ACIT, Hyderabad V. Sri P.Srinivas Reddy, Hyderabad

ITA 1487/HYD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66449 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-09-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Search and seizure; Document seized; Principle of natural justice; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report
• Section: 50C; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1487/HYD/2008 ASSESSMENT YEAR 2006-07 THE ASST. CIT CENTRAL CIRCLE-6 HYDERABAD VS. SRI P. SRINIVAS REDDY HYDERABAD PAN: AECPP6016M APPELLANT RESPONDENT APPELLANT BY: SRI K. GNANA PRAKASH RESPONDENT BY: SRI A.V. RAGHURAM DATE OF HEARING: 27 .0 9 .2012 DATE OF PRONOUNCEMENT: 16.11.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, HYDERABAD DATED 15 TH JULY, 2008 FOR A.Y. 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS AND CONTRARY BOTH ON LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FAC T THAT THE VALUATION OF THE PROPERTY WAS GOT DONE BY THE PERSON FROM WHOM ASSESSEE PURCHASED THE PROPERTY AND THAT THE VALUATION OF THE BUILDING WAS DONE BY THE REGISTERED VALUER IN SEMI-FINISHED CONDITION ONLY, THEREBY RENDERING VALUATION REPORT NON-GENUINE. 3. THE LEARNED CIT(A) ERRED TO CONSIDER THAT EVEN THE STAMP VALUATION AUTHORITIES HAVE VALUED THE PROPERTY FOR STAMP DUTY PURPOSES AT A MUCH HIGHER VALUE THAN SHOWN BY THE ASSESSEE. 4. THE LEARNED CIT(A) ERRED TO CONSIDER THAT THE PROPERTY IS LOCATED IN A PRIME LOCALITY OF HYDERABA D AND THE VALUE OF THE LAND ITSELF WOULD BE MUCH MORE THAN THE VALUE (INCLUDING LAND AND STRUCTURE) SHOWN BY THE ASSESSEE. 2 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 3. BRIEF FACTS OF THE ISSUE ARE THAT A SEARCH AND SEIZ URE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 5-8-20 05. DURING THE COURSE OF SEARCH, ADDITIONAL INCOME WAS OFFERED U/S . 132(4) OF THE ACT FOR AN AMOUNT OF RS. 50 LAKHS, WHICH WAS SPREAD OVE R VARIOUS YEARS AND RETURNS OF INCOME FILED ON WHICH THERE IS NO DISPUT E. HOWEVER, THE ASSESSEE VIDE A SALE DEED EXECUTED ON 23.7.2005 PUR CHASED A SEMI- FINISHED BUILDING BEARING MUNICIPAL DOOR NO. 6-1-82 AND 6-1-83, SITUATED AT LAKDIKAPOOL, OPP. DWARAKA HOTEL, SAIFAB AD, HYDERABAD FROM M/S. SANDHYA HOTELS PVT. LTD., FOR AN APPARENT CONSIDERATION OF RS. 3 CRORES. THE TOTAL INVESTMENT BY THE ASSESSEE INCLUDING ALL INCIDENTAL EXPENDITURE WAS SHOWN AT RS. 3,66,41,837 . THE ASSESSING OFFICER FOUND THAT FOR THE PURPOSES OF STAMP DUTY, THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS FOR RS. 5,53,40,0 00. FURTHER, THE ASSESSING OFFICER OBSERVED THAT DURING THE COURSE O F SURVEY IN THE CASE OF M/S. SANDHYA HOTELS PVT. LTD, DOCUMENTS IMPOUNDE D SHOWS THAT THE PROPERTY WAS VALUED BY AN APPROVED VALUER FOR RS. 8 CRORES. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, PROPOSED TO ADOPT THE INVESTMENT MADE IN THE PROPER TY AT RS. 8 CRORES IN ACCORDANCE WITH VALUATION REPORT OF THE APPROVED VALUER AND ACCORDINGLY PROPOSED TO ASSESS THE DIFFERENCE BETWE EN VALUE ADOPTED BY THE APPROVED VALUER AND THE VALUE MENTIONED IN THE REGISTERED DOCUMENT, AMOUNTING TO RS. 5 CRORES AS UNEXPLAINED INVESTMENT BY THE ASSESSEE U/S. 69 OF THE I.T. ACT. THE ASSESSEE OBJE CTED TO THE PROPOSAL OF THE ASSESSING OFFICER, HOWEVER, THE ASSESSING OFFIC ER OBSERVED THAT THE PROPERTY GOT VALUED BY THE VENDOR BY AN APPROVED VA LUER BEFORE IT WAS SOLD. FURTHER, THE ASSESSING OFFICER HAS TAKEN SUP PORT FROM SEIZED DOCUMENT IN THE CASE OF SANDHYA HOTELS PVT. LTD, WH EREIN ANOTHER BUILDING IN THE VICINITY WAS SOLD AT RS. 2830 PER S Q. FT AND APPLYING THAT RATE, THE VALUE OF THE PROPERTY SOLD TO THE ASSESSE E COULD WORK OUT TO RS. 12,73,50,000. ALSO WHILE FOLLOWING WEALTH TAX VALU ATION METHOD TAKING RENTAL INCOME INTO ACCOUNT, THE ASSESSING OF FICER HAS COMPUTED THE VALUE OF THE BUILDING AT RS. 8 CRORES. ACCORDI NGLY, THE ASSESSING 3 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== OFFICER HAS CONSIDERED INVESTMENT MADE BY THE ASSES SEE IN PURCHASE OF THE SAID PROPERTY AT RS. 8 CRORES. SINCE VALUE HAS BEEN SHOWN AT RS. 3 CRORES IN THE REGISTERED DEED, THE BALANCE OF RS. 5 CRORES HAS BEEN ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME AS UNEXPLAINED INVESTMENT U/S. 69 OF THE IT ACT. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE ADDITION MA DE BY THE ASSESSING OFFICER IS ONLY ON THE BASIS OF REPORT OF REGISTERED VALUER WHICH HAS BEEN IMPOUNDED IN THE CASE OF M/S. SANDHY A HOTELS PVT. LTD. AND NOT IN THE CASE OF THE ASSESSEE. ACCORDI NGLY, THE VALUATION REPORT CANNOT BE HELD AGAINST THE ASSESSEE SINCE TH E PRESUMPTION U/S. 132(4) OF THE INCOME-TAX ACT DOES NOT HOLD AGAINST THE ASSESSEE AND ITS ONLY A SUPPORTING EVIDENCE. FURTHER, EVEN OTHERWIS E, THE REGISTERED VALUER'S REPORT OR THE VALUATION ADOPTED BY THE STA MP VALUATION AUTHORITIES CANNOT BE SAID THAT CORRECTLY REFLECT M ARKET VALUE OF THE PROPERTY WHICH WAS IN A SEMI FINISHED CONDITION AND HE DELETED THE ENTIRE ADDITION. AGAINST THIS, THE REVENUE IS IN A PPEAL BEFORE US. 5. THE LEARNED DR SUBMITTED THAT THE ASSESSEE ACQUIRED THE PROPERTY LOCATED IN A PRIME COMMERCIAL AREA, OPPOSI TE TO DWARKA HOTEL, LAKDIKAPOOL, HYDERABAD AND THE PROPERTY WAS REGISTERED FOR A STAMP VALUE OF RS. 5,53,40,000 AND IT WAS ALSO VALU ED BY THE APPROVED VALUER FOR RS. 8 CRORES. HOWEVER, THE ASSESSEE HAD SHOWN THE ABOVE CONSIDERATION AT RS. 3 CRORES WHICH IS TOTALLY UNBE LIEVABLE. EVEN OTHERWISE, HE SUBMITTED THAT, THE DIRECTOR OF THE A SSESSEE-COMPANY SRI S. SRIDHAR RAO ALSO UNDERTAKEN CONSTRUCTION OF ANOT HER BUILDING BY NAME 'SSR CHAMBERS' IN THE IMMEDIATELY ADJACENT SIT E AND THE SPACE IS SOLD AT RS. 2,830 PER SQ. FEET (SFT) WHICH IS EVIDE NCED BY THE SEIZED MATERIAL MARKED AS A/SSR/2/PAGE NO. 282, SEIZED FRO M THE RESIDENCE OF SRI SRIDHAR RAO DURING THE COURSE OF SEARCH OPER ATION. AS PER THIS, THE VALUE OF THE ASSESSEE PROPERTY IS WORKED OUT AT RS. 12,73,510,000. FURTHER HE SUBMITTED THAT EVEN OTHERWISE AS PER RUL E 3 OF WEALTH-TAX RULES, THE VALUE OF THE PROPERTY BEING A BUILDING O R LAND APPURTENANT 4 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== THEREBY OR PART THEREOF SHALL BE THE AMOUNT ARRIVED AT BY MULTIPLYING THE NET MAINTAINABLE RENT BY THE FIGURE OF 12.5. A CCORDING TO THE LEARNED DR, IF WE APPLY THIS FORMULA THE VALUE OF T HE PROPERTY IS WORKED AT AN AMOUNT OF RS. 8 CRORES AFTER CONSIDERING THE MAINTAINABLE RENT, HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. H E ALSO RELIED ON THE JUDGEMENT OF KERALA HIGH COURT IN THE CASE OF CAPRI CON SHOPPING COMPLEX V. CIT (260 ITR 647). 6. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT T HE DOCUMENT SEIZED/IMPOUNDED FROM M/S. SANDHYA HOTELS PVT. LTD. , CANNOT BE USED AGAINST THE ASSESSEE SINCE IT WAS NOT SEIZED FROM H IM BEING AND IT IS A THIRD PARTY EVIDENCE. THE PROPERTY WAS GOT VALUED B Y M/S. SANDHYA HOTELS PVT. LTD FOR PURPOSES OF GETTING BANK LOAN, HENCE DO NOT REFLECT CORRECT VALUE OF THE PROPERTY. THE ASSESSEE WAS SU BJECTED TO SEARCH AND SEIZURE OPERATION, BUT NO EVIDENCES WERE FOUND REGA RDING UNEXPLAINED INVESTMENT BY THE ASSESSEE. THE VALUATION OF THE PR OPERTY BY STAMP VALUATION AUTHORITIES COULD NOT BE CONSIDERED AS TH E TRUE VALUE OF THE PROPERTY AND IN ANY CASE THERE IS NO EVIDENCE THAT THE ASSESSEE HAS PAID THE AMOUNT AS VALUED BY THE STAMP VALUATION AUTHORI TIES. THE AR SUBMITTED THAT NO ADDITION COULD BE MADE U/S. 69 OF THE IT ACT ON HYPOTHETICAL BASIS WITHOUT ACTUAL CASH OUTGO. FURTH ER, EVEN ON A REFERENCE BY THE ASSESSING OFFICER, THE VALUATION O FFICER OF THE DEPARTMENT PROPOSED TO ADOPT THE VALUE OF AT RS. 3, 87,73,000, THOUGH THE VALUATION REPORT HAS NOT BEEN RECEIVED, WHICH I S SUBSTANTIALLY LOWER THAN THE VALUE ADOPTED BY THE REGISTERED VALUER AND STAMP VALUATION AUTHORITY. THE AR RELIED UPON THE DECISIONS IN THE CASES OF CIT VS. NITIN KUMAR (2001) 248 ITR 478, SMT. BHANU R. SHAH VS. DCIT (2004) 3 SOT 792 (BANG) AND CIT VS. BHANWARLAL MORWATIYA ( 2008) 215 CTR 489 (RAJ). 7. THE AR SUBMITTED THAT AS PER THE PURCHASE DOCUMENT TOTAL AMOUNT OF INVESTMENT VIZ., CONSIDERATION WHICH HAS ACTUALLY PASSED BETWEEN THE BUYER AND SELLER IS RS. 2,76,41,837 PLU S REGISTRATION 5 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== CHARGES. THE TRANSACTION TOOK PLACE IN FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07. THE EXTENT OF INVESTMEN T AS RECORDED IN THE PURCHASE DOCUMENT INCLUDING REGISTRATION CHARGE S IS RS. 3,66,41,837. THE SAME HAS BEEN REFLECTED IN THE BAL ANCE SHEET AS ON 31.03.2006. ASSESSEE'S PREMISES WAS SEARCHED AND N O EVIDENCE WHATSOEVER WAS DISCOVERED SHOWING ANY ADDITIONAL IN VESTMENT BY WAY OF PAYMENT OF ON MONEY TO THE SELLER. IN COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFICER RESORTED TO AN EX ERCISE TO WORK OUT THE EXTENT OF INVESTMENT BY ADOPTING THE FOLLOWING METHOD: A) FAIR MARKET VALUE FOR THE PURPOSE OF STAMP DUTY AS REFLECTED IN THE PURCHASE DOCUMENT RS. 5,53,40, 000/-. B) FAIR MARKET VALUE WORKED BY THE SELLER THROUGH A RE GISTERED VALUER FOR OBTAINING BANK LOAN -RS. 8 CRORES C) COST OF CONSTRUCTION OF A NEIGHBOURING BUILDING WOR KED OUT BY ADOPTING SQ. FEET RATE OF RS. 2830 ON ESTIMATE ON T HE BASIS OF SOME STRAY NOTINGS/SCRIBBLINGS SEIZED DURING THE CO URSE OF SEARCH OF THE RESIDENCE OF ONE SRI SRIDHAR RAO THUS RS. 12, 73,53,000/-. D) FAIR MARKET VALUE ON THE BASIS OF WEALTH TAX RULES - RS. 12.50 CRORES. E) FAIR MARKET VALUE OF THE PROPERTY AS DETERMINED BY THE DEPARTMENTAL VALUER IS AT RS. 3,87,73,000/-. INTERE STINGLY ALTHOUGH A REFERENCE WAS MADE THE ASSESSING OFFICER WHO RECEIVED THE ORDER PRIOR TO COMPLETION OF THE ASSES SMENT HE DID NOT MAKE ANY MENTION OF THE SAME IN THE ASSESSMENT ORDER. OUT OF THE ABOVE, THE ASSESSING OFFICER ADOPTED RS. 8 C RORES WHICH REPRESENTED THE FAIR MARKET VALUE AS WORKED OUT BY THE SELLER THROUGH A REGISTERED VALUER FOR OBTAINING BANK LOAN AS REASONABLE INVESTMENT FOR THE PURPOSE OF S. 69 OF T HE IT ACT. 6 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 8. THE AR SUBMITTED THAT THERE IS FALLACY IN THE WORKI NG MADE BY THE ASSESSING OFFICER AND MAKING ADDITION UNDER SEC TION 69. THE ASSESSING OFFICER HAS FULLY MISCONSTRUED THE PROVI SIONS OF SECTION 69 OF THE ACT. IN CASE OF A SALE WHICH IS EVIDENCED BY A STATUTORY REGISTERED DOCUMENT, THE CONSIDERATION RECORDED IN THE SAID DO CUMENT CANNOT BE DISBELIEVED OR DISREGARDED OR CONSTRUED AS INCORREC T IN THE ABSENCE OF MATERIAL EVIDENCE IN THE POSSESSION OF THE DEPARTME NT THAT ADDITIONAL AMOUNT HAS PASSED BETWEEN THE BUYER AND SELLER. THE OTHER SITUATION WHERE SUCH CONSIDERATION AS MENTIONED IN THE DOCUME NT IS NOT TAKEN AS TRUE WHEN EITHER UNDER THE INDIAN REGISTRATION ACT OR ANY OTHER STATUTE SPECIFIC PROVISIONS ARE MADE TAKING CARE OF SPECIFI C SITUATIONS TO DEPART FROM THE CONSIDERATION STATED IN THE REGISTERED DOC UMENT. IN THE CASE OF THE ASSESSEE THERE IS NO EVIDENCE IN POSSESSION OF THE DEPARTMENT, ALTHOUGH A SEARCH WAS AUTHORISED TO DISBELIEVE THE CONSIDERATION MENTIONED IN THE REGISTERED DOCUMENT. THERE IS NO E NABLING PROVISION IN THE INCOME TAX ACT FOR THE PURPOSES OF SECTION 6 9 TO DISREGARD THE STATED CONSIDERATION. HENCE THE EXERCISE RESORTED T O BY THE ASSESSING OFFICER TO WORK OUT COST FOR WHICH THE PROPERTY COU LD HAVE BEEN TRANSFERRED IS IMAGINARY, BASED ON SUPPOSITIONS AND WITHOUT JURISDICTION. THE ASSESSING OFFICER SHOULD NOT HAVE IGNORED THE SALE CONSIDERATION RECORDED IN THE REGISTERED SALE DEED WHICH WAS DULY REFLECTED IN THE BALANCE SHEET AS ON 31.03.2006 AS HAVING BEEN INCURRED DURING FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMEN T YEAR 2006-07. INVESTMENT FOR THE PURPOSES OF SECTION 69 REPRESENT S THE ACTUAL CASH OUTGO DURING A FINANCIAL YEAR. ON THE OTHER HAND, F AIR MARKET VALUE OF A PROPERTY CONNOTES A NOTIONAL VALUE WHICH THE PROPER TY WOULD FETCH IF SOLD IN THE OPEN MARKET. WHEREVER FAIR MARKET VALUE IS TO BE ADOPTED FOR TAXATION PURPOSES, THE SAME HAS BEEN SPECIFIED IN THE ACT BY THE LEGISLATURE. SECTION 69 DOES NOT REFER TO ADOPTION OF FAIR MARKET VALUE BUT THE ACTUAL INVESTMENT. 9. THE AR SUBMITTED THAT THERE COULD BE NO ADDITION UN DER SECTION 69 ON A HYPOTHETICAL BASIS, PARTICULARLY IN CASE OF SALE TRANSACTIONS 7 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== EVIDENCED BY REGISTERED DOCUMENTS WHEREIN CONSIDERA TION HAS BEEN MENTIONED UNLESS DEPARTMENT AS A MATTER OF FACT BRI NGS IN EVIDENCE THAT THE ASSESSEE HAS PAID ON-MONEY OVER AND ABOVE THE STATED CONSIDERATION. IGNORING CONSIDERATION MENTIONED IN A DOCUMENT AS HAVING BEEN PASSED BETWEEN THE BUYER AND SELLER IS IGNORING THE PROVISIONS OF AN ALL INDIA STATUTE WHEN JUDICIAL NO TICE IS TAKEN OF SUCH DOCUMENTS UNLESS THERE IS EVIDENCE TO THE CONTRARY IN POSSESSION OF THE DEPARTMENT. IN SUCH A SITUATION AN IMAGINARY EXERC ISE TO FIX THE CONSIDERATION CANNOT DISLODGE THE EVIDENTIARY VALUE OF THE DOCUMENT. IT IS BROUGHT TO THE KIND NOTICE OF THE CIT(A) THAT THE REVENUE WAS NOT IN POSSESSION OF ANY EVIDENCE AS TO THE PASSING ON ADDITIONAL AMOUNT OVER STATED CONSIDERATION. THEREFORE, THE ASSESSING OFFICER'S EXERCISE IS NOT AUTHORISED BY LAW. THE SAME CANNOT BE UTILIZED AGAINST THE ASSESSEE TO WORK OUT UNEXPLAINED INVESTMENT U/S. 69 OF THE I T ACT. AS REGARDS STAMP DUTY VALUE, THE SAME IS GUIDANCE VALUE FOR PA YMENT OF STAMP DUTY AND THE SAME HAS NO CONNECTION WITH ACTUAL INV ESTMENT OR PAYMENT BY THE BUYER AS OTHERWISE IN THE SAME DOCUM ENT THERE WAS NO NEED TO INDICATE THE TWO AMOUNTS. MOREOVER, UNDER IT ACT, THE STAMP DUTY VALUE, BY OPERATION OF PROVISIONS OF SECTION 5 0C ARE ADOPTED AS FULL VALUE OF CONSIDERATION FOR WORKING OUT CAPITAL GAIN . THIS DEEMING PROVISION CANNOT BE IMPORTED FOR ANY OTHER PURPOSE. A DEEMING PROVISION WHICH IS HAS A SPECIFIC OBJECTIVE, CANNO T BE APPLIED DEPARTING FROM THE STATED PURPOSES FOR WHICH THE SAME IS ENAC TED. THERE IS NO OVERLAPPING BETWEEN SECTION 69 AND 50C WHICH IS ENA CTED FOR THE PURPOSES OF SECTION 48. THEY OPERATE IN THEIR RESPE CTIVE FIELDS FOR THE PURPOSES OF LEVY OF TAX UNDER RESPECTIVE HEADS OF I NCOME. 