Virandra Kumar Gupta, New Delhi V. CIT, International Texation, New Delhi

ITA 2055/DEL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4905 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Opportunity of being heard; Cost of acquisition; Non-deduction of tax; Fair market value; Valuation report; Assessment record; TDS; Set aside
• Section: 143(3); 201; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T .A . NO. 2055 /DEL/201 9 ASSESSMENT YEAR: 20 1 4 - 1 5 SHRI VIRENDER KUMAR GUPTA, 46A, FRIENDS COLONY EAST, NEW DELHI. V S . COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) NEW DELHI. TAN/PAN : AAYPK 3135G (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI V.P. GUPTA , ADV. RESPONDENT BY: SHRI SULEKHA VERMA , SR. D.R. DATE OF HEARING: 1 5 0 7 201 9 DATE OF PRONOUNCEMENT: 11 1 0 201 9 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 31.01.2019, PASSED BY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) -3, NEW DELHI IN HIS REVISIONARY JURISDICTION U/S. 263 CANC ELLING THE ASSESSMENT ORDER DATED 07.012.2016, PASSED U/S.143( 3) FOR THE ASSESSMENT YEAR 2014-15. IN THE GROUNDS OF APPE AL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE COMMISSIONER OF INCOME-TAX (INTL. TAX) -3, NEW DELHI, ERRED IN PASSING THE ORDER DATED 31.01.2019 U/S 263 OF THE ACT SETTING ASIDE THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER, CIRCLE-2, DEHRADUN, IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT. I.T.A. NO.2055/DEL/2019 2 2. THAT THE COMMISSIONER OF INCOME-TAX ALSO ERRED I N HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R DATED 07.12.2016 WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE WITHOUT PROPERLY CONSIDERING AND APPRECI ATING THE SUBMISSIONS MADE BY THE APPELLANT IN RESPECT OF EAC H OF THE ISSUES MENTIONED IN THE SHOW CAUSE NOTICE DATED 03. 10.2018 AND, ACCORDINGLY, THE ORDER UNDER REFERENCE DESERVE S TO BE QUASHED. 3. THAT THE COMMISSIONER OF INCOME-TAX ALSO ERRED IN PASSING THE ORDER U/S 263 OF THE ACT DIRECTING THE ASSESSIN G OFFICER TO CARRY OUT THE VERIFICATION WHEREAS THE ASSESSING OF FICER HAD ALREADY MADE NECESSARY VERIFICATION WHILE PASSING T HE ORDER U/S. 143(3) OF THE ACT DATED 07.12.2016 AND THE APP ELLANT HAD DULY SUBMITTED EVIDENCE IN REPLY TO SHOW CAUSE NOTI CE DATED 03.10.2018. 4. THAT THE COMMISSIONER OF INCOME-TAX ALSO ERRED I N PASSING THE ORDER U/S 263 OF THE ACT ON THE GROUND THAT THE ASS ESSING OFFICER HAD NOT INITIATED PROCEEDINGS U/S *201 OF THE ACT I N RESPECT OF NON-DEDUCTION OF TAX AT SOURCE BY PURCHASERS OF PLO TS OF LAND FROM THE APPELLANT WITHOUT APPRECIATING THAT ON THI S GROUND THE ORDER PASSED BY THE ASSESSING OFFICER IN THE CASE O F APPELLANT COULD NOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. 5. THAT THE ORDER PASSED BY THE COMMISSIONER OF I NCOME-TAX IS ILLEGAL, UNJUSTIFIED, UNWARRANTED AND SAME DESERVES TO BE QUASHED AND ORDER PASSED BY THE ASSESSING OFFICER U /S. 143(3) OF THE ACT DATED 07.12.2016 AFTER MAKING NECESSARY VERIFICATION AND COLLECTING NECESSARY DETAILS IS TO BE RESTORED. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIV IDUAL AND AN AMERICAN CITIZEN WHO IS RESIDING IN USA SINCE JU LY 1983. HE HAS FILED HIS RETURN OF INCOME IN THE STATUS OF NON-RESIDENT IN THE ASSESSMENT YEAR 2014-15 ON 08.09.2014 DECLAR ING TAXABLE INCOME OF RS.38,36,020/- AND LONG TERM CAPI TAL GAIN LOSS OF RS.96,25,104/- ON SALE OF PIECES OF LA ND TO 32 I.T.A. NO.2055/DEL/2019 3 BUYERS. THE ASSESSEE HAD INHERITED ANCESTRAL LAND I N OUTER PART OF ROORKEE CITY ADMEASURING 16,561 SQ. MTRS AN D SMALL PIECE OF LAND ADMEASURING 114.6 SQ. MTRS. WITHIN TH E CITY OF ROORKEE. THE LAND WAS DEVOLVED TO THE ASSESSEE ON F AMILY PARTITION AMONGST BROTHERS AS PER AWARD OF SOLE ARB ITRATOR REGISTERED ON 28.11.1983. THE ASSESSEES CASE WAS S ELECTED FOR SCRUTINY ON THE GROUND OF LONG TERM CAPITAL GAIN A ND CASH DEPOSITS IN BANK ACCOUNT AND ASSESSEE HAVE ALSO TRA NSFERRED ONE OR MORE PROPERTIES DURING THE YEAR. 3. AS BROUGHT ON RECORD BY THE LD. COUNSEL FOR T HE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS BE FORE THE ASSESSING OFFICER, THE ASSESSEE HAD SUBMITTED ALL T HE RELEVANT DOCUMENTS VIDE LETTER DATED 03.11.2016 ALONG WITH C OPY OF VALUATION REPORT, STATEMENT OF COMPUTATION OF CAPIT AL GAIN, COPIES OF SALE DEEDS, BANK STATEMENTS, ETC. ALL THE SE DOCUMENTS HAVE ALSO BEEN PLACED IN THE PAPER BOOK B EFORE US FROM PAGES 21 TO 450. THEREAFTER, THE ASSESSING OFF ICER SPECIFICALLY REQUIRED THE ASSESSEE TO FURNISH FURTH ER DETAILS AND EXPLANATION VIDE LETTER DATED 18.11.2016 ALONG WITH THE COPY OF AWARDS AND DETAILS REGARDING MODE OF SALE CONSIDERATION RECEIPT FROM EACH OF THE BUYERS OF TH E LAND. ALL THESE DOCUMENTS WERE FURNISHED BEFORE THE ASSESSING OFFICER. THE COPIES OF WHICH ARE APPEARING FROM PAGES 451 TO 469 OF PAPER BOOK. AFTER EXAMINING ALL THESE DETAILS AND I NQUIRY BY THE ASSESSING OFFICER, HE ACCEPTED THE RETURN OF IN COME AND ALSO THE LONG TERM CAPITAL LOSS VIDE ORDER DATED 07 .12.2016 PASSED U/S. 143(3). THEREAFTER, LD. CIT ON PERUSAL OF THE I.T.A. NO.2055/DEL/2019 4 ASSESSMENT RECORDS CAME TO A PRIMA FACIE CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY , THE SHOW CAUSE NOTICE U/S.263 DATED 03.10.2018 WAS ISSUED TO THE ASSESSEE, THE CONTENT OF WHICH HAS BEEN REPRODUCED IN THE IMPUGNED ORDER. 4. IN SUMS AND SUBSTANCE, THE RELEVANT OBSERVATIO NS OF THE LD. CIT IN THE SHOW CAUSE NOTICE WERE THAT; FIRSTLY, THERE WERE CASH DEPOSITS AMOUNTING TO RS.1,07,81,000/- IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE IN PUNJAB NATIONAL BANK AND THE ASSESSING OFFICER DID NOT GET THE DETAILS OF THE SAID BANK AC COUNT AND DID NOT EXAMINE THE DEPOSITS ALONG WITH THE SOU RCE. SECONDLY, THE IMPORTANT ISSUE INVOLVED IN THE CASE WAS THAT THERE WAS A LOW CAPITAL GAIN RETURN BY THE ASS ESSEE AND IN FACT THERE WAS A CAPITAL LOSS OF MORE THAN R S.96 LAC FROM THE TRANSACTION OF SALE OF PROPERTY AND ASSESSING OFFICER HAS FAILED TO EXAMINE THE SAID LO SS. THE ASSESSEE HAD ADOPTED THE VALUE OF THE PROPERTY SOLD AS ON 01.04.1981 ON THE BASIS OF THE VALUERS REPORT W HICH IS ARBITRARY. THIRDLY, THE FAIR MARKET VALUE ADOPTED 32 YEARS BAC K WAS NOT BASED ON INQUIRIES. THE DETAILS OF ANY INQUIRIE S ARE NOT DISCLOSED IN THE REPORT AND ASSESSING OFFICER H AS NOT QUESTIONED THE SAID VALUATION REPORT NOR HAS HE CONDUCTED ANY INQUIRY FROM THE CONCERN REGISTERED I.T.A. NO.2055/DEL/2019 5 AUTHORITY TO FIND OUT THE ACTUAL RATE PREVAILING ON 01.04.1981. FOURTHLY, AS PER THE VALUATION REPORT, 2172 SQ. MTR S. LAND WAS VALUED AT RS.1225/- PER SQ. MTRS., WHEREAS THE ASSESSEE HAS CLAIMED 2035.47 SQ. MTRS OF LAND AT RS.1225/- PER SQ. MTRS AND THEREBY WRONGLY REDUCED HIS CAPITAL GAIN. HE ALSO POINTED OUT THAT VALUATION RE PORT WAS UNRELIABLE. THE ASSESSING OFFICER DID NOT RECON CILE THE AREA OF LAND CLAIMED TO HAVE BEEN SOLD BY THE ASSESSEE THAT THE AREA OF LAND IS ARBITRARY AS PER THE ARBITRATION AWARD. THE ASSESSEE HAD CLAIMED TO SELL THE PROPERTY TO 32 DIFFERENT PERSONS ON DIFFERENT DATES AND ON DIFFERE NT CIRCLE RATES AND NO TDS WAS DEDUCTED BY ANY OF THE PERSONS TO WHOM LAND WAS SOLD. THUS, THERE WAS A CL EAR DEFAULT ON THE PART OF THE PURCHASER AS PER THE PRO VISION OF SECTION 195, AND THEREFORE, PROCEEDINGS U/S.201 HAS BEEN INITIATED IN ALL PURCHASES. NO INQUIRIES WERE CONDUCTED BY THE ASSESSING OFFICE R ON ANY OF THE PURCHASES REGARDING THE GENUINENESS OF T HE TRANSACTION OF THE PAYMENT MADE. 4. IN RESPONSE, THE ASSESSEE FILED THE DETAILED SUB MISSION AND REPLY EXPLAINING THE POSITION IN RESPECT OF EAC H OF THE OBSERVATION MADE BY THE LD. CIT IN HIS SHOW CAUSE N OTICE GIVING REFERENCE TO THE DOCUMENTS ALREADY SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE ALS O I.T.A. NO.2055/DEL/2019 6 SUBMITTED BEFORE THE LD. CIT. THE RELEVANT REPLY OF THE ASSESSEE HAS BEEN INCORPORATED IN THE IMPUGNED ORDE R FROM PAGES 3 TO 6. HOWEVER, THE LD. CIT REJECTED THE ASS ESSEES EXPLANATION AND CANCELED THE ASSESSMENT ORDER AFTER OBSERVING AND HOLDING AS UNDER: A. IT IS EVIDENT FROM THE RECORDS THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS MAINTAINING TWO BAN KS ACCOUNTS NAMELY, WITH PUNJAB NATIONAL BANK AND DEUT SCHE BANK. CASH AMOUNTING TO RS. 1,07,81,000/- WAS DEPOS ITED IN THE BANK ACCOUNT MAINTAINED WITH PUNJAB NATIONAL BA NK. DURING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT , THE ASSESSEE SUBMITTED THE DETAILS OF CREDIT ENTRIES OF BOTH THE BANK ACCOUNTS WITH NARRATION AND CLAIMED THAT THE C ASH DEPOSITED IN THE BANK ACCOUNTS IS FROM THE SALE PRO CEEDS RECEIVED BY THE ASSESSEE. THE. AO IS DIRECTED TO VE RIFY AND EXAMINE THE DETAIL OF EACH CREDIT ENTRY (CASH/RTGS/ NEFTJ ALONG .WITH THE CREDITWORTHINESS OF THE PAYER IN RE SPECT OF BOTH THE BANK ACCOUNTS AND TO CONDUCT THE ENQUIRY OF PAY ERS FOR CREDIT ENTRIES EXCEEDING RS. 10,00,000/-. B. FROM THE PERUSAL OF THE ASSESSMENT RECORDS,, IT WAS OBSERVED THAT THE ASSESSEE HAD SOLD A PROPERTY TO 3 2 DIFFERENT PERSONS ON DIFFERENT DATES AND ON DIFFERENT CIRCLE RATES CLAIMING A LONG-TERM CAPITAL LOSS OF RS. 96,25,104/- THEREON . THE COST OF ACQUISITION OF THE LAND WAS VALUED AS ON 01.04.1981 ADOPTING THE RATE DECIDED BY A VALUER WHICH IS TOTALLY ARBIT RARY. DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO FAILED TO CONDUCT THE ENQUIRY FROM THE CONCERNED REGISTRATION AUTHORI TY REGARDING THE RATE OF LAND PREVAIL DURING 01.04.1981. AS THE ASSESSEE HIMSELF CLAIMED TO BE AN NRI, THE TDS WAS NOT DEDUC TED BY ANY I.T.A. NO.2055/DEL/2019 7 PURCHASER FOR THE PURCHASE OF LAND FROM THE ASSESSE E. THE AO DID NOT INITIATE ANY PENALTY PROCEEDINGS U/S 201 OF THE ACT AND IS NOW DIRECTED TO INITIATE THE PROCEEDINGS UNDER S ECTION 201 /201 (1)(A) OF THE ACT IN THE CASE OF THE PURCHASER S. THE AO IS DIRECTED TO VERIFY THE SALE OF LAND AS PER THE MAP PROVIDED BY THE ASSESSEE DURING THE PROCEEDINGS UNDER SECTION 2 63 OF THE ACT AND TO CONDUCT THE ENQUIRY7 FROM LOCAL LAND AND URBAN DEVELOPMENT AUTHORITIES AND FROM REGISTRATION AUTHO RITY TO KNOW THE CORRECT AND FAIR VALUE OF LAND AS ON 01.04 .1981 AND TO CALCULATE THE CAPITAL GAIN OR LOSS AS PER THE LA W. THE AO IS ALSO REQUIRED TO RECONCILE THE AREA OF LAND CLAIMED TO HAVE BEEN SOLD BY THE ASSESSEE WITH THE AREA THAT COME TO HIS SHARE AS PER THE ARBITRATION AWARD AND TO VERIFY BY CONDUCTI NG ENQUIRES WHETHER THE ASSESSEE DID COLONIZATION OF THE LAND B Y ENGAGING IN COMMERCIAL ACTIVITY. IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSMENT FRA MED BY THE AO VIDE ORDER DATED 23.12.2016 IS HELD TO BE ERRONE OUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSE SSMENT SO FRAMED IS HEREBY CANCELLED AND SET ASIDE WITH THE D IRECTIONS TO THE AO TO FRAME THE ASSESSMENT AFRESH AS DIRECTED A BOVE AFTER GRANTING DUE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE LD. CIT HAS WRONGLY OBSERVED THAT THE COPY OF MAP AND THE BANK STATEMENT WAS GIVEN DURING THE REVISIO NARY PROCEEDINGS. HOWEVER, THE FACT OF THE MATTER IS THA T ALL THESE DOCUMENTS WERE DULY SUBMITTED BEFORE THE ASSESSING OFFICER ALONG WITH COPY OF VALUATION REPORT AND MAP OF THE AREA AND ALSO THE AWARD. THE COMPLETE DETAILS REGARDING SALE I.T.A. NO.2055/DEL/2019 8 CONSIDERATION RECEIVED FROM SALE THROUGH SALE DEED DEPOSITED IN THE BANK ACCOUNT WERE ALSO SUBMITTED. THE ASSESS ING OFFICER HAD EXAMINED ALL THE CASH DEPOSITS IN THE B ANK ACCOUNT AFTER RECONCILING IT WITH THE SALE DEED, HA S ACCEPTED THE COMPUTATION OF THE CAPITAL GAIN. THE ASSESSEE H AD SOLD SMALL PIECE OF LAND OF RS.114.6 SQ. MTRS. AND ALSO AGGREGATE AREA OF LAND OF 6207.08 SQ. MTRS OUT OF THE AREA IN THE VALUATION REPORT OF 16561 SQ. MTRS. THE ENTIRE SALE ABLE AREA SOLD DURING THE YEAR HAS BEEN MENTIONED IN EACH OF THE SALE DEED. BALANCE AREA OF THE LAND WAS SOLD IN THE SUBS EQUENT YEARS. THE OBSERVATION OF THE LD. CIT TO THE FACT T HAT TDS WAS NOT DEDUCTED BY THE PURCHASER, ARE NOT RELEVANT AT ALL AND THIS CANNOT BE BASIS FOR HOLDING THE ORDER AS ERRON EOUS. HE SUBMITTED THAT EXPLANATION-2 INSERTED IN SECTION 263 W.E.F. 01.06.2015 IS NOT APPLICABLE IN THE PRESENT CASE, B ECAUSE INQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN SUPPORT, H E RELIED UPON THE VARIOUS DECISIONS OF THE TRIBUNAL AND ALSO THE JUDGMENT OF HONBLE DELHI HIGH COURT. 6. ON THE OTHER HAND, LD. CIT-DR STRONGLY RELIED UPON THE OBSERVATION OF THE LD. CIT AND SUBMITTED THAT THE P OINTS WHICH HAS BEEN RAISED IN THE SHOW CAUSE NOTICE HAVE NEITHER BEEN EXAMINED BY THE ASSESSING OFFICER NOR HAVE BEE N INQUIRED, AND THEREFORE, SUCH AN ASSESSMENT ORDER W ITHOUT CARRYING OUT PROPER INQUIRY IS DEEMED TO BE ERRONEO US AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN HIS WRIT E UP, HE HAS CITED CATENA OF JUDGMENTS, THE LIST OF WHICH AS UND ER: I.T.A. NO.2055/DEL/2019 9 1. DENIEL MERCHANT PVT. LTD. VS. ITO (APPEAL NO.2396/2 017 (SC) 2. MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC) 3. RAJMANDIR ESTATES (P) LTD. VS. PCIT (2016) 386 ITR 162 (CALCUTTA) 4. RAJMANDIR ESTATES (P) LTD. VS. PCIT (2017) 77 TAXMA NN.COM 285 (SC) 5. SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WO RKS VS. CIT (1998) 231 ITR 53 (SC) 6. CIT VS. AMITABH BACHCHAN 384 ITR 200 DATED MAY 11, 2016 (SC) 7. PTC IMPEX (INDIA) PVT. LTD. VS. CIT, ITA NO.2860/DE L/2010 DATED 03.04.2018 (TRIBUNAL) 8. CIT VS. INFOSYS TECHNOLOGIES LTD., 341 ITR 293 (KAR .) 9. GEE VEE ENTERPRISES VS. ADDL. CIT, 99 ITR 375 (DEL. ) 10. PERFETTI VAN MELLE INDIA PVT. LTD., ITA NO.3046/DEL /2016 FOR A.Y. 2009-10 ORDER DATED 11.01.2019 (DELHI.) 11. RAMESH KUMAR, ITA NO.1982/DEL/2018 FOR ASSESSMENT Y EAR 2014-15 DATED 25.01.2019. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER A S WELL AS MATERIAL REFERRED TO BEFORE US. IT IS A TRITE POSIT ION OF LAW THAT REVISIONARY JURISDICTION U/S.263 CAN BE EXERCISED O NLY WHEN THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ON LY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF R EVENUE. BOTH THE CONDITIONS ARE NOT MUTUALLY EXCLUSIVE BUT HAVE TO BE SATISFIED TOGETHER. FURTHER EXPLANATION-2 INSERTED BY THE I.T.A. NO.2055/DEL/2019 10 FINANCE ACT, 2015 W.E.F. 01.06.2015, PROVIDES THAT THE ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE; FIRSTLY, THE ORDER IS PASSED WITHOUT MAKING INQUIRI ES OR VERIFICATION; SECONDLY, ORDER IS PASSED WITHOUT INQUIRING INTO TH E CLAIM; THIRDLY, ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY CBDT; AND LASTLY, ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DIRECTION WHICH IS PREJUDICIAL TO THE ASSESSEE REND ERED BY THE HONBLE JURISDICTIONAL HIGH COURT OR HONBLE SUPREME COURT. THUS, IT IS SINE QUO NON THAT FOR TREATING THE ORDER PASSED BY THE ASSESSING OFFICER TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE, THE ORDER PASSED BY THE ASSESS ING OFFICER IS WITHOUT MAKING INQUIRIES OR VERIFICATION OR IS N OT IN ACCORDANCE WITH ORDER/INSTRUCTION PASSED BY THE CBD T OR HONBLE JURISDICTIONAL HIGH COURT OR HONBLE SUPREM E COURT. IT IS ALSO QUITE SETTLED LAW THAT THE LD. CIT WHILE EXERCISING HIS REVISIONARY JURISDICTION U/S. 263 AND REACHING TO A CONCLUSION THAT INQUIRIES OR VERIFICATIONS HAS NOT BEEN DONE B Y THE ASSESSING OFFICER, THEN IT IS INCUMBENT UPON THE CI T HIMSELF TO UNDERTAKE MINIMAL INQUIRY SO AS TO COME TO A CON CLUSION THAT INQUIRY BY ASSESSING OFFICER IS NOT CORRECT OR THE I.T.A. NO.2055/DEL/2019 11 ASSESSMENT ORDER PASSED WAS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. THIS LEGAL POSITION HAS BE EN EXPLAINED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF ITO VS. DG HOUSING PROJECTS LTD., (2012) 343 ITR 329 (DE LHI) AND DIT VS. JYOTI FOUNDATION, 357 ITR 388 (DEL.). AGAIN THIS PRINCIPLE HAS BEEN REITERATED AGAIN IN THE JUD GMENT OF PCIT VS. MODI CARE LTD. IN ITA NO. 759/216, VIDE JUDGMENT AND ORDER DATED 14 TH SEPTEMBER, 2017 . 8. IF HE ANALYZE THE AFORESAID PRINCIPLE OF LAW ON THE FACTS OF THE PRESENT CASE, WE FIND THAT THE ASSESSEE, WHO IS A NON RESIDENT AND CITIZEN OF USA, HAD DECLARED LONG TERM CAPITAL LOSS OF RS.96,25,104/- ON SALE OF VARIOUS PIECES OF LAND TO 32 PARTIES, WHICH WAS DEVOLVED UPON HIM IN FAMILY PART ITION AMONGST BROTHERS AS PER AWARD OF SOLE ARBITRATOR WA Y BACK IN 28.11.1983. THE ASSESSEES CASE WAS SELECTED FOR SC RUTINY PRECISELY TO EXAMINE THE LONG TERM CAPITAL GAIN AND THE CASH DEPOSITS IN THE BANK ACCOUNT. SINCE THE SELECTION O F THE CASE WAS PRECISELY ON SAME ISSUE, THEREFORE, ASSESSING O FFICER HAD ASKED THE ASSESSEE TO SUBMIT VARIOUS DOCUMENTS AND DETAILS ALONG WITH BANK STATEMENT, COPY OF SALE DEEDS, VALU ATION REPORT, ETC. TO ASCERTAIN THE VALUE OF THE LAND AS ON 01.04.1981 AND ALSO TO VERIFY THE SOURCE OF CASH DE POSITS FROM THE SALE DEED. IN RESPONSE, THE ASSESSEE VIDE REPLY DATED 03.11.2016 SUBMITTED A VALUATION REPORT OF THE GOVE RNMENT APPROVED VALUER FOR DETERMINING THE FAIR MARKET VALU E OF THE PROPERTY AS ON 01.04.1981. IN THE SAID VALUATION RE PORT, THE REGISTERED VALUER HAD MENTIONED THAT THOUGH NO SALE I.T.A. NO.2055/DEL/2019 12 TRANSACTION OF THE SIMILAR LAND IN THE LOCALITY WAS MADE AVAILABLE FOR THE YEAR 1981, HOWEVER VARIOUS INQUIR IES WERE MADE FROM THE PROPERTY DEALERS AND THE PERSONS RESI DING IN THE LOCALITY AND AFTER DUE INQUIRY AND VERIFICATION THE LAND RATE WAS FOUND TO BE AROUND RS. 1200 TO RS. 1400 PE R SQ. MTR FOR AREA ON THE MAIN ROAD AND BETWEEN RS.500 TO 560 FOR THE BACK SIDE OF THE ROAD. AFTER EXAMINING THE LOCATION OF THE LAND, HE HAS VALUED THE LAND NEAR THE ROAD AT RS.12 25 PER SQ. MTR AND THE LAND AT THE BACK SIDE WAS VALUED AT RS. 500 PER SQ. MTR. HE ALSO NOTED THAT OUT OF 16561 SQ. MTR, T HE SALABLE LAND WAS ONLY 13670 SQ. MTR AND HE HAS DETERMINED T HE VALUE AS ON 01.04.1981 AT RS.77,29,410/-. ALONG WITH VALU ATION REPORT, HE HAS ALSO GIVEN THE LAY OUT PLAN OF THE M AP OF THE LAND. APART FROM THAT, THE COPY OF SALE DEED OF ALL THE 32 BUYERS HAVE ALSO BEEN FILED WHEREIN THE SALE CONSID ERATION RECEIVED AS PER THE CIRCLE RATE AND ALSO THE CALCUL ATION OF AMOUNT GIVEN IN CASH AND CHEQUE HAS BEEN DULY MENTI ONED. THE CASH RECEIPT ON THE SALE OF SUCH LAND HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WITH PNB, ROORK EE. THE ASSESSEE HAS ALSO GIVEN THE DETAIL OF THE DEUTSCHE BANK, NEW DELHI ALONG WITH COPY OF BANK STATEMENT SHOWING THE NATURE OF TRANSACTIONS. IT WAS CATEGORICALLY MENTIONED THA T THE CASH RECEIVED ON THE SALE OF LAND AS MENTIONED IN THE SA LE DEED WERE DEPOSITED IN THE PNB, ROORKEE. THEREAFTER, THE ASSESSING OFFICER HAD ASKED FOR FURTHER DETAILS, IN RESPONSE TO WHICH THE ASSESSEE HAD SUBMITTED THE MANNER IN WHICH LAND WAS INHERITED FROM HIS FOREFATHERS AND HOW IT WAS ACQUI RED MUCH I.T.A. NO.2055/DEL/2019 13 BEFORE 01.04.1981. THE DETAILS OF THE PARTITIONS AM ONGST THE BROTHERS, ALONG WITH ARBITRATION AWARD WHEREBY VARI OUS PIECES OF LAND WERE INHERITED BY ALL THE BROTHERS WERE ALS O SUBMITTED. EXPLAIN REGARDING AMOUNT RECEIVED ON SALE CONSIDERA TION AND AREA OF LAND SOLD, CIRCLE RATE AND THE AMOUNT RECEI VED AS PER THE CIRCLE RATE ALONG WITH DETAILS OF CASH RECEIVED WERE ALSO FURNISHED WHICH WERE ALSO TALLIED FROM THE BANK ACC OUNT. IF THE CASH DEPOSITS IN THE BANK ACCOUNT ARE DULY RECO NCILED AND MATCHED WITH THE SALE DEED WHEREIN THE CASH CONSIDE RATION HAS BEEN MENTIONED, THEN THE SOURCE OF THE CASH DEP OSIT STANDS APPROVED. 9. AS REGARDS THE OBSERVATION OF THE LD. CIT THAT T HERE WAS CERTAIN DISCREPANCIES IN THE VALUATION REPORT, THE LD. CIT COULD NOT HAVE SIMPLY REJECTED THE VALUATION REPORT ON HI S OWN AND IN CASE IF HE HAD ANY DOUBT, THEN HE SHOULD HAVE CA RRIED OUT SOME MINIMAL INQUIRY HIMSELF TO FIND OUT, WHETHER F AIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER AS ON 01.04.1981 IS ERRONEOUS OR NOT AND THEN HE COULD HA VE HELD THE SAID REPORT IS NOT RELIABLE. SIMPLY BASED ON CE RTAIN PREMISE AND PRESUMPTION LD. CIT CANNOT REJECT THE V ALUATION REPORT VALUED BY AN EXPERT DULY APPROVED BY THE GOV ERNMENT OF INDIA. FROM THE PERUSAL OF THE IMPUGNED ORDER, I T APPEARS THAT ONE OF THE MAIN CHARGES OF THE LD. CIT IS THAT , THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 HAS BE EN INFLATED FOR WHICH NO INQUIRY HAS BEEN DONE BY THE ASSESSING OFFICER. FIRST OF ALL, IF THE GOVERNMENT APPROVED VA LUER ON THE BASIS OF HIS OWN INQUIRY HAS ASCERTAIN THE FAIR MAR KET VALUE I.T.A. NO.2055/DEL/2019 14 AND HAS GIVEN THE RANGE AND HAS ADOPTED THE MINIMUM RATE PREVAILING AT THAT TIME, THEN TO HOLD THAT SOME FUR THER INQUIRY SHOULD HAVE BEEN DONE IS NOT CORRECT. AND IF HE HAD ANY DOUBT THEN IT WAS INCUMBENT UPON THE LD. CIT TO HIM SELF VERIFY AND COULD HAVE CONDUCTED HIS OWN INQUIRY TO BRING SOMETHING ON THE RECORD THAT THE VALUATION ADOPTED BY THE REGISTERED VALUER IS NOT TENABLE OR HAS BEEN VALUED AT A HIGHER RATE. 10. AS FAR AS THE DISCREPANCIES OF THE AREA OF LAND MENTIONED IN THE REGISTERED VALUERS REPORT, ASSESSE E BEFORE THE LD. CIT HAS EXPLAINED IN THE FOLLOWING MANNER: I) THE ASSESSEE HAD INHERITED THE GROVE LAND MEASUR ING 16,561 SQ MTR, WHEREAS THE SALEABLE AREA WAS ONLY 13,670 S Q. MTR. AFTER LEAVING THE LAND FOR MEASURING 2,891 SQ. MTR. FOR THE COMMON UTILITIES WHICH RESULTED IN LAND USE OF APPR OX. 121.15% OF THE SELLABLE AREA. WHILE COMPUTING THE CAPITAL G AINS THE COST OF ACQUISITION WAS TAKEN BY GROSSING UP THE SALEABL E AREA OF THE UNIT, CONCERNED. II) IN REGARD TO COST OF ACQUISITION FOR SALE OF PL OT SIZE OF 14.600SQ. MTR., IT IS STATED THAT THIS PARTICULAR P LOT IS NOT THE PART OF VALUATION REPORT. IT WAS SEPARATE AND INDEP ENDENT PLOT LOCATED AT 30 CIVIL LINES, ROORK.EE, TEHSIL ROORKEE , DISTT. HARIDWAR, UTTRAKHAND. THE VALUATION REPORT IS RELAT ING TO A LARGE PIECE OF LAND WHICH WAS LOCATED OUTSIDE THE L OCALITY. THIS PARTICULAR PIECE OF LAND WHICH WAS WITHIN THE LOCAL ITY WAS SOLD FOR A TOTAL CONSIDERATION OF RS. 13.50 LACS I.E. TH AT IS @ OF 11780/ SQ. MTR. THE AFORESAID SALE CONSIDERATION WA S AT MUCH HIGHER SALES CONSIDERATION OR EVEN NOTIFIED RATE FO R THE AREA FOR I.T.A. NO.2055/DEL/2019 15 WHICH THE VALUATION REPORT RELATE. IN FACTS CONSIDE RING THE LOCATION OF THIS PARTICULAR PLOT FAIR MARKET VALUE AS ON 01/04/1981 WAS EVEN MORE THAT A RS. 1225/SQ. MTR. T HAT IS THE HIGHER RATE MENTIONED IN THE VALUATION REPORT. SINCE THIS WAS A SMALL PIECE OF LAND NO SEPARATE VALUATION REP ORT WAS OBTAINED AND THE RATE 1000/SQ. MTR. WAS ADOPTED ON A CONSERVATIVE SIDE AND IN FACT HIGHER AMOUNT OF CAPI TAL GAIN WAS OFFERED. III) IN REGARD TO THE AREA WHICH WAS AVAILABLE WITH THE ASSESSEE FOR SALE AS PER AWARD/FAMILY SETTLEMENT IN 2013, WHEN THE VALUATION REPORT WAS OBTAINED WAS THE AREA AS MENTIONED IN THE VALUATION REPORT. MAP OF THE AREA WHICH WAS AVAILABLE TO THE ASSESSEE ON THE BASIS OF VALUATION REPORT WAS GIVEN BY THE VALUER IS ALSO ATTACHED AS ANNEXURE 5 FOR YOUR READY REFERENCE. ALL THE SALE TRANSACTION MADE DURI NG THE YEAR FOR WHICH VALUATION REPORT WAS GIVEN BY THE VALUER AND THE SAME DULLY HAS BEEN RECONCILED BY THE ASSESSING OFF ICER. IV) IN REGARD TO THE OBSERVATION THAT THE ASSESSEE HAS SOLD FRONT AREA OF 2305.47 SQ. MTR. AS AGAINST FRONT ARE A MENTIONED IN THE VALUATION REPORT OF 2172 SQ. MTR., WE MAY SU BMIT THAT FRONT AREA SOLD AS PER THE SALE DEEDS IN ONLY 1902. 99 SQ. MTRS THE AFORESAID FIGURE OF 2305.47 SQ. MTRS. WAS INCLU DING THE COMMON AREA. YOU WILL KINDLY APPRECIATE THAT THOUGH IN THE SALE DEED THE AREA WAS MENTIONED ON NET BASIS, THE ASSESSEE HAD ALSO UTILIZED THE AREA ON COMMON FACILITIES LIK E ROADS ETC. AND THAT AREA WAS ALSO BE CONSIDERED FOR THE PURPO SE OF DETERMINING THE CAPITAL GAIN. IT IS ALSO SLATED THA T SALE CONSIDERATION EVEN ON THE BASIS OF GROSS AREA I.E. 2305.47 SQ.MTR. ON AVERAGE BASIS FOR THE FRONT AREA COMES R S. 6,678/- I.T.A. NO.2055/DEL/2019 16 AS AGAINST AVERAGE RATE OF SALE CONSIDERATION OF OT HER AREA AT RS. 5,009/ -PER SQ. MTRS. THE VALUER HAD MENTIONED THE FRONT AREA TAKING IN STRICT VIEW ABOUT IT BUT ACTUALLY TH E FRONT AREA SOLD BY THE ASSESSEE INCLUDING THE COMMON AREA WAS HIGHER AND SINCE THE ASSESSEE HAD CHARGED HIGHER RATE FROM THE CUSTOMERS FOR THE FRONT AREA, COST OF ACQUISITION H AS BEEN CONSIDERED AT A HIGHER RATE IN RESPECT OF TOTAL ARE A SOLD INCLUDING THE COMMON AREA. IT MAY FURTHER BE SLATED THAT AS PER DETAILS ALREADY SUBMITTED, THERE WAS CAPITA LOSS OF RS. 96,25,108/- WHICH HAS NOT EVEN BEING EARNED OVER FO R SET OFF IN SUBSEQUENT YEARS IN TERMS OF PROVISIONS OF SECTION 80 OF THE ACT. THOUGH THE ASSESSEE HAS CORRECTLY APPLIED THE RATE OF 1225 AGAINST SALE CONSIDERATION OF THE FRONT AREA, EVEN AFTER A MINOR ADJUSTMENT IS MADE AS PER YOUR OBSERVATION THIS WIL L NOT MAKE ANY DIFFERENCE IN THE AMOUNT OF TAXABLE INCOME AND THEREFORE, IT CANNOT BE SAID THAT ORDER PASSED BY THE ASSESSING O FFICER IS PREJUDICIAL TO THE INTEREST OF REVENUE. ON SUCH AN EXPLANATION THERE IS NO REBUTTAL OR ANY REASONS GIVEN TO REJECT SUCH AN EXPLANATION WHICH H AS BEEN DULY EXPLAINED PROPERLY. THUS, THIS GROUND TAKEN BY THE LD. CIT CANNOT BE UPHELD. 11. LASTLY, WITH REGARD TO THE FACT THAT NO TDS WAS DEDUCTED BY ANY OF THE PURCHASERS, FIRST OF ALL, IS NOT RELE VANT TO THE ISSUE ARISING FROM THE ASSESSMENT ORDER; AND SECOND LY, NOWHERE IT HAS BEEN BROUGHT ON RECORD BY THE LD. CI T THAT ANY PARTICULAR SALE OF LAND HAD GONE BEYOND THE THRESHO LD OF DEDUCTING TDS, I.E., MORE THAN RS.50 LACS. THUS, TH ERE WAS NO OCCASION TO INVOKE OR INITIATE ANY PROCEEDINGS U/S. 201. I.T.A. NO.2055/DEL/2019 17 12. SIMPLY SETTING ASIDE THE ASSESSMENT ORDER WITHOUT UNDERTAKING ANY PRIMA FACIE MINIMAL INQUIRY TO HOLD THAT VERIFICATION AND INQUIRY CONDUCTED BY THE ASSESSING OFFICER IS NOT CORRECT OR INADEQUATE; IT CANNOT BE HELD THAT A SSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THIS HAS BEEN HELD SO IN THE CATENA OF JUDGMENT BY THE HONBLE JURISDICTIONAL HIGH COURT AS CITED ABOVE. H ERE IN THIS CASE, THE LD. CIT HAS FAILED TO CONDUCT ANY KIND OF INQUIRY OR VERIFICATION HIMSELF AND HAS SIMPLY ON PREMISE HAS EXPRESSED HIS OPINION THAT ASSESSING OFFICER SHOULD HAVE COND UCTED INQUIRY IN A PARTICULAR MANNER. SUCH AN ACTION BY T HE LD. CIT CANNOT BE UPHELD UNDER EXPLANATION 2 TO SECTION 263. EXPLANATION 2 DOES NOT ENVISAGE THAT ASSESSING OFFICER SHOULD GO TO THE LAST POINT OF INQUIRY ON THE ISSUE. WHAT IS EXPECTED FROM THE ASSESSING OFFICER TO CARRY OUT REASONABLE AND PRAGMATIC INQUIRY SO AS TO JUSTIFY HIS ACTIONS AND WHICH MANIFESTS HIS APPLICATION OF MIND. IF INQUIRY IS FO UND TO BE FLEETING OR EYEWASH THEN IT CAN BE HELD THAT INQUIR Y HAS NOT BEEN DONE BY THE ASSESSING OFFICER. HERE IN THIS CA SE, WE FIND THAT ASSESSING OFFICER HAS EXAMINED ALL THE RELEVAN T DOCUMENTS ASKED BY HIM FROM TIME TO TIME AND AFTER VERIFYING THE DOCUMENTS AND COPY OF SALE DEED HE HAS REACHED TO A CONCLUSION THAT THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT HAS BEEN EXPLAINED WHICH WERE TALLYING FROM THE COPY OF SALE DEEDS. EVEN THE COMPUTATION OF LONG TERM CA PITAL GAIN/LOSS WAS FOUND TO BE CORRECT IN VIEW OF THE DO CUMENTS FURNISHED AND FROM THE APPROVED VALUERS REPORT. IF THE I.T.A. NO.2055/DEL/2019 18 ASSESSEE HAS SOLD THE LAND AT A PRICE MENTIONED IN THE SALE DEED, THEN ONUS IS NOT ON THE ASSESSEE TO SHOW THAT FROM WHERE THE PURCHASERS HAVE PAID THE MONEY. THUS, THE ONUS AS CAST UPON THE ASSESSEE STOOD DULY DISCHARGED AND ASSESSING OFFICER HAS CORRECTLY ALLOWED THE CLAIM O F LONG TERM CAPITAL LOSS. ACCORDINGLY, REVISIONARY ORDER PASSED U/S.263 BY THE LD. CIT CANCELLING THE ASSESSMENT ORDER IS N OT SUSTAINABLE AND HENCE IS QUASHED. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2019. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 11 TH OCTOBER, 2019 PKK: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR