ITO, Patiala V. Sh. Sanjay Garg, Patiala

ITA 190/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86229 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S R CHHABRA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Income from undisclosed sources; Cost of acquisition
• Section: 69C; 50C; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT & SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 190/CHD/2014 ASSESSMENT YEAR: 2006-07 THE ITO, VS SHRI SANJAY GARG, WARD-2, PATIALA PATIALA PAN NO. ABEPG3345D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI S.R. CHHABRA DATE OF HEARING : 23.03.2015 DATE OF PRONOUNCEMENT : 27.03.2015 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 26.12.2013 OF CIT(A), PATIALA. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,41,26,700/- MADE BY THE AO U/S 69C OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED INVESTMENT, IGNORING THE CIRCUMSTANTIAL EVIDENCES OF HUGE DIFFE RENCE BETWEEN THE PURCHASE AND SALE PRICE IN THE SHORT PERIOD OF ONE MONTH, AND THE FACT THAT THE SUB REGISTRAR, SANGRUR HAD INFORMED THAT T HE LAND HAD BEEN GOT REGISTERED BY MISREPRESENTATION OF THE FACTS BY THE ASSESSEE REGARDING LOCATION AS WELL AS CLASSIFICATION OF THE PROPERTY. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION, IGNORING THE FACT THAT EV EN IF THE ORDER OF DIVISIONAL COMMISSIONER IS TAKEN INTO CONSIDERATION BY APPLYING THE RATE OF RS. 4200/- PER SQ. YARD FOR 2187 SQ.YARDS, THE N ORMAL COST OF ACQUISITION COMES TO RS. 91,85,400/- AGAINST THE CO ST OF RS. 32,83,000/- SHOWN BY THE ASSESSEE. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS PURCHA SED LAND LOCATED AT KHEWAT NO. 745, KHATONI NO. 1437 AT SANGRUR MEASURING 2187 SQUARE Y ARDS @ RS. 1501/- PER SQUARE YARD FOR RS. 32,83,000/-. THIS LAND WAS SOLD ON 16.3.20 06 AT RS. 1,77,14,700/- . THE ASSESSING OFFICER OBSERVED THAT THIS HAS GIVEN A GA IN OF AROUND 580% IN A SHORT PERIOD OF 2 20 DAYS WHICH WAS NOT BELIEVABLE, THEREFORE, HE MAD E CERTAIN ENQUIRIES AND NOTED THAT CIRCLE RATE REMAINED SAME AT THE TIME OF PURCHASE A ND SALE. HE FURTHER NOTICED FROM THE ENQUIRIES MADE FROM SUB REGISTRAR, SANGRUR THAT CI RCLE RATE FOR THE PROPERTY SOLD WAS RS. 20,000/- PER SQUARE YARD FOR COMMERCIAL LAND AND RS . 13,000/- FOR NON COMMERCIAL LAND. SOME OTHER ENQUIRIES WERE MADE IN RESPECT OF CIRCL E RATE AND ULTIMATELY THE ASSESSING OFFICER HELD THAT ASSESSEE MUST HAVE PURCHASED THIS LAND FOR RS. 1,77,14,700/-. THEREFORE, AN ADDITION OF RS. 12,11,26,700/- WAS MADE TOWARDS UNEXPLAINED INVESTMENT U/S 69C OF THE ACT. THIS ADDITION WAS DELETED BY LD. CIT(A) IN EARLIER ROUND AND THE RELEVANT PARAS HAS BEEN EXTRACTED BY CIT(A) IN PARA 4.1 WHICH READ S AS UNDER:- THE FACTS IN BRIEF OF THE CASE ARE THAT ASSESSEE HAS FILED RETURN OF INCOME ON 19.07.2006 DECLARING INCOME AT RS. 1,54,38,914/- IN CLUDING SHORT TERM CAPITAL GAIN OF RS. 1,41,23,000/- WHICH WAS ASSESSE D AT RS. 5,99,64,900/- AFTER MAKING THE ADDITIONS. DURING THE ASSESSMENT, THE A.O. MADE AN ADDITION OF RS. 1,41,26,700/- AS UNEXPLAINED INVESTMENT U/S 69C AS MENTIONED IN PARA B OF HIS ORDER ON THE PREMISE THAT ASSESSEE HAS PUR CHASED THE SAID LAND BY UNDERSTATING THE PURCHASE CONSIDERATION. THE A.O. H AS ALSO STATED IN HIS ORDER THAT PURCHASES MADE BY THE ASSESSEE SHOULD HA VE BEEN ON HIGHER SIDE INSTEAD OF PURCHASE VALUE OF LAND SHOWN BY THE ASSE SSEE ON 27.02.2006 AT RS. 35,88,000/-. THE A.O. HAS FURTHER STATED THAT INITI ALLY THERE WAS ADDITIONAL DEMAND OF STAMP DUTY AT RS. 9,84,786/- WAS LEVIED W HICH WAS SUBSEQUENTLY WAIVED BY THE STAMP AUTHORITIES AND FINAL PURCHASE PRICE AS DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE REVENUE AUTHORITIES. H OWEVER, A.O. DID NOT CONSIDER ASSESSEES PLEA IN THIS REGARD AND HAS STA TED THAT IRRESPECTIVE OF THE FACT THAT ADDITIONAL STAMP DUTY OF RS. 9,84,786/- W AS ULTIMATELY WAIVED BY HIGHER AUTHORITIES STILL HE WORKED OUT UNEXPLAINED INVESTMENT U/S 69C AS DISCUSSED IN PARA B OF ASSESSMENT ORDER AS FOLLOWS: UNEXPLAINED INVESTMENT IN PURCHASE OF LAND SALE CONSIDERATION SHOWN BY THE ASSESSEE ON 16.03.2006 RS. 1,77,14,700/- LESS: PURCHASE VALUE OF LAND SHOWN BY RS. 35,88,0 00/- THE ASSESSEE ON 27.02.2006 UNEXPLAINED INVESTMENT IN PURCHASES OF LAND RS. 1,41,26,700/- DURING THE APPELLATE PROCEEDINGS BEFORE ME THE COUN SEL FOR THE APPELLANT ATTENDED AND ARGUED THAT APPELLANTS CASE IS NOT CO VERED U/S 69C OF THE ACT UNDER WHICH THE A.O. HAD MADE THE ADDITION OF R S. 1,41,26,700/-. HE STATED THAT APPELLANT PURCHASED A PLOT OF LAND MEAS URING 2187 SQ. YDS. FOR 35,88,000/- WHICH IS THE BACK PORTION OF PLOT F AR AWAY FROM THE MAIN ROOT AND THERE WAS NO ROAD CONNECTIVITY EXCEPT FOR AGRICULTURE PURPOSE. THE APPELLANT MADE TOTAL INVESTMENT OF RS. 32,83,00 0/- PLUS REGISTRATION COST AND REGISTERED THE SAID PLOT ON 27.02.2006. LA TER ON, THE STAMP DUTY WAS ENHANCED BY THE REVENUE AUDIT WHICH WAS WAIVED BY THE ADC(REVENUE) AND ACCEPTED THE REGISTERED VALUE AS S HOWN BY ASSESSEE. HE CONTENDED THAT WHEN THE HIGHER AUTHORITY OF SUB- REGISTRAR HAS ACCEPTED THE CONSIDERATION AMOUNT AND CIRCLE RATE, THEN FROM WHERE THE 3 A.O. HAS GATHERED INFORMATION SOURCES. THE COUNSEL FOR THE APPELLANT ALSO STATED THAT ON ONE HAND IN SAME ASSESSMENT ORD ER A.O. HAS INVOKED THE VALUE AS ACCEPTED BY REVENUE AUTHORITIES (U/S 5 0C AS SELLER) WHEREAS IN CASE OF PURCHASE HE DOES NOT WANT TO ACCEPT THE VALUE AS FINALLY ACCEPTED BY REVENUE AUTHORITIES FOR STAMP DUTY PURP OSE. IN SUPPORT OF HIS CONTENTION, HE HAS BROUGHT MY ATTENTION TO THE VARI OUS JUDGEMENTS OF HONBLE SUPREME AND HIGH COURTS SUCH AS 131ITR 597 (SC), 226 ITR 344 (RAJASTHAN HIGH COURT), 237 ITR 570 (SC) & 261 ITR 664(DELHI) IN WHICH IT HAS BEEN HELD THAT THE BURDEN IS ON THE R EVENUE TO PROVE THAT REAL INVESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE BOOKS. THE SUBMISSIONS FILED BY THE COUNSEL WERE SENT TO A.O. FOR THE COUNTER COMMENTS WHO REITEREATED THE SAME FACTS AS IN THE A SSESSMENT ORDER. I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE , RIVAL CONTENTIONS OF THE COUNSEL OF THE APPELLANT, COUNTER COMMENTS OF THE A .O. AND JUDICIAL PRONOUNCEMENTS RELIED UPON THE COUNSEL. AFTER CAREF UL CONSIDERATION, I FIND THAT WHEN THE STAMP DUTY AUTHORITIES HAS ACCEP TED THE VALUE DECLARED BY THE APPELLANT AND THEY HAVE NOT IMPOUNDED THE RE GISTRATION DOCUMENTS AND HAS FINALLY ACCEPTED THE VALUE OF STAMP DUTY AS SHOWN BY THE ASSESSEE AND ALSO SINCE THE A.O. HAS NOT BROUGHT OUT ANY COG ENT MATERIAL AT ALL ON RECORD OF ANY UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE FOR PURCHASE OF SUCH LAND OR ANY CORROBORA TING MATERIAL TO PROVE HIS CONTENTIONS. THUS, THE A.O. CAN NOT MADE ADDITI ON U/S 69C MERELY ON BASIS OF CONJECTURES AND SURMISES. THE ORDER OF A.O . ITSELF IS CONTRADICTORY IN ITS STAND IS AS MUCH AS THAT ON ONE ISSUE HE REL IED UPON THE FINDING GIVEN BY THE REVENUE AUTHORITIES AND ON THE OTHER ISSUE I .E. WHEN ASSESSE SOLD THE SAID LAND HE REJECTS THE SAME FINDING. MORE SO, TO MY MIND IT IS ALSO A FACT THAT IN THE PRESENT CASE, IN REGARD TO THE ISS UE UNDER CONSIDERATION, THE PROVISION OF SECTION 50C ARE ALSO NOT APPLICABL E AS THE ASSESSEE IS PURCHASER AND NOT A SELLER. THIS PROPOSITION IS ALS O STRENGTHENED BY THE HONBLE TRIBUNAL JAIPUR BENCH IN THE CASE OF SANGAM TOWER VS. ITO IN ITA NO. 1592/JP/2008 DT. 31.03.2009. THE RATIO OF W HICH IS READS AS FOLLOWS:- INCOME FROM UNDISCLOSED SOURCES- ADDITION U/S 69 INVESTMENT IN PURCHASE OF LAND- PLOT PURCHASED BY FOUR INDIVIDUAL S FOR A TOTAL CONSIDERATION OF RS. 5 LACS WAS VALUED BY SUB-REGIS TRAR FOR THE PURPOSE OF STAMP DUTY AT RS. 9,82,355/- ON WHICH ST AMP DUTY OF RS. 88,420/- WAS PAID- A.O. ADDED THE ENTIRE AMOUNT OF RS. 10,70,775/- AS THE VALUE OF INVESTMENT MADE IN THE SUBJECTED LAND PURCHASED BY THE ALLEGED AOP- NOT JUSTIFIED- PROVIS IONS OF SECTION 50 C CAN NOT BE EXTENDED TO THE CASE OF THE PURCHAS ER UNLESS THE FACT OF UNDERSTATEMENT IS ESTABLISHED BY THE REVENU E. ALL THE FOUR INDIVIDUAL PURCHASERS ARE INCOME TAX ASSESSEE AND A RE IN THE SERVICE OF STATE GOVT. FOR LAST SEVERAL YEARS AND I N SOME CASES THEIR SPOUSES ARE ALSO IN SERVICE. IT WAS NOT DIFFICULT F OR THEM TO INVEST RS. 5 LAKHS COLLECTIVELY- NO CONTRARY MATERIAL WAS BROUGHT ON RECORD THEREFORE, NO ADDITION WAS SUSTAINABLE. AS FAR AS INVOKING OF PROVISIONS OF SECTION 69C IS CONCERNED THE A.O. SHOULD CONDUCT INQUIRIES AND BRING ON RECORD MATERI AL EVIDENCE TO PROVE THAT ASSESSEE HAS INFACT MADE UNEXPLAINED INVESTMEN T WHICH IS ABSOLUTELY LACKING IN THIS CASE. THE A.O. WAS ALSO GIVEN OPPOR TUNITY OF BEING HEARD 4 AND OFFER COUNTER COMMENTS BUT HE COULD NOT REBUT T HE APPELLANTS CONTENTION ON THIS ISSUE NOR HE HAS BROUGHT ANY MAT ERIAL ON RECORD TO SUBSTANTIATE HIS CONTENTION THAT REVENUE AUTHORITIE S HAS ACCEPTED THE REGISTERED VALUE AS DECLARED BY THE APPELLANT. THER EFORE, LOOKING TO THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I HELD THAT A.O. IS NOT JUSTIFIED IN ADDING THE SUM OF RS. 1,41,26,700/- AS HE COULD NOT DISCHARGE THE ONUS CASE UPON HIM BY LAW TO PROVE THAT REAL IN VESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUNT. THEREFORE , I HELD THAT THE ORDER OF A.O. IN THIS REGARD IS SKETCHY AND SKIMPICAL. HE NCE, THE ADDITION MADE BY THE A.O. IS NOT SUSTAINABLE AND DIRECTED TO BE D ELETED. 4. THE REVENUE FIELD AN APPEAL AGAINST THE ABOVE OR DER BEFORE THE TRIBUNAL. THE TRIBUNAL HAS REMANDED THE MATTER BACK TO THE FILE O F CIT(A) BECAUSE THE CIRCLE RATES ON THE BASIS OF WHICH STAMP DUTY WAS PAID WAS ACCEPTED IN AN APPEAL BY THE DIVISIONAL COMMISSIONER. THE RELEVANT PARAS 10 & 11 OF THE ORD ER OF THE TRIBUNAL IN ITA NO. 96/CHD/2010 READS AS UNDER:- 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSID ERED THEIR SUBMISSIONS. THE ASSESSMENT ORDER FOR THE YEAR UNDE R APPEAL WAS PASSED BY THE A.O. ON 31.12.2008. ON APPEAL, THE LE ARNED CIT(A) HAS DISPOSED OF THE APPEAL BY HIS ORDER DATED 23.12.200 9. QUITE OBVIOUSLY, THE ORDER PASSED BY THE DIVISIONAL COMMISSIONER ON 10.08.2010 IN CASE NO. MA-355/2009 WAS NOT AVAILABLE WHEN THE APP ELLATE ORDER WAS PASSED BY THE CIT(A). IT IS THUS ADDITIONAL PIE CE OF EVIDENCE. THE ASSESSEE COULD NOT FILE THE SAME BEFORE THE CIT(A) AS IT WAS NOT AVAILABLE TILL THEN. THE ORDER PASSED BY THE DIVISI ONAL COMMISSIONER ON 10.08.2010 GOES TO THE ROOT OF THE MATTER AND, T HEREFORE, WE CONSIDER IT APPROPRIATE TO SET ASIDE THE ORDER PASS ED BY THE CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR A FRESH DECISION IN CONFORMITY WITH LAW AFTER TAKING NOTE OF THE AFORESAID ORDER PASSED BY THE DIVISIONAL COMMISSIONER. WE ORDER ACCORDINGLY. THE LEARNED CIT (A) WILL EXAMINE THE CORRECTNESS/GENUINENESS OF THE AFORESAI D DOCUMENTS AS ALSO THE FACT AS TO WHETHER THE AFORESAID ORDER HAS ATTAINED FINALITY. REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVEN TO BOTH THE PARTIES. 11. APROPOS THE APPEAL FILED BY THE DEPARTMENT, WE HAVE ALREADY SET ASIDE THE ORDER PASSED BY THE CIT(A) IN ITS ENTIRET Y AND RESTORED THE MATTER TO HIS FILE FOR A FRESH DECISION. THE APPEAL FILED BY THE DEPARTMENT HAS THUS BECOME INFRUCTUOUS. WHILE PASSI NG THE ORDER AFRESH, THE LD. CIT(A) SHALL SPECIFICALLY COMMENT U PON THE CORRECTNESS OF THE FACTS STATED IN THE GROUNDS OF A PPEAL FILED BY THE DEPARTMENT AS ALSO WHETHER THERE IS ANY MATERIAL ON RECORD TO SUPPORT THE ACTION OF THE AO IN INVOKING SECTION 69 C. 5. IN THE SET ASIDE PROCEEDING THE CIT(A) HAS AGAIN DELETED THE ADDITION MAINLY BECAUSE THE REVENUE HAS NO EVIDENCE TO SHOW THAT AS SESSEE HAS REALLY SPENT MORE MONEY FOR ACQUIRING THIS LAND AND THE CIRCLE RATE HAS BEE N ACCEPTED IN AN APPEAL BY THE DIVISIONAL COMMISSIONER. 5 6. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 7. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE S UPPORTED THE IMPUGNED ORDER AND VEHEMENTLY CONTENDED THAT THE PURCHASE PRICE HAS BE EN ASSUMED WITHOUT ANY EVIDENCE ON RECORD TO SHOW THAT ASSESSEE HAS SPENT EXTRA MONEY. HE STRONGLY RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V ITO IN 131 ITR 597 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE FIND THAT LD. CIT (A) HAS DECIDED THIS ISSUE VIDE PARA 4.7 WHICH IS AS UN DER;- I HAVE CONSIDERED THE SUBMISSIONS MADE. AS REGARDS THE UNEXPLAINED INVESTMENT IS CONCERNED, I HAVE GONE TH ROUGH THE ORDER OF MY PREDECESSOR AND I AM OF THE OPINION THAT THE SAME HAS BEEN RIGHTLY DELETED BY MY PREDECESSOR AFTER ELABORATELY DISCUSSING THE ISSUE. NO FURTHER SUBMISSION IS MADE BY THE ASSESSI NG OFFICER IN THIS REGARD. FURTHER, AS REGARD THE CAPITAL GAIN IS CON CERNED ON THE BASIS OF CURRENT REPORT OF THE ASSESSING OFFICER, I T IS SEEN THAT THE DIVISIONAL COMMISSIONERS ORDER IS THAT THE LAND RA TE ADOPTED AT RS. 8,100/- IS MORE THAN THE PRICE FIXED BY COLLECTOR. THEREFORE, THERE IS NO OCCASION FOR ANY ADDITION U/S 50C OF THE I.T. A CT, 1961. IN VIEW OF THIS, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS ALSO DELETED. THEREFORE, GROUND NO. 3 TO 5 IS DELET ED. 9. IN OUR OPINION THE LD. CIT(A) HAS CORRECTLY DECI DED THE ISSUE BECAUSE ASSESSING OFFICER CANNOT ASSUME THE PURCHASE PRICE IN EXCESS OF CIRCLE RATE WITHOUT ANY EVIDENCE ON RECORD. EVEN BEFORE US NO EVIDENCE WAS BROUGHT TO S HOW THAT ASSESSEE HAS REALLY PAID SOME EXCESSIVE CONSIDERATION. IN SUCH A SITUATION, THE HON'BLE SUPREME COURT HAS CLEARLY HELD IN THE CASE K.P. VARGHESE V ITO (SUPRA) THAT B URDEN TO PROVE WAS ON THE DEPARTMENT. THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 10. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27.03.2015 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 27 TH MARCH, 2015 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR