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TMI Blog2023 (11) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years beyond six years but not more than ten years can be reopened u/s 153A of the Act only if the AO is in possession of evidence depicting the escapement of income of aggregating Rs.50,00,000/- or more in such relevant assessment years beyond six years from the date of search. These provisions extending the assessment beyond six years and upto ten years put a stringent condition of possession of evidence with the AO of escapement of income of Rs.50,00,000/- or more. Such provisions extending the scope of assessment beyond six years from the date of search has to be construed strictly and the evidence relied upon by the AO in such assessments of extended period must be a tangible evidence. As noted above, it has been held time and again by various courts of law that the DVO's report on standalone basis without any corroborating material cannot be construed as incriminating material and hence the additions solely on the basis of the DVO's report are not sustainable. In the case of the assessee, even there is no difference found out between the investment disclosed by the assessee in the books of account as compared to the DVO's report in respect of proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. The DVO prepared the valuation report and estimated the value of the properties/investment made in the building etc. in the said properties during the relevant assessment years. Thereafter assessment proceedings were initiated in respect six assessment years preceding the date of search as per the provisions of section 153A of the Act. Besides that, the Assessing Officer, exercising his jurisdiction under fourth proviso read with Explanation 1 2 thereof to the Sec 153A(1) of the Act, issued notices under section 153A of the Act calling upon the assessee to file returns of income for AYs 2009-10, 2010-11 and 2011-12 also i.e. the assessment years which fall beyond Six Assessment years, but not later than 10 Assessment years from the end of the Assessment year relevant to the previous year in which search was conducted and the Assessing Officer having in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years. 4. The relevant pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, asset shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. From the above reproduced provisions, it can gathered that reopening u/s 153A beyond six years but not later than ten years can only be made where the AO has documents/evidence in his possession revealing the escapement of income for relevant assessment years and he is satisfied that income escaped assessment with respect to the relevant assessment year is likely to Rs. 50 lacs or more. 4.1. The satisfaction of escapement of income aggregating to fifty lakhs or more of the Relevant Assessment Years as defined under Explanation 1 to fourth proviso to section 153A (1) was drawn by the Assessing Officer on the basis of valuation report furnished by the DVO of the properties jointly owned by the assessee with other persons/family members and thereafter calculating the unexplained investment of the assessee on the basis of share of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition confirmed by the CIT Appeal Reason 2009-10 a. Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In thename of Hari Gopal) Rs.258250/- 0 Wrong assumption of facts by the AO as the property belonged to father of the assessee Sh. Hari Gopal. As such, Addition was Deleted b. Difference valuation of Joint Shopat Gopal Leela Bhawan, Patiala (Share 14.93%) Rs.1442099/- Rs.1442099/- Difference in DVO report. 2010-11 Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In the name of Rs.1839475/- Wrong assumption of facts as the property belonged to father of the assesse Sh. HariGopal. As such, HariGopal) Addition Deleted 2011-12 Difference in Valuation of the property situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years on the date of search. He has further submitted that the report of the DVO was a mere estimation of investment and would not constitute as conclusive evidence of investment. That even the value of investment estimated by the DVO was highly disputed and cannot be formed basis for reopening of the assessment beyond six years from the date of search. He in this respect has submitted that the DVO has adopted Central Public Works Department (CPWD) rates, whereas, the property in question is situated in the State of Punjab and the DVO, otherwise was supposed to take the State Public Works Department (PWD) rates and that the State PWD rates were more than 25% lesser than the CPWD rates. That even the DVO has added a sum of Rs.4,90,600/- on account of Builder's Effort, whereas, no evidence that the assessee has given any contract of the construction/renovation of the property to any builder. That even as per the DVO, the properties in question were improved/renovated during difference assessment years. He has further submitted that rather the A.O should have given the deduction of 10% to 15% on the value estimated by the DVO on account of self-supervision and self- purchasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated. The ld. Counsel has further invited our attention to the relevant part of the DVO's report that even out of the additional items Rs.250000/- have been added on account of unforeseen items/work. The ld. Counsel has submitted that the A.O in calculating the difference on valuation has taken the entire figure of Rs.16843900/-, whereas, as noted above the DVO had covered only Rs.7453755/- for the financial year 2008-09 and that the amount of investment of the earlier years cannot be taken for calculating the difference. The ld. Counsel, therefore, has submitted that if the amount taken by the DVO of Rs.7453755/- for F.Y 2008-09 is taken then the difference will be of Rs.40150/- only. The ld. AR in this respect has furnished the following chart of calculation of difference : Calculation as per AO Total valuation Amount as per books of accounts for FY 2008-09 in books of Gopal Sweets Pvt. Ltd. Difference Appellant Share 1,68,43,900/- 71,84,834/- 96,59,066/- 14.60% 14,10,017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce found in support of such addition. The relevant part of the case laws/ submissions of the ld. Counsel for the assessee in this respect is reproduced as under: (i) [2021] 126 taxmann.com 158 (Kolkata - Trib.) IN THE ITAT KOLKATA BENCH 'A' Assistant Commissioner of Income Tax, Central Circle-1(3), Kolkata v. Narula Educational Trust* Section 153A of the Income-tax Act, 1961 -Search and seizure - Assessment in case of (Incriminating material)- Assessment year 2008-09 - A search and seizure operation under section 132 was conducted at office/residence of assessee - Pursuant to search, DDIT (Investigation) made a reference to DVO in respect of valuation of immovable properties held by assessee - DVO furnished valuation report showing value of properties at higher amount than what was shown by assessee - Thus, Assessing Officer invoked assessment for six assessment years 2008-09 to 2012-13 under section 153A and, further, passed an assessment order making addition on account of difference in valuation of properties as submitted by DVO Assessee contended that in absence of any incriminating material found in course of search at premises of assessee, invocation of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 569 - SC ORDER] and in the case of CIT Vs. Nirmal Kumar Aggarwal (2018 (10) TMI 2002- SC ORDER] as referred to supra in the contentions of the ld. AR. (iv) 2022 (5) TMI 1376 - ITAT CHANDIGARH THE DCIT, CENTRAL CIRCLE-1 LUDHIANA VERSUS M/s. RAJAN ENTERPRISES AND VICE- VERSA Addition on account of difference in cost of construction as per the books of account and as per the report of the DVO - As it is an undisputed fact on record that no incriminating material or evidence was found during the course of search which could indicate that the assessee had made investment towards cost of construction outside the regular books of account. We also note that the Ld. CIT(A) had deleted the addition in this year by following the order of the Ld. CIT(A) for the immediately preceding assessment year. Since no material was found in the search and seizure operations which could justify the Assessing Officer's action in referring the matter to the DVO for his opinion on valuation of the said properties, then the valuation arrived at by the DVO would be of no consequence. Accordingly, in view of the above cited judicial precedents as well as the factual finding recorded by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port 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 - |TAT 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. [Para 15] (viii) 2013 (5) TMI 637 - ITAT DELHI ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-11, NEVW DELHI VERSUS MS. ASHA KATARIA Addition made upon the valuation done by the DVO - value of the property in this case as reflected in the registered sale deed was Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted in the search operations impelled the A0 to complete the block assessment in this case. Conspicuously, however, there was no material in the course of the search or collected during the proceedings post search, pointing to under valuation of the assessees' properties which were ultimately held to have been the subject of under valuation. Again, significantly the assessees had at relevant time when the actual purchases were effected disclosed the transactional value of those assets; the AO has then unreservedly accepted them. Wealth Tax authorities too had accepted the valuation. - Decided in favour of assessee. (x) (2008] 166 Taxman 75 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax, Delhi-VII, New Delhi v. Ashok Khetrapal* Section 158B of the Income-tax Act, 1961 - Block assessment in search cases Undisclosed income - Assessment year 1999-2000- Whether where no incriminating material whatsoever was found during search that might show that assessee had made more investment in properties than their declared value, addition could not be made by treating investment as undisclosed on basis of any DVO's report - Held, yes (xi) (2014] 44 taxmann.com 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence in form of proof to show that additional consideration had passed between buyer and seller - Tribunal confirmed order of Commissioner (Appeals) - Whether DVO's report may be a useful tool in hands of Assessing Officer, nevertheless it is an estimation and without there being anything more, cannot form basis for addition under section 69B - Held, yes - Whether, therefore, in absence of any other material on record, impugned addition was correctly deleted - Held, yes [Para 9] [ln favour of assessee] b) (2014] 41 taxmann.com 148 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax - VIII v. National Co-operative Consumers Federation of India Ltd.* Section 48 of the Income-tax Act, 1961 - Capital gain - Computation of [Full value of consideration] - Assessment year 2002-03 - Assessee was owner of lease hold land allotted by Delhi Development authority - Assessee entered into an agreement with builder for construction of a building and it was decided that on completion 50 per cent of building was to be handed over to assessee - In addition, builder paid Rs. 30 lakhs to assessee - Assessee submitted valuation report showing cost of its 50 per cent share as Rs. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence depicting the escapement of income of aggregating Rs.50,00,000/- or more in such relevant assessment years beyond six years from the date of search. These provisions extending the assessment beyond six years and upto ten years put a stringent condition of possession of evidence with the AO of escapement of income of Rs.50,00,000/- or more. Such provisions extending the scope of assessment beyond six years from the date of search has to be construed strictly and the evidence relied upon by the AO in such assessments of extended period must be a tangible evidence. As noted above, it has been held time and again by various courts of law that the DVO's report on standalone basis without any corroborating material cannot be construed as incriminating material and hence the additions solely on the basis of the DVO's report are not sustainable. In the case of the assessee, even there is no difference found out between the investment disclosed by the assessee in the books of account as compared to the DVO's report in respect of property at Leela Bhawan Chowk, Patiala. Under the circumstances, since the evidence relating to the undisclosed investments in respect of relev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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