ITAT · Chandigarh Bench2024§69C · §142A
Khanna Infrabuild (P) Ltd · ITAT Chandigarh on §69C: a DVO estimate alone, with nothing found in search, is no basis
Can §69C additions rest purely on a DVO's construction-cost estimate?
No. Where search yielded no incriminating material, an addition based solely on the DVO's estimate of construction cost cannot stand.
Reviewed by Sri R.S.V.S. Pavan Kumar, IRS (R), Principal Commissioner of Income Tax (Retd. / VRS) · Published 2026-07-07
Facts in brief
- The AO added under §69C the difference between the hotel-building investment recorded in the books and the DVO's estimated value.
- No incriminating or corroborating evidence of unexplained investment was found during the search.
Issue before the bench
Whether a valuation estimate, without corroborating search material, proves unexplained expenditure.
Held
The Chandigarh Bench deleted the addition, following multiple High Court rulings and a coordinate-bench decision: a DVO report is an estimate, not evidence of unexplained investment.
Practitioner takeaway
Separate the valuation question from the evidence question: absent seized material showing actual unexplained spend, a DVO delta is argument, not proof.
More on this topic: Sections 68 & 69: Unexplained credits and investments · Need this drafted? Scrutiny Assessment Support for CA Firms