Reference to DVO u/s 142A can’t be made for ascertaining expenditure which assessee made on purchases of land: ITAT

Case Details: Toffee Agricultural Farms (P.) Ltd. v. ITO - [2022] 141 taxmann.com 429 (Delhi-Trib.)

Judiciary and Counsel Details

• • Kul Bharat, Judicial Member
  • Anil Bhalla, CA for the Appellant.
  • Anil Kumar Sharma, Sr. DR for the Respondent.

Facts of the Case

Assessee filed return declaring nil income. The case was selected for scrutiny and a notice was issued under section 143(2). The Assessing Officer (AO) noticed that purchased two tracts of land, thus he referred matter to the valuation officer (DVO).

DVO estimated the value of the land is less than 10% of the value adopted by the Stamp Valuation Authority. AO proceeded to treat the difference as unexplained expenditure under section 69C.

On appeal, the CIT(A) upheld the action of AO. Aggrieved-assessee filed the instant appeal before the Delhi Tribunal.

ITAT Held

The Delhi Tribunal held that there is no dispute with regard to the fact that AO in the assessment order had stated an addition regarding unexplained expenditure under section 69C. AO had not brought on record that the mentioning of section 69C was on account of any typographical error.

It was also clear from the assessment order that the AO had referred to the issue of the market value of the property in question under section 142A. However, as per section 142A, such reference can be made to ascertain the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewelry or any other valuable article referred to in section 69A or section 69B. There was the conspicuous exclusion of section 69C.

In the present case, reference under section 142A was not made regarding ascertaining the correct market value of the investment in property. But, it was in fact to ascertain the expenditure that the assessee made on the purchases. Thus, the reference to DVO under section 142A for section 69C is not valid.

List of Cases Reviewed

• • CIT v. Aar Pee Apartments (P.) Ltd. [2010] 188 Taxman 39/319 ITR 276 (Delhi) (para 6) followed.

List of Cases Referred to

• • CIT v. Aar Pee Apartments (P.) Ltd. [2010] 188 Taxman 39/[2009] 319 ITR 276 (Delhi) (para 3)
  • CIT v. Lubtec India Ltd. [2009] 311 ITR 175 (Delhi) (para 3)
  • Dinesh Kumar Mittal v. ITO [1991] 58 Taxman 179/[1992] 193 ITR 770 (All.) (para 3)
  • CIT v. Sardari Lal & Co. [2002] 120 Taxman 595/[2001]251 ITR 864 (Delhi) (para 3)
  • CIT v. Union Tyres [1999] 107 Taxman 447/240 ITR 556 (Delhi) (para 3)
  • CIT v. Naresh Khattar (HUF) [2003] 130 Taxman 15/261 ITR 664 (Delhi) (para 3)
  • Smt. Sarika Jain v. CIT [2017] 84 taxmann.com 64/249 Taxman 625/[2018] 407 ITR 254 (All.) (para 3)
  • Hari Mohan Sharma v. Asstt. CIT [2019] 110 taxmann.com 119/179 ITD 310 (Delhi – Trib.) (para 3).