ACIT, New Delhi V. Sri Manish Jain, New Delhi

ITA 2017/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65884 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: AMIT GOEL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Valuation report
• Section: 50C; 153A; 69

Judgement Text

ITA NO. 2017/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2017/DEL/2011 A.Y. : 2005-06 A CIT, CIRCLE - 33(1), ROOM NO. 217, CR BUILDING, I.P. ESTATE, NEW DELHI VS. SRI MANISH JAIN, BJ-123, SHALIMAR BAGH, NEW DELHI (PAN/GIR NO. : AAKPJ9348J) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. AMIT GOEL, CA DEPARTMENT BY : SH. GUNJAN PRASAD, C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, NEW DEL HI DATED 18.1.2011 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A) HAD ERRED IN DELETING THE ADDITION OF ` 19,74,268/- AS WAS MADE B Y THE ASSESSING OFFICER AS UNDISCLOSED INCOME ON ACCOUNT OF INVESTMENT MADE IN THE PROPERTY AND INVOKING THE PROVISION OF SECTION 142A PARTICULARLY WHEN UNDER THE PROVISIONS OF SECTION 153A OF THE AC T, IT IS NO LONGER REQUIRED THAT ADDITION CAN BE MADE O NLY ITA NO. 2017/DEL/2011 2 ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURI NG SEARCH. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE ADDITION ON THE GROUND THAT THE ASSESS ING OFFICER HAS NOT GIVEN ANY REASONS REQUIRING THE REFERENCE U/S. 142A OF THE I.T. ACT, STATING THAT I T WAS NOT A CASE OF ASSESSING OFFICER THAT THE INVESTMEN T MADE BY APPELLANT ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND THAT THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT THE INVESTMENT MADE IN THE PROPERTY WAS MORE THAN WHAT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT BY THE APPELLANT; PARTICULARLY WHEN IT I S WITHIN THE LEGITIMATE RIGHTS OF REVENUE TO TAX HIM ON A VALUE OF SALES CONSIDERATION AS DETERMINED BY AN EXPERT BY TAKING INTO ACCOUNT THE PREVALENT CIRCLE RATES; MOREOVER WHEN IT IS NOT THE ASSESSEES CASE THAT THE VALUATION OFFICER HAS VALUED HIS PROPERTY BY ADOPTING SOME IMAGINARY OR ASTRONOMICAL FIGURES, RATHER THE ADOPTION OF CIRCLE RATES MADE BY THE VALUATION OFFICER FOR THE VALUATION OF PROPERTY. III) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE CO URSE OF HEARING OF THE APPEAL. 3. IN THIS CASE ASSESSING OFFICER HAS OBSERVED THA T ASSESSEE MADE INVESTMENT OF ` 20,52,232/- IN PROPERTY NO. B-11, S ITUATED AT SOUTH CITY. THIS PROPERTY HAS BEEN PURCHASED ALONGWITH S HRI K.L. JAIN, WHO IS ITA NO. 2017/DEL/2011 3 FATHER OF THE ASSESSEE. BOTH HAVE EQUAL SHARE IN P ROPERTY. THIS PROPERTY HAS BEEN REFERRED TO VALUATION CELL U/S. 1 42A OF THE INCOME TAX ACT, 1961 FOR ESTIMATING THE COST OF INVESTMENT IN THE PROPERTY. AS PER THE VALUATION REPORT DATED 26.12.2007, THE V ALUATION CELL VALUED THE PROPERTY AT ` 40,26,500/-. THE ASSESS ING OFFICER ADOPTED THIS VALUE AND MADE THE RESULTANT ADDITION OF ` 19,7 4,268/- (` 4026500 MINUS ` 2052232). 