Whether Assessing Officer can make a reference to DVO u/s. 142A where he is of the opinion that the figure of investment in property is overstated; Held : No.

Saraswati Devi Gehlot (SMT) vs. ITO

A.Y. : 2002-03 Dated : 31.08.2007

Whether Assessing Officer can make a reference to DVO u/s.
142A where he is of the opinion that the figure of investment in property is
overstated; Held : No.

 

The assessee has shown an investment in shops at Rs.
26,45,100 and the Assessing Officer made reference to the DVO as in his
opinion this figure should be less. Hence, the Assessing Officer made a
reference to the DVO. The valuation given by the DVO Rs.23,33,177 was adopted
as cost of construction by the Assessing Officer, which resulted into a short
term capital gain of Rs. 2,50,823 against loss of Rs. 61,100 declared by the
assessee. This addition was also upheld by the CIT(A).

The Tribunal observed that :

1. Basis of cost of construction of shops shown by the
assessee has not been disputed by the Assessing Officer and no adverse
comment has been made by him in this regard. Thus, the cost of acquisition
declared by the assessee does not warrant any interference.

2. Reference to DVO u/s. 142A can be made for the purpose
of Sec. 69, 69A or 69B. All these Sections refer to a situation where either
the assessee is found to be owner of some valuables not recorded in the
books or the value recorded by him is less than the investment made by him.
However, in the present case, the Assessing Officer was of the view that the
value recorded by the assessee is more than the investment made by him.
Reference to DVO u/s. 142A is not permissible in such situation.

3. Further, reference as contemplated under S.55A is for
ascertaining the fair market value of a capital asset and not for
determining the cost of acquisition or construction.

Thus, the ITAT was of the view that reference to DVO is
void ab initio and the report supplied by the DVO is of no consequence.

Case Referred to :

· Smt. Amiya Bala Paul vs. CIT, (2003) 182 CTR
(SC) 489; (2003) 262 ITR 407 (SC) and also Circular No. 5 of 2005, dt. 15th
July, 2005.