I-T - Whether unless there is some evidence to indicate that extra consideration had flowed in purchase of property, DVO Report cannot form a basis for any addition - YES: HC
By TIOL News Service
BANGALORE, SEPT 20, 2016: THE issue is - Whether unless there is some other evidence to indicate that extra consideration had flowed in the purchase of property, the report of DVO cannot form a basis of any addition. YES is the verdict.
Facts of the case
The assessee is an individual mainly engaged in the transport business and running proprietary concern on the name and style of "Shri. Shivalinga Transport" at Shimoga. He was also receiving remuneration in the capacity as partner and the interest of his capital was also received from the firm wherein he was partner. The assessee'd retrun was subjected to scrutiny and AO made an addition u/s 69 as unexplained investment in a residential house at Shimoga. The addition was made with regard to purchase of residential house. The value of the property by the AO was taken to be higher as against actual consideration reflected in the sale deed. It appeared that after document was presented for registration, the objection was raised by the stamp department for the deficit stamp duty. As per the value fixed for the purpose of stamp duty, the assessee paid difference of the stamp duty on the basis of the valuation made for the stamp duty. The same was one of the aspects considered by the AO and then the matter was referred to the valuer for the purpose of valuation and consequently the difference was added by applying the provisions of Section 69 of the Act. AO also made addition towards cash credit by applying the provisions of Section 68 of the Act. The assessee being aggrieved by the said assessment, filed an appeal before the CIT (A)i. In the said appeal, CIT (A) confirmed the additions towards cash credit and with regard to addition made under Section 69 of the Act, he gave partial relief of a certain amount.
After hearing the parties, the High Court held that,
++ the primary burden to prove the understatement or concealment of the income by way of unexplained investment is on the revenue and it is only when such burden is discharged, it would be permissible to rely upon the valuation given by the District Valuation Officer (DVO). Further, it was also held that if there was no evidence or material in possession to come to the conclusion that the assessee had paid extra consideration over and above what was stated in the sale deed, the DVO's report cannot be a sole basis for assessment of the income. It was further held that opinion of the DVO per se was not sufficient and the other corroborative evidence was required;
++ it was observed that the law is well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of DVO cannot form basis of any addition on the part of the revenue. Since in the said case there was no evidence other than the report of DVO, it could not be relied upon for making addition. The question was decided in favour of the assessee against revenue and the appeal of the revenue was dismissed;
++ examining the matter further on facts, in the present case, it appears that it is not a case of the revenue that there was any independent or corroborative material for consideration paid or received in addition to than mentioned in the sale deed. The basis of the addition is only valuation report of the District Registrar under the Stamp Act and the Departmental valuer. As such, there is no independent material which had come on record for such purpose. The payment of additional stamp duty may be on the basis of the valuation of the valuer of the stamp Act authority but same ipso facto cannot be said to be a valid ground to initiate the proceedings under Section 69 of the Act or to invoke power under Section 69 of the Act on the premise that additional consideration was paid or received. Further, if such could not be the basis, subsequent valuation report would also not a ground. In the absence of any independent material, the report of the valuer could not be the basis for making addition. Under such circumstances, we find that the addition made by the AO and further modified by the CIT (A) as well as by the Tribunal cannot be sustained.
(See 2016-TIOL-2174-HC-KAR-IT)
