INCOME TAX OFFICER , WARD 30(5), NEW DELHI vs. SHREY AEREN, DELHI

4. That on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in sustaining the addition even though no incriminating material or evidence suggesting unexplained investment in the property was Sound during search or otherwise.

5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the order of the Ld. AO without appreciating or verifying the crucial fact that the Appellant had actually purchased the property in question and had not sold it.

6. That on the facts and circumstances of the case and in law, the Ld.CIT(A) has failed to appreciate that section 69 could not be invoked as the investments made by the Appellant are duly recorded in books of accounts and no out of books investments were made by the Appellant.

7. Thai on the facts and circumstances of the case and in law, the Ld.CIT(A) has failed to appreciate that valuation report of the DVO was never confronted to the Appellant during the assessment proceedings and no opportunity to being heard was granted before DVO.

8. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has re to appreciate that no show cause notice was issued before making the addition to the total income.

9. That on the facts and circumstances of the case and in law, the approval granted by Ld. Joint Commissioner of Income Tax, Central Range-8, New Delhi u/s 153D of the Act is mechanical in nature and without application of mind.

10. That the order dated 31.03.2025 passed by the CIT(A) is violative of principles of natural justice.

11. That the Id. ClT(A) has erred in sustaining the initiation of penalty under section 270A of the Act.

12. That the Ld. CIT(A) has erred in sustaining the charging of interest under section 234B of the Act.

14. The appellant craves leave to add, amend, alter, remove, resign, forge or withdraw any of the above grounds of appeal, which are without prejudice to one another, before or at the time of hearing of the appeal in the interest of natural justice.”

3. We first take up the appeal of the assessee in the case of Shri Gautam Gupta as the facts are identical in both the appeals. Shri Gautam Gupta filed his return of income on 07.01.2021 declaring total income of Rs.1,92,51,750/-. During the AY 2020-21 the assessee had purchased residential building along with Shri Parveen Gupta bearing property no. BP-22, West Patel Nagar, New Delhi for total sale consideration of Rs.9,90,00,000/- vide sale deed dated 12.09.2019 and the assessee had 50% share in it. On 12.02.2021 a search and seizure operation was conducted u/s 132 of the Act in the case of the assessee and the assessment for the impugned assessment year was completed on 09.05.2022 u/s 153A read with section 143(3) by making an addition of Rs.8,49,500/- u/s 69 of the Act on account of difference between the value of property shown in the sale deed and fair market value as determined by the DVO as narrated in the assessment order at pages 3 & 4. As stated in the assessment order the details of the property i.e. circle rate, sale consideration, DVO valuation and the difference between DVO and sale consideration are as under:

Property Circle Total Sales Value Addition made by Description Rate/Stamp Duty Consideration determined by the Ld.AO being Value (A) the DVO difference (B) between column (A) & (B) BP-22, West 9,70,06,834 9,90,00,000 10,06,99,100 8,49,500 Patel Nagar, (page 84 of PBK) (page 49 of PBK) (page 2 & 3 of (16,99,100/2) New Delhi. Assessment (page 3 & 4 of order) assessment order)

After arriving the difference between the sale consideration and the value determined by the DVO at Rs.16,99,100/- the Assessing Officer 4 & 2383/DEL/2025 PARVEEN GUPTA & GAUTAM GUPTA made an addition of Rs.8,49,500/- in the hands of the assessee being 50% share in the property and the balance 50% of Rs.8,49,500/- was added in the hands of the co-owner i.e. Parveen Gupta, as unexplained investment u/s 69 of the Act. The assessee preferred appeal before the Ld. CIT(Appeals) and the Ld. CIT(A) confirmed the addition made by the Assessing Officer.

“2. Reliance is placed on the following case laws for the following propositions:

& 2383/DEL/2025 PARVEEN GUPTA & GAUTAM GUPTA • There must be some material to show that the investment made by the assessee was outside the books. This, was a condition precedent for making a reference to the DVO. • A reference to the DVO be made only when a requirement is felt by the AO for making such reference. Requirement would arise or could be felt only when there is some material with the AO to show that whatever amount the assessee has shown is not correct or not reliable. The use of the word “require” is not superfluous but signifies a definite meaning whereby some preliminary formation of mind by the AO is necessary which requires him to make a reference to DVO u/s 142A. i. The Hon’ble Delhi High Court in the case of CIT vs. Abhinav Kumar Mittal [2013] 351 ITR 20 (Delhi) – para 5 ii. The Hon’ble Delhi High Court in the case of CIT vs. Aerens Infrastructure & Technology Ltd. [2012] 204 Taxman 61 (Delhi)-para 5 iii. Anand Banwarilal Adhukia vs. Deputy Commissioner of Income Tax, Circle-14 [2016] 75 taxmann.com 301 – Gujarat HC-para 10 to 13 iv. Me & Mummy Hospital vs. Assistant Commissioner of Income Tax [2014] 45 taxmann.com 248 – Gujarat HC – para 10, 15 to 17 v. The Hon’ble ITAT, Delhi in the case of Smt. Usha Rani Talla (ITA no.5698/Del/2014) para 10.06, 10.9”

& 2383/DEL/2025 PARVEEN GUPTA & GAUTAM GUPTA 6. Referring to ground no.4 of grounds of appeal Ld. Counsel submitted that the addition was made without appreciating that no incriminating material or evidence suggesting unexplained investment was found during the course of search.

7. Ld. Counsel for the assessee further submitted that the Ld. AO suspected that the value of the property at which it was purchased by the assessee was less than the market value and therefore a reference to the DVO for valuation of property was made on 17.03.2022 and the DVO estimated the value of the property at Rs.10,06,99,100/-. The Ld. Counsel further submitted that the AO had merely relied upon the DVO’s report and he has not brought anything on record or any other material to indicate that the assessee had made investment in purchase of property over and above that declared in the sale deed. The Ld. Counsel submits that unless and until there is some other evidence to indicate that extra consideration had flown in the transaction of purchase of property, the report of the DVO cannot form the basis of any addition on the part of the Revenue. Ld. Counsel submitted that in the case on hand there is no evidence other than the report of the DVO and therefore the same cannot be relied upon for making an addition. Placing reliance on the following judgments Ld. Counsel submitted that in all & 2383/DEL/2025 PARVEEN GUPTA & GAUTAM GUPTA these judgments it has been held that there must be a finding that the assessee had received an amount over and above the consideration stated in the sale deed and for this the primary burden was cast on the Revenue. It is only when this burden was discharged by the Revenue that it would be permissible to rely upon the value as given in the valuation report of the DVO. DVO report without any other material cannot form basis of making addition. Value of a property estimated by the DVO or the registered value can never be conclusive of the price finally bargained: -

143(3) is bad in law and invalid for the reason that the approval granted u/s 153D of the Act is invalid and mechanical approval. Ld. Counsel for the assessee submitted that on the following occasions, the Assessee specifically brought to the notice of the Ld, AO that it had purchased the said property: i. Specifically replied by Assessee that the said property was purchased by him on 12.09.2019 and that no immovable property was sold during the year vide reply dated 20.12.2021 at page 20 of PBK; replies dated 2.02.2022, 23.01.2022 and 25.02.2022 at page 21, 35-36, 37-41 of PBK. ii. Vide reply dated 28.02.2022 filed before the Ld. AO the assessee specifically provided copy of agreement to sell, sale deed, affidavit of director of seller, bank statement of assessee showing source of purchase and payment made for purchase of said property and home loan sanction letter- refer page 37-94 of PBK Ld. Counsel submitted that despite the above evidences and replies filed, the Ld. AO has in the assessment order dated 09.05.2022 stated and believed that the Assessee had sold the said property (Para 6 of order)

"During the year under consideration, the assessee has sold u property in Delhi. As per information available with the Department, the market value of the land was very high as compared to the value shown in the sale deed. Sh Praveen Gupta and Sh Gautam Gupta has sold property BP-22 (comprising of basement Floor, Ground Floor, First Floor, Second Floor and Third Floor), West Patel Nagar, New Delhi for total consideration of Rs.9,90,00,000/- vide sale deed dated 24.06.2019.5in this property, the assessee had total 50% share and this property was jointly sold by the assessee. The value of the property on which it was sold by the assessee was less than that of the market value for this reasons the above property was referred to the DVO on 17.03.2022 for valuation u/s 142A of the Income Tax Act to determine the fair market value as on date of sale." It is submitted that thereafter on 18.05.2022, the Ld. AO issued a corrigendum stating as follows:

“In para 6 at page no. 2 of the said order, it has been noticed that there is a typographical error as "sold". Here it is mentioned that the property has been purchased by the assessee. Therefore, the word "sold" mentioned of the said order may be read as "purchased" in the said order of the para. Rest of the contents of the order shall remain unchanged." Ld. Counsel submitted that the above actions of AO shows that the Ld. AO did not apply his mind while framing the assessment. Even the Ld. JCIT who had approved the draft assessment order did not point out this inconsistency which only shows that the Ld.JCIT approved an incorrect and inconsistent draft assessment order, the Ld.JCIT did not peruse the records, draft order and the replies and evidences filed by the assessee which stated that he purchased the said property and so the approval was granted in a perfunctory manner without application of mind. Reliance was placed on the following decisions:

• PCIT (Central)-2 v. Anuj Bansal [2024] 466ITR 251 (Delhi High Court) [SLP filed by the department also dismissed in [2024] 165 taxmann.com 3 (SC)] [Relevant Para 13,15]- inconsistencies in the figure of returned income by AO and approved by Additional CIT 11 to 2841/ Del/2024 -para 8 to 11.

6. During the year under consideration, the assessed has sold a property in Delhi. As per information available with the Department, the market value of the land was very high as compared to the value shown In the sale deed. Sh. Praveen Gupta and Sh. Gautam Gupta has sold property BP-22 (comprising of basement Floor, Ground Floor, First Floor, Second Floor and Third Floor), West Patel Nagar, New Delhi for total consideration of Rs.9,90,00,000/- vide sale deed dated 24.06.2019. In this property, the assessee had total 50% share and this property was jointly sold by the assessee. The value of the property on which it was sold by the assessee was less than that of the market value for this reasons the above property was referred to the DVO on 17.03.2022 for valuation u/s 142A of the Income Tax Act to determine the fair market value as on date of sale.

A. Whether in the given facts and circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal has erred in holding that rejection of books of accounts is a mandatory pre-condition before referring the matter to the Departmental Valuation Officer ('DVO') for the purpose of determination of the cost of Construction? B. Whether the Hon'ble Income Tax Appellate Tribunal has erred in following the decision rendered by the Hon'ble Supreme Court in the case of Sargam Cinema vs. Commissioner of Income Tax [328 ITR 513 (SC)] without appreciating the insertion of Section 142A of the Income Tax Act, 1961 introduced vide Finance Act, 2004? C. Whether the Hon’ble Income Tax Appellate Tribunal has erred in not sustaining the addition of Rs.90,50,894, relatable to the cost of construction of the project basis the DVO Report on the premise that the difference between the value declared by the Respondent/Assessee and the DVO is less than 3% and therefore constitutes an insignificant difference?

“16. In view of the above, it is evident that the valuation in this case was uncritically accepted by the AO. As can be seen from a comparison of the valuation by the assessee, with that of the DVO, the variation is 3.86%. This is a very minor variation, having regard to the large amounts involved. Besides, the fact that the AO did not examine the variations, with specific reference to any items tare that were unreasonable, or showed wide variation, these differences can also be put down to differing perceptions, and the practice adopted by the concerned business activity.

4. Accordingly, and in the light of the principles laid down in Ambience Developers, then appeal fails and shall stand dismissed.”

13. Applying the principle laid down by the above judgments to the facts of the assessees case, we find that the variation in the case on hand before us is only 1.71% which is a very minor variation and therefore on this account also the addition cannot be sustained.

Neither the AO applied his mind while framing the assessment nor the JCIT while granting approval u/s 153D of the Act. The JCIT granted approval in an incorrect and inconsistent draft assessment order without perusing the records and therefore the approval granted u/s 153D is without application of mind and is bad in law and consequently the assessment framed u/s 153A r.w.s. 143(3) of the Act based on an invalid approval granted u/s 153D is null and void.

Therefore, on this account also the addition cannot be sustained.

& 2383/DEL/2025 PARVEEN GUPTA & GAUTAM GUPTA Thus, we direct the AO to delete the addition made u/s 69 of the Act. Grounds raised by the assessee are allowed.

The grounds raised by the assessee are allowed.

Order pronounced in the open court on 21.11.2025