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2015 (2) TMI 1364 - AT - Income TaxUnexplained investment - difference in the investment disclosed by the assessee and as estimated by DVO in purchase of house property - condition precedent for making reference to the DVO u/s.142A - HELD THAT - As in the present case the revenue could not establish that there is any material suggesting that the assessee paid any amount over and above the declared consideration. In term of the provisions of section 142A the reference to DVO can be made only when there is a requirement by the AO for making such reference and such requirement would arise when there is some material with the AO to show that whatever estimate or consideration declared by assessee is not correct or not reliable. The use of the word require is not superfluous but signifies a definite meaning, whereby formation of mind even preliminary on objective basis by the AO is very much necessary. From the bare reading of assessment order, it does not suggest that there is any material which indicates that the assessee has paid any amount over and above the declared consideration for the purpose of making addition of unexplained investment u/s. 69 or 69B of the Act. In the absence of the same, the CIT(A) has rightly deleted the addition. We confirm the same. This issue of revenue s appeal is dismissed. Low drawing for household expenses - CIT(A) directed the AO to delete the addition on account of low withdrawals since the AO made the addition on suspicion without considering the submission that apart from his drawings that there are drawings by his wife as well as drawings from HUF of which assessee is the Karta - HELD THAT - The household drawing has merely been estimated by the AO without pointing out any specific expenditure being incurred by the assessee. We have gone through the provisions of section 69C of the Act and we noted that there must be evidence on record which may prove that the assessee had incurred expenses much more than what has been shown by the family members. In case the Revenue got shifted to the assessee to offer explanation about the source of such expenses to the satisfaction of the AO. Apparent is real onus is on the person who alleges apparent is not real. Our aforesaid view is duly supported by the decision of Daulat Ram Rawatmall ( 1972 (9) TMI 9 - SUPREME COURT - Hence, we find no infirmity in the order CIT(A) and the same is hereby upheld. This ground of revenue s appeal is dismissed.
Issues Involved:
1. Deletion of addition made by AO on account of unexplained investment in house property. 2. Allowing relief on account of low drawing for household expenses. Detailed Analysis: 1. Deletion of Addition Made by AO on Account of Unexplained Investment in House Property Facts and Arguments: - The AO noticed that the assessee made an investment in house property amounting to Rs. 54,32,075 during the relevant assessment year. - The property was purchased from College Estate Ltd. with an agreed total consideration of Rs. 60,36,750. - The AO referred the property to the District Valuation Officer (DVO) for valuation under Section 142A of the Income-tax Act, 1961. - The DVO valued the property at Rs. 1.16 crore using the rental method. - The AO added the differential amount of Rs. 50,05,925 as unexplained investment to the assessee's income. - The assessee argued that the property was under construction, possession was not taken, and the valuation should be in the hands of the builder, not the assessee. - CIT(A) deleted the addition, leading to the revenue's appeal before the Tribunal. Tribunal's Findings: - The Tribunal noted that the property was under construction, and possession was not handed over to the assessee. - It was held that the DVO's valuation method was not appropriate as the property was still under construction. - The Tribunal emphasized that for a reference under Section 142A, there must be material evidence indicating that the investment was not fully disclosed in the books. - The Tribunal cited the case of CIT Vs. Naveen Gera and K.P. Verghese Vs. ITO, stating that the burden of proving understatement of consideration lies with the revenue. - The Tribunal concluded that the AO did not have sufficient material to justify the reference to the DVO and the subsequent addition. - The Tribunal upheld the CIT(A)'s decision to delete the addition, dismissing the revenue's appeal on this ground. 2. Allowing Relief on Account of Low Drawing for Household Expenses Facts and Arguments: - The AO made an addition of Rs. 1,00,000 on account of low household drawings, suspecting that the assessee's drawings were insufficient. - The assessee contended that apart from his own drawings, there were also drawings by his wife and from the HUF of which he is the Karta. - CIT(A) deleted the addition, stating that the AO did not consider these aspects and made the addition based on suspicion without evidence. Tribunal's Findings: - The Tribunal agreed with CIT(A) that the AO did not bring any evidence to justify the addition. - It was noted that the AO estimated the household expenses without pointing out any specific expenditure incurred by the assessee. - The Tribunal referenced Section 69C of the Act, indicating that there must be evidence on record to prove that the assessee incurred higher expenses than shown. - The Tribunal also cited the Supreme Court decision in CIT Vs. Daulat Ram Rawatmall, emphasizing that the onus is on the revenue to prove that the apparent is not real. - The Tribunal upheld the CIT(A)'s decision to delete the addition, dismissing the revenue's appeal on this ground. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on both issues: the deletion of the addition on account of unexplained investment in house property and the relief allowed for low household drawings. The Tribunal emphasized the necessity of concrete evidence and proper valuation methods in such cases.
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