DCIT, Ernakulam V. Sri.Anil Kumar Sharma, Cochin

ITA 253/COCH/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7806 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 04-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2014
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: R KRISHNAN
• Keywords: Gift; Cost of acquisition; Fair market value; Valuation report; Onus to prove; Retraction; Revised return
• Section: 153A; 132; 15

Judgement Text

ITA NOS.252-254/COCH/2014 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO S.252-254/COCH/2014 ( #$ % /ASSESSMENT YEARS : 2007-08-2009-10) THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. VS SHRI ANIL KUMAR SHARMA, XII/333, COCHIN COLLEGE ROAD, COCHIN-2. ( &' &' &' &' /REVENUE- APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /ASSESSEE -RESPONDENT) & . . ' ./PAN NO. AFAPS 5558Q &' * + /REVENUE BY SHRI SHANTAM BOSE, CIT(DR) ( ) &' * + /ASSESSEE BY SHRI R. KRISHNAN, CA ,- * ./ / DATE OF HEARING 15/06/2016 0 % * ./ /DATE OF PRONOUNCEMENT 01/08/2016 1 1 1 1 /ORDER PER BENCH: THESE THREE APPEALS OF THE REVENUE ARISE FROM THREE DIFFERENT ORDERS OF THE LD. CIT(A)-I, KOCHI DATED 21/03/2014 FOR THE ASSESSMENT YEARS 2007-08 TO 2009-10. 2. WE SHALL TAKE UP THE APPEAL OF THE REVENUE IN I.T.A. NO. 252/COCH/2014 FOR THE ASSESSMENT YEAR 2007-08 AS UNDER: ITA NOS.252-254/COCH/2014 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-R ESPONDENT IS ENGAGED IN THE REAL ESTATE BUSINESS. A SEARCH ACTION U/S. 132 OF T HE ACT WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 25/09/2008. CONSEQUENTL Y, IN RESPONSE TO NOTICE U/S. 153A DATED 26/02/2009, THE ASSESSEE DECLARED A TOTA L INCOME OF RS.3,30,67,800/- FOR ASSESSMENT YEAR 2007-08. THE ASSESSMENT U/S. 15 3A WAS CONCLUDED VIDE ORDER DATED 29.12.2010 AND THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.4,37,40,500/- BY THE ASSESSING OFFICER. 3. AGGRIEVED BY THE ORDER DATED 29.12.2010, THE AS SESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO BY ORDER DATED 21.03.2014 ALL OWED THE APPEAL OF THE ASSESSEE. 4. THE REVENUE IS IN APPEAL BEFORE US AND RAISED T HE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APP EALS) IS OPPOSED TO LAW, WEIGHT OF EVIDENCE AND FACTS OF THE CASE. 2. THE CIT(APPEALS) ERRED IN ADMITTING THE APPEAL WITHOUT NOTICING THE FACT THAT THE APPEAL IS NOT MAINTAINABLE AS PER SECTION 249(4)OF THE I.T. ACT SINCE THE ASSESSEE HAD NOT PAID THE TAX DUE ON THE INCOME RETURNED BY HIM. THERE IS A SHORTAGE OF PAYMENT OF TAX OF RS.10,00,000/- O N THE INCOME RETURNED BY THE ASSESSEE. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(APPEALS) ERRED IN DELETING THE DISALLOWANCE OF INTEREST PAID ON BANK LOAN AMOUNTING TO RS.1,83,383/-, RS.5,45,903/- AND RS.2,03,408/- WITH OUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. ITA NOS.252-254/COCH/2014 3 A. THE ABOVE ADDITIONS HAVE BEEN DELETED BY THE CIT (A) ON THE GROUND THAT THE LOAN ON WHICH THE IMPUGNED INTEREST CLAIME D WAS UTILIZED FOR PURCHASE OF AGRICULTURAL LAND AT PANABUKADU, VALLAR PADAM AND THE SALE PROCEEDS OF THIS AGRICULTURAL LAND HAVE BEEN RE-INV ESTED FOR THE PURCHASE OF LAND AT NETTOOR WHICH IS USED IN BUSINESS AND SHOWN AS CLOSING STOCK IN THE BOOKS OF ACCOUNT. HOWEVER, NO PIAUSIBLE EVIDENCE H AS BEEN BROUGHT ON RECORDS BY THE CIT(APPEALS) IN THIS REGARD. B. MOREOVER, THE CIT(APPEALS) FAILED TO NOTICE THA T TRANSACTION IN RESPECT OF LAND AT VALLARPADAM IS NOT AN INVESTMENT BUT AN ADV ENTURE IN THE NATURE OF TRADE (35 ITR 594)(SC) PARTICULARLY WHERE THE ASSES SEE IS IN REAL ESTATE BUSINESS. THEREFORE, THE PROFIT ON SALE OF SUCH PR OPERTIES SHOULD HAVE BEEN ASSESSED AS INCOME FROM BUSINESS WHICH WAS OMITTED TO BE ASSESSED BY THE ASSESSING OFFICER (A.O.)OR THE CIT(APPEALS), WHOSE POWERS ARE CO-TERMINUS WITH THAT OF THE A.O. AS PER SECTION 251 OF THE I.T . ACT. THE CIT(APPEALS) OUGHT TO HAVE NOTICED THAT THE LAND AT VALLARPADAM PURCHASED IN MAY 2006 WAS SOLD IN JANUARY 2007 AND THE PROFIT ON SAL E OF THIS LAND WAS CLAIMED BY THE ASSESSEE AS EXEMPT BEING AGRICULTURA L LAND WAS ADMITTED BY THE ASSESSING OFFICER WITHOUT NOTICING THE FACT THAT THE ASSESSEE IS A REAL ESTATE DEALER. 4. THE CIT(APPEALS)ERRED IN DELETING THE DISALLOWA NCE OF ADDITIONAL PAYMENT OF RS.72,00,000/- CLAIMED TO HAVE BEEN MADE TO SHRI K.J. ANTO FOR PURCHASE OF LAND WITHOUT CONSIDERING THE ISSUE IN I TS PROPER PERSPECTIVE AS REPORTED IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT. A. ACCORDING TO THE CIT(APPEALS), THE ASSESSING OFF ICER HAD NOT PROPERLY ANALYZED THE FACTS AND CIRCUMSTANCES AND EVIDENCE P RODUCED BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEV ER, THE CIT(APPEALS) FAILED TO NOTICE THAT THE RECEIPTS FOR PAYMENT OF A DDITIONAL AMOUNT OF RS.72,00,000/- PRODUCED BY THE ASSESSEE ARE NOT FRO M THE REAL OWNERS OF THE LANDED PROPERTY AS PER THE AGREEMENT BETWEEN THE AS SESSEE AS PURCHASER AND SHRI K.J. ANTO, THE POWER OF ATTORNEY HOLDER, B UT FROM DIFFERENT PERSONS. THE NEXUS WITH THE IMPUGNED SUMS PAID TO PERSONS NO T FALLING WITHIN THE AGREEMENT WITH SHRI K.J. ANTO AND THE REAL OWNERS O F THE LANDED PROPERTY HAS NOT BEEN PROVED BY THE CIT(APPEALS). B. THE CIT(APPEALS)ERRED IN ACCEPTING ASSESSEES CL AIM THAT SINCE SHRI K.J. ANTO IS THE POWER OF ATTORNEY HOLDER OF THE LAND PU RCHASED BY THE ASSESSEE, THE TOTAL PURCHASE COST GIVEN BY THE ASSESSEE WOULD ULTIMATELY REACH IN THE HANDS OF THE POWER OF ATTORNEY HOLDER. C. THE CIT(APPEALS)DECIDED THAT THE REVISED RETURN FILED BY SHRI K.J. ANTO FOR THE A.Y. 2007-08 ON 22.9.2011 ITSELF, BY INCREASING INCOME SUBSTANTIALLY, IS A ITA NOS.252-254/COCH/2014 4 PROOF WHICH SHOWS THAT SHRI ANTO HAD RECEIVED ADDIT IONAL SALE CONSIDERATION. THE CIT(APPEALS)HAS ARRIVED AT THIS CONCLUSION WITHOUT BRINGING ANY CORROBORATIVE FOR THE SAME AND WITHOUT VERIFYING WHETHER THE REVISED RETURN IS VALID WHETHER TAX IS PAID AND THE SOURCE OF INCOME DISCLOSED D. THE CIT(APPEALS) FAILED TO NOTICE THAT SHRI ANTO IS ONLY THE POWER OF ATTORNEY HOLDER OF THE SELLERS AND THEREFORE, HE IS NOT THE ULTIMATE RECEIVER OF ANY ADDITIONAL CONSIDERATION. IT IS BEYOND HUMAN PR OBABILITIES THAT A MEDIATOR/POWER OF ATTORNEY HOLDER OF LAND TRANSACTI ON WOULD GET THE ENTIRE SALE CONSIDERATION AND HE WOULD FILE A REVISED RETU RN SHOWING INCOME FROM CAPITAL GAIN ACCORDINGLY. 5. THE CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS.25,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION RECE IVED WITHOUT NOTICING THE FACTS BROUGHT ON RECORD AND THE REMAND REPORT S UBMITTED BY THE A.O. IN APPEAL, THE ASSESSEE CLAIMED THAT THE AMOUNT OF RS.25 LAKHS WAS REPAID BY THE SELLER DUE TO THE SHORTAGE IN THE PURCHASED AREA OF LAND BECAUSE OF A PATHWAY CROSSING THROUGH THE PARTICULAR PIECE OF LAND WHICH WAS ACCEPTED BY THE CIT(APPEALS). HOWEVER, THE EXTENT O F THIS PATHWAY VALUED AT RS.25 LAKHS IS NOT MENTIONED ANYWHERE IN THE ORD ER. IT IS UNBELIEVABLE THAT ANY PRUDENT BUSINESSMAN OR EVEN A COMMON MAN WILL P URCHASE A PROPERTY WITHOUT MEASURING THE TOTAL EXTENT OF LAND. 6. THE CIT(APPEALS) FAILED TO NOTICE THAT THE ASSE SSEE IS ONLY A PROCURER WHO GETS COMMISSION ON TRANSACTION AND NOT A PURCHASER OF LAND. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. 5. IN GROUND NO. 2, THE REVENUE HAS RAISED THE CO NTENTION THAT THE APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS NOT MAINTAIN ABLE IN VIEW OF SECTION 249(4) OF THE ACT AS THE ASSESSEE HAD NOT PAID TAX ON THE RETURNED INCOME. THE ASSESSEE HAS FILED THE ACKNOWLEDGMENT OF RETURN AS WELL AS COMPUTATION OF INCOME FOR THE RELEVANT ASSESSMENT YEAR TO ELUCIDAT E THAT THE TAX ON THE ITA NOS.252-254/COCH/2014 5 RETURNED INCOME HAS BEEN PAID. THE PROVISION OF SE CTION 249(4) IS THEREFORE NOT APPLICABLE. GROUND NO. 2 OF THE REVENUE IS ACCORDI NGLY DISMISSED. 6. GROUND NO. 3 RELATES TO DISALLOWANCE OF INTERES T PAID ON BANK LOAN AMOUNTING TO RS.1,83,383/-, RS.5,45,903/- AND RS.2, 43,408/-. THE ASSESSEE HAD OBTAINED A BANK LOAN OF RS. 1 CRORE IN THE NAME OF ONE OF HIS ASSOCIATE SHRI K.B. RADHAKRISHNAN. ANOTHER LOAN OF RS.19,00,000/- WAS T AKEN BY THE ASSESSEE IN THE NAME OF HIS WIFE. A FURTHER LOAN OF RS.50,00,000/- WAS TAKEN BY THE ASSESSEE IN HIS OWN NAME. THE SAID LOANS WERE PROCURED TO PURCHASE THE LAND AT PANAMBUKADU. ONE HALF OF THE LAND WAS THEREAFTER, P URCHASED BY THE ASSESSEE AND THE OTHER HALF WAS PURCHASED BY SHRI K.B. RADHA KRISHAN FOR A TOTAL AMOUNT OF RS.3,23,24,524/-. THE SAID LAND WAS SUBSEQUENTL Y SOLD BY THE ASSESSEE TO M/S. ABAD BUILDERS PVT. LTD. IN JANUARY 2007 AND THE ENT IRE SALE PROCEEDS WERE UTILIZED TO PURCHASE THE LAND AT NETTOOR. THE SAME IS SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET. THE ASSESSING OFFICER WAS OF TH E VIEW THAT SINCE NO CAPITAL GAIN HAS BEEN DECLARED BY THE ASSESSEE ON THE SALE OF LAND ON THE GROUND THAT IT WAS AN AGRICULTURAL LAND, THE INTEREST ON LOAN I S NOT ALLOWABLE FROM THE INCOME OTHER THAN AN AGRICULTURAL INCOME. 7. SIMILAR IS THE CASE PERTAINING TO TWO OTHER LO AN TRANSACTIONS FOR PURCHASE OF LAND WHEREIN THE ASSESSEE HAD DEBITED INTEREST AMOU NTING TO RS.4,69,871/- AND RS.5,45,905/-. IT IS THE CASE OF THE ASSESSEE BEFO RE THE ASSESSING OFFICER AS WELL AS ITA NOS.252-254/COCH/2014 6 THE LD. CIT(A) THAT THE LOAN WAS NOT REPAID DURING THE YEAR AND THE SAME WAS USED FOR PURCHASE OF THE LAND AT NETTOOR FOR REAL ESTATE BUSINESS OF THE ASSESSEE. THE ASSESSEE FURTHER RELIES UPON THE CASH FLOW STATEMENT SUBMITTED DURING THE COURSE OF ASSESSMENT VIDE LETTER DATED 1 6/11/2010. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE FACTS OF THE CASE. THE ONLY FACT WHICH IS TO BE ESTABLISHED IS WHETHER THE ASSESSEE HAS USED THE LOAN PROCURED FROM BANK FOR BUSINESS PURPOSES. THE LD. CIT(A) HAS SIMPLY RELIED UPON THE FACT THAT SINCE THE ASSESSEE HAS SHOWN IT AS ST OCK IN TRADE IN BALANCE SHEET, THE SAME WOULD AMOUNT TO UTILIZATION OF LOAN FOR BU SINESS PURPOSES. IT IS SEEN THAT APART FROM THE BALANCE SHEET, THE ASSESSEE HAS FAIL ED TO PROVIDE ANY EVIDENCE TO ESTABLISH THAT THE LAND WAS INFACT PURCHASED FOR REAL ESTATE BUSINESS OF THE ASSESSEE. SOLE RELIANCE CANNOT BE PLACED ON THE BAL ANCE SHEET. IN VIEW THEREOF, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS GROU ND AND REMAND THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE WOULD BE GIVEN AN OPPORTUNITY TO PRESENT EVIDENCE IN SUPPORT OF HIS CLAIM THAT TH E LAND WAS PURCHASED FOR REAL ESTATE BUSINESS OF THE ASSESSEE. GROUND NO. 3 IS AL LOWED FOR STATISTICAL PURPOSES. 9. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF ADDITIONAL PAYMENT OF RS.72,00,000/- CLAIMED TO HAVE BEEN PAID BY THE ASSESSEE TO SHRI K.J. ANTO FOR PURCHASE OF LAND. F OR THE PURCHASE OF LAND AT NETTOOR, THE ASSESSEE HAD MADE AN ADDITIONAL PAYM ENT OF RS. 72 LACS. THE ITA NOS.252-254/COCH/2014 7 SAID PAYMENT WAS CLAIMED TO 5 PERSONS OTHER THAN SH . K.J. ANTO WITH WHOM THE AGREEMENT WAS ENTERED INTO. DURING THE COURSE OF A SSESSMENT SHRI K.J. ANTO DENIED HAVING RECEIVED SUCH PAYMENT OF RS. 72 LACS FROM THE ASSESSEE. THE ASSESSEE CLAIMED THAT SHRI K.J. ANTO TO WHOM THE PA YMENTS WERE MADE WAS INFACT THE POWER OF ATTORNEY HOLDER OF THOSE 5 PERS ONS. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE SHRI K.J. ANTO HAS DENIED TH E RECEIPT OF PAYMENT, A DISALLOWANCE OF RS.72,00,000/- IS TO BE MADE IN THE HANDS OF THE ASSESSEE. 10. IN APPEAL, THE CIT(A) ALLOWED THE CONTENTION R AISED BY THE ASSESSEE ON THE GROUND THAT THE STATEMENT OF SHRI K.J. ANTO CANNOT BE RELIED UPON AS HE HAD CHANGED HIS STANCE ON TWO OCCASIONS. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE FACTS OF THE CASE. THE ASSESSEE HAS SUBMITTED THAT THE AFORESAID PAYMENT M ADE TO SH. K.J. ANTO BY AN AGREEMENT ENTERED INTO WITH RESPECT TO THE AFORESAI D PROPERTY WHEREIN THE FACTUM OF PAYMENT IS MENTIONED. HE HAS FURTHER RELI ED UPON THE RECEIPT SHOWING CHEQUE NOS. AND NAME OF PARTIES, STATING THAT THE S AME IS TOWARDS PART CONSIDERATION OF NETTOOR PROPERTY. THE ASSESSEE HAS ALSO REFERRED TO ITS BANK ACCOUNT STATEMENT SHOWING DEBIT OF THE AFORESAID AM OUNT AS WELL AS THE COPY OF CHEQUES ISSUED. IN FACT, THE ASSESSING OFFICER H AS RELIED UPON THE STATEMENT OF SHRI K.J. ANTO AND NOT APPRECIATED THE DOCUMENTARY EVIDENCE AS MENTIONED HEREINABOVE W.R.T. RS.72 LACS STATED TO BE PAID FOR PURCHASE OF PROPERTY. THERE IS ITA NOS.252-254/COCH/2014 8 NO DISPUTE TO THE FACT THAT MR. K.J. ANTO HAS DENIE D HAVING RECEIVED SUCH PAYMENT. THE ASSESSEE HAS NEITHER ASKED FOR ANY CR OSS EXAMINATION OF MR. K.J. ANTO NOR HAS SUBMITTED ANY STATEMENT OF RETRACTION BY MR. K.J. ANTO INSPITE OF THE FACT THE ASSESSEE WAS CONFRONTED WITH THIS FACT . ALSO, THERE IS A CLAIM OF THE ASSESSEE THAT HE IS POWER OF ATTORNEY HOLDER OF 5 P ERSONS. NO INFORMATION OR ANY AFFIDAVIT IN THIS REGARD WAS PLACED BEFORE ANY OF T HE AUTHORITIES BELOW OR EVEN BEFORE US. SIMPLY PLACING THE AGREEMENT, WHICH ITS ELF WAS DENIED BY MR. K.J. ANTO BY NOT HAVING RECEIVED ANY PAYMENT, CANNOT HEL P THE ASSESSEE. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEP TING THE CLAIM OF THE ASSESSEE AND ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REV ERSED AND WE CONFIRM THE ORDER OF THE ASSESSING OFFICER AND REASONINGS GIVEN BY HIM. THUS GROUND NO. 4 OF THE REVENUE IS ALLOWED. 12. IN GROUND NOS. 5&6 THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF COMMISSION RECEIVED OF RS. 25 LACS BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, HE HAD PURCHASED 75 CENTS OF LAND OWNED BY MR. LAWRENCE AND MR. MICHAEL FOR RS.7,24,20,000/-. HOWEVER, THE ASSESSEE HAD PAID TOTAL CHEQUE AMOUNTING TO RS.7,49,50,000/- TO BOTH THE BU YERS. IT IS THE CASE OF THE ASSESSEE THAT THE EXCESS AMOUNT OF RS.25,00,000/- W AS RETURNED BY THE BUYERS AS THERE WAS A PUBLIC PATH IN BETWEEN THE LAND. THE A SSESSING OFFICER WAS OF THE VIEW THAT SINCE THE BUYERS HAD SHOWN THE AMOUNT OF RS.25,00,000/- AS COMMISSION PAID IN THEIR BOOKS AND THE SAME HAS BEE N ALLOWED IN THE SCRUTINY ITA NOS.252-254/COCH/2014 9 ASSESSMENT OF THE BUYERS ADDITION WAS TO BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF COMMISSION INCOME. 13. THE LD. CIT(A) DELETED THE DISALLOWANCE AND AL LOWED THE CONTENTION OF THE ASSESSEE. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE FACTS OF THE CASE. THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE IS THAT H E HAS DEMANDED BACK RS.25,00,000/- WHICH IN FACT WAS PAID BACK BY MR. L AWRENCE AND MR. MICHAEL AND WHICH WAS CREDITED IN THE BANK OF THE ASSESSEE. THE AMOUNT OF RS.25,00,000/- WAS ACTUALLY PAID BY MR. LAWRENCE AN D MR. MICHAEL TO THE ASSESSEE THROUGH BANKING CHANNEL IS NOT UNDER DISPU TE. THE SAID PAYMENT HAS BEEN ALLOWED AS COMMISSION PAID IN THE HANDS OF MR. LAWRENCE AND MR. MICHAEL IS ALSO NOT IN DISPUTE. NOW THE CREDIT OF RS.25,00,000/- IS FOUND IN THE BO OKS OF ASSESSEE, WHO DENIES TO HAVE RECEIVED AS COMMISSION. THE PLEADING PUT FOR TH BY THE ASSESSEE IS THAT THERE WAS AN EXCESS PAYMENT ON ACCOUNT OF PATHWAY. BUT THE ASSESSEE HAS NOT PLACED ON RECORD BEFORE ANY OF THE AUTHORITIES BELO W OR EVEN BEFORE US ANY DOCUMENTARY EVIDENCE ON RECORD IN SUPPORT OF HIS PL EADINGS. THEREFORE THE SAID CREDIT OF RS.25.00 LACS REMAINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE. THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE CLAIM OF T HE ASSESSEE WITHOUT ANY DOCUMENTARY EVIDENCE. THEREFORE THE ORDER OF THE L D. CIT(A) IS REVERSED AND ITA NOS.252-254/COCH/2014 10 THAT OF THE ASSESSING OFFICER IS CONFIRMED. THUS G ROUND NOS. 5&6 OF THE REVENUE ARE ALLOWED. IN THE RESULT, THE APPEAL OF THE REV ENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO.253/COCH/2014 : A.Y. 2008-09 15. IN THIS APPEAL, GROUND NO. 2 RAISED HAS ALRE ADY BEEN ADJUDICATED BY US IN THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007- 08. IN THE PRESENT CASE, ALSO, SINCE THE ASSESSEE HAS SUBMITTED ACKNOWLEDGME NT OF RETURN OF INCOME AND COMPUTATION SHOWING PAYMENT OF TAX, GROUND NO. 2 OF THE REVENUE IS DISMISSED. 16. GROUND NOS. 3 &4 PERTAIN TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT DURING THE RELE VANT ASSESSMENT YEAR, HE HAD OMITTED TO DEDUCT TDS ON CERTAIN PAYMENTS AMOUN TING TO RS.1,42,198/-. THE ASSESSEE HAD THEREAFTER, REMITTED THE SAID AMOU NTS OF TDS TO WARD OFF THE DISALLOWANCE OF EXPENSE U/S. 40(A)(IA) FOR NON PAYM ENT OF TDS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID PAYMENT IS IN THE NATURE OF A GIFT/DONATION AND ACCORDINGLY, DISALLOWED THE TAX PAID AS EXPENSE . 17. THE LD. CIT(A) FOLLOWING THE JUDGMENT OF ITAT , MUMBAI BENCH IN THE CASE OF KARAN JOHAR VS. CIT IN I.T.A. NO. 1033/MUM/2009 AC CEPTED THE CONTENTION OF THE ITA NOS.252-254/COCH/2014 11 ASSESSEE THAT THE PAYMENT OF TDS TOOK THE CHARACTER ISTIC OF A DEBT NOT RECOVERABLE FROM PARTIES AND DELETED THE DISALLOWAN CE. 18. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTI ES AND PERUSED THE FACTS OF THE CASE. IN THE PRESENT CASE, THE ASSESSING OFFIC ER HAS MADE A DISALLOWANCE OF TDS PAID AND NOT THE EXPENDITURE ITSELF UNDER SECTI ON 40(A)(IA) OF THE ACT. THE LD. CIT(A) OBSERVED THAT THE SAME IS AN ALLOWABLE E XPENDITURE. 19. THE LD. CIT(A) HAS WRONGLY RELIED UPON THE JU DGMENT OF KARAN JOHAR (SUPRA). IN THAT CASE, THE CONTRACT SPECIFICALLY PROVIDED FO R ALLOWANCE OF TAX PAID ON BEHALF OF THE RECIPIENT AS EXPENDITURE OF THE DEDUC TOR. IN THE PRESENT CASE, THERE IS NO SUCH CONTRACT OR EVIDENCE ON RECORD. TH E MATTER HAS NOT BEEN EXAMINED PROPERLY BY THE ASSESSING OFFICER KEEPING IN VIEW THE PROVISIONS OF SECTION 40(A)(IA) AND THE PROVISO TO THE SECTION. THE ASSESSING OFFICER HAS RATHER CHOSEN TO DISALLOW THE TAX PAID ON BEHALF OF THE RE CIPIENT THAT TOO BY INVOKING THE AFORESAID SECTION. WE THEREFORE REMAND THE ISS UE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH KEEPING IN MIND THE PROVISIONS OF SECTION 40(A)(IA.) GROUND NOS. 3 AND 4 ARE THEREFORE ALLOW ED FOR STATISTICAL PURPOSES. 20. GROUND NO. 5 RELATE TO THE DISALLOWANCE OF RS .75 LACS PAID BY THE ASSESSEE TO ONE SHRI MOHANRAJ FOR THE PURCHASE OF LAND BELON GING TO SHRI KISHORE KUMAR AND SMT. KANCHANA. THE ASSESSEE HAD ISSUED THE CHE QUES IN THE NAME OF SH. ITA NOS.252-254/COCH/2014 12 MOHANARAJ (FATHER OF MR. KISHORE KUMAR) AND BROTHER OF MRS. KANCHANA, SELLLERS OF THE LAND). THE ASSESSEE HAD RELIED UPON AN EMAIL RE CEIVED FROM MR. MOHANRAJ WHEREIN MR. MOHANRAJ HAD STATED THAT HE HAD ALREADY SHOWN THE AMOUNT AS LOAN. THE ASSESSING OFFICER WAS OF THE OPINION THA T SINCE MR. MOHANRAJ HAD NOT TREATED THE AMOUNT AS PART OF THE SALE CONSIDERATIO N, THE PAYMENT HAS TO BE DISALLOWED IN THE HANDS OF THE ASSESSEE. THE APPEA L OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS ALLOWED ON THIS GROUND. 21. THE REVENUE HAS CONTENDED THAT THE SOLE RELIAN CE CANNOT BE PLACED ON THE EMAIL OF SH. MOHANRAJ. IT WAS FURTHER CONTENDE D THAT SH. MOHANRAJ WAS NOT THE REAL OWNER OF THE PROPERTY AND THEREFORE THE VE RSION OF THE ASSESSEE WAS NOT BELIEVABLE. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH T HE PARTIES AND PERUSED THE FACTS OF THE CASE. THE LD. CIT(A) AT PAGE 15 OF HI S ORDER AT PARA 4.6 HAS DELETED THE ADDITION. HIS OBSERVATIONS ARE VERY RELEVANT F OR OUR FINDING ON THIS ISSUE AND THEREFORE, THE SAME ARE BEING REPRODUCED HEREINBELO W: 4.6 IT APPEARS THAT NO DETAILED VERIFICATION HAS B EEN MADE BY THE ASSESSING OFFICER AND ONLY BECAUSE THE OTHER PARTY HAS DENIED TO HAVE RECEIVED THE SALE CONSIDERATION, THE COST IN THE HANDS OF THE BU YER CANNOT BE DISALLOWED ESPECIALLY WHEN THE PAYMENTS HAVE BEEN MADE BY WAY OF CHEQUE. IT HAS NOT BEEN DISPROVED THAT THE CHEQUES WERE NOT ENCASHED B Y K. MOHAN RAJ. RATHER MR. K. MOHAN RAJ SEEMS TO HAVE DENIED THE RE CEIPT OF PAYMENT IN ORDER TO SAVE HIMSELF FROM THE INCOME TAX LIABILITI ES. FURTHER, THE APPELLANT HAS SUBMITTED ALL THE DETAILS FOR THE PAYMENT. COPIES OF E-MAIL LETTER FILED ALSO ITA NOS.252-254/COCH/2014 13 SUGGESTS THAT WHAT ACTUALLY HAS TRANSPIRED BETWEEN THE BUYER AND THE SELLER. COPY OF THE E-MAIL LETTER FILED, AS A RECEIPT FROM MR. K. MOHAN RAJ THAT OUR AUDITOR HAD ALREADY SHOWN IN OUR ACCOUNTS AS LOAN. IF YOU WANT TO ACCEPT THE AMOUNT AS CONSIDERATION THEN YOU HAVE TO PAY CAPITA L GAIN TAX TO THE TUNE OF RS.22 LAKHS. IF THE APPELLANTS STAND MADE TOWARD S THE PURCHASE OF THE LAND IT IS NOT THE ASSESSEE BUT SHRI MOHAN RAJ WHO UNDER TH E ADVICE OF HIS AUDITOR SEEMS TO HAVE GIVEN A TREATMENT TO THIS AMOUNT AS L OAN AND NOT A SALE CONSIDERATION APPARENTLY TO SAVE THE CAPITAL GAIN T AX. THE A.O. SHOULD HAVE REFERRED THIS LETTER TO THE CONCERNED ASSESSING OFF ICER FOR A THOROUGH EXAMINATION RATHER THAN DISALLOWING THE AMOUNT OF P URCHASE CONSIDERATION IN THE HANDS OF THE ASSESSEE WHICH IS ALREADY REFLECTE D IN THE VALUE OF CLOSING STOCK. THE APPELLANT HAS SUBMITTED ENOUGH EVIDENCE OF PAYMENTS MADE WHICH HAVE BEEN MADE BY WAY OF CHEQUES, AND THOSE C HEQUES HAVE BEEN GOT ENCASHED BY THE RECIPIENT OR BY THE PERSON NAME D AS INTENDED BENEFICIARY. TO THIS EXTENT, THE ASSESSEE HAS DISC HARGED THE ONUS ON THEIR PART TO HAVE ESTABLISHED SUCH PAYMENTS BEYOND DOUBT WHIC H ARE FURTHER SUPPORTED WITH THE CIRCUMSTANTIAL EVIDENCES. IN VIEW OF THIS, IT IS HELD THAT THE DISALLOWANCE FOR A SUM OF RS.25,00,000/- HAS BEEN M ADE WITHOUT PROPER APPRECIATION OF THE FACTS AND HENCE THE SAME IS DEL ETED. HENCE, THE APPEAL ON THIS GROUND IS ALLOWED. 23. FROM THE FINDINGS OF ASSESSING OFFICER, ESPECI ALLY THE FINDINGS OF THE LD. CIT(A), HEREINABOVE, IT IS QUITE EVIDENT THAT NO DE TAILED VERIFICATION HAS BEEN MADE BY THE ASSESSING OFFICER. AS A MATTER OF FACT THE E-MAIL LETTER SHOULD HAVE BEEN REFERRED TO THE CONCERNED ASSESSING OFFICER OF MR. K. MOHAN RAJ FOR A THOROUGH EXAMINATION. MR. K. MOHAN RAJ HAS ALSO DEN IED THE RECEIPT OF PAYMENT IS NOT UNDER DISPUTE. A DETAILED ENQUIRY COULD HAVE BEEN MADE BY THE ASSESSING OFFICER IN THIS RESPECT. THE LD. CIT(A) HAS ALSO G IVEN THE ABOVE FINDINGS BUT AT THE SAME TIME HAS DELETED THE DISALLOWANCE BY OBSER VING ON ONE HAND THAT NO DETAILED VERIFICATION HAS BEEN MADE BY THE ASSESSIN G OFFICER, E-MAIL LETTER SHOULD HAVE BEEN EXAMINED, MR. K. MOHAN RAJ HAVING DENIED THE RECEIPT OF PAYMENT AND ON THE OTHER HAND OBSERVED THAT THE ASS ESSEE HAS GIVEN ENOUGH ITA NOS.252-254/COCH/2014 14 EVIDENCE OF PAYMENT AND DELETED THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER, FOR THE REASONS BEST KNOWN TO HIM. THE LD. CIT(A) WAS IN HASTE TO DECIDE THE ISSUE BY DELETING THE SAME WHICH IS AGAINST LAW . THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER, WHO WILL DECIDE THE ISSUE DE NOVO BY MAKING DETAILED ENQUIRY AS DISCUSSED HEREINABOVE BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THUS GROUND NO. 5 OF THE REVENUE IS ALLOWED FOR STATISTI CAL PURPOSES. 24. GROUND NO. 6 PERTAIN TO THE DELETION OF ADDITI ON OF RS.89,95,315/- PAID TO SH. K.J. ANTO FOR PURCHASE OF LAND. THE FACTS RELATING TO THIS GROUND ARE IDENTICAL TO THE CASE OF THE ASSESSEE FOR A.Y. 2007-08. IN THAT APPEAL, WE HAVE ALLOWED THE GROUND RAISED BY THE REVENUE. FOLLOWING THE SAME, GROUND NO. 6 IS ALLOWED. 25. IN GROUND NO. 7, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF R.7,94,48,827/- ON ACCOUNT OF VALUATION OF STOCK. THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE. HE HAS VALUED THE CLOSING STOCK OF LAND AND PLOTS AT COST OR MARKET VALUE WHICHEVER IS LESS. IN THE RELEVANT A SSESSMENT YEAR, THE CLOSING STOCK WAS VALUED AT MARKET PRICE AS ACCORDING TO TH E ASSESSEE, THE VALUE OF LAND WAS LESSER THAN THE COST. THE ASSESSING OFFIC ER WAS OF THE OPINION THAT LAND WAS A COMMODITY WHICH IS ALWAYS APPRECIABLE AND THE RE CAN BE NO REASON FOR DEPLETION IN VALUE OF THE PROPERTY. THE ASSESSING OFFICER REJECTED THE VALUATION DONE BY THE REGISTERED VALUER OF THE ASSESSEE AND A DOPTED THE COST OF LAND FOR ITA NOS.252-254/COCH/2014 15 DETERMINING THE VALUE OF CLOSING STOCK AND ACCORDIN GLY MADE THE ADDITION OF RS.7,94,48,827/-. 26. IN THE APPEAL BEFORE THE LD. CIT(A), A REFERE NCE WAS MADE TO THE DVO AND THE MATTER WAS REMANDED BACK TO THE ASSESSING OFFIC ER. THE DVO IN ITS REPORT HAD VALUED THE LAND AT MARADU AND CALICUT AT SIMILA R LAND VALUE AS NETTOOR. THE DVO HAD VALUED IT AT RS.1,60,62,000/- AS AGAINS T RS.1,46,51,000/- DETERMINED BY THE REGISTERED VALUER. SIMILARLY, FOR THE LAND AT KUNDANNOOR A DIFFERENCE OF RS.35,15,602/- WAS DETERMINED BY THE DVO WITH THE V ALUE GIVEN BY THE REGISTERED VALUER. IT IS PERTINENT TO NOTE THAT IN BOTH THE CASES OF NETTOOR AND KUNDANNOOR, THE DVO HAD DETERMINED THE VALUE OF LAN D LOWER THAN THE COST OF LAND. 27. HOWEVER FOR THE LAND AT KUMBALAM, THE DIFFEREN CE BETWEEN THE VALUE OF THE LAND OF THE VALUATION OFFICER AND THE REGISTERE D VALUER WAS VERY HIGH I.E. RS.3,22,48,400/- (RS.5,95,04,000-RS.2,72,25,600). THE ASSESSEE HAD CHALLENGED THE AFORESAID REPORT OF THE DVO WITH RESPECT TO THE VAL UATION OF LAND AT KUMBALAM. THE ASSESSEE HAD RAISED THE FOLLOWING OBJECTIONS: 6.10. ITEM 2 IN ANNEXURE-1 OF VALUATION REPORT STOCK VALUE DECLARED BY THE ASSESSEE IN THE ABOVE ITEM OF THE VALUATION REPORT, THE DVO HAS COMMITTED SERIOUS MISTAKE WHILE GIVING VALUE AS DECLARED BY THE ASSESSEE F OR THE YEAR ITA NOS.252-254/COCH/2014 16 ENDED ON 31-3-2008 AND 31-3-2009. ASSESSEE HAD DEC LARED RS.3,06,28,800/- AS CLOSING STOCK VALUE FOR THIS PROPERTY IN HIS BA LANCE SHEET FOR THE YEAR ENDED ON 31-3-2008 AS PER THE VALUATIO N OF THE REGISTERED VALUER. (THIS IS ALSO MENTIONED IN THE ASSESSMENT ORDER). BUT THE DVO HAD SHOWN RS.5,04,27,319/- AS VALUE AS DECLARED BY THE ASSESSEE (SPLITTED INTO RS.4,65,38,011/- FOR 61.064 CENTS AND RS.38,89 ,308/- FOR 7 CENTS). ASSESSEE HAD DECLARED RS.2,72,25,600/- AS CLOSING S TOCK VALUE FOR THIS PROPERTY IN HIS BALANCE SHEET FOR THE YEAR ENDED ON 31-3-2009 AS VALUED BY REGISTERED VALUER. (THIS IS ALSO MENTIONED IN TH E ASSESSMENT ORDER). BUT THE DVO HAD SHOWN KRS.3,06,28,800/- AS VALUE AS DE BCLARED BY THE ASSESSEE (SPLITTED INTO RS.2,74,78,800/- FOR 61.06 4 CENTS AND RS.31,50,000/- FOR 7 CENTS). ON THE BASIS OF ABOVE ERRONEOUS FIGURES, THE DVO HA D REACHED THE FOLLOWING INFERENCE: THE DECLINING % AS SHOWN BY THE ASSESSEE IN THE STO CK BETWEEN THE YEAR 2008-09 IS =39.26%. THE DECLINING % AS SHOWN BY TH E VALUERS REPORT BETWEEN THE YEAR 2008-09 IS = 11.11% ACTUALLY, THERE IS NO DIFFERENCE IN DECLINING % SHO WN BY THE ASSESSEE IN THE CLOSING STOCK VALUE OF THIS PROPERTY BETWEEN THE YE AR 2008-09 WITH THAT OF THE REGISTERED VALUERS REPORT, SINCE ASSESSEE HAD ADOPTED CLOSING STOCK VALUE AS PER THE REGISTERED VALUERS REPORT ONLY. ITEM 3 IN ANNEXURE 1 OF VALUATION REPORT:- MODE O F VALUATIOHN 9A) IN THIS ITEM, THE DVO REVEALS THAT HE HAD ASKED FOR SUPPLYING GUIDELINE VALUE AND COMDPARABLE SALE INSTANCES OF THE PROPERT Y IN AND AROUND SURVEY NO.216/1, 216/2, 216/3 AND 216/5. HE ALSO RE VEALS THAT HE HAD RECEIVED THREE LETTERS FROM SUB REGISTRAR, PROVIDIN G SOME SALE INSTANCES AND GUIDELINE VALUE WHICH HE RECORDS AS NEITHER RE LIABLE IN NATURE NOR COMPARABLE OF ALL. THIS OBSERVATION OF THE DVO IS NOT TENABLE IN LAW SINCE THE SUB REGISTRAR IS THE CORRECT AUTHORITY IN DETER MINING THE FAIR MARKET VALUE OF ANY PROPERTY FALLING UNDER HIS JURISDICTIO N. THE SUB REGISTRARS CERTIFICATE WHICH SHOWS FAIR MARKET VALUE OF PROPER TIES IN THE SURVEY NOS. WHERE ASSESSEES PROPERTY IS ALSO SITUATED. IT ALS O SHOWS THAT THERE IS NO DOCUMENT WHICH HAD BEEN EXECUTED ALL THROUGH THE YE ARS 2006, 2007 AND 2008 OTHER THAN THE DOCUMENT OF SAID PROPERTY B ROUGHT BY THE ASSESSEE. THE CERTIFICATE OF THE SUB REGISTRAR ALSO SAYS THAT THERE WERE NO TRANSACTION FOR THE YEARS 1981, 1982 & 1983. (B) IN POINT NO. 2 OF THIS ITEM, THE DVO HAS RECORD ED THAT THE LOCATION OF THE LAND HAS GOT A HIGH POTENTIAL FOR DEVELOPMENT . THIS IS NOT CORRECT. ITA NOS.252-254/COCH/2014 17 ONLY 29 CENTS OUT OF 68.064 CENTS CAN BE USED FOR D EVELOPMENT PURPOSE AS CAN BE SEEN FROM THE SITE PLAN SUBMITTED TO THE DVO. THIS IS BECAUSE IT IS MANDATORY TO LEAVE 35 METERS AS SET BACK FROM TH E CENTER LINE OF NH 47, WHICH CAN BE SEEN FROM THE SITE PLAN. IT IS DIFFICU LT TO UTILIZE AVAILABLE FAR (FLOOR AREA RATIO) EVEN. THEREFORE, IT CANNOT BE T ERMED TO HAVE HIGH POTENTIALITY FOR DEVELOPMENT. (C) IN POINT NO. 3 OF THIS ITEM, THE DVO HAS SAID T HAT IN THE SAME STRETCH OF THE ROAD MAJOR COMMERCIAL ESTABLISHMENTS LIKE HOTEL LE-MERIDIAN HAS COME UP. THIS IS TOTALLY UNTRUE. MY PROPERTY IS 3. 5 KILO METERS AWAY FROM HOTEL LE-MERIDIAN. WHILE LE-MERIDIAN HOTEL IS ON TH E RIGHT SIDE OF NH 47 FACING EAST, MY PROPERTY IS ON THE LEFT SIDE OF NH 47 FACING WEST, LE- MERIDIAN HOTEL IS AT KUNDANNOOR JUNCTION WHERE THER E ARE LOT OF BIG ESTABLISHMENTS. PLACE WHERE MY PROPERTY IS SITUATE D IS NOT HAVING A SINGLE ESTABLISHMENT, BIG OR SMALL. (D) IN POINT NO.4 OF THIS ITEM, THE DVO HAS RECORDE D AS FLOWS: THE ASSESSEE DECLARES THE VALUE OF PROPERTY AS ON DATE OF PURCHASE (I.E. AS ON 2007 MAY) AS RS.2,14,65,000/- WHEREAS ON 31-3 -2008, THE ASSESSEE SHOWS HIS STOCK VALUE AS RS.5,04,27,319/-. THEREBY THE ASSESSEE HIMSELF HAS AGREED THAT THERE IS AN INCREASE IN THE VALUE O F THE PROPERTY BY MORE THAN ABOUT 2.35 TIMES FROM THE DATE OF PURCHASE TO 31-3-2008. IT IS REALLY SURPRISING TO NOTE THE ABOVE COMMENT. IT PROVES THAT THE DVO HAS NOT GONE THROUGH MY RECORDS AND COMPREHENDED IT CORRECTLY. FOR PURCHASING 68.064 CENTS, IN ADDITION TO THE DOCUMEN T VALUE OF RS.2,14,65,000/-, I HAD PAID RS.21,46,500/- AS STAM P DUTY, RS.4,21,319/- AS REGISTRATION CHARGES, RS.38,500/- AS LEGAL FEE, RS. 30,000/- AS INCIDENTAL CHARGES AND RS.2,63,18,000/- AS ADDITIONAL CONSIDER ATION TOTALLING TO RS.5,04,27,319/-, WHICH CAN BE SEEN FROM PAGE 13, I TEM A.2(III) OF THE ASSESSMENT ORDER FOR THE AY 2008-09. IT IS TO BE SEEN THAT RS.5,04,27,319/- IS NOT THE STOCK VALUE, BUT IT IS THE COST OF PURCHASE . SINCE THIS PROPERTY WAS TREATED AS A STOCK IN TRADE ITEM, I HAD TO SHOW IT AT COST OR MARKET VALUE WHICHEVER IS LESS. SINCE THERE WAS SUBSTANTIAL DEC LINE IN VALUE OF PROPERTIES GENERALLY, I GOT ALL MY PROPERTIES KEPT AS STOCK IN TRADE, VALUED BY A REGISTERED VALUER. I HAD DECLARED RS.3,06,28,8 00/- AS VALUE OF CLOSING STOCK OF THIS PROPERTY OF 68.064 CENTS AS ON 31-3-2 008 AS PER THE INDEPENDENT VALUATION DONE BY THE REGISTRAR VALUER. IT CAN BE SEEN THAT THERE IS A DECLINE IN VALUE TO THE TUNE OF RS.1,97, 98,519/- EQUAL TO 39.26% (I.E. 1,97,98,519/50427,319 *100). INSTEAD OF THIS DVO HAS GIVEN A TOTALLY MISLEADING INFERENCE THAT THE ASSESSEE HIMSELF HAS AGREED THAT THERE IS AN INCREASE IN THE VALUE OF THE PROPERTY BY MORE THAN ABOUT 2.35 TIMES FROM THE DATE OF PURCHASE TO 31-3-2008. ITA NOS.252-254/COCH/2014 18 (E) IN THE LAST BUT ONE PARAGRAPH OF THIS ITEM, THE DVO HAS RECORDED GENERALLY THERE WAS NO DECLINING TREND ANYWHERE IN THE COUNTRY PARTICULARLY IN TAMIL NADU AND NEIGHBOURING STATES. BY READING THIS, I REALLY WONDER WHETHER THE DVO HAS MISTAKEN THAT MY PROPERT Y IS IN TAMIL NADU. THIS ALSO SHOWS THAT THE DVO HAS NOT APPLIED HIS MI ND PROPERLY IN COMPREHENDING FACTS. THUS, RELYING ON CERTAIN INCO RRECT INFERENCES THE DVO HAS CONCLUDED THAT IT IS HARD TO BELIEVE THAT T HERE WAS A DECLINING TREND IN THE VALUE OF THE LAND FROM THE YEAR OF 200 8 & 2009. 6. ITEM 4 IN ANNEXURE-1 OF VALUATION REPORT:- COMMENTS ON THE VALUERS REPORT THE DVO HAS NOTED THAT THE REGISTERED VALUER IN HIS REPORT ON 31-3-2008 AND 31-3-2009 HAS MENTIONED THAT THE MARKET TREND A ND PROSPECTS OF MARKETABILITY AS GOOD AND ALL CIVIC AMENITIES ARE A VAILABLE WITHIN THE REACH. FROM THAT THE DVO HAS INFERRED THAT DECLINE IN VALUE FROM THE YEAR 2008 & 2009 CANNOT HAPPEN. DVO OUGHT TO HAVE UNDER STOOD THAT MARKET TREND AND PROSPECTS OF MARKETABILITY ARE DECIDED TA KING THEN PREVAILING MARKET RATES. MARKET RATES WILL VARY FROM YEAR TO YEAR DEPENDING ON THE GENERAL TREND OF PROPERTY VALUES. I WOULD LIKE TO SUBMIT THAT THE REGISTERED VALUER H AS VALUED THE PROPERTY CONSIDERING ALL THE ABOVE ASPECTS OF THE PROPERTY A ND ARRIVED ON THE VALUATION DURING THE YEAR 2008 & 2009 BASED ON THE GENERAL DECLINE IN THE PROPERTY VALUES DURING THAT PERIOD AND LOOKING AT T HE MERITS AND DEMERITS OF THE PROPERTY. SO, THE CONCLUSION OF THE DVO THA T DECLINING TREND SHOWN IN THE REPORT OF REGISTERED VALUER IS NOT ACCEPTABL E IS NOT CORRECT. 7. ITEM 5 IN ANNEXURE-1 OF VALUATION REPORT:- VALUE A) THE DVO HAS RECORDED THAT AS THE GUIDELINE VALUE AND SALE INSTANCES ARE NOT COMPARABLE, THE APPRECIATION IN L AND VALUE OF 2008 & 2009 COULD NOT BE ASCERTAINED. THIS IS ABSOLUTELY WRONG. GUIDELINE VALUE FOR THE PURPOSE OF STAMP DUTY IS FIXED BY THE GOVER NMENT OF KERALA ON THE BASIS OF FAIR MARKET VALUE PROVIDED BY RESPECTIVE S UB REGISTRARS AND IN THE CASE OF LANDED PROPERTIES, SUB REGISTRARS VALUATIO N IS FINAL AND BINDING ON ALL. B) IT IS STATED BY THE DVO THAT THE APPRECIATION IN THE LAND VALUE IS EVIDENCE FROM THE PURCHASE MADE BY THE ASSESSEE ITS ELF. THE ASSESSEE HAD PURCHASED 61.064 CENTS OF THE SAID PROPERTY ON APRIL, 2007 @ RS.2.948 LAKHS PER CENT WHEREAS FOR THE REMAINING PORTION CO MPRISING THE 7 CENTS HAS BEEN PURCHASED BY THE ASSESSEE ON MAY, 2007 (WI THIN ONE MONTH GAP ITA NOS.252-254/COCH/2014 19 FROM THE PREVIOUS PURCHASE) @ RS.4.95 LAKHS/CENT. THE PERCENTAGE OF HIKE IN THE LAND VALUE WITHIN A PERIOD OF ONE MONTH IS A BOU 67.91%. THE DVO HAS DISTORTED FACTS. FOR PURCHASING 68.064 CENTS OF LAND ASSESSEE HAD PAID RS.5,04,27,319/- AS EXPLAINED IN 5(D) ABOVE. OUT OF THIS, 61.064 CENTS WERE PURCHASED IN APRIL, 2007 FOR RS.4,65,38, 011/- (DOCUMENT VALUE LEGAL FEE RS.30,000/-, INCIDENTAL EXPENSES RS.30,00 0/- AND ADDITIONAL AMOUNT PAID RS.2,63,18,000/-). THUS PER CENT THE CO ST FOR 61.064 CENTS COME TO RS.38,89,308/- (DOCUMENT VALUE RS.34,65,000 /-, STAMP DUTY RS.3,46,500/-, REGISTRATION FEE RS.69,308/-, LEGAL FEE RS. 8,500/-). THUS, PER CENT COST FOR 7 CENTS COME TO RS.5,55,615/-. WHILE, THE ASSESSEE HAD BOUGHT 61.064 CENTS @ RS.7.62119 LAKHS PER CENT, DV O HAS SHOWN IT AS FOR RS.2,948 LAKHS/CENT. WHILE THE ASSESSEE HAD BOUGHT 7 CENTS ONE MONTH LATER FOR RS.5.55615 LAKHS/CENT, DVO HAS SHOWN IT A S FOR RS.4.95 LAKHS/CENT. IN BOTH CASES, DVO HAS TAKEN ONLY DOCUMENT VALUE. HE HAD IGNORED ALL OTHER COSTS VIZ., STAMP DUTY, REGISTRATION FEE, LEG AL FEE, INCIDENTAL CHARGE AND ADDITIONAL AMOUNT PAID, ACCEPTED BY INCO ME TAX DEPARTMENT. IF CORRECT FIGURES ARE TAKEN, IT CAN B E SEEN FROM ABOVE THAT, PRICE PER CENT HAD COME DOWN FROM RS.7,62119 LAKHS PER CENT TO RS.5,55615 LAKHS PER CENT. THUS, THERE WAS A DECLIN E OF RS.2,06,504 LAKHS PER CENT, OR IN OTHER WORDS, DECLINE WAS 27.09% (I.E. 2 ,06504/7.62119*100). C) IT IS ALSO STATED BY THE DVO THAT THERE WAS AN INCR EASE IN THE VALUE OF THE PROPERTY BY MORE THAN 135% FROM THE DATE OF PU RCHASE (IN 2007 MAY) TO 31-3-2008. HE HAS STATED IN HIS REPORT THAT IN MAY, 2007 THE PURCHASE VALUE OF 68.064 CENTS WAS RS.2,14,65,000/- AND THE STOCK VALUE OF 68.064 CENTS ON 31-3-2008 WAS RS.5,04,27,319/-. THESE FIG URES TAKEN BY THE DVO ARE WRONG. IN MAY, 2007, THE PURCHASE PRICE WAS RS .5,04,27,319/- AND THE STOCK VALUE OF 68.064 CENTS OF LAND ON 31-3-2008 WA S RS.3,06,28,800/- ONLY. HENCE, IT CAN BE SEEN THAT THERE IS A DECLINE IN VA LUE IN THE YEAR ENDED ON 31-3-2008 AND NOT AN INCREASE. DECLINE WAS RS.1, 97,98,519/- I.E. 39.26% (1,97,98,519/5,04,27,319*100). SO, THE FINDING OF THE DVO IS TOTALLY INCORRECT. D) IT IS FURTHER STATED BY THE DVO THAT THE RATE OF D ECLINATION SHOWN BY THE ASSESSEE FROM THE DATE 31-3-2008 TO 31-3-2009 I S @39.26% WHEREAS THE RATE OF DECLINATION AS SHOWN BY THE REGISTERED VALU ER OF THE ASSESSEE FROM THE DATE 31-3-2008 TO 31-3-2009 IS ONLY 11.11%. TH E STATEMENT OF ASSESSEE IS DEADLY CONTRARY TO THE STATEMENT OF REGISTERED V ALUER ITSELF AS FAR AS RATE OF DECLINATION IS CONCERNED. THIS STATEMENT OF DVO IS TOTALLY INCORRECT AND MISLEADING. DECLINE OF 39.26% SHOWN BY THE ASS ESSEE IS NOT FROM 31-3- 2008 TO 31-3-2009, IT IS THE DECLINE IN RATE BETWEE N PURCHASE COST IN MAY, 2007 (RS.5,04,27,319) AND CLOSING STOCK VALUE ON 31 -3-2008 AS PER ITA NOS.252-254/COCH/2014 20 REGISTERED VALUERS CERTIFICATE (RS/3,06,28,800/-) AND CLOSING STOCK VALUE OF THIS PROPERTY VALUED BY THE REGISTERED VALUER ON 31-3-2009 (RS.2,72,25,600/-). IT IS VERY SAD THAT AN INCOME TAX AUTHORITY LIKE DVO IS MAKING SUCH MISLEADING STATEMENTS WITHOUT TAKING CO RRECT FIGURES AND REACHES CONCLUSION THAT THE STATEMENT OF ASSESSEE IS DEADLY CONTRARY TO THE STATEMENT OF REGISTERED VALUER ITSELF AS FAR AS RATE OF DECLINATION IS CONCERNED. (E) RELYING ON WRONG FIGURES AND INFERENCES THE DV O HAD DECIDED NOT TO CONSIDER THE REPORTS OF THE REGISTERED VALUER AND H AD CONCLUDED THAT THERE WOULD BE CONTINUOUS APPRECIATION IN LAND VAL UE FROM THE YEAR 2008-09. (F) DVO HAS CONCLUDED THAT THE VALUE OF THE PROP ERTY AS ON 31-3-2008 IS CONSIDERED AS THE VALUE DECLARED BY THE ASSESSEE AS ON 31-3-2008 (I.E. RS.5,04,27,319) SAY RS.5,04,27,000/-. I HAVE POIN TED OUT SEVERAL TIMES ABOVE THAT VALUE OF CLOSING STOCK DECLARED BY ME AS ON 31-3-2008 IS RS.3,06,28,800/- AND NOT RS.5,04,27,319/-, WHICH IS THE COST OF PURCHASE IN MAY, 2007. FOR THE NEXT YEAR, DVO HAS ARRIVED AT T HE VALUE BY ADDING 18% TO RS.5,04,27,319/-, SAYING THAT IT IS THE STANDARD PROCEDURE, WHEN COMPARABLE INSTANCES ARE NOT AVAILABLE, THE FAIR MA RKET VALUE CERTIFIED BY THE SUB REGISTRAR IS USUALLY ADOPTED. 28. THE ASSESSEE FILED OBJECTIONS BEFORE THE DVO, WHICH WERE DISPOSED OF BY THE DVO VIDE LETTER DATED 19/02/2014. THE ASSESSING OFFICER WAS OF THE SAME OPINION THAT THERE CANNOT BE ANY DECLINE IN THE VAL UE OF THE PROPERTIES IN KERALA AND MAINTAINED ITS STAND TAKEN IN THE ASSESSMENT OR DER. 29. THE LD. CIT(A) AGREED WITH THE CONTENTION OF T HE ASSESSEE AND HELD THAT THE REPORT OF THE DVO PERTAINING TO THE LAND AT KUMBALA M DOES NOT PRESENT THE CORRECT PICTURE. THE APPEAL OF THE ASSESSEE WAS AL LOWED ON THIS GROUND BY THE LD. CIT(A). ITA NOS.252-254/COCH/2014 21 30. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAD VALUED THE CLOSING STOCK AT MARKET VAL UE AS ACCORDING TO THE ASSESSEE, THE VALUE OF LAND HAD DEPLETED. THE ASSES SEE HAS SUBMITTED THE REASONS FOR THE DECLINE IN THE VALUE OF STOCK. HE SUBMITTED THAT HE HAS BEEN BUYING THE FRONTAGE OF THE LAND SO THAT THE BACKSID E PORTION WOULD BE BLOCKED. THE SAID LANDS WERE THEREFORE PURCHASED AT HIGHER C OSTS BY THE ASSESSEE. THE SAME WERE PURCHASED IN ANTICIPATION WITH HIS FUTURE DEALINGS. THE ASSESSEE HAS FURTHER CITED THE FACT THAT IN SOME CASES THE LAND COULD NOT GET CONNECTIVITY WITH OTHER CHUNKS OF LAND AND THEREFORE, THE VALUE OF LAND GOT SUBSTANTIALLY REDUCED. IN HIS SUBMISSIONS, THE ASSESSEE HAS CLAI MED THAT THE VALUE OF THE LAND HAD DEPLETED SINCE THE DATE OF PURCHASE FOR ASSESSM ENT YEAR 2008-09 AND THEREFORE, THE CLOSING STOCK WAS VALUED AT MARKET P RICE. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE REASONS FOR DEPLETION OF THE VAL UE OF CLOSING STOCK WAS SPECIFIC TO THE BUSINESS OF THE ASSESSEE AS IT HAD BOUGHT FRONTAL LANDS AT HIGHER PRICE SO AS TO BLOCK THE BACKSIDE PORTION OF THE LA ND. 31. DURING THE COURSE OF ASSESSMENT, THE ASSESSE E WAS SPECIFICALLY ASKED TO SUBSTANTIATE THE AFORESAID CLAIM. THE ASSESSEE HAS PLACED SOLE RELIANCE ON THE VALUATION REPORT. THERE IS NO OTHER EVIDENCE TO CO RROBORATE THE THEORY OF THE ASSESSEE. BALD AVERMENTS WITHOUT ANY CORROBORATION CANNOT BE GIVEN ANY CREDENCE. SINCE THE DEPLETION OF VALUE OF LAND IS NOT A GENERAL PHENOMENON, THE BURDEN OF PROOF WAS ON THE ASSESSEE TO SUBSTANT IATE ITS CLAIM. THE ASSESSEE ITA NOS.252-254/COCH/2014 22 HAS FURTHER RELIED UPON THE FACT OUT OF 5 PROPERTIE S, IN FOUR PROPERTIES, THE DVO HAS AGREED WITH THE ASSESSEE IN AS MUCH AS THE VALU E OF LAND WAS REPORTED BELOW THE COST PRICE. IT IS TRITE LAW THAT REPORT OF DVO DOES NOT BIND THE ASSESSING OFFICER. THE ASSESSING OFFICER IN EVERY CASE, HAS TO APPLY HIS MIND INDEPENDENTLY CONSIDERING THE REPORT OF THE DVO. T HE LD. CIT(A) FELL IN ERROR BY IGNORING THE FACT THAT THE PRESENT CASE IS A CASE O F NO EVIDENCE. THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE BUSINESS MODE L OF THE ASSESSEE. IN VIEW THEREOF, WE DISAGREE WITH THE VIEW OF THE LD. CIT(A ) AND ACCORDINGLY, ALLOW GROUND NO. 7 OF THE REVENUE. ACCORDINGLY, THE APPE AL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 254/COCH/2014 :A.Y 2009-10 32. GROUND NO. 2 PERTAIN TO MAINTAINABILITY OF TH E APPEAL UNDER THE PROVISIONS OF SECTION 249(4). WE HAVE ALREADY ADJUDICATED THE ISSUE IN THE CASE OF THE ASSESSEE FOR A.YS. 2007-08 AND 2008-09. SINCE THE FACTS ARE IDENTICAL, GROUND NO. 2 OF THE REVENUE IS DISMISSED. 33. GROUND NO. 3 PERTAIN TO THE DELETION OF ADDITIO N OF RS.1,42,88,541/- ON ACCOUNT OF VALUATION OF CLOSING STOCK. THE FACTS I N THIS ASSESSMENT YEAR ARE IDENTICAL TO THE FACTS IN THE ASSESSMENT YEAR 2008- 09, WE ACCORDINGLY ALLOW GROUND NO. 3 RAISED BY THE REVENUE. ITA NOS.252-254/COCH/2014 23 34. IN THE RESULT, THE APPEALS OF THE REVENUE IN I .T.A. NOS. 252 & 253/COCH/2014 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APP EAL IN I.T.A. NO.254/COCH/2014 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/ 2016 SD/- SD/- . ) (GEORGE GEORGE K.) ( . . ) ( B.P. JAIN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER & /PLACE: /COCHIN 8 /DATED: 1 ST JULY, 2016 GJ/ 1 * (.9 :9%. /COPY TO: 1. &' /SHRI ANIL KUMAR SHARMA, XII/333, COCHIN COLLEGE RO AD, COCHIN-2 . 2. () &' /THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIR CLE-1, ERNAKULAM. 3. ,; . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS-I, KOCHI. 4. ,; . /THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. 9<= (. , /THE DR/ITAT, COCHIN BENCH. 6. =? @- /GUARD FILE. 1, /BY ORDER A /ASSISTANT REGISTRAR - . B/ . C . B/ ., /I.T.A.T., COCHIN