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TMI Blog2024 (9) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 relevant assessment years as defined in Explanation 1 to 4th Proviso of section 153A(1) was less than Rs.50,00,000/-, therefore, the reopening of the assessment of the relevant years was bad in law and the same is hereby quashed. Assessee appeal allowed. - SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER For the Assessee: Shri Rohit Kapoor, CA and Shri Vir Sain Aggarwal, CA For the Revenue: Smt. Kusum Bansal, CIT DR Order Per Krinwant Sahay, A.M.: Appeals in captioned cases have been filed by the different Assessees against the separate orders dated 24.02.2022 of the ld. Commissioner of Income Tax (Appeals)-3, Gurgaon [herein referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant 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. 6. The relevant part of the provisions of Section 153A, for the sake of ready reference, is reproduced as under: Section 153A. (1) Not with standing anything contained in section 139, sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both, shares and securities, loans and advances, deposits in bank account. From the above reproduced provisions, it can be 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. 6.1. 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 assessee in the said properties. Besides that one loose receipt/note dated 27.01.2011 was also seized which had noting of payment to be made to the tune of Rs. 1.80 crores against purchase of House No. 762, Sector-8, Chandigarh. The Assessing Officer calculated the unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 118 Phase 2, Urban Estate Patiala(In the name of HariGopal) Rs.1839475/- Wrong assumption of facts as the property belonged to father of the assessee Sh. HariGopal. As such, Addition Deleted 2011-12 Difference in Valuation of the property situated at SCO 118 Phase 2, Urban Estate Patiala(In the name of HariGopal) Rs.627402/- Wrong assumption of facts as the property belongs to father of the assessee Sh. Hari Gopal. As such, Addition Deleted H.no.762, Sector 8B, Chandigarh (On Money 16000000/4) Rs.4500000/- Rs.4500000/- On the basis of loose sheet found during the search action. Rs.8667226/- Rs.5786588/- 8. The additions of Rs. 258250/-, 1839475/- and Rs.627402/- have been deleted by the CIT(A) on the ground the said property belonged to Late Sh. Hari Gopal Singh (father of the appellant) during AY 2009-10, 2010-11 and 2011-12 and that there was no evidence that the assessee has made any investment in the aforesaid property during the relevant years. The Revenue has not filed any appeal against the said deletion of addition made by the AO, however the assessee has come in appeals before us agitating against the additions confirmed by the CIT(A). 9. We have heard the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial. He has further invited our attention to the page 143-148 of the paper-book to submit that in respect of the shop at Gopal Leela Bhawan Chowk, Patiala, the DVO has given the abstract of cost of investment as under: OUTLET AT LEELA BHAWAN CHOWK, PATIALA FINANCIA L YEAR Particulars Structure Amount Grand Total Page No. 1993-94 Running business premises in the front Structure-1 Basement 4,86,237/- 18,83,083/- 129 Structure-1 Ground Floor 6,32,416/- Structure-1 First Floor 7,64,430/- 2002-03 Running business premises in the front Structure-2 Second Floor 12,64,240/- 12,64,240/- 129 1996-97 Backside running workshop Structure-3 basement floor 17,44,369/- 57,52,250/- 148 Structure-3 ground floor 8,01,738/- Structure-3 first floor 9,02,171 Structure-3 second floor 11,58,704/- Structure -3 Third floor 11,45,268 2008-09 Additional items not covered under par 74,53,755/- 74,53,755/- 129 Builders effort 4,90,600/- 4,90,600/- 129 Total 1,68,43,900- 10. The ld. Counsel pointing out to the above table has submitted that the DVO has himself noted that the construction has been made from F.Y 1993-94 to 1996-97 and that only on account of additional items/accessories a sum of Rs.7453755/- has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. Civil Appeal No.6580 of 2021 dated 24.04.2023 reported in [2023] 149 taxmann.com 399 (SC) wherein the Hon ble Supreme Court has held that in respect of completed/unabated assessments, no addition can be made by the AO in an assessment carried out u/s 153A of the Income Tax Act in the absence of any incriminating material found during the search action. He has further relied upon various case laws to contend that the report of the DVO cannot be construed as an incriminating material found during the course of search and further that addition cannot be made on account of unexplained investment in a property solely on the basis of DVO report without any other corroborating evidence or incriminating evidence 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 - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inating material has been found during the course of search qua this addition towards cost of construction. This fact is evident from the perusal of the orders of the lower authorities. [Refer para 13] Sole basis of the addition is only the valuation report furnished by the DVO which has been obtained by the ld. AO during the course of search assessment proceedings. Then, the said report cannot constitute incriminating material found during the course of search. Hence, we have no hesitation to hold that no addition could be made by placing reliance on the said valuation report while framing the assessment u/s 153A of the Act in the hands of the assessee. This issue is now well settled by the recent decision of Sargam Cinema vs. (2009 (10) 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 incriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was not in accordance with law - HELD THAT:- As in the present case, the authorities below have not pointed out any corroborative evidence to show that the assessee had made investment in question more than the amount declared by the her during assessment proceedings. Hence respectfully following the judgment of Abhinav Kumar Mittal [2013 (1) TMI 629 - DELHI HIGH COURT] we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A).[Para 6 7] (vii) 2021 (7) TMI 671 - ITAT KOLKATA ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1 (3), KOLKATA VERSUS M/S. JIS FOUNDATION AND (VICE-VERSA) Assessment 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 - |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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax the amounts that he ultimately did merely based upon the DVO's report in the absence of any material pointing to under valuation - Held that:- As decided on CIT Versus. Naveen Gera (2010 (8) TMI 194 - Delhi High Court] it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an understatement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO. As apparent from the factual narrative, the materials collected 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 A0 has then unreservedly accepted them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments [Investment in land and buildings] - Assessment year 2006-07 During relevant year, assessee made some investment in land and building Assessing Officer referred matter to DVO who valued land and building at a higher amount - In view of difference between disclosed investment of assessee in purchase of property and DVO's estimation of its fair market value, Assessing Officer added Certain amount to taxable income of assessee under section 69B Commissioner (Appeals) deleted addition holding that valuation report of DVO could not be a conclusive evidence and there had to be some clinching 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty was in the name of Shri Hari Gopal, father of the assessee. The ld. CIT(A) has also categorically held so and deleted the additions made by the AO in respect of investment in the said property and this fact has not been disputed by the revenue in appeal. In respect of first property as discussed above, there is no noticeable difference in the value estimated by the DVO as compared to the investment shown by the assessee in his books of account. The only evidence available to the AO was relating to the loose sheet where by the unexplained investment of the assessee has been taken by the AO at Rs.45,00,000/-. The provisions of section 153A are in itself a separate code. After the search action u/s 132 of the Act, the assessment/reassessment is reopened for the six years preceding the date of search. However, as laid down by the Hon ble Supreme Court of PCIT vs. Abhisar Buildwell P Ltd. (supra) no addition can be made in respect of completed/unabated assessment years in assessments carried out u/s 153A in the absence of any incriminating material found during the search action. The assessment years beyond six years but not more than ten years can be reopened u/s 153A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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