M/s. Mahagun Technologies Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 37/DEL/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1695 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BALWAN CHAUDHARY
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 143(3); 50C; 153A; 15

Judgement Text

ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A.NO. 4969 /DEL/201 1 A.Y. : 200 8 - 0 9 ACIT, CC - 3, NEW DELHI ROOM NO. 354, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI VS. M/S MAHAGUN TECHNOLOGIES PVT. LTD., B-66, VIVEK VIHAR, DELHI 92 (PAN: AACCB3143L) C.O. NO. 37 /DEL/201 2 (IN ITA NO. 4969/DEL/2011) A.Y. : 200 8 - 0 9 M/S MAHAGUN TECHNOLOGIES PVT. LTD., B-66, VIVEK VIHAR, DELHI 92 (PAN: AACCB3143L) VS. ACIT, CC - 3, NEW DELHI ROOM NO. 354, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI (APPELLANT) (RESPONDENT) ASSESSE BY : SHRI RAKESH GUPTA, ADV., SH. SOMIL AGGARWAL, ADV. & SH. PRAKASH GUPTA, ADV. DEPARTMENT BY : SHRI BALWAN CHAUDHARY, CIT(DR) DATE OF HEARING : 27-11-2015 DATE OF ORDER : 08-12-2015 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE APPEAL AND ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE ORDER PASSED BY THE LD. COMM ISSIONER OF INCOME TAX (APPEALS)-II, NEW DELHI DATED 16.8.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. SINCE THE ISSUES INVOLVED IN THE APPEAL AND ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 2 CROSS OBJECTION ARE COMMON AND IDENTICAL, HENCE, WE ARE CONSOLIDATED THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVE NIENCE. 2. THE GROUNDS RAISED IN REVENUES APPEAL NO. 4969 /DEL/2011 (AY 2008-09) READ AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND IN FACT OF THE CASE IN DELETING THE ADDITION OF RS.54,64,000/ - MA DE ON ACCOUNT OF SUPPRESSED SALE CONSIDERATION PROPERT Y BEARING NO. A-29 SECTOR-63, NOIDA DISREGARDING THE FACT THAT THE VALUATION AS ADOPTED BY THE ASSESSING OFFICER WAS DULY GETTING SUPPORTED WITH THE VALUATI ON AS WORKED OUT BY THE DEPARTMENTAL VALUATION OFFICER . 2. THAT THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN DELETING THE ADDITION MADE BY JUST MAKING REFERENCE TO PROVISIONS OF SECTION 50C WHEREAS THE ADDITION MADE BY THE AO WAS DULY SUPPORTED BY THE VALUATION ARRIVED AT BY THE DVO? 3. THAT THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN HOLDING THAT PRIOR TO INSERTION OF SECTION 50C ADDI TION FOR SUPPRESSION SALE CONSIDERATION WAS NOT PERMISSIBLE. 4. THE LD. CIT(A) HAS ERRED IN FACT AND IN LAW IN N OT CONSIDERING THE REMAND REPORT SUBMITTED BY THE AO WHERE AO HAD MADE OUT A CLEAR CASE WITH THE HELP OF VALUATION REPORT THAT THE SALE CONSIDERATION HAD BEEN GROSSLY SUPPRESSED BY THE ASSESSEE. 5. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 3 (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. THE GROUNDS RAISED IN ASSESSEES CROSS OBJECTION NO. 37/DEL/2012 (AY 2008-09) READ AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION O F RS.54,64,0001- ON ACCOUNT OF ALLEGED SUPPRESSED SAL E CONSIDERATION FOR THE PROPERTY BEARING NO. A-29, SE CTOR 63, NOIDA. 2. THE LD. CIT (A) IS ERRED UNDER THE LAW WHILE HOL DING THAT A.O. HAS A VALID JURISDICTION ULS 153A OF THE ACT. 3. THAT THE LD. A.O. HAS GROSSLY FAILED TO SUBMIT R EMAND REPORT ON TIME IN SPITE OF REPEATED REMINDERS BY TH E LD. CIT (A) WHICH IS APPARENT FROM THE APPELLATE ORDER. 4. THAT IT IS UNFAIR ON THE PART OF A.O. TO ALLEGE LD. CIT (A) THAT HE HAS NOT CONSIDERED THE REMAND REPORT ALONGW ITH REPORT OF DVO, CONTRARY TO THE FACT, THAT THE IMPUG NED REMAND REPORT WAS NEVER RECEIVED BY THE CIT (A) BEF ORE FRAMING THE APPELLATE ORDER. 5. THAT THE A.O. IS ERRED UNDER THE LAW WHILE, MAKI NG REFERENCE TO THE DVO AFTER COMPLETION OF THE IMPUGN ED ASSESSMENT ORDER AND THAT TO WITHOUT REJECTING THE BOOKS OF ACCOUNTS SO MAINTAINED BY THE APPELLANT. 6. THAT THE REFERENCE TO DVO IS ALSO ARBITRARY, IN VIEW OF THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURIN G THE ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 4 SEARCH TO SUGGEST THAT THE APPELLANT HAS RECEIVED A NY CONSIDERATION OVER AND ABOVE AS DECLARED IN THE ITR . 7. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AMEND, MODIFY, DELETE ANY OF THE GROUNDS(S) OF CROSS OBJEC TION BEFORE OR AT THE TIME OF HEARING. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGINA L RETURN DECLARING NET TAXABLE INCOME OF RS. 7,37,640/- WAS E-FILED ON 29.8.2008. THE RETURN WAS DULY PROCESSED U/S 143(1) OF THE INCOME TAX ACT AND AO HELD THAT THE DIFFERENCE OF RS. 56,64,000/- HAS BEE N RECEIVED BY THE ASSESSEE OVER AND ABOVE THE SALE CONSIDERATION SHOW N WHICH IS ADDED TO THE INCOME OF THE ASSESSEE BEING UNDISCLOSED REC EIPT ON SALE OF THE PROPERTY VIDE ORDER DATED 28.12.2010 PASSED U/S. 15 3A READ WITH SECTION 143(3) OF THE I.T. ACT, 1961. 5. AGAINST THE AFORESAID ASSESSMENT ORDER DATED 28. 12.2010, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE IM PUGNED ORDER DATED 16.8.2011 PARTLY ALLOWED THE APPEAL OF THE AS SESSEE. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 7. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 8. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE R ELIED UPON THE ORDER OF THE LD. CIT(A) AND REQUESTED THAT THE SAME MAY BE UPHELD. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN DISPU TE IN HIS IMPUGNED ORDER FROM PAGES 9 TO 11 VIDE PARA NOS. 8 TO 10. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING HEREWITH THE RELEVA NT PARAS AS UNDER:- ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 5 8. AS REGARDS GROUND NO 4, IT RELATES TO ADDITION OF RS. 54,64,000/- ON ACCOUNT OF UNACCOUNTED RECEIPTS ON S ALE OF PROPERTY BY THE APPELLANT COMPANY DURING THE YEAR. THE AO. WHILE FRAMING THE ASSESSMENT ORDER HAS MADE THE FOLLOWING REMARKS:- 'AS PER THE COMPUTATION OF INCOME, THE ASSESSEE HAS SHOWN LONG' TERM CAPITAL GAIN OF RS.9,20,8571- ON SALE OF PROPERTY I.E. A-19, SECTOR-63, NOIDA AND AS PEER THE ANNEXUR E, COST INDEXATION HAS BEEN MADE. THE SALE CONSIDERATION OF THIS PROPERTY IS RS.1.88 CRORES. AS PER INFORMATION DOWN LOADED FROM THE WEBSITE OF ELITE REALTY CONSULTANTS PVT. L TD. THE CIRCLE RATE OF THE PLOT IN SECTOR-63 NOIDA IS RS. 12,000/- PER SQ. MTRS. ON THIS BASIS, THE SALE RATE OF THE PROPE RTY IS WORKED OUT AS UNDER: LAND CIRCLE RATE - RS. 12,000/- PER SQ. MTR X 1000 SQ. MTRS = RS. 1,20,00,000/- CONSTRUCTION CIRCLE RATE- RS.6,000/- PER SQ.MTR X 2 044 SQ. MTRS = RS.1,22,64,000/- TOTAL RS.2,42,64,000/- AS AGAINST THIS, SALE CONSIDERATION SHOWN BY THE AS SESSEE IS RS. 1.88 CRORES. AS PER THE PROVISIONS OF SECTION 142A OF THE IT ACT, THE MATTER WAS REFERRED TO DEPARTMENT'S VALUATION C ELL TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 6 COMPUTATION OF CAPITAL GAIN. THE REPORT HAS NOT BEE N RECEIVED TILL DATE AND SINCE IT IS TIME BARRING MATTER, THE ASSES SMENT IS FRAMED BY ADOPTING THE CIRCLE RATES AS PER THE INFORMATION DOWNLOADED FROM THE WEBSITE OF ELITE REALTY CONSULTANTS PVT LT D. HOWEVER, IN THE MEANTIME, THE RATE IS ADOPTED AS PER THE CALCUL ATIONS MADE ABOVE. IT IS HELD THAT THE DIFFERENCE OF RS. 54,64,000/- H AS BEEN RECEIVED BY THE ASSESSEE OVER AND ABOVE THE SALE CONSIDERATI ON SHOWN WHICH IS ADDED TO THE INCOME OF THE ASSESSEE BEING UNDISCLOSED RECEIPT ON SALE OF PROPERTY. PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE IT ACT ARE BEING INITIATED SEPARATELY FOR FURNI SHING INACCURATE PARTICULARS AND CONCEALING THE PARTICULARS OF INCOM E. ADDITION ON ACCOUNT OF UNACCOUNTED RECEIPTS OF PROP ERTY RS.54,64,000/- 9. THE AR VIDE HIS WRITTEN SUBMISSION DATED 06.05. 2011 HAS SUBMITTED BEFORE ME AS UNDER:- 'DURING THE YEAR UNDER REVIEW, THE APPELLANT SOLD B UILT UP INDUSTRIAL PROPERTY A-19, SECTOR-50, NOIDA TO M/S. MAHAGUN INDIA PVT. LTD. VIDE SALE DEED DATED 03.06.2007 DUL Y REGISTERED WITH SUB-REGISTRAR GHAZIABAD FOR A SALE CONSIDERATION OF RS. 1.88 CRORES. HOWEVER, WHILE FR AMING THE IMPUGNED ASSESSMENT ORDER THE LD. A. O. HAS ADO PTED ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 7 CIRCLE RATE FROM THE WEBSITE OF ELITE REALTY CONSUL TANT PRIVATE LIMITED, A REAL ESTATE COMPANY AND HAS ALLEGED THAT THE SALE CONSIDERATION AS DISCLOSED BY THE APPELLANT IS LESS THAN THE APPLICABLE CIRCLE RATE. ACCORDING TO THE INFORMATIO N DOWNLOADED FROM THE WEBSITE, THE LD. A.O. HAS TAKEN CIRCLE RATE OF THE LAND AT RS. 12,000/- PER SQ. MTR. AS AG AINST RS. 6,500/- APPLICABLE CIRCLE RATE AS ON DATE OF SALE D EED, WHICH IS EVIDENT FROM THE COPY OF SALE DEED ITSELF (PB 35 -99) FILED BEFORE A.0. VIDE LETTER DATED 08. 10.2010 (PB32-34) WITHOUT AFFORDING ANY OPPORTUNITY OF REBUT THE SAME. THE APPELLANT HAS ALSO VISITED THE WEBSITE OF 'ELIT E REALTY CONSULTANTS PVT. LTD.' AND HAVE DOWNLOADED T HE INFORMATION USED BY THE A. O. FOR THE PURPOSE OF IM PUGNED ASSESSMENT ORDER (PB100-101). ON PERUSAL OF SUCH INFORMATION YOUR HONOUR WILL APPRECIATE THE CIRCLE RATE /OPTED BY THE A.O. IS APPLICABLE W.E.F. 01.11.2008. WHEREAS, THE SALE HAS TAKEN /IIACE ON 03.06.2007. IT APPEARS THAT THE LD. A. O. BY OVERSIGHT HAS NOT NOTICED THE APPLICAB ILITY OF THE CIRCLE RATE BEFORE ALLEGING THAT THE APPELLANT HAS UNDER STATED THE CIRCLE RATE. THEREFORE, THE IMPUGNED ADD ITION IS FACTUALLY INCORRECT. ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 8 WITHOUT PREJUDICE, FURTHER THE LD. A. O. 1N THE CONCLUDING PARAGRAPH OF THE IMPUGNED ORDER HAS ALLE GED THE DIFFERENCE OF RS.54,64,000/- (DIFFERENCE DUE TO CIR CLE RATE) HAS BEEN RECEIVED BY THE APPELLANT OVER AND ABOVE T HE SALE CONSIDERATION AND HAS TREATED THE SAME AS 'UNACCOUN TED RECEIPTS ON SALE OF PROPERTY'. THE AO HAS TREATED T HE SAID IMPUGNED INCOME AS INCOME FROM OTHER SOURCES AND HA S TAXED @ 30% AS AGAINST 20% APPLICABLE IN THE CASE O F LONG TERM CAPITAL GAIN. YOUR HONOURWILL APPRECIATE THAT THERE IS NO PROVISIONS UNDER THE LAW WHICH PERMITS THE AO TO CH ANGE THE NATURE OF RECEIPT OF INCOME UNLESS UNTIL CIRCUM STANCES SO WARRANT. IT IS NOT CASE OF THE AO THAT THE TRANSACT ION IS NOT RELATED TO A LONG TERM ASSETS. THE ACTION OF THE AO CLEARLY PROVES HIS BIAS ABOUT IMPOSITION OF TAX LIABILITY O N THE APPELLANT WHETHER IT IS SUSTAINABLE UNDER THE LAW O R NOT? ALTERNATIVELY, WITHOUT PREJUDICE, IT IS SETTLED PRO POSITION OF LAW THAT UNLESS THERE IS EVIDENCE THAT MORE THAN WH AT WAS STATED WAS RECEIVED, NO HIGHER PRICE CAN BE TAKEN T O BE THE BASIS FOR COMPUTATION OF CAPITAL GAINS. IT WAS FURT HER 'HELD IN NUMBER OF CASES THAT CAPITAL GAINS TAX WAS INTENDED TO TAX THE GAINS OF AN ASSESSEE, NOT WHAT, AN ASSESSEE MIG HT HAVE GAINED. WHAT IS NOT GAINED CANNOT BE COMPUTED AS GA INED. ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 9 CAPITAL GAINS TAX IS NOT A TAX ON WHAT MIGHT HAVE B EEN RECEIVED OR COULD HAVE BEEN TAXED. RELIANCE CAN BE PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- A) CIT V/S. NILOFAR I SINGH (2009) 309 ITR 0233 (DE L) B) DEV KUMAR JAIN VIS. ITO (2009) 309 ITR 0240 (DEL ) C) COMMISSIONER OF INCOME TAXRGE HENDERSON AND CO. LTD. (1967) 066 ITR 0622 (SC) D) COMMISSIONER OF INCOME TAX VIS. GILLIANDERS ARBU THNOT AND CO. GILLANDERS ARBUTHNOT AND CO. VIS. COMMISSIONER OF INCOME TAX (1973) 087 ITR 0407 (SC) E) CIT VS. SHIVAKAMI CO. P LTD. (1986) 159 ITR 0071 (SC) F) ACIT VS. NAKUL KAPOOR (2010) TIOL 727 ITAT (DEL. ) THEREFORE, VIEWED FROM ANY ANGLE WHETHER ON FACTUA/ S OR ON LAW, THE ADDITION MADE BY THE A.O. IS LIABLE TO BE DELETED.' 10. I HAVE CONSIDERED THE ASSESSMENT ORDER AND WR ITTEN SUBMISSIONS FILED BY THE APPELLANT COMPANY ALONGWIT H ANNEXURES THERETO, THE FACTS OF THE CASE AND POSITI ON OF LAW. IT APPEARS THAT WHILE FINALIZING THE IMPUGNED ASSES SMENT ORDER THE A.O. OVERLOOKED THE DATE OF APPLICABILITY OF CIRCLE ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 10 RATE WHICH IS CLEARLY MENTIONED AS 'W.E.F. 01 NOV. 2008 WHICH IS EVIDENT FROM HARD COPY OF CIRCULAR FURNISH ED BY THE APPELLANT DURING THESE PROCEEDINGS. THEREFORE, IN T HE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE OR MATE RIAL ON RECORDS OF UNACCOUNTED RECEIPTS ON SALE OF PROPERTY , I HAVE NO HESITATION IN DELETING THE ADDITION SO MADE BY T HE A.O. WHICH IS OTHERWISE A FACTUAL ERROR. THE APPELLANT G ETS RELIEF ON THIS ACCOUNT. THE GROUNDS TAKEN ON THIS ACCOUNT ARE ALLOWED. 10. AFTER GOING THROUGH THE AFORESAID ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASON ED ORDER BY STATING THAT THE AO HAS OVERLOOKED THE DATE OF APPLICABILIT Y OF CIRCLE RATE WHICH IS CLEARLY MENTIONED AS W.E.F. 01 NOV. 2008 WHEREAS THE SALE HAS TAKEN PLACE ON 3.6.2007. THEREFORE, IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE OR MATERIAL ON RECORDS OF UNACCOUNTED RECE IPTS ON SALE OF PROPERTY, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISPUTE. THEREFORE, IN VIEW OF ABOVE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE , HENCE, WE UPHOLD THE SAME. ACCORDINGLY, THE APPEAL FILED BY THE REVE NUE STANDS DISMISSED. ITA NO. 4969/DEL/2011 & CO NO. 37/DEL/2012 11 ASSESSEES CROSS OBJECTION 11. AS FAR AS ASSESSEES CROSS OBJECTION IS CONCERN ED, THE SAME IS ONLY SUPPORTIVE THE LD. CIT(A)S ORDER. SINCE WE HA VE DISMISSED THE APPEAL OF THE REVENUE AS AFORESAID, HENCE, THE CRO SS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND DISMISSE D AS SUCH. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/12/2015. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 08-12-2015 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR