TaxTMI 
TaxTMI 
2020 (2) TMI 1180
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 3,40,89,000/- made by the AO on account of explained income. 2. Admitting the additional evidence without giving the opportunity to AO under Rule 46A. 3. Holding that the reference to DVO held as invalid. 4. The assessee craves the right to add, alter or demand any ground of appeal." 3. The grounds raised in the Revenue's Appeal No. 3820/Del/2014 (AY 2009-10) read as under:- "On the facts and circumstances of the case and in law CIT(A) has erred in:- 1. Deleting the addition of Rs. 2,28,46,000/- made by the AO on account of explained income. 2. Admitting the additional evidence without giving the opportunity to AO under Rule 46A. 3. Holding that the reference to DVO held as invalid. 4. The assessee craves the right to add, alter or demand any ground of appeal." 4. At the time of hearing, Ld. Counsel for the assessee stated that the issues involved in these 02 appeals have already been adjudicated and decided by the ITAT, Delhi 'H' Bench, New Delhi vide its common order dated 30.6.2015 passed in Revenue's appeal in ITA No. 5698/Del/2014 i.e. ACIT vs. Smt. Usha Rani Talla and in Assessee's appeal being ITA No. 5974/Del/2014 (AY 2009-10) i.e. Smt. Usha Rani Tall....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court has observed as under:- "8. Having heard the learned counsel for the Revenue, we find the contentions urged in the appeal to be wholly misplaced. It is fairly concede (at bar) by the counsel for the Revenue that the reference to DVO for estimation of the market value of the property in Punjabi Bagh was not based on 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 sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en, New Delhi The assessee also submitted the copies of bank statements 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 makin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s some material with the AO to show that whatever amount the assessee has 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ked the provisions of section 142A and sent the issue to the DVO for valuation 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. 10.10To 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) whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he provisions of section 142A 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 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Appeals) deleted addition made by Assessing Officer - It was noted 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" 10.15In 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 nee....