Unexplained investment and 80G disallowance: small DVO variance without evidence cannot sustain addition, and disallowance cannot exceed the claim

A marginal gap of about 6.42% between declared land consideration and a later DVO valuation, without direct or corroborative evidence of any extra cash payment, was treated as an estimation difference insufficient to support an addition for unexplained investment, and the deletion was upheld. For the 80G donation issue, the assessee had claimed only 50% of the donation in the return, so any disallowance had to be confined to the amount actually claimed and could not exceed that figure; the restricted disallowance was therefore sustained. The Revenue's challenge to both additions failed and the appellate order was upheld.

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Issues: (i) Whether the addition for alleged on-money payment on purchase of land was sustainable on the basis of the DVO valuation and seized material. (ii) Whether the disallowance of donation claimed under section 80G was to be sustained in full or restricted to the amount actually claimed.

Issue (i): Whether the addition for alleged on-money payment on purchase of land was sustainable on the basis of the DVO valuation and seized material.

Analysis: The difference between the registered consideration and the DVO valuation was only about 6.42%. The valuation itself was made years after the transaction and the record did not contain direct or corroborative evidence establishing any cash payment over and above the registered sale consideration. A marginal difference of this nature was treated as within the permissible range of estimation error and, by itself, insufficient to infer understatement of consideration or unexplained investment.

Conclusion: The addition was not sustainable and was rightly deleted, in favour of the assessee.

Issue (ii): Whether the disallowance of donation claimed under section 80G was to be sustained in full or restricted to the amount actually claimed.

Analysis: The donee trust's registration was effective from 31-05-2017 and the donation was made earlier, but the record showed that the assessee had claimed only 50% of the donation amount in the return. The disallowance therefore had to match the amount actually claimed, rather than the entire donation paid.

Conclusion: The disallowance was correctly restricted to the claimed amount and the balance deletion was justified, in favour of the assessee.

Final Conclusion: The appellate order of the first appellate authority was upheld and the Revenue's challenge to both additions failed.

Ratio Decidendi: A small difference between DVO valuation and declared consideration, without corroborative evidence of extra consideration, cannot by itself justify an addition for unexplained investment; and a deduction disallowance cannot exceed the amount actually claimed in the return.

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