2012 (10) TMI 576 - AT - Income Tax

Addition by DVO - CIT(A)deleted the addition - further addition made by AO while passing order u/s 154 - Held that - CIT(A) by observing that there was no iota of evidence before the AO to arrive at a conclusion that assessee had received something more than what has been disclosed in the books of accounts and there is no room for any estimation for making addition u/s 69B, and for extending the implication of the expression expended used in Section 69B, so far as the sale of the shares is concerned. Accordingly, the addition made in the original assessment by taking the value of Rs.5000 per sq. yard was deleted by the CIT(A). Since CIT(A) observed that since the original order has been decided in favour of the assessee, therefore, the present rectification of the said order which merely goes on to enhance the value of the land for calculation of the value of shares is also consequentially and logically required to be deleted. Enhancement of income on the basis of valuation report of the DVO is itself a debatable issue and, therefore, cannot form part of rectification per se. Thus as the addition made originally has already been deleted by the predecessor of the present Commissioner of Income Tax(A) therefore, further enhancing any addition without any material was also liable to deleted - against revenue.

Summary

Issues:
- Appeal against deletion of addition of Rs.77,50,000 based on valuation of shares of a company.
- Validity of the order passed by the Commissioner of Income Tax(A).
- Assessment of the value of land for calculating the value of shares.

Analysis:
1. The appeal was filed by the Revenue against the deletion of an addition of Rs.77,50,000 based on the valuation of shares of M/s SJS holdings Pvt. Ltd. The original assessment order was passed under section 143(3) and the Assessing Officer reworked the value of shares based on a valuation report received from the Valuation Officer, Ludhiana. This resulted in an additional amount being added to the assessment under section 154, which was challenged by the assessee before the Commissioner of Income Tax(A).

2. The Commissioner of Income Tax(A) allowed the appeal of the assessee, stating that there was no evidence to support the additional addition made by the Assessing Officer. The Commissioner observed that the original order in favor of the assessee had already been decided, and therefore, any rectification enhancing the value of land for share valuation was not justified. The Commissioner noted that the enhancement of income based on the valuation report was a debatable issue and could not be part of rectification. The department failed to provide any material or evidence to counter these findings.

3. The Commissioner's decision was based on the lack of evidence supporting the original addition and the absence of any new material to justify further enhancement. The Commissioner rightly deleted the additional addition, as the original addition had already been deleted by the predecessor of the current Commissioner. The Tribunal confirmed the Commissioner's order, dismissing the appeal of the Revenue.

In conclusion, the judgment focused on the validity of the additional addition made by the Assessing Officer based on the valuation of shares and the subsequent decision of the Commissioner to delete this addition due to lack of evidence and justification. The Tribunal upheld the Commissioner's decision, emphasizing the importance of supporting evidence in such assessments.