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2021 (7) TMI 671 - AT - Income TaxAssessment u/s 153A - Unexplained investment u/s. 69 - valuation report of the District Valuation Officer (DVO) - Estimation of value of assets by Valuation Officer - HELD THAT - As relying on M/S. NARULA EDUCATIONAL TRUST AND M/S. NARULA EDUCATIONAL TRUST VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 (3) KOLKATA 2021 (2) TMI 459 - ITAT KOLKATA From the perusal of panchnama and the assessment orders it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties was without any incriminating materials found during search oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction Therefore no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. - Decided in favour of assessee.
Issues Involved:
1. Validity of additions made based on the District Valuation Officer (DVO) report. 2. Jurisdiction of the DDIT (Inv.) to refer valuation to the DVO. 3. Compliance with the statutory period for submission of the DVO report. 4. Legality of additions in the absence of incriminating material during search for unabated assessment years. Detailed Analysis: 1. Validity of Additions Based on DVO Report: The revenue challenged the deletion of additions made by the AO based on the DVO report. The AO had added back significant amounts to the total income of the assessee trust for various assessment years based on the DVO's valuation report. The assessee objected to the method of valuation and requested re-valuation. The Ld. CIT(A) allowed the additional ground raised by the assessee, holding that the initial DVO report was non-est due to non-submission within the statutory period, thus rendering the additions invalid. 2. Jurisdiction of the DDIT (Inv.) to Refer Valuation to the DVO: The assessee contended that the DDIT (Inv.) did not have the authority to refer the matter to the DVO for valuation of immovable properties before the introduction of section 132(9D) of the Act on 01.04.2017. The Ld. CIT(A) agreed with this contention, noting that the DDIT (Inv.) lacked the power to make such a reference in 2014, which invalidated the initial DVO report used by the AO for making additions. 3. Compliance with the Statutory Period for Submission of the DVO Report: The Ld. CIT(A) found that the DVO failed to submit the valuation report within six months from the end of the month when the reference was first made by the AO, as mandated by section 142A(6) of the Act. This non-compliance rendered the DVO report non-est and invalid for making additions. The Tribunal upheld this finding, emphasizing the statutory time limit for the DVO report. 4. Legality of Additions in the Absence of Incriminating Material During Search for Unabated Assessment Years: The assessee argued that for assessment years 2008-09 to 2012-13, which were not pending before the AO on the date of search, no additions could be made without incriminating material unearthed during the search. The Tribunal agreed, citing the principle that in the case of unabated assessments, additions can only be made based on incriminating material found during the search. Since no such material was found, the additions were deemed unsustainable. Conclusion: - Revenue Appeals Dismissed: The Tribunal dismissed the revenue's appeals for all the assessment years, upholding the Ld. CIT(A)'s deletion of additions based on the invalid DVO report. - Assessee's Appeals Allowed for AY 2008-09 to 2012-13: The Tribunal allowed the assessee's appeals for these years, confirming that no additions could be made without incriminating material for unabated assessments. - Assessee's Appeal Dismissed for AY 2013-14: The Tribunal dismissed the assessee's appeal for AY 2013-14, as it was an abated assessment year where the AO had the authority to reassess the income. The Tribunal's decision was in line with the legal principles established in previous judgments, particularly the Hon'ble Supreme Court's decision in Smt. Amiya Bala Paul vs. CIT and the Hon'ble Delhi High Court's decision in CIT vs. Kabul Chawla.
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