to be taken at the values declared by the assessee.

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Issues: (i) Whether the declared sale consideration of the Ashok Vihar property could be substituted by the value estimated by the valuation officer for computing capital gains in the absence of material showing extra consideration. (ii) Whether a reference under section 55A for determining the fair market value of the New Rohtak Road property was valid where it was made for the purpose of making an addition as unexplained investment under section 69, and whether the valuation report could be relied upon.

Issue (i): Whether the declared sale consideration of the Ashok Vihar property could be substituted by the value estimated by the valuation officer for computing capital gains in the absence of material showing extra consideration.

Analysis: The assessee had declared the sale price in the sale deeds and the Revenue did not bring any cogent material to show that anything over and above the declared consideration had passed. The purchasers' declared investment was also accepted, and the property was a residential one in a purely residential locality, whereas the valuation relied on comparable instances from a commercial area. In such circumstances, the declared consideration could not be discarded merely on the basis of the estimated market value.

Conclusion: The declared sale consideration had to be accepted and the higher valuation was not sustainable.

Issue (ii): Whether a reference under section 55A for determining the fair market value of the New Rohtak Road property was valid where it was made for the purpose of making an addition as unexplained investment under section 69, and whether the valuation report could be relied upon.

Analysis: A reference under section 55A is confined to the computation of capital gains and cannot be used to enquire into unexplained investment for the purpose of section 69. Since the reference was made for a purpose outside that statutory field, it was invalid. A valuation report obtained pursuant to an invalid reference had no evidentiary value for sustaining the addition. No material was brought to show payment of any excess consideration over and above the amount recorded in the sale deed.

Conclusion: The reference was invalid, the valuation report could not be relied upon, and the addition based on the higher valuation was unsustainable.

Final Conclusion: Both properties were directed to be taken at the values declared by the assessee, resulting in deletion of the impugned additions.

Ratio Decidendi: In the absence of material showing payment of consideration over and above the amount stated in the sale deed, the Revenue cannot substitute its own estimated market value; and a reference to the valuation officer under section 55A cannot be made for purposes beyond the computation of capital gains.

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