Case Law Details
Case Name : CIT Vs Anil Arora (Delhi High Court)
Appeal Number : ITA no. 340/2015 & CM No. 9241/2015
Date of Judgement/Order : 22/05/2015
Related Assessment Year :
Issue before Court:
- Whether tribunal erred in confirming order passed by CIT (A) without considering report of DVO sought by AO u/s 142 A of the Act.
- Search & Seizure operation was carried out in Wing Pharmaceuticals Pvt. Ltd. group cases in which assessee was covered.
- AO noticed that assessee along with his brothers jointly purchased property in Punjabi Bagh Delhi. AO suspected it as case of under valuation and referred matter to Departmental Valuation Officer (DVO) to ascertain the correct value of the property.
- DVO declared a much higher value of the said property and thus on the basis of his report AO assessed assessee’s share more than declared by assessee and he made addition u/s 69 B holding the same as undisclosed investment.
- AO again noted that assessee declared less fair rent of shop at chandni chowk. AO assessed the fair rent on basis of 6 % of the current value of the shop. In this way AO added the difference between the values of fair rent u/s 23 (4) (b).
- Both CIT (A) & Tribunal favoured assessee in appeal.
Contention of the revenue:
- Assessee is not able to produce seller and even he was not aware of the whereabout of the seller. Assessee at his own convenience trying to mould the facts to cover up the issue and failed to produce any documentary evidence regarding his claim.
- During search documentary evidences were come out which show that assessee and his family members were investing their unaccounted money in properties.
- The property was lying in one of the posh areas of the capital and declared value was quite low in comparison to prevailing rates which have been evidenced by the valuation report.
- The valuation made by the valuer in no way can be termed as illegal and without jurisdiction as specific reference has been made to him to value the property and valuer is an authorized officer to estimate the value of the Property.
Contention of the assessee:
- Assessee made a request to issue summon u/s 131 for examining seller as he was unable to produce seller. Assessee didnot know the present address & whereabout of the seller.
- The property was under dispute. Assessee along with his brothers utilized their influence and relation to settle the matter and they acquired property at the declared consideration.
- The reference to DVO for estimation of the market value of the property in Punjabi Bagh was not based on any material discovered or seized during the search operations. Therefore, the valuation made by DVO is illegal and without any jurisdiction.
- Some other property near to the property in question and in same area sold at lower price paid by the assessee.
Held by the Court:
- There is undoubtedly no material available to even remotely reflect that consideration over and above what was shown to be paid in the registered sale deed of the said property was made over to the seller. In these circumstances, it was not fair in the first place to refer the said property for estimation of its market value by DVO.
- If there is any difference in shares in consideration borne by the four brothers, it is a matter of their mutual understanding. Doubts as the real value cannot arise from such fact alone.
- Shop at Chandni Chowk had remained vacant throughout the year under consideration. No evidence was gathered by the AO to refute the claim of the assessee to such effect or to show that rent over and above what was declared was realized.
- The conclusion brought out by assessee are affirmed by tribunal.
While dismissing the appeal Hon’ble Court have held that the assessment of the value by DVO cannot hold primacy over the consideration for which property was actually acquired. There is nothing available to show that over consideration was paid to the seller and hence, in these circumstances reference to DVO is not justified.
Compiled by our Team Member Advocate Jagjeet Singh