Unexplained investment addition cannot be sustained solely

Unexplained investment addition cannot be sustained solely on a DVO valuation report without independent evidence of on-money payment.

Issue

Whether an addition under Section 69 for unexplained property investment can be sustained based solely on an Insight portal alert or a Departmental Valuation Officer (DVO) report, when the registered sale deed reflects a lower purchase price and the co-owner’s assessment accepting that very purchase price has already attained finality.

Facts

The assessee, a salaried teacher, jointly purchased a residential property with her husband.
The registered sale deed recorded the total purchase consideration as ₹40 lakhs.
The investment was funded through a joint housing loan and verified savings bank accounts.
The Assessing Officer (AO) initiated reassessment proceedings based on information from the Insight portal, which flagged a property investment value of ₹1.50 crores.
The AO subsequently made an addition of ₹1.10 crores as unexplained investment under Section 69.
On appeal, the Commissioner (Appeals) relied on a DVO report that valued the property at ₹93.15 lakhs and reduced the addition to the differential amount of ₹53.15 lakhs.
The assessee presented the registered sale deed and the final assessment order of her husband (the co-owner), whose identical source documents and declared investment value had already been accepted by the tax department.

Decision

Portal Data and DVO Reports Lack Statutory Weight Alone: Held, yes. An addition for unexplained investment under Section 69 cannot stand purely on automated portal information or a DVO’s valuation estimate when a valid, registered sale deed is available.
Banking Channels Fully Accounted For: Held, yes. Since the acquisition sources were fully accounted for through transparent banking streams and formal housing loan data, no addition is permissible without concrete proof of extra under-the-table cash exchanges.
Rule of Consistency Across Co-owners: Held, yes. Because the exact same transaction and funding sources were verified and accepted without any addition in the co-owner husband’s tax assessment, the department cannot take a contradictory stance against the wife. The remaining addition of ₹53.15 lakhs was ordered to be deleted.

Key Takeaways

Valuation and On-Money Require Proof: A DVO report is merely an opinion on market value; it does not constitute dynamic legal proof that the buyer actually paid cash over and above the registered contract value. The burden remains on the Revenue to find independent, incriminating evidence of an “on-money” payment before invoking Section 69.

Parity in Joint Property Assessments: When the tax authorities accept the declared value and financial sources of a transaction in the hands of one co-owner, they are legally bound by the principle of consistency to extend the same treatment to the other co-owner, provided the underlying facts and documentation are identical.

IN THE ITAT AMRITSAR BENCH

Harpreet Kaur

Income-tax Officer^*

Udayan Dasgupta, Judicial Member
and KRINWANT SAHAY, Accountant Member

IT Appeal No. 450 (Asr.) of 2025
[Assessment year 2018-19]

MAY 6, 2026

Rohit Kapoor, Adv. for the Appellant. Charan Dass, Sr. DR for the Respondent.

ORDER

Udayan Dasgupta, Judicial Member. – This appeal is filed by the assessee against the order of ld. CIT(A), NFAC, Delhi, passed u/s 250 of the IT Act, 1961, dated 08.04.2025 which has emanated from the order of AO, assessment unit, passed u/s 147 r.w.s. 144B of the Act, dated 28.03.2023.

2. The grounds of appeal taken in form 36 are as follows:

“1. That the CIT(A) has erred in law and on facts in confirming the addition of Rs. 53,15,100u/s 69, on account of alleged unexplained investment in the purchase of immovable property (Plot No.85).

2. That the assessment framed u/s 147 is bad in law, as the notice u/s 148 and the order under section 148A(d) were issued on the basis of a common approval number 100000029119758, despite the legal requirement for separate approvals.

3. The assessment under section 147 is bad in law, as the order under section 148A(d) was passed without considering the assessee’s reply dated 17.03.2022submitted in response to the enquiry under section 148A(a). This jurisdictional defect has vitiated the entire reassessment process, defeating the legislative intent behind the scheme introduced by the Finance Act, 2021.

3.1 That the reopening u/s 147 is bad in law, as the notice u/s 148A(b) was issued based on incorrect facts and in violation of Instruction No.F.No.299/10/2022Dir(Inv.III)/611|Dated: 01/08/2022.

4. That the assessment framed u/s 147 is bad in law as the notice u/s 148 was issued by the jurisdictional AO. That the assumption of jurisdiction by the Ld. AO u/s 148 is in violation of mandatory jurisdictional conditions as stipulated in Notification No 18/2022 dated 29th March, 2022.

5. That the assessment u/s 147 is bad in law, as the approval granted by the PCIT on 26.03. 2022 was mechanical and granted without due consideration of the submissions and information available on record. 6. That the addition made u/s 147 is bad in law, as the AO relied solely on information uploaded on the Insight portal by the Investigation Wing without furnishing the underlying material to the assessee as mandatorily required u/s 148A(b) and ignoring the registered sale deed for purchase of Immovable Property (Plot No.85). 7. The CIT(A), while confirming the addition, failed to appreciate that the buyer and seller cannot be subjected to different treatment under the same transaction. Further, the CIT(A) failed to consider that no evidence was provided by the department to substantiate the alleged Sales executed for Rs.93,15,100, as against the registered sale deed reflecting a consideration of Rs.40,00,000.

8. That the Ld. CIT(A) NFAC has erred on both facts and law, vide order u/s 250 of the Act dated 08.04.2025, in arbitrarily rejecting the grounds of appeal raised by the assessee that the AO has erred in invoking the provisions of Section 115BBE of the Act to charge special rate of tax.

9. Without prejudice to the above grounds, the CIT(A) erred in partly confirming the addition of Rs.53,50,100, disregarding that the property is jointly owned by the assessee and her husband, Sh. Jivan Jot Singh Bedi. The addition is unsustainable in law, having been upheld without proper consideration of the facts.”

3. Brief facts appearing from record are that the assessee is a teacher (salaried employee with the State Education department) and has filed her regular return disclosing an income of Rs. 9.21 lakhs which was assessed u/s 143(1), and on the basis of flagged information under high risk criu/vru cases that the assessee has invested an amount of Rs.1.50 crores, in purchase of a residential property during the FY 2017-18 , the case was reopened vide notice issued u/s 148 dated 30th March, 2022 (as per procedure) but without taking into cognizance the reply filed by the assessee explaining the source, in response to notice u/s 148A.

3.1 As evident, the residential property was purchased by the lady assessee jointly with her husband (Mr Jivanjot Singh Bedi) a legal professional, separately assessed to tax (under PAN AGZPB3602J), for a total amount of Rs.40 (forty lakhs) plus registration charges, as per registered deed , the source of which has been satisfactorily explained to have come from joint housing loan obtained from SBI amounting to Rs.32 lakhs and the balance amount being paid jointly by the assessee (and her husband) from their respective savings bank accounts (as per details contained in page – 3 of appellate order).

3.2 However, the assessment was completed on a total income of Rs.1.19 crores (with an addition of Rs.1.10 crores) as unexplained investment u/s 69 of the Act, being the difference of the deed value and the value as per insight portal.

4. In course of first appeal, report from the DVO was obtained on remand where the valuation of the property was estimated at Rs.93.15 lakhs, (against Rs.1.50 crores as per portal) and consequently, the Ld. first appellate authority has allowed part relief, by reducing the addition to Rs.53.15 lakhs.

5. Now the assessee is before the tribunal on the grounds contained in the memorandum of appeal.

6. In course of hearing the Ld. AR of the assessee filed a paper book, consisting of copies of registered purchase deed (deed value being Rs.40 lakhs and market value even less at 22.84 lakhs), copy of assessment order of the husband of the assessee for the same assessment year (PAN AGZPB 3602J) where after full verification and examination of documents pertaining to banks and housing building loan and after considering the information contained in insight portal, the submission of the husband (being the co-owner) explaining the source of investment jointly made in the property, by the husband and wife (assessee) has been accepted at the declared consideration at Rs. 40 lakhs.

7. The Ld. AR further submitted that the DVO report is just an estimation and there is no evidence on record to prove payment of any on money by the assessee to the seller at any stage, and there is no case for addition on account of any unexplained investment u/s 69 of the Act.

7.1 He further submitted that the same transaction cannot be subjected to inconsistent treatment in hands of co-owners in absence of any independent materials being brought on record. In support of his argument, he relied on the following decisions:

“1. NIKITA JENISHKUMAR PATEL v. INCOME TAXOFFICER HIGH COURT OF GUJARAT Judges):

Bhargav D. Karia & Niral R. Mehta, 11. Spesial Ovill Appin. Nos. 22045 & 22046 of 2019 Date of Decision 14th June, 2024

Reassessment-Notice under 1. 148-Notice in the case of the assessee based on notice of reopening held bad-inlaw in case of co-owner-co-owner of land which is Respondent-Revenue justify the reassessment proceedings on the basis of report obtained from DVO incas subject-matter of re-opening-Not tenable as no fresh material to justify the reassessment forming part of the reasons recorded can be pressed into service to justify the validity of the reassessment notice it is also a matter of fact that valuation made by the stamp valuation authority cannot be considered as a tangible material-Notice under s. 148 in the case is nothing but change of opinion-When facts in case of co-owner being identical, different yardstick cannot be applied for reopening the assessment Therefore, in the present case else, when the notice of reopening is held bad in law in case of the co-owner, on the same ground, the impugned notice for reopening, on the same facts, would not sustain-Accordingly, the petitions are allowed and the impugned notices issued under s. 148 are quashed and set aside Munir Ismail Voraji v. ITO (2018) 404 ITR 696 (Guj) and Surat District Co-op Milk Producers Union Ltd. (Special Civil Appin. No. 18608 of 2011, dt. 19th Sept., 2016) relied on; Yogendra kumar Gupta v. ITO (2014) 106 DTR (Guj) 241 distinguished

ii. (Madras) HIGH COURT OF MADRAS Commissioner of Income-tax, Chennal v. Kumararani Smt. Meenakshi Achi

Section 48 of the Income-tax Act, 1961-Capital gains-Computaion of-Assessment year 1995-96 Whether where during same assessment year, same quantity of wealth in possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax-Held, yes Assessee along with co-owners sold property and received its share of Rs. 6,85,28,195Assessee, for purpose of capital gain, had taken value of property as on 1-4-1981 at Rs.2,86,000 per ground based on valuer’s report-Assessing Officer, based on wealth-tax assessment of other co-owner for assessment year 1992-93, adopted value at Rs. 70,000 per ground and computed long-term capital gains Tribunal deleted addition holding that Commissioner in case of co-owner dropped proceedings initiated under section 263 and accepted value shown by co-owner which was same as shown by assessee while arriving at capital gains assessable for assessment year 1995-96-Whether assessee was entitled to benefit enjoyed by other co-owner whose valuation of same property at same rate as that of assessee was accepted by Commissioner-Held, yes”

8. Regarding the legal grounds agitated by the assessee on the issue of reopening of the case based on DVO report the Ld. AR submitted that an opinion of the DVO is not an information for the purpose of reopening of assessment and has relied on the following decisions for support:

“i. 2010 (2) TMI 612-SC Order Assistant Commissioner of Income-tax Versus, Dhariya Construction Co, reopening of the assessment-based on the opinion given by the District Valuation Officer-opinion of the DVO per se is not an information for the the assessment purposes of reopening assessment under section 147 of the Income-lax Act, 1961-Held that: – Department was not entitled to reopen the assessment.

ii. 2025 (11) TMI 340-GUJARAT HIGH COURT Sahyog Corporation Versus Assistant Commissioner Of Income Tax, Circle 1 (1) (1). VADODARA: Reopening of assessment u/s 147-suppression of closing stock figure-matter was referred to the DVO, who vide his report valued the investment of Projects-HELD THAT:- The Hon’ble Apex Court in the case of Dhaniya Construction Company [2010 (2) TMI 612-SC ORDER) has held that the opinion of DVO per se is not an information for the purposes of reopening of an assessment u/s 147 of the Act and the Assessing Officer has to apply his mind to the information, if any, collected and must form a belief thereon.

In the facts of the present case the respondent AO has for the purpose of referring the matter to the DVO has relied upon the survey proceedings, but after the receipt of report of DVO, therein, the DVO has formed an opinion of excess investment made by the petitioner for the year under consideration, the Assessing Officer has not made any further inquiry which is contemplated u/s 148A(a) of the Act to verify any fact to support such conclusion arrived at by the DVO, AO has also not recorded any satisfaction about the correctness or otherwise of the contents of the report of the DVO. Assessing Officer could not have assumed the jurisdiction only on the basis of the report of DVO as the same cannot be considered as per se information for the purpose of reopening of the assessment. As relying on Aavkar Infrastructure Company [2015 (11) TMI 1313-GUJARAT HIGH COURT) we are of the opinion that in the impugned order passed u/s 148A(d) of the Act, the respondent Assessing Officer could not come to a conclusion that it is fit case to reopen the assessment on the ground that the income chargeable to tax has escaped the assessment. Under the circumstance, the very assumption of jurisdiction under Section 147 of the Act on the part of the Assessing Officer while issuing the impugned notice under Section 148 of the Act is without authority of law and hence the same cannot be sustained.