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCO ME TAX (A) OBSERVED THAT SEARCH AND SEIZURE OPERATION U/S. 132 OF THE I.T. ACT WAS CARRIED OUT IN THE ASSESSEES CASE ON 20.1.2006. LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT NO INCRIMINATING DOCUMENT / EVIDENCE WAS FOUND NOR REFERRED TO BY THE ASSESSING OFFICER TO SUGGEST THAT INVESTMENT MADE IN THE PROPERTY BY THE ASSESSEE WAS MORE THAN WHAT HAS BEEN DECLARED BY ASSESSEE IN THE RETURN OF INCO ME. LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT ASSESSI NG OFFICER HAS NOT GIVEN ANY REASONS REQUIRING THE REFERENCE U/S. 142A OF THE I.T. ACT, 1961. HE FURTHER NOTED THAT A REFERENCE HAS BEEN MADE TO THE VALUATION CELL WITHOUT FIRST POINTING OUT THE REAS ONS NECESSITATING THE REFERENCE. SECTION 142A PROVIDE FOR REFERENCE W HERE AN ESTIMATE OF VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR 69B IS REQUIRED TO BE MADE. SECTION 69 RELATES TO INVESTMENT MADE B Y THE ASSESSEE WHICH ARE NOT RECORDED IN THE BOOKS AND SECTION 69 B RELATES TO A SITUATION WHERE THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPENDED FOR MAKING SUCH INVESTMENT EXCEEDS THE AMOU NT RECORDED IN THE BOOKS OF ACCOUNT. LD. COMMISSIONER OF INCO ME TAX (A) NOTED THAT IT IS NOT THE CASE OF THE ASSESSING OFFICER T HAT THE INVESTMENTS MADE BY THE ASSESSEE ARE NOT RECORDED IN THE BOOKS O F ACCOUNT. LD. COMMISSIONER OF INCOME TAX (A) HELD THAT THE ASSESSI NG OFFICER HAS ITA NO. 2017/DEL/2011 4 NOT ESTABLISHED THAT THE INVESTMENT MADE IN THE PRO PERTY WAS MORE THAN WHAT HAS BEEN RECORDED IN THE BOOKS OF ACCO UNTS BY THE ASSESSEE. HE FOUND IN THE VALUATION REPORT, THE DVO HAS NOT GIVEN ANY EVIDENCE OF ANY COMPARATIVE SALE. HE NOTED THAT INFACT THE VALUE AS PER THE STAMP DUTY PURPOSES HAS BEEN ADOPTE D. THEREAFTER, LD. COMMISSIONER OF INCOME TAX (A) REFERRED THE SEVER AL CASE LAWS AND CONSIDERED THE FACTUAL AND LEGAL POSITION. HE HELD THAT THE ADDITION OF ` 19,74,268/- MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AND HENCE, THE SAME WAS DIRECTED TO BE DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (A) IS CORRECT ONE AND TH E SAME SHOULD BE ADOPTED. FURTHER, COUNSEL OF THE ASSESSEE REFERRED T O THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F C.I.T. VS. KHOOBSURAT RESORTS PVT. LTD. IN I.T.A. NO. 776/2011 VIDE ORDER DATED 5.11.2012. 8. WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THAT NO INCRIMINATING DOCUMENT / EVIDENCE WAS FOUND NOR REFE RRED TO BY THE ASSESSING OFFICER TO SUGGEST THAT INVESTMENT MADE I N THE PROPERTY BY THE ASSESSEE WAS MORE THAN WHAT HAS BEEN DECLARED BY ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER HAS NOT GIVEN ANY REASONS REQUIRING THE REFERENCE U/S. 142A OF THE I. T. ACT, 1961. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT TH E INVESTMENT MADE IN THE PROPERTY WAS MORE THAN WHAT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE. WE FURTHER NOTE THAT IN THE VALUATION REPORT, THE DVO HAS NOT GIVEN ANY EVIDENCE OF ANY CO MPARATIVE SALE. ITA NO. 2017/DEL/2011 5 UNDER THE CIRCUMSTANCES, WE AGREE WITH THE LD. COMMIS SIONER OF INCOME TAX (A) THAT THERE IS NO SUSTAINABLE BASIS O N WHICH THE ADDITION HAD BEEN MADE. THE ADDITION MADE IS SOLELY BASED ON THE VALUATION DONE BY THE VALUATION CELL. NO COMPARATIVE INSTAN CE OF SALE HAS BEEN REFERRED NOR ANY COGENT EVIDENCE HAS BEEN GIVEN BY THE VALUATION CELL. 9. IN THIS REGARD, THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF C.I.T. VS. KHOOBSURAT RESORTS PVT. LTD. (SUPRA) IS GERMANE. IN THIS CASE IT WAS HELD THAT THIS COURT IS OF THE OPINION THAT THE EXPRESS PROVISION OF SECTION 50C ENABLING THE REVEN UE TO TREAT THE VALUE DECLARED BY AN ASSESSEE FOR PAYMENT OF STAMP D UTY, IPSO FACTO, CANNOT BE A LEGITIMATE GROUND FOR CONCLUDING THAT TH ERE WAS UNDERVALUATION, IN THE ACQUISITION OF IMMOVABLE PROP ERTY. IF PARLIAMENTARY INTENTION WAS TO ENABLE SUCH A FINDING , A PROVISION AKIN TO SECTION 50-C WOULD HAVE BEEN INCLUDED IN THE ST ATUTE BOOK, TO ASSESS INCOME ON THE BASIS OF A SIMILAR FICTION IN T HE CASE OF THE ASSESSEE WHO ACQUIRES SUCH AN ASSET. NO DOUBT, THE DECLARATION OF A HIGHER COST FOR ACQUISITION FOR STAMP DUTY MIGHT BE THE STARTING POINT FOR AN INQUIRY IN THAT REGARD; THAT INQUIRY MIGHT EX TEND TO ANALYZING SALE OR TRANSFER DEEDS EXECUTED IN RESPECT OF SIMILA R OR NEIGHBOURING PROPERTIES; CONTEMPORANEOUSLY AT THE TIME OF TRANSAC TION. YET, THE FINDING CANNOT START AND CONCLUDE WITH THE FACT THA T SUCH STAMP DUTY VALUE OR BASIS IS HIGHER THAN THE CONSIDERATION ME NTIONED IN THE DEED. ITA NO. 2017/DEL/2011 6 THE COMPULSION FOR SUCH HIGHER VALUE, IS THE MANDATE OF THE STAMP ACT, AND PROVISIONS WHICH LEVY STAMP DUTY AT PRE-DET ERMINED OR NOTIFIED DATES. IN THE PRESENT CASE, THE REVENUE DID NOT RELY ON ANY OBJECTIVE FACT OR CIRCUMSTANCES; CONSEQUENTLY, THE C OURT HOLDS THAT THERE IS NO INFIRMITY IN THE APPROACH OF THE LOWER A UTHORITIES AND THE TRIBUNAL, GRANTING RELIEF TO THE ASSESSEE. THIS QU ESTION IS ACCORDINGLY ANSWERED IN FAVOUR OF THE ASSESSEE, AND AGAINST THE REVENUE. 10. THUS WE FIND THAT IN THE ABOVE CASE HONBLE JUR ISDICTIONAL HIGH COURT HAS HELD THAT IN THE CASE OF PURCHASE OF PR OPERTY VALUATION ON THE BASIS OF STAMP DUTY RATES CANNOT BE APPLIED, UN LESS THERE ARE ANY OBJECTIVE FACT OR CIRCUMSTANCES. 11. WE FIND THAT HONBLE APEX COURT IN THE CASE OF K.P. VERGHESE 131 ITR 597 HAS HELD THAT THERE CANNOT BE ANY PRESUMPTIO N REGARDING UNDISCLOSED INVESTMENT IN THE ABSENCE OF ANY MATERIA L OR EVIDENCE REGARDING PAYMENT OF UNRECORDED TRANSACTION. 12. ON EXAMINING THE CASE ON THE TOUCHSTONE OF THE ABOVE CITED CASE LAWS, THERE IS NO COGENT BASIS ON WHICH THE ADDITION HAS BEEN BASED. NO INCRIMINATING DOCUMENT HAS BEEN FOUND. AS SESSING OFFICER HAS NOT SPECIFIED ANY REASON FOR REFERENCE TO THE V ALUATION CELL. NO COMPARATIVE SALE INSTANCE HAS BEEN RELIED UPON BY T HE REVENUE TO ITA NO. 2017/DEL/2011 7 MAKE THE ADDITION. HENCE, WE HOLD THAT THE REVENUE HAS NOT RELIED UPON ANY OBJECTIVE FACT OR CIRCUMSTANCES WARRANTING ENHANCEMENT OF THE PURCHASE VALUATION. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX(A), ACCORDINGLY, WE UPHOLD THE SAME. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/11/2012. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 23/11/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES