Commissioner of Income Tax vs Lahsa Construction Pvt. Ltd.

The Revenue in this appeal u/s 260A of the income tax Act, 1961 ("the Act" for short), impugns the order dated June 25, 2010, passed by the income tax Appellate Tribunal in the case Lahsa Construction Pvt. Ltd. on the ground of perversity. The appeal pertains to the assessment year 1999-2000, (incorrectly mentioned in the impugned order as assessment year 2006-07). The property in question, bearing No. C-20, NDSE, South Ex., Part II, New Delhi, had two sellers. The respondent-assessee, Lahsa Construction Pvt. Ltd., had sold 50 percent share of the property in favour of Mrs. Madhu Arora, whereas the second group of owners consisting of four individuals had sold 50 percent of the property in favour of Mrs. Madhu Arora and her husband, Mr. Om Prakash Arora.

It is stated by the counsel for the respondent that the Revenue had accepted the order of the Tribunal in the case of the said four individuals as the addition was made solely on the report of the Departmental Valuation Officer. This statement is not controverted or accepted by the counsel for the Revenue as he has no information.

The Departmental Valuation Officer had opined that the value of the property at the time of purchase was Rs. 2,84,72,600 and this became the basis of the addition made by the Assessing Officer. The respondent-assessee had disclosed the sale consideration of as Rs. 39,00,000 for sale of their 50 percent. share, in the property to Mrs. Madhu Arora. Mrs. Madhu Arora and Mr. Om Prakash Arora paid an amount of Rs. 44,00,000 to the four individual co-owners for purchase of the balance 50 percent share. Thus, in all they had shown the sale consideration of Rs. 83,00,000, instead of Rs. 2,84,72,600, as opined by the Departmental Valuation Officer. This property was sold in the period relating to the assessment year 2004-05 for Rs. 1,00,00,000. No addition was made by the Assessing Officer on this sale consideration.

Whether an addition can be made solely and on the basis of the report of the Departmental Valuation Officer, is no longer res integra and is covered by the decisions of this court in Commissioner of Income Tax Vs. S.K. Construction Co., , Commissioner of Income Tax Vs. Naveen Gera, , Commissioner of Income Tax Vs. Smt. Suraj Devi, and Commissioner of Income Tax Vs. Bajrang Lal Bansal, . It has been repeated!)'' held that addition cannot be justified solely relying upon the valuation report. The decision of the Supreme Court in the case of K.P. Varghese Vs. Income Tax Officer, Ernakulam and Another, has been followed. In view of the aforesaid position, the order of the Tribunal does not require interference. No substantial question of law arises. The appeal is accordingly dismissed.