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2015 (11) TMI 75 - DELHI HIGH COURT

2015 (11) TMI 75 - DELHI HIGH COURT - TMI - Addition u/s 69B - unexplained investment - estimation of value of the property - total amount spent by the three co-owners in acquiring the farm - Held that:- As regards the probative value of the report of a DVO, the settled legal position appears to be that in the absence of there being material with the AO to come to a conclusion that the Assessee had paid extra consideration for the purchase of property over and above what is stated in the sale de .....

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was accepted by the ITAT, makes it clear that the addition was sought to be sustained only on the basis of the report of the DVO.

Thus the Court finds that the additions made in the hands of the Assessees, are in the facts and circumstances of the case, unsustainable in law. The question is answered in the negative i.e. in favour of the Assessees and against the Revenue. - ITA 144/2003, ITA 145/2003, ITA 146/2003 - Dated:- 28-10-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appel .....

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4-95. 2. The three Assessees are brothers. They purchased a farm house at Asola in Delhi and the purchase price recorded in the books of accounts was ₹ 8,40,000. On 12th October 1994, a search was carried out under Section 132 of the Act in the premises of Mr. R.S. Bedi and a paper was seized which had some notings purportedly disclosing the investment made in a farm to the extent of ₹ 76 lakhs. According to the Revenue when the said Assessee was confronted with the said piece of pap .....

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the extent of the Assessees investment in the said farm. 4. The Department Valuation Officer ( DVO ) submitted a report estimating the value of the property at ₹ 14,36, 300 per acre for 1.63 acres purchased on 29th March 1994 and at ₹ 13,03,900 per acre for 3.1 acres of land purchased on 28th February 1994. The AO then adopted the report of the DVO and applying Section 69B of the Act held that a total amount of ₹ 66,47,800 was spent by the three co-owners in acquiring the farm .....

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he IT Act not on the basis of any document, but on the basis of the report of the Department Valuation Officer after giving full opportunity to the Appellants. In fact, the DR submitted that had additions been made on the basis of the said document, the value taken by Department would have been 76 lacs as disclosed in the document and ₹ 67,47,800 and not the amount as estimated by the DVO. It was submitted that as the document is not the basis of the addition under Section 69B, no note of .....

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had failed to do so and, therefore, the addition under Section 69B of the Act was justified. 7. While admitting these appeals on 2nd May 2003, the Court framed the following question of law for determination: Whether on the facts and in the circumstances of the case the Tribunal was correct in law in holding that the provisions of Section 69B of the Income Tax Act, 1961 were attracted in the case and in sustaining of addition and ₹ 19,35,667/-, being the differential amount of unexplained .....

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ection 69B of the Act solely on the basis of the report of the Valuation Officer cannot be sustained. The decision of this Court in Commissioner of Income Tax v. Puneet Sabharwal (2011) 338 ITR 485 (Del) is an authority to the above legal position. Another decision which holds likewise is Commissioner of Income Tax v. Lahsa Construction Pvt. Ltd. (2013) 357 ITR 671 (Del). In other words, the report of the DVO cannot form the sole basis to sustain addition under Section 69B of the Act. It can at .....

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Dr. Rakesh Gupta, learned counsel for the Assessees, drew the attention of the Court to the decision of the Supreme Court in Commissioner of Income Tax v. Smt. Amiya Bala Paul (2003) 262 ITR 407 (SC) and submitted that in terms of the said decision the very act of the AO seeking the report of the DVO by issuing a commission under Section 131 of the Act was without jurisdiction. He submitted that although following the said decision, Section 142A of the Act was inserted with retrospective effect .....

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