iii. 2026 (1) TMI 1300-ITAT DELHI Income Tax Officer, Ward 18 (3), New Delhi Versus Smt. Samiksha Mahajan And (Vice-Versa) Addition of unaccounted investment in property-AD on the basis of valuation report treated this as unexplained investment-Scope of Incriminating material in search assessments-While pledging the said property the assessee for the purpose of obtaining OD/CC facility from Indian Overseas Bank (10B), the assessee got the valuation prepared of this property-CIT(A) restricted addition -held that Assessee before the CIT(A) and now before us, contended that this valuation report was sent by the IOB to AO in response to notice u/s. 133(6) of the Act and there is no incriminating material available and the said valuation report cannot be as incriminating material and hence, the CIT(A) has rightly restricted the addition,

iv. Commissioner of Income-tax v. Smt. Suraj Devi (Delhi) (Mag.)/[2010] 328 ITR 604 (Delhi) [13-08-2010): Section 69 of the Income-tax Act, 1961 Unexplained investments Assessment year 2005-06-Assessee had made investment in properties which was duly declared in regular return filed by her, however, Assessing Officer made an addition on account of undisclosed payment having been made by assessee solely on basis of report of DVO on appeal, Tribunal deleted addition-Whether primary burden of proof to prove understatement or concealment of income is on revenue and it is only when such burden is discharged that it would be permissible to rely upon valuation given by DVO-Held, yes Whether, moreover, opinion of DVO, per se, is not an information and cannot be relied upon without books of account being rejected-Hold, yes-Whether, since, in instant case, no evidence much less Incriminating evidence. is found to suggest that assessee had made any payment over and above consideration mentioned in registered purchase deed, Impugned addition was rightly deleted by Tribunal- Held, yes

v. Commissioner of Income-tax, Faridabad v. Chandni Bhuchar (Punjab & Haryana)/[2010] 323 ITR 510 (Punjab & Haryana)/[2010] 229 CTR 190 (Punjab & Haryana) (07-01-2010]: Section 59 of the Income-tax Act, 1961-Undisclosed investments Assessment year 2004-05-Assessee filed return of income wherein she disclosed purchase price of a property at Rs. 17.06 lakha-Assessing Officer however, adopted purchase price of property at Rs. 30,32,000 which was assessed for purpose of paying stamp duty Accordingly, Assessing Officer taking a view that assessen must have paid Rs. 13.25 lakhs over and above purchase price disclosed in sala deed, added said amount to assessee’s income as income from unexplained sources-On appeal, Commissioner (Appeal) held that absence of any legally acceptable evidence, valuation done. purpose of section 50C would not represent actual consideration passed on to seller-He, therefore, deleted addition made by Assessing Officer-Tribunal upheld order passed by Commissioner (Appeals) – Whether, on facts, no substantial question of law arose in instant appeal and, therefore, it was to be dismissed-Held, yes”

8.1 The Ld. AR rested his arguments praying for deletion of the addition on merits as well as on the legal grounds.

9. The Ld. DR relied on the order of the Ld. first appellate authority and submitted that in the instant case reopening has been rightly done because reasons to believe are existing on the basis of information available in the insight portal and sufficiency and correctness of material is not a thing to be considered at this stage and it is always open to the assessee to prove that the assumption of facts made in the notice was erroneous and in support of his argument he relied on the decision of ” Anshul Jain v. Pr. CIT (Punj. & Har.)/dated 2.06.2022 “,

9.1 However, on merits of the case the Ld. DR has not brought any material on record to prove the allegation of payment of any on money by the assessee, other than the declared value flowing from known sources of funds already accepted by the department.

10. We have heard the rival submissions and considered the materials on record and the contents of the paper book filed before us and we are of the view that there is absolutely no dispute regarding the declared value of Rs.40 lakhs paid by the assessee jointly with her husband , for purchase of the residential property , the source of which are absolutely transparent to have come out of housing loan and bank savings and there is absolutely no material brought on record at any stage to prove the allegation of on money payment by the assessee, except the opinion of the DVO report (obtained at the appellate stage without submitting any copy to the assessee to rebut the same).

10.1 We also take into consideration the assessment order of the husband (of the assessee) for the same assessment year where the AO after considering the insight portal and the supporting papers and documentary evidences and bank statement has accepted the declared investment (jointly made by the assessee and her husband) as correct and complete.

10.2 We are also of the opinion that the registered sale deed of an immovable property carries the presumption of correctness in absence of any material or evidence indicating payment of consideration over and above the amount recorded therein and the same cannot be disregarded or substituted by a valuation report, which are at best opinion based estimates, and in the instant case in absence of any material evidence brought on record to prove existence of any extra payments made by the assessee, we delete the addition of Rs. 53.15 lakhs sustained by the Ld. first appellate authority and allow the appeal of the assessee on merits.

10.3 Since we have allowed the appeal of the assessee on merits the legal issues raised by the assessee in the remaining grounds of appeal are not adjudicated being academic.

11. In the result the appeal of the assessee is allowed.