DCIT CC-10, V. Seema Gupta,

ITA 1774/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 6986 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2000-2001
• Appeal Filed On: 08-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KISHORE B SENIOR
• Keywords: Capital asset; Search and seizure; Onus to prove; Set aside; Capital Gains
• Section: 153A; 69

Judgement Text

IN THE INCOME TA X AP PELLA TE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE H ON'BLE SENIOR VICE P RESIDENT, SHRI R.P. GARG AN D HON'BLE JUDICIAL MEMBER, SHRI A.D. JAIN ITA NO.1619/DEL./2008 (ASSESSMENT YEAR : 2000-01 ) S MT. SEEM A GUPTA, VS. DCIT, CENTRAL CIRCLE 10, 25/75, SHAKTI NAGAR, NEW DELHI. NEW DELHI. (P AN : AEUPG2843M) ITA NO.1774/DEL./2008 (ASSESSMENT YEAR : 2000-01 ) DCIT, CENTRAL CIRCLE 10, VS. S MT. SEEM A GUPTA, NEW DELHI. 25/75, SHAKTI NAGAR, NEW DELHI. (P AN : AEUPG2843M) (APP EL LANT ) (RES PONDENT ) ASS ESS EE BY : SHR I VED JAIN, CA REVENU E BY : SHRI KISHORE B., SENIOR DR O R D E R GARG, SENIOR VP : T HESE C ROSS APPEALS ARE FILED AGAINST THE O RDER OF THE CIT ( APPEALS) FOR THE ASSES SM EN T YEA R 2000-01. 2. THE ASSES SEE IS A REGULAR ASSESS EE. A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1 ) OF THE I NCO ME- TAX ACT WAS CONDUCTED ON 7.10.2004 IN T HE CASE OF GRAIN MERCHANT S G ROUP CASES WHICH INCLUDED THE R ESIDENTIAL PREMI SE S OF ASSE SSEE AS WELL. A NOTICE UNDER SECTION 153A WAS ISSUED ON 24.8.2006 TO THE ASSE SSE E. ASSES SEE PU RCHASED A PROPERT Y OF RS.14 LACS EXCLUDING STA MP 2 I TA NO.1619 & 1774/DEL./2008 DUTY AS HER 1/8 TH SHARE OF P ROPERTY AT ROOP NAGAR, DELHI. T HE ASSES SING OFFICER, DU RING THE PROCEEDINGS, REFERRED THE M ATTER T O THE DEPAR T MENTAL VALUATION OFFICER UNDE R SECTION 142A WHO DETERMINED THE VALUE OF THE PROPERT Y AT RS.2,00,12,792/- AND 1/8 T H SHARE OF THE ASSES SEE WORKED OUT AT RS.25,01,600/- . T HE DIFFERENCE OF RS.11,01,600/- (RS.25,01,600/- MINU S RS.14,00,000/- ) WAS ADDED TO THE INCO ME OF THE ASSE SSEE. 3. THE M ATTER WAS CAR RIED IN APPEAL. T HE CI T (APPEALS) REDUCED THE VALUE OF THE ASSES SEES SHARE TO RS.15,37,500/- AND CONFIR MED AN ADDITION OF RS.1,37,500/- . 4. BOTH THE ASSES SEE AND R EVENUE ARE I N APPEAL. THE LEA RNED COUNSEL OF THE ASSE SSE E SUB MITTED THAT THE ASSE SSE E HAD PURCHASED THE PROPE RTY FOR A SUM OF RS.14 LACS AND IT WAS DECLARED AS SUCH IN THE RE TURN. THE RE IS NO MAT ERIAL ON RECORD NO R WAS IT FOUND I N THE SEARCH PROCEEDINGS THAT AN Y AMOUNT OVER AND ABOVE THE SAID DECLARED CONSIDERATION WAS INVESTED BY THE ASSE SSE E IN THE PROPERT Y. I N THESE CIRCUM STANCE S, HE SUB MITTED T HAT T HE ASSESSING OFFICER HAD NO POWER TO R EFER THE MATTER TO VALUATION OFFICER BY INVOKING THE P ROVISIONS OF SECTION 142A WHICH IS A PROPOSITION FOUND ACCEPTED B Y THE TR IBUNAL IN THE CASE OF I TO VS. M/S. RAJESHWAR NATH GUPTA HUF IN I TA NO.4295/DEL/2005 FOR ASSES SM EN T Y EAR 2001-02 BY O RDER DATED 9.5.2008 VIDE DISCUS SION IN PARAGRAPHS 15 TO 18 AS UNDER : 15. A PERUSAL OF THE AFORESAID PROVISIONS SHOWS THAT SECTION 142A IS ATT RACTED, INTE R ALIA, WHE RE T HE ASSESS EE IS FOUND TO HAVE M ADE I NVEST ME NT OUTSIDE T HE BOOKS OF ACCOUNT OR WHERE AN Y SUCH INVESTM ENT M ADE B Y HIM IS NOT FULL Y DISCLOSED IN THE BOOKS OF ACCOUNT. T HE CONDITION PRECEDENT FOR MAKING THE REFERENCE BY INVOKING THE PROVISIONS OF SECTION 142A THUS IS THAT THERE SHOULD BE SOM ETHING ON RECORD TO SHOW THAT THE ASSES SEE IN FIRST 3 I TA NO.1619 & 1774/DEL./2008 PLACE HAS M ADE SUCH INVEST MENT OUTSIDE THE BOOKS O R THE INVEST MENT SO M ADE B Y H I M IS NOT FULL Y DISCLOSED IN THE BOOKS OF ACCOUNT AND ONCE THIS CONDITION IS SATISFIED, THE QUANTUM OF SUCH INVEST ME NT M ADE CAN BE ASCERTAINED B Y THE AO B Y M AKING A REFERENCE U/S 142A I N ORDER TO MAKE THE ADDITION U/S 69 OR 69B, WHICHEVER IS APPLICABLE. IN THE P RESENT CASE. THE R ELEVANT PROPERT Y WAS PURCHASED BY THE ASSE SSE E DU RING THE YEA R UNDE R CONSIDERATION FOR RS.15 LAKHS AND THE AMOUNT OF THE SAID CONSIDERATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACCEPTED EVEN B Y THE AO IN THE REASSESS ME NT, A PERUSAL OF THE ASSE SS ME NT ORDE R, HOWEVER, SHOWS THAT T HERE WAS NO R EFERENCE WHATSOEVER M ADE BY THE AO TO ANY M ATERIAL/EVIDENCE/INFOR MA TION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID CONSIDERATION SHOWN BY THE ASSESS EE WAS UNDERSTATED AND THAT AN YTHING ABOVE WHAT WAS DISCLOSED BY THE ASSE SSEE HAD ACTUALLY BEEN PAID AS CONSIDERATION. T HE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE DVO B Y INVOKING THE PROVISIONS OF SECTION 142A THUS WAS NO T SATISFIED IN T HE PRESENT CASE AND NEITHER THE SAID REFERENCE NOR THE ADDITION M ADE ON THE BASIS OF REPO RT OBTAINED FRO M THE DVO IN R ESPONSE TO T HE SAID REFERENCE, IN OU R OPINION, WAS SUSTAINABLE IN LAW AS R IGHTLY HELD BY THE LEARNED C1T (A). IN THE CASE OF SUBHASH CHAND CHOPRA VS. ACI T - 92 T TJ I087, THIS BENCH OF THE T RIBUNAL HAS HELD THAT NO M ATERIAL OR EVIDENCE HAVING BEEN R ECOVERED DURING THE COURSE OF SEARCH SHOWING INVEST MENT IN CONSTRUCTION, THE AO WAS NO T COM PETENT TO M AKE A R EFERENCE TO THE DVO U/S 142A AND TO M AKE ADDITION ON T HAT BASIS,. 16. IN THE CASE OF K. P.VERGHESE (SUPRA) CITED B Y THE LEARNED COUNSEL FOR THE ASSES SEE. HON'BLE SUP RE ME COURT HAD AN OCCASION TO CONSIDER A SIMILAR ASPECT IN THE CONTEXT OF CO MPUTATION OF CAPITAL GAINS AND IT WAS HELD B Y THEIR LO RDSHIPS THAT THE BURDEN TO PROVE THAT THE CONSIDERATION FOR THE TRANSFER OF A CAPITAL ASSET HAS BEEN UNDERSTATED BY THE ASSE SSE E O R IN OTHER WORDS THE FULL VALUE OF CONSIDERATION IN R ESPECT OF THE TRANSFER IS SHOWN AT A LESSER FIGURE THAN THAT ACTUALL Y R ECEIVED BY THE ASSE SSEE AS ALLEGED, IS 011 THE REVENUE. FOLLOWING THE SAID DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF K.P.VE RGHESE (SUPRA), HON'BLE DELHI HIGH COURT HAS HELD IN THE CASE OF 4 I TA NO.1619 & 1774/DEL./2008 GULSHAN KUM AR (SUP RA) THAT THERE BEING NO M ATERIAL ON RECO RD LO SHOW THAT THE SALE CONSIDERATION WAS UNDE RSTATED OR THAT THE ASSE SSEE HAD RECEIVED ANY THING DIRECTL Y OR I NDIRECTL Y OVER AND ABOVE THE DECLARED VALUE OF THE SHARES, THE ADDITION MADE ON ACCOUNT OF DEE MED CAPITAL GAINS WAS NOT SUSTAINABLE. 17. IT IS ALSO OBSERVED THAT THE VALUATION MAD E B Y THE DVO OF THE P ROPERTY PU RCHASED B Y THE ASSES SEE ON THE HIGHER SIDE WAS CHALLENGED B Y THE ASSES SEE B Y PO INTING OUT SPECIFIC DEFECTS IN THE SAID VALUATION. ONE OF SUCH DEFECTS POINTED OUT B Y THE ASSE SSEE WAS ABOUT THE METHOD OF VALUATION ADOPTED B Y THE DVO IN HIS REPORT. AS POINTED OUT B Y THE LEARNED COUNSEL FOR THE ASSES SEE AT THE TIM E OF HEARING BEFORE US, THE P ROPERT Y IN QUESTION WAS FULL Y LET OUT AND THE TOTAL ANNUAL RENT IN RESPECT THEREOF R ECEIVED DU RING THE RELEVANT PERIOD WAS ONL Y RS.2,000/-. KEEPING IN V IEW THIS UNDISPUTED FACTUAL POSITION, THE APPROPRIATE M ETHOD TO DETERMIN E T HE VALUATION OF THE SAID PROPERT Y WOULD HAVE BEEN THE RENT CAPITALIZATION M ETHOD AND NOT THE LAND AND BU ILDING M ETHOD AS ADOPTED BY THE DVO. T HE VALUATION DONE B Y THE DVO THUS WAS APPA RENTLY SUFFERING FROM M ANY DEFECTS. HOWEVER, KEEPING IN VIEW OUR DECISION R ENDERED ABOVE UPHOLD ING THE IMPUGNED O RDER OF THE LEA RNED CI T(A ) HOLDING THE REFERENCE M ADE BY T HE AO TO THE DVO AS WELL AS THE ADDITION M ADE ON T HE BASIS OF REPO RT OB TAINED UNDER SUCH REFERENCE TO BE UNSUSTAINABLE, WE DO NOT DEEM I T NECESSARY O R EXPEDIENT TO CONSIDER AND DISCUSS THIS ASPECT OF THE M ATTER IN ANY FURTHER DETAILS. 18. AS SUCH, CONSIDERING ALL THE FACTS OF THE CASE AS WELL AS THE LEGAL POSITION E MANATING FRO M THE JUDICIAL P RONOUNCE MENT S DISCUSS ED ABOVE, WE A RE OF THE VIEW THAT THE ADDITION OF RS.17,37,000/- MADE B Y THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTM ENT M ADE BY THE ASSE SSE E IN THE PROPE RTY WAS NO T SUSTAINABLE EITHE R IN LAW OR ON FACTS OF T HE CASE AND THE LEARNED CI T(A) WAS FULLY JUSTIFIED I LL DELETING THE SA ME. HIS I MPUGNED ORDER ON TH IS ISSUE IS, THEREFORE, UPHELD DISMI SSING THE APPEAL FILED BY THE REVENUE. 5 I TA NO.1619 & 1774/DEL./2008 5. LEARNED DR COULD NOT PRODUCE AN Y M ATERIAL WHICH COULD REQUI RE VALUATION OF THE PROPE RTY TO BE REFERRED TO VALUATION OFFICER UNDER SECTION 142A OF THE ACT. IN THESE CI RCU MSTAN CES, ON THIS GROUND ALONE, THE ADDITION CANNOT BE MADE AND THE O RDER IS TO BE VACATED. WE MAY ALSO POIN T OUT THAT THE CO MPARABLE CASE REFERRED TO BY THE DISTRICT VALUATION OFFICER FOR THE PURPOSES OF VALUATION HAS BEEN FOUND B Y THE CI T ( APPEALS) TO BE NOT A CO MPARABLE ONE AS IT WAS IN RESPECT OF A PROPER TY LOCATED AT SHRI RA M ROAD WHICH IS 9 K MS. AWAY FRO M THE PROPERT Y OWNED B Y THE ASSES SEE. E VEN THOUGH, THE CI T (APPEALS) ADOPTED A ROUGH ESTI MATE OF RS.13,000/- PER SQ.M TR. WHICH HAS NO BASIS AND ON THAT G ROUND ALSO, NO ADDITION CAN BE M ADE. WE ACCORDINGLY SET ASIDE T HE ORDE R OF THE CI T ( APPEALS) AS WELL AS THAT OF THE ASSES SING OFFICER AND ALLOW T HE ASSESS EES APPEAL AND DISM IS S THE APPEAL OF THE REVENUE. O RDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF APRIL 2009. ( A.D. JAIN) ( R.P. GARG) JU DICIAL ME MB ER SENIOR VICE P RESIDENT DATED THE 22 N D DA Y OF AP RIL 2009 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-I I, NEW DELHI. 5.CIT (I TAT), NEW DELHI. AR, I TA T NEW DE LHI.