Investigation by SVB [Spl.Valuation Branch]

Investigation by SVB[Spl.Valuation Branch]

The price charged to a related person is presumed to be understated and to dissuade such sales the legislature had introduced certain provisions in the law.  [The Hon’ble Supreme Court has endorsed this point of view more than once] CBEC Circular says that SVB [Special Valuation Branch) has to investigate transactions involving special relationships. So, it is to be borne in mind that the work of the SVB is not a routine clerical work comparing or verifying the documents produced but there need to be a worthwhile investigation to ascertain the truth.

Four elements of investigation are:-

1. Collection and collation of intelligence

2. Securing incriminating or other relevant documents either by summons or by search

3. Recording of Statements [Note: With regard to companies, all correspondence should be got signed by the MD  or an authorised signatory through resolution by the Board of Directors.  Copy of the resolution to be obtained in the first instance and kept in a master file in the office. All declarations or information provided are either to be as sworn affidavits or  in the form of a written statement to be given before a Gazetted Officer.]

4. Preparation of SCN

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