Law:

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Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Cost of construction) - Assessment years 2002-03 to 2004-05 - Whether solely on basis of DVO's report which as per catena of decisions, can be said to be opinion of DVO only, no addition can be made with respect to difference between cost of construction determined by DVO and as shown by assessee - Held, yes [para 4.1] [In favour of assessee] FACTS â–  Based upon the valuation report obtained by the department from District Valuation Officer (DVO), in case of one 'M' from whom, the assessee got the project transferred, the Assessing Officer made certain addition to the assessee's income on account of difference between cost of construction determined by the DVO and that shown by the assessee. He also levied penalty under section 271(1)(c) on the assessee on basis of such addition. â–  On appeal, the Commissioner (Appeals) confirmed addition made by the Assessing Officer but deleted the penalty imposed under section 271(1)(c). â–  On further appeal, the Tribunal deleted the additions made by the Assessing Officer and also dismissed the appeal preferred by the revenue against the order passed by the Commissioner (Appeals) deleting the penalty under section 271(1)(c). â–  On appeal to the High Court: HELD â–  The Assessing Officer made addition with respect to the difference in the cost of construction based upon and/or relying upon the DVO's report in the case of one 'M' from whom, the assessee subsequently got the project. It is true that in the instant case, copy of the DVO's report was furnished to the assessee during the re-assessment proceedings. However, it is required to be noted that except the DVO's report, there was no further tangible material before the Assessing Officer. Therefore, solely on the basis of the DVO's report which, as per the catena of decisions of the Supreme Court as well as this Court, can be said to be the opinion of the DVO only, no addition can be made with respect to difference between the cost of construction determined by the DVO and that shown by the assessee. [Para 4.1] â–  Under the circumstances, Tribunal has not committed any…

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