2010 (9) TMI 139 - HC - Income Tax

Valuation of asset - AO has worked out the difference in assets by making a reference to DVO - AO had not brought any material on record to prove that assessee had received consideration more than what was mentioned in the sale deed -Assessing Authority (AO) could not have referred the matter to the Departmental Valuation Officer (DVO) without books of accounts being rejected - books were never rejected - Held that - Department sought reopening of the assessment based on the opinion given by the District Valuation Officer (DVO) - Opinion of the DVO per se is not an information for the purposes of reopening assessment under Section 147 - no merit in the Civil Appeal - The Department was not entitled to reopen the assessment Appeal is dismissed.

Summary

Issues:
1. Appeal filed under Section 260A of the Income Tax Act,1961 challenging the order of the Tribunal for the Assessment Year 2004-2005.
2. Dispute regarding the fair market value of property for the purpose of Section 50 of the Act.
3. Validity of relying on the opinion of the Departmental Valuation Officer (DVO) without rejection of books of accounts.
4. Reopening of assessment based on the DVO's opinion under Section 147 of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed challenging the Tribunal's order for the Assessment Year 2004-2005 under Section 260A of the Income Tax Act, 1961. The Tribunal had rejected the argument that the Assessing Officer could resort to the fair market value of the property in the absence of transfer documents. The Tribunal held that the AO had not provided evidence to prove that the consideration received was more than stated in the sale deed. The burden of proof lies with the Revenue to show under-statement or concealment of income before relying on the DVO's valuation, as per established legal precedents.

2. The Court agreed with the Tribunal that without incriminating evidence of additional payment, the Revenue must prove under-statement of income before relying on the DVO's valuation. The Court cited various cases to support this principle. Additionally, the Court emphasized that the DVO's opinion alone cannot be considered as information and relied on a Supreme Court order that set aside a judgment based on the DVO's report due to the books of accounts not being rejected.

3. The Supreme Court's decision in a related case highlighted that the DVO's opinion is not sufficient information for reopening assessments under Section 147 of the Income Tax Act, 1961. The AO must apply their mind to the information collected and form a belief independently. Consequently, the Court found no substantial question of law in the present appeal and dismissed it for lacking merit, aligning with the principles established in previous judgments.

This detailed analysis of the judgment addresses the issues raised in the appeal comprehensively, focusing on the legal principles and precedents cited by the Court to support its decision.