2010 (12) TMI 846 - HC - Income Tax

Determination of fair market value of property - reference to District valuation officer - section 48 read with section 45(5) - Whether AO bound to accept the value stated in the registered sales deed - held 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 District Valuation Officer. It was also held that the opinion of the Valuation Officer per se was not an information and could not be relied upon without the books of account being rejected which had not been done in that case. - Decided in favor of assessee.

Summary

Issues involved:
1. Referral of fair market value to District Valuation Officer under Income-tax Act.
2. Acceptance of value stated in registered sale deed under sections 48 and 45(5) of the Income-tax Act.
3. Requirement of Revenue to prove extra consideration received over declared value of sale.

Analysis:

Issue 1: Referral of fair market value to District Valuation Officer
The Assessing Officer referred the fair market value of properties purchased by the assessee to the District Valuation Officer (DVO) for determination. The DVO's report indicated a higher value than that stated in the sale deed. The Commissioner of Income-tax (Appeals) allowed the appeal, emphasizing the need for evidence of extra consideration paid by the assessee beyond the sale deed value. The Tribunal upheld this decision, stating that the Revenue must establish the actual additional consideration received. The court reiterated that invoking section 69B requires proof of excess investments beyond recorded amounts, citing the K. P. Varghese case. The court affirmed the Commissioner's decision, dismissing the Revenue's appeal.

Issue 2: Acceptance of value in registered sale deed
The Assessing Officer primarily relied on the DVO's report without additional evidence of extra consideration paid by the assessee. The court referenced past judgments, including K. P. Varghese and CIT v. Smt. Suraj Devi, emphasizing the Revenue's burden to prove income understatement. The court held that the Valuation Officer's opinion alone is insufficient, requiring corroborated evidence. The consistent legal position established in previous cases led to a decision in favor of the assessee against the Revenue, resulting in the appeal's dismissal.

In conclusion, the court's judgment focused on the necessity for the Revenue to substantiate claims of additional consideration beyond sale deed values, emphasizing the burden of proof on the Revenue to establish income discrepancies. The court reiterated the legal principles from previous cases, ultimately ruling in favor of the assessee based on the lack of concrete evidence supporting the Revenue's assertions.