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2010 (6) TMI 790

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....,36,300/-. 2. In ITA No. 1197/D/07 i.e. in the appeal of Smt. Madhu Arora the revenue is challenging the deletion of addition of ₹ 1,00,86,300/-. 3. As far as the issue with regard to the deletion of quantum addition in both the appeals is concerned it is common. M/s. Lhasa Construction was owner and in possession, half share of a building bearing No. C-20, NDSE-Part-II, New Delhi. This building was sold by M/s. Lhasa Construction vide two separate sale deeds to Smt. Madhu Arora and her husband Shri Om Prakash Arora during the accounting year relevant to asstt. year 1999-2000. According to the AO purchasers have understated the purchase price. Market value of the property was not less than equivalent to the one disclosed in the sale deed. Therefore a reference was made to the DVO who determined the market value of the property at ₹ 2,84,72,600/-. The difference between ₹ 83,00,000/- and ₹ 2,84,72,600/- was added in the hands of Smt. Madhu Arora and her husband Shri Om Prakash Arora in equal shares on account of unexplained investment in the purchase of property. 4. In the case of M/s. Lhasa Construction the assessee had shown 50% of share of property bear....

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....s entered into during the year for total consideration of ₹ 83 lakhs in coownership with his wife Smt. Madhu Arora. In the view of the AO, the consideration of the property declared by the assessee was understated and accordingly a reference was made to the Departmental Valuation Officer (DVO) for determining its market value. The DVO vide his report dated 21.3.2006 valued the property at ₹ 2,84,72,600/-. The AO required the assessee to show-cause as to why 50% of difference of ₹ 2,84,72,600/- should not be added to the taxable income of the assessee as unexplained investment in the property. The assessee filed his explanation along with a report form registered Valuer which was, however, rejected by the AO by holding that report of DVO was more reliable than the report of the registered Valuer considering the location of the property. The AO accordingly held that total investment made by the assessee in this immoveable property along with his wife was ₹ 2,84,72,600/- as determined by the DVO. 50% of difference amounting to ₹ 1,00,86,300/- was thus added to the total income of the assessee. 10. Before CIT(A), the addition was agitated by the assessee....

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....stood accepted by the AO himself while completing assessment for AY 2004- 05. Therefore, the value of property which was sold for ₹ 1 crore and accepted by the AO could not be valued at ₹ 2,84,72,600/- in AY 1999-2000. 11. The CIT(A) considered the submissions made by the assessee. He examined the matter in detail. He was of the opinion that AO had based the addition merely on the basis of departmental valuation report. No material was brought on record by the AO on the basis of which it could be said that any amount over and above the declared sale consideration was paid for the purchase of impugned property. He also noted that during the course of search no material was found indicating any suppression of purchase consideration. Therefore, according to the CIT(A), the assessee had successfully rebutted the basis on which the DVO had prepared the report. It was also observed that onus to prove that the assessee had spent more money was on the AO as held in the case of Naresh Kumar Khatter (HUF) by Hon'ble Delhi High Court reported in 261 ITR 664. The CIT(A) also placed reliance on the decision of Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO, 131 ITR 5....

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.... of section 69B, the burden is on Revenue to prove that real investment exceeds the investment shown in the books of account of the assessee. 13. We have hard both the parties and gone through the material available on record. From the facts stated above, it is clear that AO had made addition merely on the basis of valuation report of the DVO. The property which was purchased by the assessee for ₹ 83 lakh in 1999 was sold in AY 2004-05 for ₹ 1 crore. The AO has not brought on record any material to show that extra investment was made by the assessee. The property has been registered on which stamp duty as per rate applicable has been paid. Hon'ble Delhi High Court in the case of CIT vs. Naresh Kumar Khatter (supra) has held that the burden is on Revenue to prove that the real investment exceeded the investment shown in the books of account. In the absence of any such material, addition could not be made. In the case before us, the AO had not brought any material on record and, therefore, in our considered opinion, CIT(A) was justified in deleting the addition. Accordingly, we do not find any infirmity in the order passed by the CIT(A) deleting the addition." 7. Resp....

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....e Supreme Court in the case of ACIT Vs. Rajesh Jhaveri 291 ITR 500. Ld. Counsel for the assessee on the other hand submitted that what was opposed by the AO while recording reasons is the report of DVO. The report of DVO cannot be said an information which can lead to form an opinion that income has escaped assessment. It is just an information of an expert and on the basis of this the assessment of an assessee cannot be reopened. He placed a reliance upon the order of Hon'ble Supreme Court rendered in the Civil Appeal No. 9468 of 2003 in the case of ACIT Gujarat Vs. M/s. Dhariya Construction Company. 11. We have duly considered the rival contention and gone through the record carefully. The proposition is not as simple as propounded by the Ld. Counsel for the assessee. There was a survey conducted u/s 133A at M/s. surplus Books , 125A Shahpur Jat, New Delhi where Smt. Madhu Arora is a proprietor. In her case information was received that she has purchased a property alongwith her husband wherein they have understated the purchase price. On the basis of those information a reference was made to the DVO and the DVO has determined market value of the property on the date of purchase....