Case Law Details
Ananthakrishna Vasudev Aithal Vs ITO (ITAT Bangalore)
ITAT held that Investment referred in Section 142A pertains to Investment made by assessee in construction of property and not investment made in purchase of ready built house property.
The case of the assessee was selected for compulsory scrutiny. In the assessment proceedings, the AO referred to the Valuation Officer i.e., the District Valuation Officer (DVO) for estimating the value of the property purchased by the assessee. The DVO, vide his report dated 29.06.2016, determined the value of the cost of land and building at Rs.95,90,900/- as on 06.05.2013. The AO, based on the report of the DVO, added a sum of Rs.5,90,900/- which was over and above the sum of Rs.90 lakhs for which the assessee purchased the property. The AO added the aforesaid sum to the total income of the assessee as unexplained income under section 69 of the Act.
It was submitted that when house is purchased such transaction does not warrant reference to a Valuation Officer for valuation under Section 142A of the IT Act, 1961. It was contended that under sub section 1 of Section 142A of the Income Tax Act, 1961(Act) introduced by Finance Act of 2004, subsequent to the Supreme Court Judgement in Amiya Bala Pal case, the Assessing Officer may refer to the Valuation Officer to make an estimate of the value of an investment referred to in Section 69A and 69B of the income Tax Act. It is to be understood that Investment referred to in this Section pertains to the Investment made by the assessee in the construction of the property and not the investment made in the purchase of the property. It was thus contended that the provisions of valuation of an immovable property contained in Section 142A of the Income Tax Act, 1961 do not apply to a house purchased. Therefore, the addition of Rs. 590,900/- made based on Valuation Report dated 29/06/2015 is not as per the provisions of Income Tax Act. 1961 and the same has to be deleted. It was contended that the AO has wrongly invoked the provisions of Section 142A of the Act even though the same are inapplicable to the appellant and brought to income tax Rs. 5,90,900/-under Section 69 as unexplained investment to the declared income on the basis of valuation report. The assessment done by adding Rs. 5,90,900/- u/s. 69 of the Act on the basis of valuation report is void ab initio since it has no valid legal ground and against the provisions of the Income Tax Act, 1961.
ITAT held that provisions of section 142A of the Act are applicable only when the assessee has made investment in construction. In the present case, the assessee purchased a ready built house and therefore the provisions of section 142A of the Act are not attracted to the facts and circumstances of the present case. Hence, I am of the view that the reference to the DVO by the AO was not valid and consequently, the addition made by the AO on the report of the DVO cannot be sustained.
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