TaxTMI 
TaxTMI 
2015 (7) TMI 250
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....essee craves the right to add, alter or demand any ground of appeal." 3. The grounds raised in the Assessee's Appeal No. 5974/Del/2014 read as under:- "1. That CIT(A) erred in passing order without disposing off ground no. 4 of the grounds of appeal filed before CIT(A) whereas in the appeal order CIT(A) has reproduced ground no. 4 also. 2. The AO erred in taking sales consideration u/s. 48 on the basis of market value as per old valuation report instead of actual sales consideration of Rs. 95,00,000/- as per registered sales deed and as such additions be deleted. 3. That exemption u/s. 54 be allowed to the assessee in respect of "residential property" purchased by the assessee. 4. That CIT(A) erred in holding that case of the assessee is squarely covered u/s. 292BB. 5. The assessee craves leave to add to or amend the aforesaid grounds before disposal of the appeal. 4. First we take up the Revenue's s appeal. The brief facts of the case are that a survey uls 133 of the Income Tax Act was carried out by ADIT(lnv. )Unit -Ill, New Delhi on 06.10.2010 at the premises of Mls Vishal Gold and Precious Stone Pvt. Ltd., B- 5, Near Durga Mandir, Moti Nagar, Delhi. During ....
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....elhi. However, the Assessing Officer was not satisfied with the explanation of the assessee and vide letter dated 21.11.2012, he referred the matter to the valuation officer for estimation of value officer for estimation made by the assessee in the property J-1/161, Rajouri Garden, New Delhi u/s. 142A of the IT Act. The valuation officer vide his letter No. VO-II/ND.IT-05/142-A/2012-13/23 dated 20.3.2013 submitted his valuation report to the Assessing Officer in respect of property J-1/161 Rajouri Garden, New Delhi wherein he assessed the value of such property at Rs. 3,53,30,000/- against its declared value of Rs. 88,60,000/-. Thereafter, the Assessing Officer issued a letter dated 21.03.2013 to the assessee and requested her to explain as to why not the aforesaid property should be valued at Rs. 3,53,30,000/- as per the Report of the Valuation Officer by 22.03.2013. The assessee could not explain the difference in the valuation of the aforesaid property. Therefore, the Assessing Officer. concluded that the assessee failed to explain the investments in the property by establishing the genuineness and her creditworthiness and he added the aggregate values of the property at Rs. 3,5....
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....be cancelled and the order of the AO may be upheld. 8. On the contrary, Ld. Counsel of the assessee relied upon the order passed by the Ld. CIT(A) on the issue involved in the Revenue's Appeal and stated that the Ld. CIT(A) has rightly deleted the addition of Rs. 3,53,30,000/- on account of unexplained income for which the assessee has produced sufficient opportunity before the Revenue Authority. He further stated that the assessee has not filed any additional evidence before the Ld. CIT(A), therefore, there is no question to giving the opportunity to the AO under Rule 46 of the I.T. Rules, 1962. He further stated that the sale consideration received by the assessee is Rs. 95 lacs. There is no evidence on record and sale consideration received by the Assessee is more than Rs. 95 lacs. Therefore, the actual sale consideration as per Section 48 should be Rs. 95 lacs. Ld. Counsel of the assessee further stated that even if it is presumed that sale consideration is as per Valuation Report, then exemption u/s. 54 is allowable on entire capital gain, as assessee has invested entire sale consideration received in new property. In support of his contention, he cited the following decisi....
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....any material discovered' or seized during the search operations. The counsel, however, referred to the case of another property in District Baddi (Himachal Pradesh), in respect of which documentary evidence indicated unaccounted consideration paid by the assessee, referred to by the AO in para 4.3 of his order. At the same time, learned counsel also conceded that no addition to the tax liability of the assessee on account of the said other property has been made. There is no nexus between the property in Baddi (Himachal Pradesh) and the property in Punjabi Bagh (West). There is undoubtedly no material available to even remotely reflect that consideration over and above what was shown to be paid in the registered sale deed of the West Punjabi Bagh property was made over to the seller. In these circumstances, it was not fair in the first place to refer the said property for estimation of its market value by DVO. 9. The assessment of the value by DVO cannot hold primacy over the consideration for which the property was actually acquired. If there is any difference in the shares in consideration borne by the four brothers, it is matter of their inter se understanding. Doubts as ....
