2015 (6) TMI 182 - HC - Income Tax

Addition u/s 69B - ITAT deleted the addition - estimation of the market value of the property - reference to DV0 - Held that - There is no nexus between the property in Baddi (Himachal Pradesh) and the property in Punjabi Bagh (West). There is undoubtedly no material available to even remotely reflect that consideration over and above what was shown to be paid in the registered sale deed of the West Punjabi Bagh property was made over to the seller. In these circumstances it was not fair in the first place to refer the said property for estimation of its market value by DVO. The assessment of the value by DVO cannot hold primacy over the consideration for which the property was actually acquired. If there is any difference in the shares in consideration borne by the four brothers it is a matter of their inter se understanding. Doubts as to the real value cannot arise from such fact alone. The shop in Bhagirath Place is the property of the assessee. It has been found as a fact by the CIT(Appeals) that the shop had remained vacant throughout the AY. No evidence was gathered by the AO to refute the claim of the assessee to such effect or to show that rent over and above what was declared was realized. The conclusion of the CIT(Appeals) to the contrary was affirmed by ITAT in the order dated 08.08.2014. Both the said authorities have also found on factual inquiry that the assessee had explained the recovery during the search with the help of books of accounts of Wings Pharmaceuticals Pvt. Ltd. There is nothing brought by the Revenue to demonstrate that these pure findings of fact are perverse. - Decided against revenue.

Issues involved:
1. Challenge to the order of the Income Tax Appellate Tribunal (ITAT) regarding Assessment Year 2008-09 under Section 260-A of the Income Tax Act, 1961.
2. Valuation of property under Section 69B of the Act.
3. Addition of rental income under Section 23(4)(b).
4. Addition of unexplained cash under Section 69A.
5. Substantial questions of law raised by the Revenue.

Detailed Analysis:
1. The appeal challenged the ITAT's order regarding Assessment Year 2008-09. The assessee, a resident individual associated with a pharmaceutical company, was covered in a search and seizure action. The Assessing Officer (AO) noted discrepancies in property valuation and rental income, leading to additions under Sections 69B and 23(4)(b) of the Act. Additionally, unexplained cash found during the search was added under Section 69A.

2. The AO referred the property valuation to the Departmental Valuation Officer (DVO) based on suspicions of under-valuation. The DVO estimated the property value higher than the declared value, resulting in an addition under Section 69B. However, the High Court found no material to support the valuation discrepancy and dismissed the addition, emphasizing that the DVO's assessment cannot override the actual consideration paid for the property.

3. Regarding the rental income addition under Section 23(4)(b), the AO assessed a higher rental value for a shop owned by the assessee. The CIT(A) and ITAT found no evidence to support the AO's assessment, noting that the shop remained vacant throughout the assessment year. The courts upheld the assessee's explanation and dismissed the addition, as there was no evidence to refute the claim.

4. The AO added unexplained cash found during the search under Section 69A. However, the ITAT found no substantial evidence to support this addition, and the High Court concurred, stating that the Revenue failed to demonstrate any illegality or infirmity in the ITAT's decision.

5. The Revenue raised substantial questions of law, challenging the ITAT's decisions on various additions. However, the High Court found the contentions misplaced and dismissed the appeal, stating that there was no nexus between the properties in question and no material to support the Revenue's claims. The Court concluded that no substantial question of law arose, and the appeal was dismissed.

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