ITAT, DELHI BENCH ‘F’: NEW DELHI
Section 142A is attracted, inter alia, where the assessee is found to have made investment outside the books of account or where any such investment made by him is not fully disclosed in the books of account; the condition precedent for making the reference by invoking the provisions of section 142A thus is that there should be something on record to show that the assessee in first place has made such investment outside the books or the investment so made by him is not fully disclosed in the books of account.
Rajeshwar Nath Gupta, HUF
ITA No. 4295/Del/2005
& C.O. No. 375/Del/2007
14. We have considered the rival submissions and also perused the relevant material on record. It is observed that the addition in dispute on account of alleged unexplained investment made by the assessee in the property was made by the AO on the basis of valuation report obtained from the DVO by making a reference u/s 142A, the provisions of which read as under:-
“[Estimate by Valuation Officer in certain cases.
142A. (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valueable article referred to in section 69A or section 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him.
(2) The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957(27 of 1957).
(3) On receipt of the report from the Valuation Officer, the Assessing Officer may, after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment:
Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A.
Explanation – In this section, “Valuation Officer” has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).]”
15. A perusal of the aforesaid provisions shows that section 142A is attracted, inter alia, where the assessee is found to have made investment outside the books of account or where any such investment made by him is not fully disclosed in the books of account. The condition precedent for making the reference by invoking the provisions of section 142A thus is that there should be something on record to show that the assessee in first place has made such investment outside the books or the investment so made him is not fully disclosed in the books of account and once this condition is satisfied, the quantum of such investment made can be ascertained by the AO by making a reference u/s142A in order to make the addition u/s 69 or 69B, whichever is applicable. In the present case, the relevant property was purchased by the assessee during the year under consideration for Rs. 15 lakhs and the amount of the said consideration was paid out of its disclosed sources as accepted even by the AO in the reassessment. A perusal of the assessment order, however, shows that there was no reference whatsoever made by the AO to any material/evidence/ information on the basis of which it could be said that the said consideration shown by the assessee was understated and that anything above what was disclosed by the assessee had actually been paid as consideration. The condition precedent for making a reference to the DVO by invoking the provisions of section 142A thus was not satisfied in the present case and neither the said reference nor the addition made on the basis of report obtained from the DVO in response to the said reference, in our opinion, was sustainable in law as rightly held by the learned CIT (A). In the case of Subhash Chand Chopra vs. ACIT -92 TTJ 1087, this Bench of the Tribunal has held that no material or evidence having been recovered during the course of search showing investment in construction, the AO was not competent to made a reference to the DVO u/s 142A and to make addition on that basis.