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.... of the BOI, Kirti Nagar and Axis Bank, New Delhi 10.4 From the above chart, it is clear that the assessee had made the investment in the aforesaid properties through her bank accounts at Axis Bank, West Kirti Nagar Branch, Delhi & Bank of India, Kirti Nagar Branch, Delhi. It was explained that during the relevant assessment year, the assessee sold a property at 20C/72, West Punjabi Baqh, New Delhi and utilized the sale proceeds for the purchase of property at J-1/161, Rajouri Garden, New Delhi. However, it seems that the Assessing Officer has ignored all the explanations given by the assessee during the course of assessment. From the assessment order, it is also evident that the Assessing Officer has not controverted the explanation given by the assessee regarding the investments made in the aforementioned property. Further, no material has been brought on record by the Assessing Officer to show that the assessee has made any excess investments in the aforesaid property over and above the value recorded in the sale deed. Therefore, we are of the view that the Assessing Officer has grossly erred in making addition of RS.3,53,30,OOO/- on account of investment in the properties at....
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....s shown is not correct or not reliable. The use of the word "require" is not superfluous but signifies a definite meaning whereby some preliminary formation of mind by the AO is necessary which requires him to make a reference to DVO uls 142A. In other words, it is only during the course of pendency of the assessment that the AO can frame his mind to refer the property to DVO. Such mind can be framed if there is a basis to think that the assessee may have understated the cost of construction or whatever is declared by him in this regard is not believable. Ld. CIT(A) has rightly appreciated the all evidences as well as provisions of law and decided the issue in favor of the assessee. 10.7 On perusal of the assessment order, we find that there was no reference whatsoever made by the AO to any material/evidence/information on the basis of which it could be said that the said that the investment shown by the appellant was understated and that anything above what was disclosed by the appellant. Thus, the condition precedent for making reference to the DVO by invoking the provisions of Sec. 142A was not satisfied in the present case. Moreover, on perusal of the assessment order, it is....
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....uation of the property at the fair market value. On the basis of report of the Valuation Officer valuing the property at Rs. 60,53,700 the Assessing Officer had treated the difference between the purchase consideration shown by the assessee and the fair market value as on the date of purchase determined by the ova as unexplained money paid by the assessee for the purchase or the property. 10.9 We further note that there was no finding by the Assessing Officer that the assessee had incurred any expenditure in excess of what had been declared but he had referred the issue of valuation to the ova only on the basis of speculation alleging information in the form of newspaper report about enhanced property prices in the area. In these circumstances, the reference made by the Assessing Officer by invoking the provisions of section 142A was without justification and, consequently, no addition could be made on the basis of valuation made by the DVO. 10.10 To support our finding, we place reliance on the decision of the Hon'ble Supreme Court of India in the case of Sargam Cinema vs. CIT [2011] 197 Taxman 203 (SC) wherein it was held as under:- "4. In the present case, we find that ....
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....t case and neither the said reference nor the addition made on the basis of report obtained from the DVO in response to the said reference, in our opinion, was sustainable in Jaw as rightly held by the learned Commissioner of Income-tax tax (Appeals)." 10.12 We further find that similar views were taken in the cases of Commissioner of Income-tax v. Ambience Developers and Infrastructure(P.) Ltd, [2012] 25 taxmann.com 210 (Delhi), CIT vs Gulshan Kumar [2002] 257 ITR 703 (Delhi), CIT v. P .V. Kalyanasundaram [2007] 294 ITR 49 (SC) Subhash Chand Chopra v. Asst. CIT [2005] 92 TTJ (Delhi) 1087) and K.P Varghese. v. ITO [1981] 131 ITR 597 (SC). 10.13 Under these circumstances, We are of the opinion that the Assessing Officer has erred in referring the matter to the DVO and consequently the DVO's report on the value of investment in the property cannot replace the actual purchase value shown in the purchase deed of the aforesaid property at J-1/161, Rajouri Garden, New Delhi. Hence, the Assessing Officer has erred in adopting the value of the property at J-1/161, Rajouri Garden, New Delhi estimated by the DVO by replacing the value shown in the purchase deed. Ld. First Appellate....
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....oted from records that value of assessee's property as per circle rates was Rs. 2 crores as against sale consideration of Rs. 2.90 crores admitted by assessee - Further, there was nothing on record to suggest that assessee had received more than what was stated in sale deed - Whether in aforesaid circumstances, Assessing Officer had to adopt amount received by assessee as full value of sale consideration for calculating capital gain liable to tax - Held, yes - Whether even otherwise, adoption of report of ova without providing an opportunity of being heard to assessee was against principles of natural justice - Held, yes - Whether, consequently, impugned addition made by Assessing Officer was rightly deleted - Held, yes" 10.15 In the background of the aforesaid discussions and respectfully following the precedents as aforesaid, we are of the considered view that the Ld. CIT(A) was right in observing that the AO has erred in making the addition Rs. 3,53,30,000/- on account of unexplained income of the assessee and accordingly rightly directed the AO to delete the addition in dispute, which in our opinion, does not need any interference on our part, hence, we uphold the same. ....