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TMI Blog2012 (7) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... e holding that AO failed to bring on record any material to justify understatement of purchase consideration. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 5978938/- on account of difference in the purchase consideration as shown by the assessee and as ascertained by DVO without holding such references as void or beyond jurisdiction. 5. The appellant craves leave to add, alter or amend any all of the grounds of appeal before or during the course of the hearing of the appeal." 2. Facts, in brief, as per the relevant orders are that return declaring income of Rs. 39,90,410/- was filed by the assessee on 18th July, 2006. Subsequently on 26th April, 2007, a search u/s 132 of the Income Tax Act 1961, (hereinafter referred to as the Act) and a survey u/s 133A of the Act was conducted in the premises of M/s A.K. Capital Services Ltd and its group companies as also in the premises of Directors of these companies and their relatives. Consequently, a notice u/s 153 C of the Act was issued on 7th Oct. 2009. In response, the assessee replied vide their letter dated 13th Oct. 2009 that return already filed on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid additions, holding as under: "The contentions raised by the assessee as well as the findings of the Assessing Officer and the material on record has been carefully perused. It is seen that the assessee has purchased two properties at Ahemdabad as well as the property at Kolkata during the instant year by way of registered sale deeds. It is also seen that the source of declared investment in these properties has been found to be fully explained in the hands of the assessee. It is further seen that no material has been found during the course of search on the basis of which it could be said that the assessee has made any investment over and above the amount declared by him and as evidenced by the registered sale deeds. The Assessing Officer has also not given any justifiable reason for referring these properties to valuation u/s 142A of the Act. I have also perused the order of jurisdictional bench of ITAT in the case of Rajeshwar Nath Gupta (HUF) and Sunil Kumar Jain as cited by the A.R. wherein it has been held as under: "We have considered the rival submissions and also perused the relevant material on record. It is observed that the addition in dispute on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the relevant property was purchased by the assessee during the year under consideration for Rs.15 lakhs and the amount of the said consideration was paid out of its disclosed sources as accepted even by the Assessing Officer in the reassessment. A perusal of the assessment order, however, shows that there was no reference whatsoever made by the Assessing Officer to any material/evidence/information on the basis of which it could be said that the said consideration shown by the assessee was understated and that anything above what was disclosed by the assessee had actually been paid as consideration. The condition precedent for making a reference to the DVO by invoking the provisions of Section 142A thus was not satisfied in the present case and neither the said reference nor the addition made on the basis of report obtained from the DVO in response to the said reference, in our opinion, was sustainable in law as rightly held by the learned CIT(A). In the case of Subhash Chand Chopra vs. ACIT-92 TT J 1087, this Bench of the Tribunal has held that no material or evidence having been recovered during the course of search showing investment in construction, the AO was not competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are based on wholly incomparable sales instances which are neither proximate in time nor proximate in characteristics. It is a settled principle of law that only likes can be compared with likes and in this case it is found that the DVO at Kolkata as well as Ahemdabad have estimated the fair market value of the property of the assessee on the basis of incomparable sales instance and therefore also these valuation reports cannot be considered reliable. It is also seen that the Assessing Officer has failed to take into account the valuation report submitted by the assessee from a registered valuer, who has given various sales instances which are proximate both in time as well in characteristics with the property of the assessee. The learned Assessing Officer has not given any basis for not accepting such sales instance and the valuation report of the registered valuer. On these facts and circumstances the addition as made by the A.O. without bringing on record any material to show that any investment over and above the amount declared by the assessee has actually been paid by the assessee, the addition as made of Rs.50,21,900/- in respect of Ahemdabad property and Rs.9,57,038/- in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing to suggest that any incriminating document was found and seized during the course of search or survey on 26-04-2007 in the premises of the aforesaid group. In the original return filed, the assessee declared income from salary and House Property. A mere glance at the assessment order reveals that there is no reference to any material/evidence/information on the basis of which it could be said that the cost of construction shown by assessee was understated or anything above what was disclosed by assessee. In terms of provisions of sec.142A of the Act, reference to DVO can be made only when a requirement is felt by the AO for making such reference and such a requirement would arise or could be felt only when there is some material with the AO to show that whatever estimate assessee has shown is not correct or not reliable. The use of word 'require' is not superfluous but signifies a definite meaning whereby some preliminary formation of mind on objective basis by the AO is necessary, which requires him to make a reference to the DVO u/s 142A. The burden is on the Revenue to prove that the real investment exceeds the investment shown by the assessee and that burden has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on shown by the assessee was understated and that anything above what was disclosed by the assessee had actually been paid as consideration. The condition precedent for making a reference to the DVO by invoking the provisions of section 142A thus was not satisfied in the present case and neither the said reference nor the addition made on the basis of report obtained from the DVO in response to the said reference, in our opinion, was sustainable in law as rightly held by the learned Commissioner of Income-tax (Appeals). In the case of Subhash Chand Chopra v. Asst. CIT [2005] 92 TTJ 1087, this Bench of the Tribunal has held that no material or evidence having been recovered during the course of search showing investment in construction, the Assessing Officer was not competent to make a reference to the DVO under section 142A and to make addition on that basis. In the case of K.P. Varghese v. ITO [1981] 131 ITR 597 cited by learned counsel for the assessee, the hon'ble Supreme Court had an occasion to consider a similar aspect in the context of computation of capital gains and it was held by their Lordships that the burden to prove that the consideration for the transfer of a capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment would not require to be estimated, as such value cannot be deemed to be the income of the assessee and it is, therefore, that the provisions of section 142A cannot be invoked in such a case. 30. The ld. CIT(A) has further erred in observing to the effect that since section 142A only refers to 'for the purpose of making assessment or reassessment', the AO can requisition the Departmental Valuation Officer to estimate the value of the property and hence, before making such a reference, understatement of purchase consideration is not required to be established. There is no question of the understatement of purchase consideration requiring to be established before making the reference. Rather, the requirement is that the AO be in possession of some material showing that the investment was not fully disclosed in the books. As held in 'M/s. Rajeshwar Nath Gupta, HUF' (supra), it is only then that the question of ascertaining such investment by making a reference u/s 142 A, would crop up. Moreover, it cannot be gainsaid that 'K.P.Varghese'(supra), still holds the field and the onus of the Department to prove understatement of sale consideration, has not been discharged in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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