Mr. Raj Kumar Jain, New Delhi V. ACIT, New Delhi

ITA 1911/DEL/2012

• Counselvise Citation: 191120114 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 24-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKHVEER CHOUDHARY
• Assessee Lawyers: PN SHASTRI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Question of law; Fair market value; Onus to prove
• Section: 50C; 45(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A .NO.-1911/DEL/2012 (ASSESSMENT YEAR-2007-08) MR. RAJ KUMAR JAIN VS. ACIT H-82 SOUTH EXTENSION PART-I CENTRAL CIRCLE-12 NEW DELHI. JHANDEWALA EXTENSION NEW DELHI. PAN: AALPJ6435F I.T.A .NO.-2340/DEL/2012 (ASSESSMENT YEAR-2007-08) ACIT VS. MR. RAJ KUMAR JAIN CENTRAL CIRCLE-12, H-82, ROOM NO. 330, SOUTH EXTN. PART-I ARA CENTRE NEW DELHI. JHANDEWALAN EXTN. PAN: AAACE0763B I.T.A .NO.-1912/DEL/2012 (ASSESSMENT YEAR-2007-08) MR. RAVINDER KUMAR JAIN VS. ACIT H-82 SOUTH EXTENSION PART-I CENTRAL CIRCLE-12 NEW DELHI. JHANDEWALA EXTENSION NEW DELHI. PAN: AALPJ7472P 2 I.T.A .NO.-2339/DEL/2012 (ASSESSMENT YEAR-2007-08) ACIT VS. MR. RAVINDER KUMAR JAIN CENTRAL CIRCLE-12, H-82, ROOM NO. 330, SOUTH EXTN. PART-I ARA CENTRE NEW DELHI. JHANDEWALAN EXTN. PAN: AALPJ7472P I.T.A .NO.-1913/DEL/2012 (ASSESSMENT YEAR-2007-08) MR. RAJESH KUMAR JAIN VS. ACIT H-78 SOUTH EXTENSION PART-I CENTRAL CIRCLE-12 NEW DELHI. JHANDEWALA EXTENSION NEW DELHI. PAN: AALPJ6432C I.T.A .NO.-2342/DEL/2012 (ASSESSMENT YEAR-2007-08) ACIT VS. RAJESH KUMAR JAIN CENTRAL CIRCLE-12, H-78, ROOM NO. 330, SOUTH EXTN. PART-I ARA CENTRE NEW DELHI. JHANDEWALAN EXTN. PAN: AALPJ6432C I.T.A .NO.-1914/DEL/2012 (ASSESSMENT YEAR-2007-08) MR. MAHABIR PRASAD JAIN ACIT G-19 SOUTH EXTENSION PART-I CENTRAL CIRCLE-12 NEW DELHI. JHANDEWALA EXTENSION NEW DELHI. PAN: AALPJ6433D 3 I.T.A .NO.-2343/DEL/2012 (ASSESSMENT YEAR-2007-08) ACIT VS. MAHABIR PRASAD JAIN CENTRAL CIRCLE-12, G -19, ROOM NO. 330, SOUTH EXTN. PART-I ARA CENTRE NEW DELHI. JHANDEWALAN EXTN. NEW DELHI. PAN: AALPJ6433D (APPELLANT) (RESPONDENT) ASSESSEE BY:-SH. M.P. RASTOGI ADV. & SH.P.N. SHASTRI, REVENUE BY:-SH. SUKHVEER CHOUDHARY, SR. DR ORDER PER BENCH. THE ASSESSEES AND REVENUE ARE IN CROSS-APPEALS AGA INST THE SEPARATE ORDERS OF EVEN DATE I.E. 15.03.2012 PASSED ON THE R ESPECTIVE APPEALS OF THE ASSESSEES IN A.Y. 2007-08 BY LD. CIT (A). THE ISSUE S INVOLVED IN ALL THE APPEALS ARE COMMON, THEREFORE, WE HEARD THEM TOGETH ER AND DEEM IT APPROPRIATE TO DISPOSE OFF THEM BY THIS COMMON ORDE R. 2. IN BRIEF THE ISSUE INVOLVED IS THAT ASSESSEES HA VE PURCHASED A PROPERTY BEARING NO. E-24, ON 18.12.2006 FOR A CONSIDERATION OF RS.35 LACS. THE LD. AO HAS DETERMINED THE VALUE OF THE PROPERTY FOR INV ESTMENT AT RS.27525780/- ON THE BASIS OF DVOS REPORT AND HELD THAT ASSESSEES HAVE MADE AN UNEXPLAINED INVESTMENT. EACH ASSESSEES HAD SHARE, IN THIS WAY LD. 4 AO HAS DIVIDED THE TOTAL VALUE BY AND MADE THE AD DITION OF UNEXPLAINED INVESTMENT IN HANDS EACH ASSESSEE. THE ADDITION HAS BEEN MADE AT RS.60,06,445/- IN THE HAND OF EACH ASSESSEE. 3. ON APPEAL LD. CIT (A) HELD THAT ADOPTION OF VALU E AS PER DVOS REPORT IS NOT CORRECT, HE TOOK THE VALUE AS PER THE CIRCLE RATE AND DETERMINE THE VALUE OF UNEXPLAINED INVESTMENT AT RS.76,41,100/-. THE LD . CIT (A) HAD DIVIDED THIS AMOUNT AMONGST THE FOUR ASSESSEES AND CONFIRME D THE ADDITION TO THAT EXTENT. 4. THE ASSESSEES ARE AGGRIEVED WITH CONFIRMATION OF ADDITIONS PARTLY BY THE LD. CIT (A), WHEREAS REVENUE IS AGGRIEVED WITH THE DELETION OF ADDITIONS. THUS THE COMMON ISSUE REQUIRED TO BE ADJUDICATED BY US IS, WHETHER ANY ADDITION IS REQUIRED TO BE MADE IN THE HANDS OF ASS ESSEES ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF HOUSE PROPERT Y BEARING NO. 24-E BLOCK SOUTH EXTENSION PART-1? 5. THE FACTS ON THIS ISSUE ARE COMMON IN ALL THE AP PEALS. IT EMERGES OUT FROM THE RECORD THAT PLOT BEARING NO. 24 IN BLOCK E OF SOUTH EXTENSION, I COMPRISING AN AREA OF 212 SQ.YD. WAS PURCHASED BY S MT. DHAN KAUR WIFE OF SARDAR GANGA SINGH ON 27.11.1961. SHE HAS CONSTRUCT ED FIRST FLOOR OF THE HOUSE. SHE HAD MADE A WILL ON 2.05.1979 IN FAVOUR O F HER GRAND SON SH. TARSEM SINGH SOLITARY SON OF SH. GURDAYAL SINGH. SH . GURDAYAL SINGH WAS 5 MARRIED WITH SMT. SUSHILA GANGA SINGH AND OUT OF T HIS WEDLOCK TARSEM SINGH WAS BORN. SMT. SUSHILA, DIED ON 24.03.1988, O N THE DEATH OF SMT. DHAN KAUR THE PROPERTY DEVOLVED UPON SHRI TARSEM SI NGH WHO WAS STATED TO BE MINOR AT THAT POINT OF TIME. 6. SHRI MAHABIR PRASAD FATHER OF OTHER THREE ASSES SEES HAD OCCUPIED THE REAR PORTION OF THIS BUILDING AS A TENANT IN THE YE AR 1985. IT ALSO EMERGES OUT FROM THE COMPROMISE DEED AND OTHER DETAILS AVAILABL E ON RECORD, THAT SHRI GURDAYAL SINGH HAD ENTERED INTO AN AGREEMENT WITH S HRI M.P. JAIN FOR SALE OF THIS HOUSE, THE AGREEMENT WAS EXECUTED ON 27.04. 1989 COPY OF THE AGREEMENT IS AVAILABLE ON PAGE 32 OF THE PAPER BOOK . AS PER THIS AGREEMENT A SUM OF RS.20 LAC WAS PAID BY SHRI M.P. JAIN VIDE CH EQUE NO. 078981 DATED 27.04.1989. SOME HOW A DISPUTE AROSE BETWEEN THE PA RTIES,SH. M.P. JAIN HAD FILED A CIVIL SUIT BEARING NO. 1345/1989 IN THE HON BLE DELHI HIGH COURT FOR PERMANENT INJUNCTION. DURING THE PENDENCY OF CIVIL SUIT, A COMPROMISE WAS ENTERED INTO AND AS PER THE COMPROMISE ASSESSEE M.P . JAIN HAD PAID A SUM OF RS.10 LACS THROUGH ACCOUNT PAYEE CHEQUE BEARING NO. 78982 DATED 06.09.1989. THE COMPROMISE DEED WAS DRAWN, AND AN A PPLICATION UNDER ORDER 23 RULE 3 R.W.S. 151 OF CPC WAS FILED FOR DIS POSAL OF THE SUIT. SHRI GURDAYAL SINGH HAD APPEARED IN THE COURT. THE STATE MENT OF SHRI MAHABIR PRASAD JAIN AND SHRI GURDAYAL SINGH WERE RECORDED O N 18.09.1989. IT IS ALSO 6 BROUGHT TO OUR NOTICE THAT SHRI GURDAYAL SINGH WAS EXPIRED ON 13.12.1994 AND TARSEM SINGH DIED ON 13.08.1996. THE DISPUTE OF INHERITANCE CONTINUED, IT IS ALSO THE CASE OF ASSESSEE THAT AFTER THE DEAT H OF SUSHILA GANGA SINGH I.E. FIRST WIFE OF SHRI GURDAYAL SINGH, HE HAD CONTRACTE D SECOND MARRIAGE WITH KAMLESH KAUR. SMT. KAMLESH KAUR AND OTHERS HAVE SIG NED THE SALE DEED AS A VENDOR AND THE PLOT IN DISPUTE HAS BEEN PURCHASED B Y ALL THE ASSESSEE IN EQUAL SHARE ON 18.12.2006 FOR A CONSIDERATION OF RS .35 LACS WHICH WAS AGREED IN THE AGREEMENT DATED 27.04.1989. 7. THE LD. AO HAS OBSERVED THAT A SEARCH AND SEIZUR E OPERATION WAS CARRIED OUT AT THE PREMISES OF SHRI MAHABIR PRASAD JAIN, DURING THE COURSE OF SEARCH THE COPY OF THE AGREEMENT TO SALE DATED 27.0 4.1989, DEED OF DECLARATION -CUM-BOND HAVE BEEN SEIZED. THE AO HAS EXPRESSED HIS SUSPICION AS TO WHY THE SALE DEED WAS NOT REGISTERE D UPTO 2006, HE DID NOT DISPUTE ALL THESE FACTS BUT FORMED AN OPINION THAT AGREEMENT DATED 27.04.1989 MIGHT HAVE NOT BEEN GIVEN EFFECT, BECAUS E SALE DEED, HAS BEEN EXECUTED ON 18.12.2006. IN HIS OPINION, ASSESSEE, M UST HAVE PAID THE MARKET PRICE ON THE DATE OF SALE DEED WHICH THEY ARE NOT D ISCLOSING, THUS THEY MUST HAVE MADE UNEXPLAINED INVESTMENT IN PURCHASE OF THE PROPERTY. HE MADE A REFERENCE TO THE DVO FOR DETERMINING THE FAIR MARKE T VALUE OF THE PROPERTY ON THE DATE OF THE SALE. LD. DVO ON THE BASIS OF SA LE INSTANCES EFFECTED 7 DURING AN AUCTION IN THE AREA OF GREEN PARK CONDUCT ED IN 2008 HAS DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.27,525,780/-. THE LD. AO TOOK THIS AMOUNT AS A FAIR MARKET VALUE OF THE P ROPERTY AND HELD THAT ASSESSEES HAVE MADE AN UNEXPLAINED INVESTMENT OF RS .24,025,780/-. HE WORKED OUT THIS AMOUNT BY DEBITING A SUM OF RS.35 L ACS FROM THE VALUE OF RS.27,525,780/- DETERMINATION BY THE DVO. THE AMOUN T OF RS.24,025,780/- HAS BEEN DIVIDED EQUALLY AMONGST ALL THE ASSESSEES, BECAUSE THEY ARE THE CO- SHARER, HENCE AN ADDITION OF RS.60,06,445/- WAS MAD E IN THE HANDS OF EACH ASSESSEE. 8. ON APPEAL LD. FIRST APPELLATE AUTHORITY DID NOT AGREE WITH THE CONCLUSIONS DRAWN BY THE AO, BECAUSE LD. AO HAS MAD E THE ADDITION OF UNEXPLAINED INVESTMENT ON THE BASIS OF DVOS REPORT , AND THE DVO HAS DETERMINED THE FAIR MARKET VALUE ON THE BASIS OF PR OPERTY SOLD IN AUCTION IN 2008, WHICH IS IN A DIFFERENT AREA. THE LD. CIT (A) WAS OF THE OPINION THAT DELHI GOVERNMENT HAS NOTIFIED THE PROPERTY RATES IN DIFFERENT PARTS OF THE DELHI FOR THE PURPOSE OF STAMP DUTY PAYMENTS WHILE REGISTERING THE SALE DEEDS ON TRANSFER OF PROPERTIES. ACCORDING TO THE C IT (A) THESE RATES ARE THE BEST GUIDING FACTOR FOR DETERMINING THE FAIR MARKET VALUE OF A PROPERTY AT A PARTICULAR TIME IN A PARTICULAR AREA. ACCORDING TO THE LD. CIT (A) THE SOUTH EXTENSION PART-1 IS A GOOD COLONY AND THE CIRCLE RA TE OF THE PROPERTIES IN THIS 8 AREA WAS AT RS.43,000/- PER SQ. METER. ON THE BASIS OF THIS RATE LD. CIT (A) HAS WORKED OUT THE FAIR MARKET VALUE OF THE PROPERT Y AT RS.76,41,100/-, SHE OBSERVED THAT THIS AMOUNT HAS TO BE ADDED IN THE IN COME OF ALL THE ASSESSEES, ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHAS E OF A HOUSE PROPERTY. ACCORDINGLY LD. CIT (A) HAS DIVIDED THIS AMOUNT IN FOUR EQUAL SHARE AND DIRECTED THE AO TO MAKE THE ADDITION OF THIS AMOUNT . 9. DISSATISFIED WITH THE ORDERS OF LD. CIT (A), LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE REVENUE AUTHORITIES HAVE NO T DISPUTED ABOUT EXISTENCE OF AN AGREEMENT EXECUTED ON 27.04.1989. THE LD. REV ENUE AUTHORITIES HAVE TOTALLY IGNORED THE COMPROMISE ARRIVED AT BETWEEN A SSESSEES AND THE VENDOR. THE SALE DEED EXECUTED ON 18.12.2006 IS IN PURSUANC E OF THE AGREEMENT ENTERED ON 27.04.1989. HE FURTHER CONTENDED THAT AS SESSEES ARE IN POSSESSION OF THE PREMISES. THE ELECTRICITY CONNECTION IS IN T HE NAME OF M/S DHAN KAUR WHO DIED IN 1980, THE ASSESSEES ARE PAYING ELECTRIC ITY BILL, EVIDENCE OF THE PAYMENT WAS BROUGHT TO THE NOTICE OF THE LD. REVENU E AUTHORITIES. THE ASSESSEE M.P. JAIN HAS GOT A TELEPHONE CONNECTION I N THIS PREMISE IN THE YEAR 1991. SH. MAHABIR PRASAD JAIN HAS FILED HIS WEALTH TAX RETURN IN 1991 AND IN THE COMPUTATION OF RETURN, HE HAS SHOWN PAYMENT OF RS.30 LACS FOR PURCHASE OF AN IMMOVABLE PROPERTY AS AN ADVANCED TO SHRI GUR DAYAL SINGH. THIS ADVANCEMENT OF RS.30 LACS HAS BEEN SHOWN UNDER THE HEAD MOVABLE 9 PROPERTY. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATT ENTION TOWARDS PAGE 38 OF THE PAPER BOOK WHERE COMPUTATION OF WEALTH TAX RETU RN IS AVAILABLE. HE FURTHER CONTENDED THAT ASSESSMENT FOR A.Y. 1991 WAS PASSED U/S 16(3) OF THE WEALTH TAX ACT 1952. THE LD. COUNSEL FOR THE ASSESS EE FURTHER SUBMITTED THAT COPIES OF THE AGREEMENT AND OTHER EVIDENCES WERE FO UND AT THE PREMISES OF THE ASSESSEES DURING THE COURSE OF SEARCH, HENCE TH E PROPERTY WAS UNDER AN ENCUMBRANCE. IT IS DEEMED TO HAVE BEEN PURCHASED IN 1989, THE ONLY THING IS THAT IT WAS NOT REGISTERED IN THE NAME OF THE ASSES SEES, BECAUSE OF THE DEMISE OF SHRI GURDAYAL SINGH, HIS SON TARSEM SINGH. THE D ELAY OCCURRED ON ACCOUNT OF TAKING UP SUCCESSION CERTIFICATE ETC. HE FURTHER CONTENDED THERE IS NO EVIDENCE WITH THE AO TO SUGGEST THAT ASSESSEES H AVE MADE PAYMENTS OVER AND ABOVE THE ONE STATED IN THE SALE DEED AS WELL A S IN AGREEMENT TO SELL. THE ASSESSEES HAVE ALSO PRODUCED RENT RECEIPT BEFORE TH E AO, INDICATING THE FACT THAT THIS PROPERTY WAS TAKEN ON RENT BY SHRI MAHABI R PRASAD JAIN FOR A MONTHLY RENT OF RS.1200/- PER MONTH. HE DREW OUT AT TENTION TOWARDS THE COMPROMISE DEED AVAILABLE AT PAGE 45-46 OF THE PAPE R BOOK AS WELL AS THE STATEMENT OF SHRI MAHABIR PRASAD, AND SHRI GURDAYA L SINGH GIVEN ON OATH BEFORE HONBLE HIGH COURT IN PURSUANCE OF THE COMPR OMISE. 10. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT LD. CIT (A) HAS CONFIRMED THE ADDITION WITH THE HELP OF SECTION 50C OF THE INCOME TAX ACT 10 1961, HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF CIT VS. KHOOBSURAT RESORTS REPORTED IN 211 TAXMAN PAGE 510 THAT SECTIO N 50C IS NOT APPLICABLE IN THE CASE OF THE PURCHASER, THE FICTION CREATED B Y VIRTUE OF SECTION 50C APPLIES ONLY IN RESPECT OF ESCAPED INCOME OF A SELL ER, FOR THE DETERMINATION OF TRUE CAPITAL GAIN, SUCH A SPECIAL PROVISION HAS TO BE CONSIDERED NARROWLY, HAVING REGARD TO THE SUBJECT MATTER AND THE FICTION CANNOT BE EXTENDED FOR PRESUMING UNEXPLAINED INVESTMENT ETC. THUS ON THE B ASIS OF SECTION 50C NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT CAN B E MADE IN THE HANDS OF THE ASSESSEE. 11. THE LD. DR ON THE OTHER HAND SUBMITTED THAT ALL EGED AGREEMENT WAS ENTERED ON 27.04.1989 THE COMPROMISE WAS ALSO ARRIV ED IN THE MONTH OF SEPTEMBER 1989, IN PURSUANCE OF THE COMPROMISE HON BLE COURT MUST HAVE PASSED A DECREE IN THE CIVIL SUIT. THE ASSESSEES FA ILED TO FILE COPY OF THE DECREE BEFORE THE AO. IN SPITE OF THE COMPROMISE, W HY ASSESSEES FAILED TO GET THE SALE DEED EXECUTED FOR A SUCH A LONG PERIOD . THE SALE DEED HAS BEEN EXECUTED IN THE YEAR 2006. THE VENDORS WHO ARE STAT ED TO BE RESIDING ABROAD WOULD HAVE NOT TURNED UP FOR EXECUTING THE SALE DEE D UNLESS SOME PAYMENT WAS MADE TO THEM. HE SUBMITTED THAT IT IS BEYOND CO MPREHENSION THAT SUCH A PROPERTY WOULD HAVE BEEN AGREED BY THE VENDORS TO B E SOLD ON SUCH A RATE. THE ASSESSEES MUST HAVE PAID SOMETHING OVER AND ABO VE THE AMOUNTS STATED 11 IN THE SALE DEED. HE FURTHER CONTENDED THAT AO HAS RIGHTLY MADE A REFERENCE TO THE DVO FOR WORKING OUT THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE DEED. 12. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND SUBMITTED THAT SUM OF RS.5 LACS WAS PAID TO THE VENDORS WHICH IS THE B ALANCE. SMT. KAMLESH IS BASICALLY RESIDENT OF VILLAGE PALDI, DISTRICT HOSHI ARPUR, PUNJAB, THE OTHER CHILDREN OF GURDAYAL SINGH ARE RESIDING IN NEW ZEAL AND BUT THEY USED TO COME TO INDIA. ASSESSEES HAVE NOT PAID ANY AMOUNT E XCEPT RS.5 LAC PAID ON 15.12.1006 THROUGH CHEQUE NO. 988344. HE FURTHER RE LIED UPON THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. NAVEEN GERA REPORTED IN 328 ITR 516 AND CIT VS. SMT. SURAJ DEVI REPORTED IN 328 ITR 604. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED U PON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PUN EET SABHARWAL REPORTED IN 338 ITR 485. 13. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. THE AO IN THE ASSESSMENT ORDER HA S RAISED SOME SUSPICION ABOUT EXISTENCE OF ALLEGED AGREEMENT DATED 27.04.19 89, THOUGH HE HAS NOT SPECIFICALLY REJECTED THE EXISTENCE OF THE AGREEMEN T. HIS PERIPHERAL OBJECTIONS WERE THAT AUTHENTICITY OF AGREEMENT CANN OT BE PROVED BECAUSE NEITHER SMT. DHAN KAUR, SHRI TARSEM SINGH OR SHRI G URDAYAL SINGH ARE 12 ALIVE. THE PERSONS, WHO HAVE SOLD THE PROPERTY ARE LIVING IN, NEW ZEALAND, EXCEPT SMT. KAMLESH KAUR WHO LIVES IN HOSHIARPUR, P UNJAB. WHY SALE DEED WAS NOT EXECUTED FOR SUCH A LONG PERIOD? CONTRARY T O THESE APPREHENSIONS, THE EVIDENCES PRODUCED BY THE ASSESSEE ARE, (A) COP Y OF THE SALE AGREEMENT, (B) COPY OF WEALTH TAX RETURN FOR A.Y. 1990-91, (C) COMPUTATION OF WEALTH OF SH. M.P. JAIN, WHERE HE HAS SHOWN A SUM OF RS.30 LACS PAID AS ADVANCE FOR HOUSE TO SHRI GURDAYAL SINGH, (D) THE ASSESSMEN T IN THIS YEAR WAS PASSED U/S 16(3) OF THE WEALTH TAX. THE ASSESSEE M.P. JAIN IS A TENANT OVER THE PROPERTY. HE GOT A TELEPHONE CONNECTION, HE HAS FIL ED A SUIT FOR PERMANENT INJUNCTION IN THE YEAR 1989, A COMPROMISE WAS ARRIV ED AT BETWEEN HIM AND SHRI GURDAYAL SINGH, SHRI GURDAYAL SINGH HAS ALLEGE D THAT TARSEM SINGH WAS A MINOR AND HE IN THE CAPACITY OF GUARDIAN HAS ENTERED INTO AN AGREEMENT FOR SALE OF THIS PROPERTY. THE RELEVANT C LAUSES OF THE COMPROMISE DEED READ AS UNDER: C) THAT THE DEFENDANT AGREE AND CONFIRMS THAT HE H AS RECEIVED A SUM OF RS.20,00,000/- (RUPEES TWENTY LAKHS) FROM TH E PLAINTIFF VIDE CHEQUE 078981-1100290081 DATED 27.4.1989 DRAWN ON VIJAYA BANK, HAUZ KHAS, NEW DELHI. THE DEFENDANT AL SO CONFIRMS THAT THE AMOUNT OF RS.20,00,000/- WAS RECE IVED AS PART CONSIDERATION FROM THE PLAINTIFF AND THE AMOUNT OF THE CONSIDERATION OF PROPERTY BEARING NO.E-24 N.D.S.E. PART-I, 13 NEW DELHI, WITH ALL RIGHTS WAS OFFERED AND ACCEPTED AT RS.35,00,000/-. E) THAT THE DEFENDANT CONFIRMS THAT HE IS THE GUARD IAN OF MINOR TARSEM SINGH ALIAS TERRY AND IS COMPETENT TO SELL T HE AFOREMENTIONED PROPERTY SITUATED AT E-24 N.D.S.E. P ART-I, NEW DELHI, TO THE PLAINTIFF. THAT THE DEFENDANT FURTHER CONFIRMS THAT THE SAID PROPERTY IS FREE FROM ALL SORTS OF ENCUMBR ANCES, CHARGES, LIENS, DEMANDS, GIFTS, MORTGAGES, LEGAL DE FECTS, LITIGATION, COURT DECREE, INJUNCTION ETC. EXCEPT FO R THE PRESENT PENDING PROCEEDINGS BETWEEN THE PARTIES BEFORE THIS HONBLE COURT. F) THAT THE DEFENDANT CONFIRMS HAVING RECEIVED FROM THE PLAINTIFF ANOTHER SUM OF RS.10,00,000/- (RUPEES TEN LAKHS) TO WARDS THE CONSIDERATION OF THE AFORESAID PROPERTY / HOUSE BEA RING NO. E- 24. N.D.S.E. PART I, NEW DELHI, VIDE CHEQUE NO. 078 982 DATED 6.9.89 DRAWN ON VIJAYA BANK, HAUZ KHAS, NEW DELHI. THE BALANCE CONSIDERATION AMOUNT IS RS.5,00,000/- WHICH AMOUNT SHALL BE PAID BY THE PLAINTIFF TO THE DEFENDANT WHE N ALL THE DOCUMENTS AN EXECUTED BY DEFENDANT IN FAVOUR OF THE PLAINTIFF WITH RESPECT TO THE SALE OF THE AFORESAID PROPERTY. THE DEFENDANT THUS CONFIRMS HAVING RECEIVED A SUM OF RS .30 LAKHS BY WAY OF EARNEST MONEY FROM PLAINTIFF FOR CONDUCTI NG THE NEGOTIATIONS. 14. SHRI GURDAYAL SINGH AND SHRI M.P. JAIN HAD APPE ARED AS A PLAINTIFF AND DEFENDANT BEFORE THE HONBLE DELHI HIGH COURT A ND IN THEIR STATEMENT THEY HAVE CONFIRMED THE EXECUTION OF COMPROMISE DEE D WHICH IS 14 INCONSONANCE WITH AGREEMENT TO SELL; THEIR STATEMEN T WERE RECORDED ON OATH BEFORE HONBLE JUSTICE SUNANDA BHANDARE. THEIR STAT EMENTS READ AS UNDER: S.NO. 1345/89 18.9.89 STATEMENT OF SHRI MAHABIR PRASAD JAIN, PLAI NTIFF ON S.A.:- I HAVE COMPROMISED THE MATTER WITH THE DEFENDANT A ND HAVE SIGNED THE APPLICATION FILED UNDER ORDER 23 RU LE 3 BEING I.A. 6932/89. I HAVE PAID A SUM OF RS.20 LAKHS ON 2 7.4.89 AND I AM PAYING A FURTHER SUM OF RS.10 LAKHS BY WAY OF CH EQUE NO.78982 DATED 6.9.89 DRAWN ON VIJAYA BANK, IN COUR T TODAY. I PRAY THAT THE SUIT MAY BE DECREED IN TERMS OF THE C OMPROMISE. R.O. & A.C. SUNANDA BHANDARE, J. 18 TH SEPTEMBER 1989 STATEMENT OF S. GURDIAL SINGH, DEFENDANT, ON S.A.:- I HAVE SIGNED THE APPLICATION UNDER ORDER 23 RULE 3 BEING I.A. 6932/89. I HAVE ALSO SWORN AN AFFIDAVIT IN SUPPORT OF THE SAID APPLICATION AND I HAVE RS.20 LAKHS ON 27.4 .89 FROM THE PLAINTIFF AND I HAVE RECEIVED TODAY A CHEQUE FOR RS .10 LAKHS. I WILL BE BOUND BY THE TERMS OF THE COMPROMISE STATED IN THE APPLICATION. SD/- R.O. & A.C. SUNANDA BHANDARE, J. 18 TH SEPTEMBER 1989 *NANGIA* 15 15. IN THE PRESENT APPEALS, WE ARE NOT DECIDING THE QUESTION OF TITLE, OUR LIMITED CONCERN IS, WHETHER ASSESSEES HAVE PAID ANY AMOUNT OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE DEED? WHICH CA N BE ADDED U/S 69B ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE AUTHENTICITY OF THE AGREEMENT HAS NOT BEEN CHALLENGED BY THE VENDORS. IN PURSUANCE OF THE AGREEMENT THEY HAVE EXECUTED THE SALE DEED IN FAVOUR OF THE ASSESSEE. T HUS ALL PERIPHERALS SUSPICIOUS RAISED BY THE AO ARE NOT RELEVANT. HIS E NDEAVOUR SHOULD BE TO COLLECT EVIDENCE INDICATING THE UNEXPLAINED INVESTM ENT BY THE ASSESSEE IN THAT YEAR, HE MEASURABLY FAILED. SUCH TYPE OF ADDIT IONS HAVE BEEN MADE IN THE PAST ALSO, THE DISPUTE TRAVELED UPTO THE HONBL E DELHI HIGH COURT. IN THE CASE OF PUNEET SABHARWAL, THE ASSESSEE HAD PURCHASE D THREE PROPERTIES, LD. AO HAD MADE AN ADDITION ON ACCOUNT OF UNEXPLAINED I NVESTMENT U/S 69B. THE LD. CIT (A) HAS DELETED THE ADDITION, THE TRIBU NAL UPHELD THE DELETION. WHEN THE DISPUTE TRAVELED UP TO THE HONBLE HIGH CO URT, THE HONBLE HIGH COURT HAS UPHELD THE DELETION. THE QUESTION CONSIDE RED BY THE HONBLE HIGH COURT READS AS UNDER: 1. WHETHER THE ASSESSING OFFICER WAS RIGHT IN REFE RRING THE QUESTION OF FAIR MARKET VALUE OF THE PROPERTY SOLD BY THE ASSESSEE TO THE DISTRICT VALUATION OFFICER IN TERMS OF SECTION 55A OF THE INCOME-TAX ACT, 1961 (THE ACT)? ALTERN ATIVELY, WAS THE ASSESSING OFFICER IN TERMS OF SECTION 48 READ W ITH SECTION 16 45(5) OF THE ACT BOUND TO ACCEPT THE VALUE STATED I N THE REGISTERED SALE DEED? 2. WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS RI GHT IN HOLDING THAT NOTWITHSTANDING THE REPORT OF THE DIST RICT VALUATION OFFICER, THE REVENUE HAD TO PROVE THAT TH E ASSESSEE HAD IN FACT RECEIVED EXTRA CONSIDERATION OVER AND A BOVE THE DECLARED VALUE OF THE SALE? 16. THE HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL THE DISCUSSION MADE BY THE HONBLE HIGH COURT IS WORTH TO NOTE IT READ AS UNDER: 7. COMING TO THE FIRST QUESTION, IT DOES NOT ARISE FOR CONSIDERATION. AS PER THE QUESTION FORMULATED, THE PROPERTY WAS SO LD BY THE ASSESSEE WHEREAS, IN THE INSTANT CASE, THE PROPERTI ES IN QUESTION WERE PURCHASED BY THE ASSESSEE AND WERE NOT SOLD BY HIM. EVEN IF WE TREAT THE SAME AS TYPOGRAPHICAL MISTAKE, WE A RE OF THE VIEW THAT IT WOULD NOT BE NECESSARY TO DECIDE THIS QUESTION IN VIEW OF THE ANSWER THAT WE PROPOSE TO GIVE TO QUEST ION NO. 2. 8. AS FAR AS THE QUESTION NO. 2 IS CONCERNED, AS AL READY INDICATED ABOVE, THE AO SOLELY RELIED UPON THE REPORT OF THE DVO. APART FROM THIS, THERE WAS ADMITTEDLY NO EVIDENCE OR MATE RIAL IN HIS POSSESSION TO COME TO THE CONCLUSION THAT THE ASSES SEE HAD PAID EXTRA CONSIDERATION OVER AND ABOVE WHAT WAS STATED IN THE SALE DEED. THIS VERY ISSUE HAS COME UP FOR CONSIDERATION BEFORE THIS COURT REPEATEDLY AND AFTER FOLLOWING THE JUDGMENT O F THE SUPREME COURT IN THE CASE OF K.P. VARGHESE (SUPRA), THE AFORESAID PROPOSITION OF LAW IS REITERATED TIME AND AGAIN. FOR OUR BENEFIT, WE MAY REFER TO THE LATEST JUDGMENT OF THIS COURT IN 17 THE CASE OF CIT VS. SMT. SURAJ DEVI (2010) 328 ITR 604 (DEL) WHEREIN THIS COURT HAD HELD THAT THE PRIMARY BURDEN OF PROOF TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT IS ONLY WHEN SUCH BURDEN IS DISCHARG ED THAT IT WOULD BE PERMISSIBLE TO REPLY UPON THE VALUATION ON GIVEN BY THE DVO. IT WAS ALSO HELD THAT THE OPINION OF THE V ALUATION OFFICER, PER SE, WAS NOT INFORMATION AND COULD NOT BE RELIED UPON WITHOUT THE BOOKS OF ACCOUNTS BEING REJECTED W HICH HAD NOT BEEN DONE IN THAT CASE. 9. THE AFORESAID PRINCIPLE OF LAW HAS BEEN REAFFIR MED IN CIT VS. NAVEEN GERA (2011) 56 DTR (DEL) 170 : (2010) 328 IT R 516 (DEL) STATING THAT OPINION OF THE DVO PER SE WAS NO T SUFFICIENT AND OTHER CORROBORATED EVIDENCE IS REQUIRED. MR. MA RATHA, LEARNED COUNSEL APPEARING FOR THE REVENUE SUBMITTED THAT THE JUDGMENT OF THE SUPREME COURT IN K.P. VARGHESE (SUP RA) HAS BEEN EXPLAINED BY THE RAJASTHAN HIGH COURT IN THE C ASE OF SMT. AMAR KUMARI SURANA VS. CIT (1996) 134 CTR (RAJ) 313 : (1997) 226 ITR 344 (RAJ). 10. HAVING REGARD TO THE CONSISTENT VIEWS TAKEN BY THIS COURT IN THE AFORESAID AND OTHE R JUDGMENTS WHICH BIND US, WE DECIDE THE QUESTION OF LAW NO. 2 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AS A CONSEQUE NCE, THIS APPEAL IS DISMISSED. 17. SIMILAR ARE THE VIEW OF HONBLE DELHI HIGH COUR T IN THE JUDGMENT OF NAVEEN GERA AND SMT. SURAJ DEVI, THUS UNLESS AO IS ABLE TO LAY HIS HAND ON ANY EVIDENCE INDICATING THAT ASSESSEES HAVE MADE PA YMENT OVER AND ABOVE THE SALE CONSIDERATION STATED IN THE SALE DEED ADDI TION ON ACCOUNT OF 18 UNEXPLAINED INVESTMENT CANNOT BE MADE SIMPLY RELYIN G UPON THE DVOS REPORT. 18. APART FROM THIS POSITION OF LAW, IT IS TO BE SE EN THAT THIS PROPERTY IS IN THE POSSESSION OF SHRI M.P. JAIN, WHO IS A TENANT S INCE 1985, THE AGREEMENT TO SELL IS IN HIS FAVOUR. HE HAS PAID A SUM OF RS.3 0 LACS IN 1989 THUS AN ENCUMBRANCE IS THERE ON THIS PROPERTY IN FAVOUR OF SHRI M.P. JAIN. THE AO IS TAKING UP THE RATES ON THE BASIS OF DVOS REPORT OB TAINED ON THE RATES ACHIEVED IN AUCTION CARRIED OUT IN 2008. HE HAS TO ASCERTAIN WHAT WAS THE VALUE OF THE PROPERTY IN 1989. HE HAS TOTALLY IGNOR ED THE PAYMENT OF RS.30 LAC IN 1989. THE AO HAS TO SEE, HAD ANYBODY INVESTE D A SUM OF RS.30 LACS IN THIS AREA IN 1989? WHAT WOULD BE THE CONSIDERATION IN TERMS OF RETURN IN 2006? IN THE YEAR 1989, IF A PERSON MADE FIXED DEPO SITS IN A POST OFFICE, THEN, THE DEPOSIT WOULD BE DOUBLED IN A PERIOD OF 5 - YEARS. EVEN FROM THAT ANGLE, APPRECIATION OF PAYMENT OF RS.30 LACS IN THE YEAR 1989 IS CONSIDERED THEN, BY THE YEAR 2006, IT WOULD BECOME 2.40 CRORE, WHICH IS NEARER TO THE VALUE DETERMINE BY THE DVO. HOW, THE LD. AO CAN ALL EGE THAT PROPERTY WAS NOT PURCHASED AT MARKET RATE. 19. AS FAR AS THE ORDERS OF LD. CIT (A) ARE CONCERN , HE IS AGAIN APPLYING THE POSITION OF 2006 INSTEAD OF 1989, MOREOVER HON BLE DELHI HIGH COURT HAS HELD IN THE CASE OF KHOOBSURAT RESTAURANT THAT SECTION 50C APPLIES ONLY 19 IN RESPECT OF ESCAPED INCOME OF A SELLER. IT IS NOT APPLICABLE IN THE CASE OF A PURCHASER. THUS FICTION IS FOR THE DETERMINATION OF TRUE CAPITAL GAIN AND NOT FOR AN UNEXPLAINED INVESTMENT. NO MATERIAL IS BROUG HT ON THE RECORD BY THE AO THAT VENDORS HAVE OBJECTED THE EXISTENCE OF AGRE EMENT OR HAVE TAKEN ANY LEGAL PROCEEDINGS AGAINST SHRI M.P. JAIN FOR EVICTI ON FROM THE HOUSE. BY REGISTERING THE SALE DEED AT THE SAME RATE, THEY HA VE APPROVED AND RATIFIED THE AGREEMENT AND CONDUCT OF SHRI GURDYAL SINGH. THUS T AKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES, WE A RE OF THE VIEW THAT, AO IS UNABLE TO BRING ANY EVIDENCE ON RECORD TO SAY THAT ASSESSEES HAVE PAID MORE THAN THE ONE STATED IN THE SALE DEED. THEREFORE, AL L THE APPEALS OF ASSESSEE ARE ALLOWED, ADDITIONS MADE BY AO ARE DELETED. CONSEQUE NTLY APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8/08/2013. SD/- SD/- ( T. S. KAPOOR ) (RAJP AL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 8/08/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR