Commissioner of Income Tax vs Smt. Suraj Devi

Manmohan, J.—The present appeal has been filed u/s 260A of the income tax Act, 1961 (for brevity ""the Act, 1961"") challenging the order

dated July 8, 2009 passed by the income tax Appellate Tribunal (in short ""ITAT"") in I.T.A. No. 3451(Delhi)2008, for the assessment year 2005-

The facts relevant to the present case are that the respondent-assessee had made investment in properties bearing No. 101, Ground Floor,

Bangala Sahib Road, New Delhi and a flat on the first floor of that property. The respondent-assessee had duly registered the purchase deed with

the Sub-Registrar-VI, New Delhi. The said investment was duly declared in the regular return filed by the respondent-assessee. It is pertinent to

mention that the property purchased is a disputed property which is tenanted and whose mutation has not been allowed in the name of the

respondent-assessee by the Land and Development Officer. However, the Assessing Officer (in short ""AO"") made an addition on account of

undisclosed payment having been made by the purchaser/respondent-assessee solely on the basis of the report of the DVO. On an appeal being

filed by the respondent-assessee, the income tax Appellate Tribunal allowed the appeal by observing as under:

During the course of search what the Department recovered was only the registered purchase deed. No other incriminating document

whatsoever was found on the basis of suspicion that the market value of the property is more can be raised, reference to the valuation cell was

made u/s 142(1A). On the basis of the DVO, the market value of the property has been estimated at Rs. 1,50,07,800 as against the consideration

in terms of the registered deed at Rs. 62,50,000 only resulting in addition of Rs. 43,78,900 in the hands of the assessee. Because the DVO,

various objections were raised besides it was pointed out that vacant possession of the shop was not given as there was already a tenant, i.e.,

Indian Overseas Bank. The DVO failed to consider this vital aspect that due to presence of a tenant, the market value of the property in Delhi is

severely diminished. Apart from this, learned counsel vehemently argues that there is no material whatsoever with the Department to come to a

conclusion that any on-money was paid by the assessee, corresponding addition in the case of the vendor Shri Ashok Deish has not been made.

The collateral instances referred to by the DVO are in respect of vacant possession property besides in better locality, therefore, it was claimed

that the matter should not have been referred to the valuation cell u/s 141A and in any case, the addition is not sustainable on the merits in view of

this deficiency...

We have heard the rival contentions and perused the material on record. Learned Departmental representative could not dispute the argument of

the assessee that any incriminating material whatsoever was found during the course of search. There is no other corroborating evidence to

substantiate the addition in respect of cost of acquisition of the assessee''s property. The DVO and the Assessing Officer have not considered the

vital aspect of the property being in possession of a tenant. Since the assessee''s arguments remain uncontroverted, in our considered view, the

arguments of learned counsel deserve merit. The addition has been made on presumption relying only on the report of the DVO, which may be

binding on the Assessing Officer but we have to examine the intrinsic value of the merits for the addition. In our considered view, the addition made

is without any corroborating evidence, proper reasons and an estimate bereft of any corroborating evidence, which is material for making such

addition. In the entirety of the facts and circumstances, we delete the additions made by the lower authorities in respect of this property.

Ms. Prem Lata Bansal, learned counsel for the Revenue submitted that the income tax Appellate Tribunal had erred in law in deleting the

addition of Rs. 48,78,900 made by the Assessing Officer on account of undisclosed investment in purchase of the aforesaid shop and the flat at

Bangla Sahib Road. She further submitted that the income tax Appellate Tribunal had failed to appreciate that the DVO''s report was admissible

evidence for making addition on account of undisclosed investment in the property. Ms. Bansal also relied upon para 3.4.1. of the Assessing

Officer''s order to contend that the respondent-assessee had made a statement which suggested undisclosed investment in the aforesaid property.

It is settled law that the primary burden of proof to prove understatement or concealment of income is on the Revenue and it is only when such

burden is discharged that it would be permissible to rely upon the valuation given by the DVO. (See K.P. Varghese Vs. Income Tax Officer,

Ernakulam and Another, , Commissioner of Income Tax Vs. Smt. Shakuntala Devi, and CIT v. Vinod Singhal (I.T. Appeal No. 482 of 2010

decided by this court on 5-5-2010).

In any event, the opinion of the DVO, per se, is not an information and cannot be relied upon without the books of account being rejected-

which has not been done in the present case. The Supreme Court in its order dated October 19, 2009 in Civil Appeal No. 6973 of 2009 (Sargam

Cinema v. CIT [2010] 328 ITR 513 (SC)) has held as under:

Delay condoned.

Leave granted.

By consent the matter is taken up for final hearing.

In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion

that the assessing authority (AO) could not have referred the matter to the Departmental Valuation Officer (DVO) without books of account being

rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been

considered by the High Court. In the circumstances, reliance placed on the report of the DVO was misconceived.

For the above reasons, the impugned judgment of the High Court is set aside and the order passed by the Tribunal stands restored to the file.

Accordingly, the assessee succeeds.

Civil appeal is allowed. No order as to costs.

Further, the Supreme Court in its order dated February 16, 2010 in Civil Appeal No. 9468 of 2003 ( Asstt. Commissioner of Income Tax Vs.

Dhariya Construction Co., ) has held as under:

Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the

District Valuation Officer (DVO). The opinion of the DVO per se is not an information for the purposes of reopening assessment u/s 147 of the

income tax Act, 1961. The Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon. In the

circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment.

Civil appeal is, accordingly, dismissed. No order as to costs.

Moreover, in the present case, no evidence much less incriminating evidence was found as a result of the search to suggest that the assessee had

made any payment over and above the consideration mentioned in the registered purchase deed. A reading of para 3.4.1. of the Assessing

Officer''s order does not disclose that the respondent-assessee had made any admission in her alleged statement u/s 132(4) of the Act, 1961. In

fact, no such statement has been produced before us. It is also pertinent to mention that no adjustment on account of sale consideration has been

made by the Revenue in the case of the seller. Consequently, we find that no substantial question of law arises in the present appeal which, being

bereft of merit, is dismissed.