Sh. Satish Maheshwari, Delhi V. ACIT, New Delhi

CO 74/DEL/2011

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2951 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 17-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Additional evidence; Fair market value; Valuation report
• Section: 131; 68

Judgement Text

1 ITA NO.3918/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO.3918/DEL/20 10 (A.Y 2006-07) ACIT CIRCLE-39(1), ROOM NO. 212, C. R. BUILDING NEW DELHI (APPELLANT) VS SATISH MAHESHWARI PRO. M/S CHETAN OVERSEAS, 5859/2, BASTI HARPHOOL SINGH, SADAR BAZAR DELHI AAMPM5296L (RESPONDENT) C.O NO.74/DEL/2011 (A.Y 2006-07) SATISH MAHESHWARI PRO. M/S CHETAN OVERSEAS, 5859/2, BASTI HARPHOOL SINGH, SADAR BAZAR DELHI AAMPM5296L (APPELLANT) VS ACIT CIRCLE-39(1), ROOM NO. 212, C. R. BUILDING NEW DELHI (RESPONDENT) APPELLANT BY SH. N.K. BANSAL, SR. DR RESPONDENT BY SH. RAJIV JAIN, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 17/06/ 2010 PASSED BY CIT(A)-XXVIII, NEW DELHI. DATE OF HEARING 17.05.2017 DATE OF PRONOUNCEMENT 25.05.2017 2 ITA NO.3918/DEL/2010 2. THE GROUND OF APPEAL AND CROSS OBJECTION ARE AS UNDER:- (ITA NO. 3918/DEL/2010) 1. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERR ED IN DELETING THE ADDITION OF RS.76,00,000/- MADE ON ACCOUNT OF INCOM E FROM UNDISCLOSED SOURCES U/S 68 OF THE INCOME-TAX ACT, BY ADMITTING THE ADDITIONAL EVIDENCE IN CONTRAVENTIONS OF THE PROVIS ION OF RULE 46A OF THE INCOME-TAX RULES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE ADDITION OF RS.28,07,518/- MADE ON ACCOUNT OF CAPIT AL GAIN BY ARRIVING AT THE FAIR MARKET VALUE OF THE LAND ON TH E BASIS OF THE LETTER OF THE SDM AND NOTIFICATION DATED 30/8/2005. C.O NO.74/DEL/2011 1. THAT FOR COMPUTATION OF INCOME U/H CAPITAL GAIN F ROM SALE OF PLOT AT SAMAIPUR THE LD CIT(A)-XXVIII WAS WRONG IN ASSUMI NG THE SALE CONSIDERATION AT THE FAIR VALUE DETERMINED BY NAIB TAHSILDAR AT R S. 3,84,377/- AS AGAINST THE ACTUAL SALE CONSIDERATION AMOUNTING TO RS.3,50,000/ -. 3. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN BUSINES S OF TRADING IN SCRAP/WASTE OF FERROUS & NON-FERROUS METALS. DURING THE YEAR THE ASSESSEE HAS TOTAL TURNOVER OF RS.51,22,88,000/- WITH GROSS PROF IT OF RS.48,78,000/- WITH A GP RATE OF 0.95% AS AGAINST GROSS TURNOVER OF RS. 3 1,54,83,000/-WITH A GROSS PROFIT OF RS.24,79,000/- WITH A GP RATE OF 0.78% DU RING THE PRECEDING YEAR. THE ASSESSEE CLAIMED AN AMOUNT OF RS.57,340/- ACCOUNT O F PETROL EXPENSES, AN AMOUNT OF RS.38,396/- ON ACCOUNT OF INTEREST ON CAR LOAN, AN AMOUNT OF RS. 60,000/- ON ACCOUNT OF DRIVERS SALARY, AN AMOUNT O F RS.35,891/- ON ACCOUNT OF CAR INSURANCE AND AN AMOUNT OF RS.1,19,011/- ON ACCOUNT OF CAR DEPRECIATION. TOTAL EXPENSES UNDER THESE HEADS AMO UNTED TO RS.3,10,638/-. THE ASSESSING OFFICER OBSERVED THAT SINCE THE ASSES SEE IS NOT MAINTAINING ANY LOG BOOK AND AS THE PERSONAL USE OF CAR CANNOT BE R ULED OUT HE DISALLOWED AN AMOUNT OF RS.62,128/- I.E. 1/5 TH OF THE TOTAL EXPENSES BY ADDING THE SAME TO 3 ITA NO.3918/DEL/2010 THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE ALSO CLAIMED AN AMOUNT OF RS. 1,40,933/- UNDER THE HEAD TELEPHONE EXPENSES. THE ASSESSING OFFICER OBSERVED THAT SINCE USE OF TELEPHONE FOR PERSONAL P URPOSE CANNOT BE RULED OUT & AS THE CALLS ARE NOT VERIFIABLE, AND DISALLOWED A N AMOUNT OF RS.28,186/- I.E 1/5 TH OF RS.1,40,933/- BY ADDING THE SAME TO THE TOTAL I NCOME OF THE ASSESSEE. 4. THE ASSESSING OFFICER FURTHER OBSERVED FROM THE DETAILS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAD TAKEN LOAN DURING TH E YEAR FROM VARIOUS PERSONS. HOWEVER, IN RESPECT OF FOLLOWING THREE PE RSONS REQUISITE EVIDENCE AS TO GENUINENESS & CREDITWORTHINESS WAS NOT FURNISHED. I) M/S MAHALAXMI EXTRUSIONS RS.22,00,000/- THOUGH THE ASSESSEE FILED CONFIRMATION BUT EVIDENCE AS TO ITS CREDITWORTHINESS HAS NOT BEEN PRODUCED. (II) M/S S. K. ENTERPRISES RS.5,00,000/- NEITHER EVIDENCE AS TO GENUINENESS NOR AS TO ITS CR EDITWORTHINESS HAS BEEN FILED. (III) M/S PARACHI SCRAPS TRADING PVT. LTD. RS.49,0 0,000/- NEITHER EVIDENCE AS TO GENUINENESS NOR AS TO ITS CR EDITWORTHINESS HAS BEEN FILED. AS SUCH THE TOTAL AMOUNT OF RS.76,00,000/- IN RESPE CT OF ABOVE THREE PERSONS WHICH WAS FOUND DEPOSITED IN THE BOOKS OF ACCOUNTS AND WHERE THE ASSESSEE HAD NOT DISCHARGED THE BURDEN PLACED ON HIM BY PROD UCING SUFFICIENT EVIDENCE THE SAME WAS TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AS PER PROVISIONS OF SECTION 68 OF THE I. T. ACT, 1961 BY THE ASSESSING OFFICER. 5. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD A PLOT MEASURING 1008 SQ. YARDS SITUATED AT KHASRA NO. 19/25, SWAMI SHARDHANAND COLONY, VILLAGE, SAMAIPUR FOR A CONSIDERATION OF RS.3,50,00 0/- ON 3,50,000/- ON 4 ITA NO.3918/DEL/2010 13/10/2005. THE ASSESSING OFFICER ASKED THE ASSESS EE TO JUSTIFY THE CONSIDERATION OF SALE OF SAID LAND AT A VERY LOW PR ICE. VIDE ITS LETTER DATED 14/11/2008 ASSESSEE SUBMITTED THAT THE PLOT WAS SIT UATED AT DELHI WASTE DUMP YARD AND NEAR GANDA NALA & JHUGEES. IN A COMP ARABLE CASE WHERE THE PROPERTY WAS SOLD ON 10/2/2006 SITUATED AT KHASRA N O. 5/6 VILLAGE SAMAIPUR, DELHI OF 1000 SQ. YARDS WHICH WAS REFERRED TO VALUA TION CELL, THE DISTRICT VALUATION OFFICER VIDE HIS VALUATION REPORT DATED 2 4/11/2008 HAD APPLIED THE RATE OF 3599/- PER SQ. METER. SINCE THE PROPERTY I N HAND IS LOCATED IN THE SAME VILLAGE THE ASSESSEE WAS CONFRONTED BY THE ASSESSIN G OFFICER WITH THE ABOVE RATE ACCORDING TO WHICH THE FAIR MARKET VALUE OF TH E PROPERTY COMES TO RS.30,33,196/- (842.78 @ RS.3599 AS 1 SQ. YARD= 0.8 361 SQ. METER). THIS FACT WAS RECORDED IN THE ORDER SHEET ENTRY DATED 29/12/2 008 AND THE ASSESSEE SUBMITTED THE JUSTIFICATION FOR HIS SALE CONSIDERAT ION VIDE HIS LETTER DATED 14/11/2008. THEREFORE, THE ASSESSING OFFICER HELD THAT SINCE THE PROPERTY IN THE SAME VILLAGE TO WHICH THE ABOVE QUOTED VALUATIO N REPORT REFERS I.E. SAMAIPUR, AND TAKEN AS SUCH VALUE OF RS.30,33,196/- FOR CALCULATING PROPER CAPITA GAIN INSTEAD OF RS.3,50,000/-. THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE DELIBERATELY ENTERED INTO SALE TRANSACTION AT LOWER VALUE IN ORDER TO EVADE TAX. 6. AGGRIEVED BY THE ADDITIONS, THE ASSESSEE FILED A PPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS ADMITTED AS THE CONDITIONS LAID DOWN IN RULE 46A WERE SATISF IED. ON MERIT THE CIT(A) FOR THE ISSUE RELATED TO CAPITAL GAIN HAS REDUCED THE A DDITION TO RS. 34,377/- (RS.3,84,377 RS.3,50,000) MADE BY THE ASSESSING O FFICER. THE CIT(A) HELD THAT THE ASSESSING OFFICER IN HIS REMAND REPORT HAD NOT SENT A COPY OF THE VALUATION REPORT RELIED UPON BY HIM. THE CIT(A) FUR THER HELD THAT THE A.O. ALSO FAILED TO REBUT THE ASSESSEES ARGUMENT THAT DVOS VALUATION REPORT RELIED UPON BY THE AO WAS NOT RELEVANT TO THIS CASE BECAUSE IT WAS IN RESPECT OF SOME OTHER PROPERTY, IN A DIFFERENT AREA. THUS, THE CIT(A) TOO K THE SALE CONSIDERATION AT RS. 5 ITA NO.3918/DEL/2010 3,84,377/- WHICH WAS THE VALUE TAKEN BY THE NAIB TE HSILDAR WHEREAS THE ASSESSEE HAS SHOWN THE SALE CONSIDERATION TO BE RS. 3,50,000/-. 7. THE LD. DR SUBMITTED THAT THE CIT(A) HAS NOT PRO PERLY APPLIED THE RULE 46A OF THE INCOME TAX RULES AND HAS NOT VERIFIED TH E CONDITIONS LAID DOWN THEREIN, BUT SIMPLICITOR ADMITTED THE EVIDENCE. TH E LD. DR FURTHER SUBMITTED DESPITE GIVING MORE THAN 3 OPPORTUNITIES TO THE ASS ESSEE ON VARIOUS OPINIONS, THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE BEFORE THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICER GAVE COMME NT THAT ADDITIONAL EVIDENCE IS NOT PROPER ON MERIT. THE SAME WAS IGNOR ED BY THE CIT(A). AS RELATES TO CAPITAL GAIN I.E. GROUND NO. 2, THE LD. DR SUBMITTED THAT THE CALCULATION OF THE FAIR MARKET VALUE BY THE CIT(A) WAS NOT JUSTIFIED AND THERE IS NO REASON GIVEN IN THE ORDER. 8. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER WAS GIVEN AN OPPORTUNITY OF GIVING REMAND REPOT BEFORE THE CIT(A ) RELATED TO ADDITIONAL EVIDENCE. THE SAME WAS AVAILED AND IT IS PERTINEN T TO NOTE THAT THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT THESE DOCUMENTS A RE CRUCIAL EVIDENCE. AS RELATED TO CAPITAL GAIN, THE CIT (A) WAS WRONG IN A SSUMING THE SALE CONSIDERATION AT THE FAIR VALUE DETERMINED BY NAIB TAHSILDAR AT RS. 3,84,377/- AS AGAINST THE ACTUAL SALE CONSIDERATION AMOUNTING TO RS. 3,50,000/-. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS. THE LD. DR SUBMITTED THAT DESPITE GIVING MORE THAN 3 OP PORTUNITIES TO THE ASSESSEE ON VARIOUS OPINIONS, THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE BEFORE THE ASSESSING OFFICER. BUT AT THE SAME TIME THE ASSESSE E ALSO POINTED OUT BEFORE THE CIT(A) THAT AT THE TIME OF ASSESSMENT PROCEEDIN GS MOST OF THE DOCUMENTARY EVIDENCE WAS TENDERED, BUT THE CRUCIAL EVIDENCE SUC H AS NAME, ADDRESS, PAN WAS NOT AVAILABLE WHICH WAS LATER ON FURNISHED BY T HE ASSESSEE. IN FACT, THE ASSESSEE ALSO MADE REQUEST VIDE LETTER DATED 17.12. 2008 TO THE ASSESSING OFFICER TO TAKE NECESSARY ACTION U/S 131 OF THE ACT , BUT AO INSTEAD OF TAKING 6 ITA NO.3918/DEL/2010 COGNIZANCE OF THE SAME PASSED THE ASSESSMENT ORDER. THE CIT (A) WHILE ALLOWING THE ADMITTING THE ADDITIONAL EVIDENCE HAS GIVEN A CATEGORICAL FINDING THAT THE SAME IS ADMITTED AS PER THE CONDITIONS LAI D DOWN IN RULE 46A. THE ASSESSING OFFICER ALSO NOTED IN HIS REMAND REPORT T HAT THESE EVIDENCES ARE IMPORTANT/CRUCIAL EVIDENCES REGARDING THE CLAIM OF THE ASSESSEE. THUS, CIT(A) RIGHTLY ALLOWED THE ADDITIONAL EVIDENCE AS PER RULE 46A. THUS, GROUND NO. 1 OF THE REVENUES APPEAL IS DISMISSED. 10. IN RESPECT OF CAPITAL GAIN, THE ASSESSING OFFIC ER IN HIS REMAND REPORT HAD NOT SENT A COPY OF THE VALUATION REPORT RELIED UPON BY HIM. THE CIT(A) HAS GIVEN FINDING THAT THE ASSESSING OFFICER FAILED TO REBUT THE ASSESSEES ARGUMENT THAT DVOS VALUATION REPORT RELIED UPON BY THE ASSESSING OFFICER WAS NOT RELEVANT TO THIS CASE BECAUSE IT WAS IN RESPECT OF SOME OTHER P ROPERTY, IN A DIFFERENT AREA. BUT, THE QUANTIFICATION OF THE SALE CONSIDERATION A ND THE ADDITION HOW THE SAME HAS BEEN ARRIVED AT BY THE CIT(A) WAS NOT SPECIFIED IN THE ORDER. THEREFORE, THE SAME NEEDS TO BE LOOKED INTO AND VERIFIED BY THE AS SESSING OFFICER. THUS, THE ISSUE RELATED TO CAPITAL GAIN IS REMANDED BACK TO T HE ASSESSING OFFICER. NEEDLESS TO SAY THE ASSESSEE BE GIVEN HEARING. 11. IN RESULT, APPEAL OF THE REVENUE AND CROSS OBJE CTION OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2017 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: /05/2017 R. NAHEED * COPY FORWARDED TO: 7 ITA NO.3918/DEL/2010 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 17/05/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 18/05/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 25.05.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 5 .05.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 8 ITA NO.3918/DEL/2010