2010 (8) TMI 217 - HC - Income Tax

Undisclosed payment - Additions on the basis of DVO report - assessee had made investment in properties - 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 Held 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

Summary

Issues:
Challenge to ITAT order under section 260A of the Income-tax Act, 1961 for assessment year 2005-06.

Analysis:
1. The respondent-assessee invested in disputed properties, duly declared in the return, but faced an addition by the Assessing Officer based on a report by the DVO. The ITAT allowed the appeal, highlighting the lack of incriminating evidence and the property being tenanted, diminishing its market value. The ITAT emphasized the absence of material to conclude on any extra payment made by the assessee. The Tribunal found the addition baseless and deleted it.

2. The Revenue challenged the ITAT's decision, arguing that the DVO's report was admissible evidence for the undisclosed investment addition. However, settled law places the burden of proof on the Revenue, requiring them to discharge it before relying on the DVO's valuation. The Supreme Court's judgments emphasized that the DVO's opinion alone is not sufficient without rejecting the books of account, which did not occur in this case. The Tribunal's decision was upheld, emphasizing that the AO cannot refer to the DVO without rejecting the books of account.

3. The Supreme Court rulings further clarified that the DVO's opinion is not substantial for reopening assessments under section 147 of the Income-tax Act, 1961. In this case, no incriminating evidence was found during the search to support any additional payment beyond the registered deed consideration. The absence of any admission by the assessee or adjustment in the seller's case led to the dismissal of the appeal, as no substantial legal question arose.