10. THE AR FURTHER SUBMITTED THAT AS REGARDS THE INVEST MENT MADE BY A THIRD PARTY IN A NEIGHBOURING BUILDING THE SAM E CANNOT BE AN YARDSTICK FOR THERE ARE SO MANY PARAMETERS TO BE JU DGED IN THE CONTEXT OF CONSTRUCTION AS DISTINGUISHED FROM A SIMPLE PURC HASE-LIKE PERIOD OF CONSTRUCTION, QUALITY OF CONSTRUCTION ETC. MOREOVE R, A SALE DIFFERS FROM CONSTRUCTION. BOTH THE TRANSACTIONS ARE NOT COMPAR ABLE TO ARRIVE AT ANY 8 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== CONCLUSION-ONE BEING A SALE SIMPLICITOR AND ANOTHER BEING INVESTMENT IN CONSTRUCTION. MOREOVER, A THIRD PARTY EVIDENCE C ANNOT BE UTILIZED AGAINST THE APPELLANT TO DETERMINE INVESTMENT AS RE CORDED IN SALE TRANSACTION EVIDENCED BY A STATUTORY REGISTERED DOC UMENT. HENCE THE ASSESSING OFFICER WENT WRONG IN APPLYING ESTIMATED SQ. FEET RATE OF RS. 2830 FOR ESTIMATING THE INVESTMENT IN THE PROPERTY WHICH WAS A OUTRIGHT PURCHASE. THE FAIR MARKET VALUE DETERMINE D BY ASSESSING OFFICER FOLLOWING WEALTH TAX RULES AS ONE OF THE PA RAMETERS HAS NO RELEVANCE WITH REFERENCE TO SECTION 69. WHILE FORM ER SPEAKS ABOUT THE FAIR MARKET VALUE WHICH IS VALUE FOR WEALTH TAX PUR POSES, THE LATER SPEAKS ABOUT THE ACTUAL INVESTMENT MADE DURING A FI NANCIAL YEAR. IN THE CASE OF THE ASSESSEE THE ACTUAL INVESTMENT IS A S RECORDED IN THE REGISTERED DOCUMENT IN THE ABSENCE OF ANY EVIDENCE THAT ACTUAL CONSIDERATION PASSED IS MORE THAN THE STATED CONSID ERATION. 11. THE AR SUBMITTED THAT THE ASSESSING OFFICER HAS REF ERRED THE CASE OF VALUATION CELL TO DETERMINE THE FAIR MARKET VALU E OF THE PROPERTY. THIS WAS DETERMINED AT RS. 3,87,73,000. ALTHOUGH THE REP ORT INDICATING THE FAIR MARKET VALUE WAS AVAILABLE WITH THE ASSESSING OFFICER FOR THE REASONS BEST KNOWN TO THE REVENUE THERE IS NO MENTI ON ABOUT THE SAME IN THE ASSESSMENT ORDER. BE THAT AS IT MAY, THIS RE PORT HAS NO RELEVANCE FOR THE REASONS STATED IN THE PRE PARA FOR THE PURP OSE OF SECTION 69 AS THE SAME REPRESENTS THE FAIR MARKET VALUE OF THE PR OPERTY. THE ASSESSING OFFICER HAS ADOPTED THE VALUE OF THE PROP ERTY AT RS. 8 CRORES ON THE BASIS OF FAIR MARKET VALUE OF THE PROPERTY W ORKED OUT BY REGISTERED VALUER. COLUMN 1 OF THE SAID VALUATION REPORT SUBMITTED TO STATE BANK OF INDIA, SIB BRANCH, HACA BHAVAN, SAIF ABAD, HYDERABAD READS AS UNDER: '01. PURPOSE FOR WHICH THE VALUATION IS MADE: TO EVALUATE THE FAIR MARKET VALUE OF THE COMMERCIAL PROPERTY FOR MORTGAGING AS COLLATERAL SECURITY, AG AINST LOAN ADVANCE TO M/S. SANDHYA HOTELS (P) LTD, UNDER RENT PLUS SCHEME.' 9 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 12. THE AR FURTHER SUBMITTED THAT THIS WOULD SHOW THAT THE FAIR MARKET VALUE WAS WORKED OUT FOR OBTAINING LOAN FROM THE BANK. IT IS SUBMITTED THAT FAIR MARKET VALUE OF A PROPERTY AS A N A PARTICULAR DATE IS DIFFERENT FROM THE SALE VALUE AS MENTIONED IN A REG ISTERED DOCUMENT. WHILE THE FORMER REFERS TO THE VALUE WHICH THE PROP ERTY WOULD FETCH IF SOLD IN THE OPEN MARKET, THE LATER REPRESENTS THE A CTUAL CONSIDERATION PASSED ON BETWEEN THE BUYER AND SELLER. THEREFORE A S PER THE PROVISIONS OF SECTION 69 THE FAIR MARKET VALUE CANNOT BE ADOPT ED FOR WORKING OUT UNEXPLAINED INVESTMENT U/S. 69. THE ACTION ON THE P ART OF THE ASSESSING OFFICER IS LEGALLY NOT TENABLE. LEGALLY THE ASSESSI NG OFFICER IS NOT PERMITTED TO INDULGING SUCH AN EXERCISE AS NO INCRI MINATING EVIDENCE WAS FOUND TO INDICATE PAYMENT OF ADDITIONAL CONSIDE RATION IN CASE OF PURCHASE OF A PROPERTY. EVEN IN SUCH AN EVENT THE INVESTMENT FOR THE PURPOSE OF SECTION 69 SHOULD BE LIMITED TO THE EVI DENCE FOUND. IN CASE OF A SALE TRANSACTION EVIDENCE BY A DOCUMENT, THE A SSESSING OFFICER IS TOTALLY PRECLUDED FROM ESTIMATING THE INVESTMENT EX CEPT ADOPTING THE SALE VALUE AS MENTIONED IN THE DOCUMENT. THERE COUL D BE NO PRESUMPTION THAT' THE BUYER MIGHT HAVE PAID MORE AM OUNT THAN WHAT IS STATED IN THE DEED IN THE ABSENCE OF CORROBORATI VE EVIDENCE. TO SUM UP IT IS SUBMITTED THAT THE ASSESSING OFFICER FELL INTO SERIOUS ERROR BY IGNORING THE DOCUMENT VALUE AS MENTIONED IN THE 'RE GISTERED DEED AND RESORTING TO HIS OWN ESTIMATE FOR THE PURPOSES OF D ETERMINATION OF UNEXPLAINED INVESTMENT U/S. 69 OF THE IT ACT. IN TH IS CONTEXT THE AR FURNISHED THE GIST OF VARIOUS DECISIONS DECIDED IN THE CONTEXT OF ADDITION U/S. 69 OF THE IT ACT WHEN THE TRANSACTION IS EVIDENCED BY A REGISTERED DOCUMENT. CASE - LAW GIST OF THE DECISION CIT VS. NITIN KUMAR 248 ITR 478 THE ADDITION MADE UNDER SECTION 69 ON ESTIMATED BASIS OVER AND ABOVE THE STATED CONSIDERATION IN THE DEED WAS DETECTED AS NO EVIDENCE WAS FOUND IN COURSE OF SEARCH THAT THE ASSESSEE HAS PAID MORE AMOUNT THAN WHAT WAS STATED IN THE DOCUMENT. 10 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== BHANU R. SHAH SMT. VS. DCIT, 3 SOT 792 BANG. ADDITION IGNORING THE DOCUMENT VALUE AND ESTIMATING THE VALUE NOT SUSTAINABLE UNLESS THERE IS POSITIVE EVIDENCE THAT THE DOCUMENT VALUE IS UNDERSTATED. STAMP DUTY VALUE HAS NO APPLICATION IN THE CONTEXT OF SECTION 69 WHICH IS FOR A DIFFERENT PURPOSE. THIS IS A SEARCH CASE WHERE NO EVIDENCE WAS FOUND TO INDICATE THAT THE ASSESSEE HAS PAID MORE AMOUNT THAN WHAT WAS STATED IN THE DOCUMENT. CIT VS. BHANWARLAL MURWATIYA 2008, 215 CTR (RAJ) THE FACTS OF THE CASE IS SIMILAR TO THE ONE BEFORE THE CIT. IN THIS CASE THE SALE DEED WAS REGISTERED FOR A CONSIDERATION OF RS. 9 LAKHS. BASING ON THE STATEMENT OF THE SELLER THE DEPARTMENT ADDED RS. 61 LAKHS AS UNEXPLAINED INVESTMENT U/S. 69 OF THE IT ACT. IN THIS REGARD THE HON'BLE COURT OBSERVED AS UNDER: 'APART FROM THE FACT, THAT EVEN IF, IT WERE TO BE ASSUMED THAT THE PRICE OF THE LAND WAS DIFFERENT THAN THE ONE RECITED IN THE SALE DEED UNLESS IT IS ESTABLISHED ON RECORD BY THE DEPARTMENT, THAT AS A MATTER OF FACT THE CONSIDERATION AS ALLEGED BY THE DEPARTMENT DID PASS TO THE SELLER FROM THE PURCHASER IT CANNOT BE SAID THAT THE DEPARTMENT HAD ANY RIGHT TO MAKE AN ADDITION. IF THE CASE OF THE APPELLANT STANDS IN A MUCH BETTER FOOTING IN AS MUCH AS THERE IS NO IOTA EVIDENCE FOUND IN COURSE OF SEARCH THAT THE APPELLANT HAD PAID MORE MONEY THAN WHAT WAS STATED IN THE PURCHASE DOCUMENT. IN THE CASE OF THE APPELLANT THE EXERCISE CARRIED OUT BY THE ASSESSING OFFICER IS WITHOUT THE AUTHORITY OF LAW AND THEREFORE THE SAME CANNOT BE A BASIS FOR ADDITION. U/S. 69 OF THE IT ACT.' 13. THE AR SUBMITTED THAT AS FAR AS THE VALUE ADOPTED B Y THE STAMP DUTY AUTHORITIES ARE CONCERNED, IN THE COURSE OF HE ARING OF THE APPEAL, CIT(A) DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY T HE STAMP DUTY VALUE MENTIONED IN THE REGISTERED DOCUMENT SHOULD NOT BE ADOPTED AS MARKET VALUE FOR WHICH THE PROPERTY FOR THE PURPOSES OF SE CTION 69 OF IT ACT. 11 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== THE AR SUBMITTED THAT THE STAMP DUTY VALUE IS FORMU LATED UNDER EXECUTIVE INSTRUCTION FOR GUIDANCE OF THE REGISTERI NG AUTHORITIES IN THE MATTER OF COLLECTION OF STAMP DUTY. FOR THE PURPOS E, A REGISTER IS MAINTAINED WHICH IS CALLED BASIC VALUE REGISTER WHI CH INDICATES THE MARKET VALUE OF THE PROPERTY IN A PARTICULAR AREA S O AS TO ENABLE THE REGISTERING AUTHORITIES TO LEVY STAMP DUTY IN A TRA NSACTION OF IMMOVABLE PROPERTY. IT SERVES AS A GUIDELINE ONLY FOR COLLECT ION OT STAMP DUTY. COURTS HAVE CONSISTENTLY HELD THAT IT HAS NO BINDIN G EFFECT ON EITHER PARTY. THE EVIDENTIARY VALUE OF THE MARKET RATE AS MENTIONED IN SUCH BASIC VALUE REGISTER WAS SUBJECT MATTER OF DISCUSSI ON BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF MRS. NIRMAL LAXMIN ARAYAN GROVER V. APPROPRIATE AUTHORITY, 223 ITR 572. THE RELEVANT P ORTION OF THE JUDGMENT IS EXTRACTED BELOW: 'HOWEVER, AS REGARDS THE CONTENTION RAISED ON BEHAL F OF THE PETITIONER THAT THE MARKET RATE FIXED FOR THE A REA IN QUESTION AT THE RELEVANT TIME IN THE LAND RATES FIX ED BY THE NAGPUR MUNICIPAL CORPORATION, NAGPUR, AS WELL A S BY THE STAMP AUTHORITY FOR THE PURPOSES OF LEVY OF STAMP DUTY ON REGISTRATION OF THE DOCUMENTS WAS RS. 1,500 PER SQ. METER, I.E., RS. 145 PER SQ. FT. AND THEREFORE, THE RATE OF RS. 225 PER SQ. FT. AGREED TO BETWEEN THE PARTIES F OR PURCHASE OF THE SUIT LAND WAS MORE THAN THE MARKET RATE FOR SUCH LAND, IT MAY BE SEEN THAT THE RATES OF PRO PERTIES MAINTAINED BY THE ABOVE AUTHORITY OR OFFICERS FOR T HE PURPOSE OF CHECKING EVASION OF STAMP DUTY UPON TRAN SFER DEEDS ARE NOT PURSUANT TO THE PROVISION IN ANY STAT UTE, RELATING EVEN TO STAMP DUTY. AT ANY RATE IT CANNOT BE A BASIS FOR DETERMINATION OF THE MARKET VALUE FOR ACQUISITION OF OR FOR COMPULSORY PURCHASE OF ANY LA ND WHERE THE USUAL TEST IS OF A PRUDENT BUYER AND A PR UDENT SELLER DETERMINED BY THE EVIDENCE OF SALE TRANSACTI ON, IF AVAILABLE IN THE VICINITY, OF THE LAND IN QUESTION WHOSE MARKET RATE IS TO BE DETERMINED POSSESSING THE SAME OR MORE OR LESS SIMILAR ADVANTAGEOUS FEATURES. THIS IS THE VIEW TAKEN BY THE SUPREME COURT IN THE CASE OF JAWA JEE NAGNATHAM V. THE REVENUE DIVISIONAL OFFICER [1994] 2 JT (SC) 604; AIR 1994 SCW 2852. THE SUBMISSION ON BEHALF OF THE PETITIONERS BASED UPON THE RATES OF PROPERTIES MAINTAINED BY THE STATE GOVERNMENT FOR T HE PURPOSE OF CHECKING EVASION OF STAMP DUTY ON TRANSF ER DEEDS CANNOT, THEREFORE BE ACCEPTED. ' 12 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 14. IN THE CASE OF CGT V R JAWAHAR, 1996, 217 ITR 59 .M AD., THE EMPHASIS ON GUIDELINE VALUE ADOPTED FOR REGISTRATIO N DID NOT FIND FAVOUR WITH THE HON'BLE COURT TO DETERMINE THE VALU E OF A GIFTED PROPERTY THE SAME PRINCIPLE WAS REITERATED IN THE CASE OF CGT V R DAMODARAN 2001,.247 ITR 698 (MAD). IN THIS CASE TH E REGISTERED CONVEYANCE DEED SHOWED THE VALUE OF RS. 1,70,000. T HE COMMISSIONER HAS FOUND THAT THE ENHANCED STAMP DUTY WAS PAID AS THE REGISTERING AUTHORITIES HAD THEIR OWN METHOD OF EVALUATING PROP ERTIES. IT WAS HELD THAT STAMP DUTY VALUE HAS NO RELEVANCE FOR DETERMIN ING THE ACTUAL CONSIDERATION WHICH HAS PASSED BETWEEN THE PARTIES. THE BASIC VALUA- TION IS ONLY FOR THE PURPOSES OF COLLECTION OF STAM P DUTY AND IT CANNOT FORM THE BASIS TO DETERMINE THE MARKET VALUE. UP JA L NIGAM, LUCKNOW VS. KALRA PROPERTIES P. LTD (AIR 1996 SC 1170). TH IS DECISION WAS FOLLOWED BY THE ITAT IN THE CASE OF JAI MAR WAR A C OMPANY V ACIT 2004, 2 SOT 847 JODH ON THE ISSUE OF ADDITION UNDER SECTION 69 OF THE IT ACT. THE AR SUBMITTED THAT AS PER NARRA TION IN PAGE 7, 8 ON OF THE SALE DEED THE ASSESSEE HAS PAID RS. 3,00,00, 000 AND THE SELLER HAS ACCEPTED THE SAME AS ACTUAL CONSIDERATION BEFOR E SRO WHO IS A QUASI JUDICIAL AUTHORITY. THE NARRATION IN THE DOCU MENT IS TAKEN JUDICIAL NOTICE UNLESS SOMETHING CONTRARY IS FOUND TO INDICA TE THAT MORE AMOUNT HAS ACTUALLY PASSED BETWEEN THE BUYER AND THE SELLE R. HE RELIED ON THE CASE OF K.P. VERGHESE V. ITO 9 131 ITR 597) AND THE JUDGEMENT OF P & H HIGH COURT IN THE CASE OF CIT VS. CHANDNI BUCHAR (3 23 ITR 510). THE AR ALSO RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SURESH KUMAR AGARWAL DATED 15.10.2010 IN ITA NO. 995/HYD/10 WHER EIN HELD AS UNDER: ' WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPU TED FACT THAT THE ASSESSEE SOLD THE PROPERTY WITHIN A SPAN O F 11 DAYS FROM THE DATE OF PURCHASE WHICH PROVES THAT TH E ASSESSEE WOULD HAVE SOLD AWAY THE PROPERTY AT THE SAME SALE CONSIDERATION DUE TO COMPELLING CIRCUMSTANCES LIKE THREATENING AND ILLEGAL ENCROACHMENT ETC., WHICH IS BEYOND THE CONTROL OF THE ASSESSEE AND THE ASSESSEE HAD 13 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== NO ALTERNATIVE EXCEPT TO DISPOSE OF THE PROPERTY. UNDER THESE COMPELLING CIRCUMSTANCES, THE ASSESSEE CANNO T EXPECT PROFIT OR GAIN ON THE SALE OF THE SAID PROPE RTY. THE ASSESSING OFFICER NOT DOUBTED THE PURCHASE COST OF THE PROPERTY AT RS. 14,93,000 BUT AT THE SAME TIME, THE ASSESSING OFFICER ASSUMED THE SALE CONSIDERATION OF THE PROPERTY INCLUDING THE ON-MONEY PAYMENT AT RS. 74,06,300. IN OUR CONSIDERED OPINION, WITHIN THE SP AN OF 11 DAYS, IT IS IMPRACTICABLE TO IMAGINE THAT THE AS SESSEE MADE A HUGE GAIN OF RS. 59,13,300 FROM THIS TRANSAC TION. THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 59,13,300 IS BASED ON PURELY CONJEC TURES AND SUSPICIONS. THE THEORY OF RECEIPT OF ON-MONEY FASTENED ON THE ASSESSEE IS TOTALLY ARBITRARY WITHO UT ANY BASIS. WE ALSO FIND THAT THE ASSESSEE GAVE A STATEM ENT IN RESPONSE TO SUMMONS UNDER SECTION 131, AS STATED IN THE ASSESSMENT ORDER, CATEGORICALLY DENIED HAVING RECEI VED ANY ON MONEY OVER AND ABOVE THE SALE CONSIDERATION STATED IN THE DOCUMENT FOR THE SALE OF THE PROPERTY . WE HAVE GONE THROUGH THE ORDER OF THE LEARNED CIT(A) A ND FOUND THAT HE HAS EXTRACTED IN HIS ORDER, OATH TAKE N ON 16-11-2007 I.E., STATEMENT UNDER SECTION 132(4) OF THE ACT WHICH WAS RECORDED FROM SRI G. JANARDHAN REDDY WHIC H IS APPEARING AT PAGES 8 AND 9 OF THE CIT(A) ORDER. IT WAS FOUND FROM THE ASSESSMENT ORDER THAT SRI G. JANARDH AN REDDY HAS PRINCIPALLY GREED ON THE ISSUE OF PAYMENT OF ON MONEY IN THE SAID TRANSACTION. FURTHER, THE STA TEMENT OF SRI G. JANARDHAN REDDY DID NOT MENTION ABOUT THE RECEIPT OF MONEY BY THE ASSESSEE. AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE SEE MER IT IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE THAT THE ADDITIONS HAVE BEEN MADE BASED ON SURMISES , CONJECTURES AND SUSPICION WITHOUT ANY BASIS BY THE ASSESSING OFFICER AGAINST THE PRINCIPLES OF NATURAL JUSTICE. WE ALSO FIND THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS WITHOUT ANY BASIS AND THE ASSE SSING OFFICER COLLECTED THE MATERIAL BEHIND THE BACK OF T HE OF THE ASSESSEE WHICH WAS USED AGAINST HIM WITHOUT GIV ING ANY OPPORTUNITY TO CROSS EXAMINE THE PERSON WHOSE STATEMENT HAD BEEN USED BY THE ASSESSING OFFICER AGAINST THE INTEREST OF THE ASSESSEE. IN VIEW OF T HE ABOVE AND AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, NO INTERFERENCE IS CALLE D FOR. ACCORDINGLY, THE ORDER OF THE CIT CA) IS CONFIRMED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED.' 14 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 15. FOR THE SAME PROPOSITION, HE RELIED ON THE ORDER OF THE TRIBUNAL DATED 31.10.2011 IN ITA NO. 572/HYD/10 AND CO NO. 3 1/HYD/2010 IN THE CASE OF BHARAT KUMAR. THE DR RELIED ON THE ORD ER OF AO. 16. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E MATERIAL AVAILABLE ON RECORD. THE ASSESSEE SHOWN THE SALE C ONSIDERATION OF PROPERTY PURCHASED FROM M/S. SANDHYA HOTELS PVT. LT D. AT A VALUE OF RS. 3 CRORES. AS AGAINST THIS THE ASSESSING OFFICE R ADOPTED THE VALUE OF RS. 8 CRORES ON THE BASIS OF REGISTERED VALUER REP ORT. ACCORDING TO THE ASSESSEE'S COUNSEL REPORT OF THE REGISTERED VALUER CANNOT BE RELIED UPON AS IT HAS BEEN PREPARED FOR THE PURPOSE OF OBTAININ G BANK LOAN AND IT IS A COMMON PRACTICE TO INFLATE VALUE OF THE PROPERTY WITH A MOTIVE TO AVAIL HIGHER BANK LOAN. THE CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE'S COUNSEL AND DIRECTED THE ASSESSING OFFIC ER TO ADOPT THE CONSIDERATION REFLECTED BY THE ASSESSEE'S BOOKS OF ACCOUNT AS A TRUE CONSIDERATION. THOUGH THE VALUE OF THE PROPERTY WA S REGISTERED FOR STAMP VALUE PURPOSES AT RS. 5,53,40,000, THE ASSESS ING OFFICER BASED HIS CONCLUSION ON THE BASIS OF REGISTERED VALUER'S REPORT. THE CIT(A) NOT GIVEN ANY CREDENCE TO THE REPORT OF THE REGISTE RED VALUER ON THE BASIS THAT IT WAS MOTIVATED AND OBTAINED FOR THE PU RPOSE OF AVAILING BANK LOAN. TO THAT EXTENT THE CIT(A) IS CORRECT IN BRUSHING ASIDE THE REPORT OF THE REGISTERED VALUER BUT AT THE SAME TI ME HE OBSERVED THAT THE ASSESSING OFFICER NOT COLLECTED ANY CORROBORATI VE CIRCUMSTANTIAL EVIDENCE IN SUPPORT OF THE REPORT OF THE REGISTERED VALUER . HOWEVER, HE HAS NOT CONSIDERED THE COMPARABLE CASE BROUGHT ON R ECORD BY THE ASSESSING OFFICER WITH REFERENCE TO THE CONSTRUCTIO N UNDERTAKEN BY SRI S. SRIDHAR RAO OF M/S. SANDHYA HOTELS PVT. LTD. BY NAME SSR CHAMBERS IN THE IMMEDIATELY ADJACENT SITE OF THE IM PUGNED PROPERTY AND THE SPACE IS SOLD AT RS. 2830 PER SFT EVIDENCED BY SEIZED MATERIAL. BEING SO, THE CIT(A) IS NOT CORRECT IN TOTALLY BRUS HING ASIDE THE CONTEMPORANEOUS EVIDENCE.- 15 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== 17. UNDER SECTION 142A, THE ASSESSING OFFICER IS EMPOWE RED TO REFER ANY CASE TO THE VALUATION CELL FOR THE PURPOSE OF M AKING AN ASSESSMENT OR RE-ASSESSMENT WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VAL UE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED TO IN SECTION 69A OR SECTION 69B OF THE ACT. THUS, PROVISIONS OF SECTION 142A A RE APPLICABLE WHERE THE VALUE OF INVESTMENT IS TO BE DETERMINED. PRO VISIONS OF SECTION 142A ARE NOT APPLICABLE FOR THE PURPOSE OF DETERMIN ATION OF FULL VALUE OF CONSIDERATION. THE ASSESSING OFFICER HAD TO ADOPT THE VALUE FOR THE PURPOSE OF STAMP VALUATION AS ON THE DATE OF TRANSF ER. FOR THE PURPOSE OF DETERMINING THE SALE CONSIDERATION IN THE CASE O F COMPUTATION OF CAPITAL GAIN. NOW COMING TO THE DETERMINATION OF I NVESTMENT MADE BY THE ASSESSEE, THE ASSESSING OFFICER CAN MAKE USE OF THE PROVISIONS OF SECTION 142A OF THE ACT WHICH ARE BROUGHT INTO THE STATUTE BOOK BY FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 15.11.19 72. THERE IS ALSO ONE MORE AMENDMENT WITH EFFECT FROM 1.7.2010 WHEREIN PR OPERTY REFERRED IN SUBSECTION (2) OF SECTION 56 ALSO BROUGHT INTO T HIS PROVISION. THUS SECTION 69 OF THE ACT DEALS WITH THE UNEXPLAINED IN VESTMENT NOT RECORDED IN BOOKS OF ACCOUNT IF NOT MAINTAINED BY T HE ASSESSEE FOR ANY SOURCE OF INCOME. WE ARE CONCERNED WITH ONLY PRO VISIONS OF SECTION 69 IN THIS CASE. BEING SO, THE ASSESSING OFFICER T O ESTIMATE THE VALUE OF SUCH INVESTMENT IN ASSETS MAY REFER THE MATTER TO T HE VALUATION OFFICER AND CONSIDER THE VALUE ON THE BASIS OF VALUATION RE PORT. ON THE OTHER HAND, THE ASSESSING OFFICER ALSO CAN ADOPT RENT CAP ITALISATION METHOD WHICH IS ONE OF THE METHODS RECOGNISED BY LAW PRESC RIBED IN WEALTH-TAX ACT. IT IS ALSO APPLICABLE FOR VALUATION OF A PROP ERTY COVERED BY SECTIONS 69/69A/69B OF THE ACT. DURING THE COURSE OF HEARIN G THE LEARNED AR HAS NOT DENIED THE APPLICABILITY OF CAPITALISATION METHOD OF VALUATION OF PROPERTY. 18. BEING SO, NOW THE OPTION BEFORE US IS EITHER TO CON SIDER THE MATTER TO REFER TO THE DVO U/S 142A OF THE ACT OR T O FOLLOW THE RENT CAPITALIZATION METHOD OF VALUATION OF PROPERTY AS P ER THE PROVISIONS OF 16 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== WEALTH-TAX RULES OR TO CONSIDER THE VALUE ADOPTED B Y THE STATE AUTHORITIES FOR REGISTRATION PURPOSES. AS THERE WAS A HUGE DIFFERENCE IN THE AMOUNT SHOWN TO HAVE EXPENDED BY THE ASSESSEE O N PURCHASE OF THE IMPUGNED IMMOVABLE PROPERTY AND THE AMOUNT REPRESEN TING THE SIMILAR PROPERTY IN THE AREA AND THE DIFFERENCE IS NOT SMALL. IN OUR OPINION, CONSIDERING THE FACTS OF THE CASE AS THE A SSESSEE DID NOT DISCLOSE PROPER VALUE OF INVESTMENT MADE BY THE ASS ESSEE IN ITS BOOKS OF ACCOUNT AND THERE WAS UNDER STATEMENT OF INVESTMENT , THE PROVISIONS OF SECTION 69 ARE CLEARLY ATTRACTED AND THERE WAS A TIME LAPSE OF MORE THAN 6 YEARS AND THERE IS NO USEFUL PURPOSE WILL BE SERVED NOW REFERRING THE MATTER TO THE DVO. THE VALUE SHOWN BY THE ASSE SSEE WHICH IS VERY LOW AS COMPARED TO THE PREVAILING MARKET CONDITIONS AS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN HIS ORDER THAT T HE DIRECTOR SRI S. SRIDHAR RAO CONSTRUCTED ANOTHER BUILDING IN THE IMM EDIATE VICINITY BY NAME SSR CHAMBERS AND THE SPACE IS SOLD FOR RS. 283 0 PER SFT. THIS IS REFLECTED IN THE SEIZED MATERIAL FOUND DURING THE C OURSE OF SEARCH. THOUGH IT IS RELATING TO OTHER PERSON THE PROPERTY IS VERY MUCH SITUATED VERY NEXT TO THE ASSESSEES BUILDING AND CLOSING OU R EYES REALLY LEADS TO MISCARRIAGE OF JUSTICE. BEING SO, CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ENTIRE EDITION. ACCORDINGLY WE DIRECT THE ASSES SING OFFICER TO ADOPT VALUE OF THE PROPERTY AS PER RULE 3 OF SCHEDULE II I OF THE WEALTH TAX ACT, 1957 AND DETERMINE THE INCOME OF THE ASSESSEE ACCORDINGLY. 19. COMING TO THE RELIANCE PLACED BY THE ASSESSEES COU NSEL ON VARIOUS ORDERS OF THE TRIBUNAL, WE HAVE GONE THROUG H THE ORDERS OF THE TRIBUNAL RELIED ON BY THE ASSESSEE COUNSEL CITED SU PRA. THERE ORDERS ARE DECIDED ON DIFFERENT SET OF FACTS AND CIRCUMSTANCES AND THE ADDITION WAS DELETED BY THE TRIBUNAL ON THE REASON THAT THE ASSESSING OFFICER MADE THE ADDITION WITHOUT ANY BASIS AND THE ASSESSI NG OFFICER COLLECTED THE MATERIAL ON THE BACK OF THE ASSESSEE WHICH WAS USED AGAINST THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO CROSS EXAMIN E THOSE PERSONS WHOSE STATEMENTS HAVE BEEN RELIED ON BY THE ASSESSI NG OFFICER AGAINST 17 ITA NO. 1487/HYD/2008 SRI P. SRINIVAS REDDY ================== THE ASSESSEE. IN THE PRESENT THE CASE THIS IS NOT THE FACT. VARIOUS EVIDENCES BROUGHT ON RECORD BY THE ASSESSING OFFICE R WHICH SHOW THE VALUE OF THE ASSET IS UNDERSTATED. FURTHER THE JU DGEMENT OF SUPREME COURT IN THE CASE OF K.P. VARGHESE (131 ITR 597) SU PRA AND ALSO THE JUDGEMENT OF P & H HIGH COURT IN THE CASE OF CIT VS. CHANDNI BUCHAR (323 ITR 510) CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. A JUDGEMENT OF THE SUPREME COURT WAS DELIVERED WHERE THERE WERE NO PROVISIONS OF THE SECTION 50C AND THERE WERE ALSO N O PROVISIONS OF SECTION 142A OF THE ACT. FURTHER, THE JUDGEMENT OF P & H HIGH COURT WAS ALSO DELIVERED ON DIFFERENT SET OF FACTS. 20. IN THE RESULT, THE REVENUE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH NOVEMBER, 2012 TPRAO COPY FORWARDED TO: 1. THE ASST. CIT, CENTRAL CIRCLE - 6, ROOM NO. 706, 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 004. 2. SRI P. SRINIVAS REDDY, 5 - 8 - 74, NAMPALLY STATION ROAD, FS LANE, HYDERABAD. 3. THE CIT(A) - I , HYDERABAD. 4. THE CIT (CENTRAL) , HYDERABAD 5. THE DR B BENCH, ITAT, HYDERABAD