Section 142A is attracted, inter alia, where the assessee is found to have made investment outside the books of accounts or where any such investment made by him is not fully disclosed in the books of account. The condition precedent for making the reference by invoking the provisions of Section 142A thus is that there should be something on record to show that the assessee in first place has made such investment outside the books or the investment so made by him is not fully disclosed in the books of account and once this condition is satisfied, the quantum of such investment made can be ascertained by the Assessing Officer by making reference u/s 142A in order to make the addition u/s 69 or 69B, whichever is applicable. In the present case, 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 to make a reference to the DVO u/s 142A and to make addition on that basis.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA no.4460/Del/2010 – Assessment year: 2006-07
DCIT V/s. Mr. Abhinav Kumar Mittal
Date of pronouncement 29-06-2012
O R D E R
A.N.Pahuja:-
This appeal filed on 6th Oct. 2010 by the Revenue against an order dated 30th July, 2010 of the Ld. CIT(A)-1,New Delhi, raises the following grounds:
1. The order of the Ld. CIT(A) is not correct in law and facts.
2. 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. 59,78,938/- on account of difference in the investment as shown by the assessee and as ascertained by DVO on valid and legal reference made by AO u/s 142A of Income Tax Act, 1961 which has no requirement for AO to bring record any material to justify understatement of purchase consideration.
3. On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is perverse as it disregarded legal provision of section 142A while 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 18th July 2006 may be treated as return in response to notice u/s 153 C of the Act. During the course of assessment proceedings, the Assessing Officer (AO in short) referred the valuation of following premises to DVO u/s 142 A of the Act :-
i. Office Premises no. 101, Kaivana Building Malkans, Near Polytechnic Ahmedabad.;
ii. Office Premises no. 102, Kaivana Building, Malkans, Near Polytechnic, Ahmedabad; and
iii. Commercial Property at Chowranghee, Kolkata.
2.1 The valuation report of the DVO was handed over to the assessee on 14th Dec. 2009 in respect of Ahemdabad properties and on 24th Dec. 2009 in respect of Kolkata property. In his report, DVO determined the value of the property as under:
