Income Tax Officer, Wd-1, Kadapa V. G Rajayalakshmi, Hyderabad

CO 163/HYD/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9269 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Assessment record
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1615/HYD/2012 ASSESSMENT YEAR 2009-2010 ITO, WARD 1 KADAPA. VS. SMT. G. RAJYA LAKSHMI YERRAGUNTLA, KADAPA DIST. PAN ACTPG9092R (APPELLANT) (RESPONDENT) C.O.NO.163/HYD/2012 ARISING OUT OF ITA.NO.1615/HYD/2012 - ASSESSMENT YEAR 2009-2010 SMT. G. RAJYA LAKSHMI YERRAGUNTLA, KADAPA DIST. PAN ACTPG9092R VS. ITO, WARD 1 KADAPA. (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. K. HARITHA FOR ASSESSEE : MR. P. RAVISESHAGIRI RAO DATE OF HEARING : 16.01.2014 DATE OF PRONOUNCEMENT : 24.01.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE ARE CROSS-APPEALS BY REVENUE AND ASSESSEE AGAINST THE ORDER OF THE CIT(A), GUNTUR DATED 17.08.201 2. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS IN THE BUSINESS OF MONEY LENDING, FIL ED HER RETURN FOR THE A.Y. 2009-2010 ON 15.10.2009 DECLARING T OTAL INCOME OF RS.3,36,230/-. AS PER THE ANNUAL INFORMATION REPORTS (IN SHORT AIR) DATA RECEIVED BY THE A.O. ASSES SEE HAS INVESTED AN AMOUNT OF RS.44,74,500/- IN PURCHASE OF VA CANT 2 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. SITE NOS. 182, 183 AND 187 MEASURING 5593 SQ. FEET A T BANGALORE. THE COST OF THE PROPERTY AS PER THE STAMP VA LUE WAS AT RS.44,74,500/- BUT THE ASSESSEE HAS SHOWN TO HAV E PAID AN AMOUNT OF RS.26,58,440/-. ASSESSEE WAS ASKED TO EXPLAI N WHY THE PLOT HAS BEEN PURCHASED AT MUCH LOWER RATE THAN THE PREVAILING MARKET RATE. ASSESSEE SUBMITTED THAT IN OR DER TO AVOID LITIGATION WITH THE REGISTRATION DEPARTMENT, SHE PAID STAMP DUTY AS PER THE DIRECTION OF THE SUB REGISTRAR, YELAHANKA WHO ESTIMATED THE MARKET VALUE AT AN AMOUNT OF RS.44,74,500/-. THE A.O. REFERRED THE MATTER TO THE DVO , BANGALORE TO ELUCIDATE THE CORRECTNESS OF THE AMOUNT OF INVESTMENT MADE BY THE ASSESSEE. A LETTER WAS ALSO ADD RESSED TO THE SUB-REGISTRAR TO FURNISH THE CONSIDERATION ADMITTE D BY OTHER PURCHASERS AS PER THE SUB-REGISTRAR RECORD. VALUATIO N REPORT FROM THE DVO WAS RECEIVED ESTIMATING THE PROPERTY AT RS.55,93,000/-. AFTER OBTAINING THE COMMENTS OF ASSES SEE, THE AMOUNT OF DIFFERENCE OF RS.29,34,560/- WAS BROUGHT TO TAX UNDER SECTION 69B READ WITH SECTION 142A OF THE I.T. ACT . 3. ASSESSEE AGGRIEVED BY THE ORDER CONTESTED THAT THE ADDITION IS MADE MERELY ON THE BASIS OF DVOS VALUA TION AND A.O. FAILED TO APPRECIATE THAT REFERENCE TO DVO IS NOT E NOUGH BUT HE SHOULD HAVE OBTAINED INFORMATION/ EVIDENCE THAT SOME EXTRA CONSIDERATION WAS PASSED ON, FOR MAKING THE ADDITIO N UNDER SECTION 69B. AFTER CONSIDERING ASSESSEES SUBMISS IONS, THE LEARNED CIT(A) PASSED ORDER AS UNDER : 4.3. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH THE ORDER OF THE AO AND HEARD THE AR IN PERSON BESIDES PERUSING ALL OTHER INFORMATIO N AVAILABLE ON RECORD. IT IS SEEN FROM THE RECORDS THA T THIS CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. ONE OF THE CRITERIONS FOR THE YEAR UNDER CONSIDERATION FOR CAS S WAS AIR INFORMATION. THE IMPUGNED PROPERTY WAS SITUATED IN 3 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. BENGALURU CITY, WHICH THE APPELLANT PURCHASED FOR RS.26,58,440/-. WHILE PAYMENT OF STAMP DUTY WAS HAPPENING, AS PER THE PROCEDURE PREVALENT, THE REGISTRATION AUTHORITIES AT THAT PLACE, FOUND OUT T HE MARKET PRICE TO BE RS.44,78,875/- AND ACCORDINGLY PROPOSED STAMP DUTY. IN CASE, SUCH PROPOSED STAMP DUTY WAS DISPUTED, THEN THE APPELLANT HAS TO GO FOR APPEAL BEFORE THE DEPUTY COMMISSIONER UNDER SECTION 45A OF THE KARNATAKA STAMP ACT, 1957 FOR DETERMINAT ION OF STAMP VALUE. DUE TO HUGE TIME CONSUMPTION FOR SU CH PROCEDURE, THE APPELLANT WAS PRACTICAL IN NOT OPTING THAT ROUTE AND DECIDED TO PAY THE STAMP DUTY DETERMINED BY THE SRO, BENGALURU. THIS WAS THE INFORMATION GOT BY T HE AO FROM AIR RETURN AND WAS OF THE VIEW THAT IN PURCHASE OF IMPUGNED SITE AT BENGALURU, UNACCOUNTED INVESTMENTS HAVE HAPPENED. BASED ON SUCH CRITERION, THE AO REFERRED THE MATTER TO DVO AND IN FINALISING THE ASSESSMENT PROCEEDINGS ADDED THE DIFFERENTIAL AMOUN T OF VALUE RECORDED IN BOOKS AT RS.26,58,440/- TO THA T ONE DETERMINED BY DVO AT RS.55,93,000/-, I.E., RS.29,34,560 UNDER SECTION 69B OF THE IT ACT, 1961, WHICH IS UNDER CHALLENGE NOW. THE AR HAS MADE TWO SUBMISSIONS NAMELY THAT THE APPELLANT HAS NOT MADE ANY EXTRA PAYMENT IN PURCHASE OF IMPUGNED SITE BUT AGREED TO PAY STAMP DUTY AS DETERMINED BY SRO ON AN ENHANCED MARKET VALUE, WITHOUT CONTESTING SUCH MARKE T VALUE AND THE CONSEQUENTIAL STAMP DUTY ONLY TO BE PRACTICAL AND NOT TO WASTE TIME, MONEY, ENERGY ETC., IT IS CONTENDED THAT THE AO HAS NOT BROUGHT ANY M ATERIAL THAT THE APPELLANT PAID EXTRA MONEY TO THE SELLER O F THE IMPUGNED SITE THAN WHAT HAS BEEN RECORDED IN BOOKS AND TRIED TO IMPRESS ON THE UNDER SIGNED THAT WITHOUT COGENT REASONS, THERE IS NO JURISDICTION TO AO TO MAKE ADDITIONS. IT IS ALSO CONTESTED THAT WITHOU T REJECTING BOOKS AND WITHOUT POINTING OUT DEFECTS IN BOOKS, THE AO CANNOT MAKE A REFERENCE TO DVO FOR VALUATION OF THE IMPUGNED SITE. HERE,' THERE IS A P OINT IN THE SUBMISSIONS OF THE AR THAT WITHOUT REJECTING BOOKS OR POINTING OUT DEFECTS IN BOOKS, REFERENCE T O DVO IS ILL FOUNDED. A PERUSAL OF RECORDS REVEALED T HAT NO COGENT REASONS WERE FURNISHED EITHER IN THE BODY OF THE ORDER OR ANYWHERE IN THE ASSESSMENT RECORDS THE REASONS FOR REFERRING TO DVO. LEAVE ALONE, WHETHER ANY OPPORTUNITY WAS GIVEN TO THE APPELLANT BEFORE ADOPTING THE DIFFERENTIAL VALUE OF OVA REPOR T AND THE VALUE AS SHOWN IN BOOKS, THE VERY REFERENCE 4 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. TO OVA WITHOUT REJECTING BOOKS BY SHOWING DEFECTS I N SUCH BOOKS CANNOT BE APPRECIATED AND IT HAS TO BE S ET ASIDE. NOW, HAVING REJECTED THE REPORT OF THE OVA, ONE HAS TO CONSIDER THE SURROUNDING CIRCUMSTANCES. IN THIS CONTEXT, THE AO HAS RIGHTLY MENTIONED THE RELEVANCE OF SURROUNDING CIRCUMSTANCES AS SPELT OUT BY THE APEX COURT IN THE CASE OF DURGA PRASAD MORE, REPORTED IN (1973) 82 ITR 540 (SE), WHEREIN, IT HAS BEEN SAID THAT THE AO HAS TO GO BEYOND THE DOCUMENTS PRODUCED TO SHOW THAT APPARENT WAS NOT REAL. THE AIR INFORMATION HAS GIVEN INDICATION TO T HE AO THAT BASED ON THE DATA GOT FROM STAMP DUTY AUTHORITIES OF BANGALURU, PROBE IS REQUIRED IN THE AFFAIRS OF THE APPELLANT TO FIND OUT AS TO WHAT IS REAL. THE IMMEDIATE PROVOCATION FOR THE AO WAS THAT THE AMOUNT SAID TO HAVE BEEN SPENT FOR PURCHASE OF SITE AT BANGALURU WAS ALMOST DOUBLE, WHEN THE MARKET VALUE WAS CONSIDERED BY THE STAMP DUTY AUTHORITIES FOR DETERMINING STAMP DUTY PAYABLE BY THE APPELLANT IN THE PROCESS OF REGISTRATION OF THE SITE AT BANGA LURU. HAD THE MARKET VALUE BEEN SAY ABOUT 10% OR 20% MORE, IT IS UNDERSTANDABLE, BUT IT IS ALMOST 100% I S A TRANSACTION LOADED WITH SUSPICION, BUT EXCEPT FOR STAMP DUTY PAID THERE WAS NO EVIDENCE OR MATERIAL WITH THE REVENUE TO NAIL THAT SUCH AND SUCH AMOUNT WAS PAID IN THAT TRANSACTION BEYOND THE AMOUNT RECORDED IN BOOKS. HAVING NOT GOT ANY DIRECT EVIDEN CE FOR PAYMENT OF ANY EXTRA AMOUNTS, THE FACT THAT FOR STAMP DUTY PURPOSE THE MARKET VALUE DETERMINED BY SRO BEING ALMOST DOUBLE IS AN INDICATION PROVOKED THE AO AND RIGHTLY SO. IT IS SEEN FROM RECORDS THAT FOR THE PURPOSE OF STAMP DUTY, THE SRO TOOK THE MARKET VALUE OF THE PROPERTY AT RS.44,78,875/-, WHILE BOOK VALUE BEING RS.26,58,440/-, THUS ALLEGED EXTRA AMOUNTS BEING NOT RECORDED AT RS.18,20,434/- IN AS MUCH AS SRO IS CONCERNED, WHEREAS, IN AS MUCH AS DVO IS CONCERNED SUCH DIFFERENTIAL AMOUNT AS WORKED OUT BY THE AO STANDS AT RS.29,34,560/-. SINCE, THE ADDITION WAS MADE BY THE PROVISIONS OF SECTION 69B, EVEN THOUGH THE REVENUE HAS NOT FOUND OUT EVIDENCE FOR PAYMENT OF EXTRA AMOUNTS, HAVING REGARD TO THE RATIO OF THE DECISION OF THE APEX COURT IN THE CASE OF DURGA PRASAD MORE, IN MY CONSIDERED OPINION, ENDS OF JUSTICE ARE MET IF THE ADDITION MADE UNDER SECTI ON 69B IS RESTRICTED TO RS.2,93,456/- OR SAY RS.2,93,4 60, AND THE AO IS DIRECTED ACCORDINGLY. 5 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. 4. DEPARTMENT IS AGGRIEVED ON THE ABOVE ORDER AND RAISED A GROUND THAT CIT(A) ERRED IN CONFIRMING ONLY 10% INCREASE IN THE VALUE ADMITTED, WHICH IS BASELESS. AS SESSEE IN HER CROSS OBJECTION IS CONTESTING THE CONFIRMATION OF THE AMOUNT PARTLY UNDER SECTION 69B. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAMINED THE DOCUMENTS ON RECORD. AS SEEN FROM THE DOCUMENTS OF PURCHASE OF PROPERTY, ASSESSEE PURCHASED VACANT SITE NO.182, 183 AND 187 FROM ONE MR. K. VENKATA SUBBA RAJU AND THE DOCUMENT WAS PRESENTED FOR REGISTRATIO N ON 8 TH AUGUST, 2008. THE DOCUMENT WAS REGISTERED ON THE SAME DAY. AS PER THE ENCLOSURES TO THE DOCUMENT, THE S UB REGISTRAR SEEMS TO HAVE INFORMED THE MARKET VALUE FOR REGISTRATION AT ABOUT 11:16:36 AM AND ON THE SAME D AY, ASSESSEE ACCEPTED THE SAME AND SIGNED THE AFFIRMATIO N OF THE VALUATION AND PRESENTED THE DOCUMENT, AS SEEN FROM THE BACKSIDE OF THE FIRST PAGE WHICH INDICATE THAT THE SA ME WAS REGISTERED AT 11:41:52 AM. ACCORDINGLY, ASSESSEES EXP LANATION THAT IN ORDER TO AVOID LITIGATION, ASSESSEE HAS ACCE PTED THE VALUATION CANNOT BE CONSIDERED, IN THE SENSE THAT ASSE SSEE IS VERY WELL AWARE ABOUT THE DOCUMENT VALUE AND MUST HAVE GONE PREPARED TO REGISTER THE DOCUMENT AT THAT PRICE. OTHERWIS E, HOW THE STAMP DUTY AND REGISTRATION VALUE HAS BEEN PAID CONSIDERING HIGHER VALUE IS NOT EXPLAINED. 5.1. BE THAT AS IT MAY, A.O. ASKED THE ASSESSE E TO EXPLAIN WHY THERE IS HUGE DIFFERENCE IN THE AMOUNT SATED AS CONSIDERATION IN TITLE DEED AND PREVAILING MARKET RATE. THERE IS NO EXPLANATION FROM THE ASSESSEE. IN THE ABSENCE OF AN Y EXPLANATION A.O., EVEN THOUGH NOT REQUIRED, HAS REFERRED THE MATTER TO THE DVO FOR CONSIDERING THE MARKET VALUE WHICH 6 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. INDICATES VALUE MORE THAN VALUE ESTIMATED BY THE STA MP REGISTRATION AUTHORITY. IN THESE CIRCUMSTANCES, THE OR DER OF THE CIT(A) DETERMINING THE VALUE AT 10% OF THE REGISTRA TION VALUE IS NOT ONLY WITHOUT ANY BASIS, AS CONTENDED BY THE REVENUE IN ITS GROUNDS, BUT ALSO PERVERSE TO SAY LEAST. THERE IS NO BASIS FOR THE CIT(A) TO REDUCE THE AMOUNT AS WAS DONE BY HIM. WE ARE NOT IN AGREEMENT WITH THE SAID ORDER. SINCE BO TH ASSESSEE AND REVENUE ARE CONTESTING THE ORDER AND WE ARE ALSO OF THE VIEW THAT CIT(A) HAS NO BASIS TO DETERMINE AS S UCH, WE HAVE NO OPTION THAN TO RESTORE THE ISSUE TO THE FILE OF AO BY SETTING ASIDE THE IMPUGNED ORDER. 5.2. ASSESSING OFFICER DID NOT ENQUIRE THE ACTUAL MARKET VALUE, EVEN THOUGH REFERRED THE MATTER TO THE SU B- REGISTRAR FOR VALUATION OF SIMILAR PROPERTIES IN AND AROUND THE SAME PLACE WHERE ASSESSEE PURCHASED. AS SEEN FROM THE DOCUMENT THE PROPERTY PURCHASED IS OPEN LAND-PLOTS. THER E MAY BE SALE OF PLOTS IN THE SAME LOCATION. THIS REQUIRES VERIFICATION. JUST BASING ON DVO REPORT IS ALSO NOT CORRECT AS IT IS ONLY ESTIMATION. WE ARE OF THE OPINION THAT THE M ATTER REQUIRES TO BE RE-EXAMINED BY THE A.O. BY GIVING DUE OPPORTUNITY TO THE ASSESSEE. ASSESSING OFFICER IS ALS O FREE TO ENQUIRE FROM THE SELLER AND THE OUTCOME OF HIS INCOME T AX PROCEEDINGS AS PROVISIONS OF SECTION 50C COULD HAVE BEEN INVOKED IN SELLERS CASE. IT IS ALL THE MORE NECESSARY TO ENQUIRE AND FIND OUT THE OUTCOME OF ASSESSMENT IN THE HANDS OF THE SELLER AS WELL. SINCE, THESE ASPECTS ARE NOT ON RECORD AN D SINCE ORDER OF THE CIT(A) IS NOT CORRECT BOTH ON FACTS AND ON LAW, WE SET ASIDE THE SAME AND RESTORE THE ENTIRE ISSUE TO THE F ILE OF THE A.O. FOR FRESH EXAMINATION. NEEDLESS TO SAY THAT ASSESS EE BE GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN WHY THE PROPERTY WAS 7 ITA.NO.1615/HYD/2012 & CO.NO.163/HYD/2012 G. RAJYALAKSHMI, YERRAGUNTLA, KADAPA DIST. PURCHASED AT A LESSER PRICE THAN THE MARKET VALUE. WITH THESE OBSERVATIONS AND DIRECTIONS, BOTH GROUNDS OF THE ASSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS- OBJECTION OF THE ASSESSEE ARE CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATE 24 TH JANUARY, 2014 VBP/- COPY TO : 1. ITO, WARD-1, KADAPA 2. SMT. G. RAJYA LAKSHMI, 4-258, MUDDANUR ROAD, YERRAGUNTLA, KADAPA DIST.PAN ACTPG9092R 3. CIT(A), GUNTUR 4. CIT, TIRUPATI 5. D.R. ITAT A BENCH, HYDERABAD.