DCIT Vs M/s Riar Builders Pvt. Ltd. (ITAT Amritsar)
Section 69B cannot be invoked on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account.
Sec. 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very subjective and could involve the dangerous consequence of a al or fictional income being brought to tax contrary to the strict visions of Article 265 of the Constitution of India and Entry 82 in List 1 of the seventh schedule thereto which deals with “Taxes on income other than agricultural income.”
For the purposes of Section 69B it is the burden of the Assessing Oficer to first prove that there was understatement of the consideration (investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Oficer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act.
