DCIT, New Delhi V. Smt. Kalawati Aggarwal, New Delhi

ITA 112/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69207 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 08-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH MAHRA
• Assessee Lawyers: DK MISHR A
• Keywords: Valuation report
• Section: 143(3); 131; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D: NEW DELHI) BEFORE SHRI R.P.TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.112 /DEL/ 2010 (ASSESSMENT YEAR: 2002-03) DCIT VS. KALAWATI AGGARWAL, CENT. CIRCLE 25, F- 170B, WESTERN AVENUE, ROOM NO. 331, S AINIK FARMS, ARA CENTRE, JHANDEWALAN EXTENSION NEW DELHI NEW DELH I AAHPA4204B (APPELLANT) (RESPONDE NT) ASSESSEE BY : D.K. MISHRA, DR REVENUE BY : SHRI RAJESH MAHRA, AD. ORDER PER SHAMIM YAHYA, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST O RDER OF CIT(A) DATED 30.10.2009 AND PERTAINS TO ASSESSMENT YEAR 2 002-03. THE GROUND RAISED READ AS UNDER :- 1. THE ORDER OF THE LD. CIT (APPEALS) IS NOT CORRE CT IN LAW AND FACTS. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION ITA NO1 12 / DEL/ 2010 2 OF RS. 5,18,220/- MADE BY THE AO ON ACCOUNT OF BOGU S CAPITAL GAIN. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS. 6,09,000/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED MONEY PAID FOR THE PURCHASE OF IMMOVABL E PROPERTY. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 2. APROPOS, DELETION OF ADDITION OF RS. 5,18,220/- MAD E BY THE AO ON ACCOUNT OF BOGUS CAPITAL GAIN. 3. THE APPELLANTS HAD PURCHASED 10,000/- SHARES EACH O F A COMPANY, NAMELY, M/S BETSY GROWTH FINANCE LTD. ON 3/4/2000 A ND THE SAID FACT WAS DISCLOSED BY THE APPELLANT IN THEIR RETURN OF I NCOME FOR AY 2001- 02. THE SAID RETURN WAS FILED BY THE APPELLANTS IN REGULAR COURSE ON 22/10/2001 U/S 139 OF THE ACT. THE DETAILS OF INVES TMENT OF THE AFORESAID SHARES WERE ALSO DISCLOSED IN THE RETURN. THE ASSESSMENT FOR AY 2001-02 WAS COMPLETED BY DCIT, CC-XII, KOLKATA. THEREAFTER THE SAID SHARES WERE SOLD BY THE APPELLANTS DURING AY 2002-03 FOR RS. 5,18,110/- AND THE APPELLANTS MADE A LONG TERM CAPI TAL GAIN OF RS. 4,97,610/- EACH. THE SAID INCOME WAS DISCLOSED IN T HE RETURN OF THE APPELLANTS AT KOLKATA AND ASSESSMENT WAS FRAMED BY THE SAID ITA NO1 12 / DEL/ 2010 3 ASSESSING AUTHORITY ON 19/3/2004 ACCEPTING THE RETU RN BY THE APPELLANTS. 4. SUBSEQUENTLY, ASSESSMENT WAS REFRAMED U/S 153(A) / 143(3) OF THE IT ACT VIDE ORDER DATED 29.12.2006. IN THIS ASSESSM ENT A SUM OF RS. 5,18,220/- WAS HELD BOGUS CAPITAL GAIN. UPON ASSES SEES APPEAL, LD. CIT(A) DELETED THE ADDITION. 5. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS, LD. COUN SEL OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE TRIBUNAL IN ITA NO. 113/DEL/2010 FOR ASSESSMENT YEAR 2002-03 IN THE CASE OF DCIT VS. SMT . PRATIBHA AGGARWAL IN ORDER DATED 16 DECEMBER, 2011 HAS CONSIDERED IDENTI CAL SITUATION. IN THIS CASE, TRIBUNAL HAS REFERRED TO THE DECISION TO ITAT IN ASSESSEES OWN CASE WHEREIN ITAT WHILE SETTING ASIDE THE MATTER HAS HEL D AS UNDER :- 7. WE HAVE CONSIDERED THE CONTENTION OF THE LD. DR AND GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW. WE FOUND THAT AFTER SEARCH AT ASSESSEES PREMISES, THE AO EXAMINED THE ASSESSEE AND THE LONG TERM CAPITAL GAI N SHOWN BY HER ON ACCOUNT OF SALE OF SHARES OF M/S. B .T. TECHNET LTD. WAS QUESTIONED. THE STATEMENTS OF VARI OUS PERSONS WERE RECORDED INCLUDING THE DIRECTORS OF M/ S. DIWAKAR SECURITIES LTD., WHO HAVE DENIED THE TRANSA CTION HAVING BEEN ENTERED WITH THE ASSESSEE FOR SALE OF S HARES. THE AO HAS RECORDED A FINDING TO THE EFFECT THAT TH E ASSESSEE DID NOT OWN THESE SHARES ON 31.3.2001 AS P ER DETAILS OF INVESTMENT IN SHARES AND DEBENTURES AS ON 31.3.2001 AS PER PAGE 11 OF ANNEXURE A-S OF PANCHNAMA DRAWN AT THE RESIDENCE OF THE ASSESSEE AT THE ITA NO1 12 / DEL/ 2010 4 TIME OF SEARCH ON 4.11.2004. BY CONSIDERING THE STATEMENT OF DIRECTOR OR M/S. DIWAKAR SECURITIES LT D. THE AO REACHED TO THE CONCLUSION THAT SINCE THE SHARES WERE NOT HELD BY THE ASSESSEE AS ON 31.3.2001, THERE DID NOT ARISE ANY OCCASION FOR ITS SALE TO M/S. DIWAKAR SEC URITIES LTD. ON 2.8.2002. THE ASSESSEE ASKED FOR THE CROSS EXAMINATION OF THE STATEMENTS OF DIRECTORS OF M/S. DIWAKAR SECURITIES LTD., WHICH ALSO CONSTITUTED SUBSTANTIAL EVIDENCE BEFORE THE AO FOR REACHING TO THE CONCLUSION THAT IT WAS A BOGUS TRANSACTION AND THE ASSESSEE HAD NOT SOLD ANY SHARES. HOWEVER, THE AO H AS DECLINED THE CROSS EXAMINATION BY STATING THAT THE CLAIM OF THE ASSESSEE WAS PUT TO THE VERIFICATION, THEREF ORE, IT CANNOT BE SAID THAT THE PERSONS INCLUDING THE DIREC TORS OF M/S. DIWAKER SECURITIES LTD., WHOSE STATEMENTS WERE RECORDED BY THE DEPARTMENT ARE THE WITNESSES OF THE DEPARTMENT. HOWEVER, THE CIT(A) HAS JUST ACCEPTED T HE ASSESSEES CONTENTION WITHOUT CONTROVERTING THE DET AILED FINDINGS RECORDED BY THE AO VIS--VIS THE STATEMENT S OF PERSONS INCLUDING DIRECTORS OF M/S. DIWAKAR SECURIT IES LTD. THE CIT(A) HAS HELD THAT THE AO IS BOUND TO AL LOW CROSS EXAMINATION OF THE SAID WITNESSES AND IN THE ABSENCE OF SAME, THE SAID STATEMENTS CANNOT BE RELI ED UPON, ACCORDINGLY ADDITION WAS HELD TO BE NOT JUSTI FIED. THERE IS NO DISPUTE TO THE WELL SETTLED LEGAL PROPO SITION THAT POWERS OF THE CIT(A) IS CO-TERMINUS WITH THAT OF THE AO, WHAT THE AO HAS FAILED TO DO THE CIT(A) IS COMPETENT TO DO THE SAME AND HE CANNOT BRUSH ASIDE THE FINDINGS RECORDED BY THE AO AND THE STATEMENTS OF VARIOUS PERSONS RECORDED BY DEPARTMENT JUST BY STAT ING THAT CROSS EXAMINATION WAS NOT ALLOWED TO THE ASSES SEE. IN ALL FAIRNESS THE CIT(A) SHOULD HAVE ALLOWED THE CROSS EXAMINATION BEFORE DELETING THE ADDITION MADE BY TH E AO, AND SHOULD HAVE CONTROVERTED THE FINDINGS RECOR DED BY AO BY MENTIONING HIS OBSERVATION AND COMMENTS THEREON. THE CIT(A) HAS ALSO NOT GIVEN POSITIVE FIN DING WITH REGARD TO HOLDING OF SHARES BY ASSESSEE ON THE DATE OF SALE. IN ALL FAIRNESS AND IN THE INTEREST OF JUS TICE, WE RESTORE THE ENTIRE MATTER BACK TO THE FILE OF THE A SSESSING OFFICER AND THE ASSESSING OFFICER IS DIRECTED TO AL LOW ITA NO1 12 / DEL/ 2010 5 CROSS EXAMINATION OF THE WITNESSES BY THE ASSESSEE AND TO DECIDE THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNIT Y TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 6. SINCE, ON IDENTICAL ISSUE ITAT HAS SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, RESPECTFULLY, FOLLOWING THE ORDE R OF ITAT, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS . THE AOS WILL DECIDE THE ISSUE AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 7. APROPOS, THE ISSUE OF DELETION OF ADDITION OF RS. 6,09,000/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED MONEY PAID FOR THE PURCHASE OF IMMOVABLE PROPERTY. 8. AT THE OUTSET, ON THIS ISSUE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THIS ITAT IN THE CASE OF A CO-OWNER OF THE CONCERNE D PROPERTY SMT. PRATIBHA AGGARWAL IN ITA NO. 113 SUPRA HAS DELETED THE ADDIT ION. THEREFORE, HE SUBMITTED THAT THE ADDITION IN THIS CASE SHOULD BE DELETED. 9. LD. DR ON THE OTHER HAND, SUBMITTED THAT THER E WERE INFIRMITIES IN THE ORDER OF LD. CIT(A) AND THE TRIBUNAL IN THE SAID OR DER. BY WAY OF WRITTEN SUBMISSIONS IN THIS REGARD, THE LD. DR REQUESTED TH AT EARLIER ORDER OF ITAT IN CONNECTED CASE SHOULD NOT BE FOLLOWED AND THE AD DITION BE CONFIRMED OR MATTER MAY BE SET ASIDE TO AO/CITA WITH APPROPRIATE DIRECTION TO MAKE CORRECT FINDING OF FACTS THAN ENDORSING A DELETION BY CIT(A) BASED ON INCORRECT APPRECIATION OF FACTS AND LAW. ITA NO1 12 / DEL/ 2010 6 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. UPON CAREFULLY CONSIDERATION, WE DO NOT FIND OURSEL VES IN AGREEMENT WITH THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATI VE. JUDICIAL DISCIPLINE DEMANDS THAT ITAT DECISION IN THE CASE OF CO-OWNER BE FOLLOWED. WE ARE NOT CONVINCED WITH THE ARGUMENT OF THE LD. DR THAT WE SHOULD TAKE A DIFFERENT VIEW THAN THAT EXPOUNDED BY THE TRIBUNAL IN THE CASE AS ABOVE. 11. WE FIND THAT TRIBUNAL IN THE CASE OF CO-OWNE R OF THE PROPERTY IN ITA NO. 113/DEL/2010 IN DCIT VS. SMT. PRATIBHA AGGARWAL VIDE ORDER DATED 16 DECEMBER, 2011 HAS CONSIDERED THE ISSUE OF DELETION OF ADDITION RS. 6,09,000/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED MONEY PAID FOR THE PURCHASE OF IMMOVABLE PROPERTY. THE TRIBUNAL HAD AD JUDICATED THE ISSUE AS UNDER :- 9. THE SECOND ISSUE FOR CONSIDERATION RELATES TO DELETING THE ADDITION OF RS. 6,09,000/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF UNACCOUNTED MONEY, PAID FOR PURCHASE OF IMMOVABLE PROPERTIES. THE FACTS OF THE CASE RELATING TO THIS GROUND OF APPEAL ARE THAT THE ASSE SSEE HAD PURCHASED SHARE IN RESIDENTIAL PROPERTY AT F-170B , WESTERN AVENUE, SAINIK FARM, NEW DELHI FOR TOTAL CONSIDERATION OF RS. 70 LAKHS AND ASSESSEES SHAR E WAS OF RS. 35,00,250/-. AS PER RETURN OF INCOME FILED F OR SUBSEQUENT YEAR, THE VALUE OF HOUSE PROPERTY WAS SH OWN AT RS. 37,57,292/- AND RS. 42,89,342/- AS ON 31.3.2 003 AND 31.3.2004, RESPECTIVELY. THE ASSESSING OFFICER REFERRED THE MATTER TO THE DISTRICT VALUATION OFFIC ER TO ESTIMATE THE COST OF INV ESTMENT MADE IN PURCHASE O F HOUSE AND ALSO THE ADDITION/ALTERATION CARRIED OUT SUBSEQUENTLY. THE DISTRICT VALUATION OFFICER DETERM INED ITA NO1 12 / DEL/ 2010 7 THE VAUE AT RS. 82,19,200/- AS AGAINST RS. 70 LAKHS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER MADE ADDITIO N OF RS. 6,09,600/- BEING SHARE OF RS. 12,19,200/- OUT OF UNDISCLOSED INCOME. 10. BEFORE THE CIT(A) LD. AR SUBMITTED THAT T HERE WAS NO EVIDENCE ON RECORD REGARDING PAYMENT OF ANY MONE Y BY THE ASSESSEE TO THE SELLER OVER AND ABOVE THE DE CLARED VALUE IN THE AGREEMENT TO SELL. THERE WERE NO EFFOR TS MADE BY THE REVENUE TO BRING TO TAX THE ALLEGED UNDISCLOSED PAYMENT OF RS. 6,09,600/-. THE REPORT O F DVO WAS MERELY AN OPINION AND WOULD NOT BECOME AN EVIDENCE OF ANY UNDISCLOSED INVESTMENT. THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ADDITIO N WAS MADE BASED ON VALUATION REPORT OF THE DEPARTMENTAL VALUER. HE NOTED THAT ONUS WAS ON THE DEPARTMENT TO PROVE THAT THERE WAS UNDISCLOSED INVESTMENT IN THE PROPERTY. NO SUCH EVIDENCE WAS BROUGHT ON RECORD TO JUSTIFY THE ADDITION. THE CIT(A) RELYING ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHE SE VS. ITO, 131 I.T.R. 597 AND CIT VS. SHIVAKAMI CO. P VT. LTD., 159 I.T.R. 71 HAS HELD THAT ADDITION MERELY O N ACCOUNT OF VALUATION REPORT COULD NOT BE MADE. 11. WE HAVE HEARD BOTH THE PARTIES. ADMITTEDLY, THERE IS NO EVIDENCE ON RECORD BROUGHT BY THE ASSESSING OFFI CER TO SUGGEST THAT ANY MONEY OVER AND ABOVE WHAT IS RECOR DED IN SALE DEED HAS BEEN PAID BY THE ASSESSEE. THERE I S NO OTHER EVIDENCE OR SURROUNDING CIRCUMSTANCES TO INDI CATE THAT THERE WAS UNDER HAND PAYMENT OF MONEY FOR PURCHASE OF THE PROPERTIES. THE ADDITION CANNOT BE MADE MERELY ON THE BASIS OF VALUATION REPORT. ACCORDINGL Y, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY TH E CIT(A) DELETING THE ADDITION. 12. WE FIND THAT IN IDENTICAL SITUATION IN THE CASE OF CO-OWNER THE TRIBUNAL HAS HELD THAT THERE WAS NO INFIRMITY IN THE ORDER P ASSED BY THE LD. CIT(A). ADHERING TO THE DOCTRINE OF STARE DECISIS AND FOLLO WING THE ITATS ORDER IN THE CASE OF CO-OWNER SMT. PRATIBHA AGGARWAL SUPRA W E HOLD THAT THERE IS NO ITA NO1 12 / DEL/ 2010 8 INFIRMITY IN THE ORDER PASSED BY THE CITA ON THIS I SSUE. HENCE, THE UPHOLD THE SAME. 13. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 8 AUGUST, 2013. SD/- SD/- (R.P.TOLANI ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER BINITA RUKHAIYAR DATE: 8 AUGUST, 2013 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI ITA NO1 12 / DEL/ 2010 9