The ACIT, Central Circle-2, Surat V. Smt. Kali Paras Shah, Surat

ITA 3021/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6454 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained investment; Tangible material; Valuation report; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA,AM ITA NO.3021/AHD/2009 (ASSESSMENT YEAR:-2006-07) ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 2, ROOM NO. 504,AAYAKAR BHAVAN,MAJURA GATE, SURAT V/S SMT. KALI PARAS SHAH, 63, ADARSH SOCIETY, ATHWALINES, SURAT PAN: AHPPS 8009 M [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI KARTAR SINGH, DR ASSESSEE BY:- SHRI J P SHAH, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 18- 08-2009 OF THE LD. CIT(APPEALS)-II, AHMEDABAD, FOR THE ASSESSMENT YEAR (AY) 2006-07, RAISES THE FOLLOWING GROUNDS:- [1] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE LANDS ON THE BA SIS OF THE VALUATION REPORT OF THE DVO, ON REFERENCE UNDER SECTION 142A OF THE ACT. [2] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THAT WHETHER THE ITAT IS RIGHT IN LAW IN HOLDING THAT SECTION 142A OF THE ACT CANNOT BE INVOKED UNLESS AND UNTIL THE AO GIVES THE FINDING THAT THE ACTUAL INVESTME NTS ARE MUCH MORE THAN THAT RECORDED IN THE BOOKS OF ACCOUNTS AS PER THE P ROVISIONS OF SECTION 69B OF THE I.T. ACT. [3] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THAT WHETHER THE REPORT OF THE DVO CAN BE IGNORED IN THE APPELLATE PROCEEDINGS. [4] THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THAT WHETHER THE BINDING NATURE OF THE PROVISIONS OF SECTION 142A(3) CAN BE IGNOR ED AND VIOLATED. [5] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [6] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 2. ADVERTING FIRST TO GROUND NOS. 1 TO 4 IN THE APP EAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECL ARING INCOME OF 2 ITA NO.3021/AHF/2009 2 RS.45,38,410/- FILED ON 22-12-2006 BY THE ASSESSEE, A PARTNER IN M/S SURIN CORPORATION, WAS TAKEN FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ON 23.10.2007. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE HAD MADE INVESTMENT OF RS.20,60,650/- IN PLOTS NO. 1, 3, 4 AND 5, AT SULTANABAD DUMAS, SURAT .WITH A VIEW TO VERIFY THE CORRECT VALUE OF THE INVESTMENT THEREIN, A REF ERENCE WAS MADE TO THE DISTRICT VALUATION OFFICER [DVO FOR SHORT] INCOME-TAX DEPARTMENT, AHMEDABAD. THE DVO VIDE ITS VALUATION R EPORT DATED 20-12-2007 VALUED THE ABOVE PROPERTIES AS UNDER:- PLOT NO.1 RS.38,49,000/- PLOT NO.3 RS.38,49,000/- PLOT NO.4 RS.35,87,270/- PLOT NO.5 RS. 8,10,320/- ------------------ TOTAL RS.1,20,95,590/- ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE TO EXPLAIN AS TO WHY THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE DETERMINED BY THE DVO BE NO T ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN REPLY, THE ASSESSE E STATED THAT THE VALUE AS DECLARED BY HER WAS CORRECT AND THE VALUE DETERMINED BY THE DVO WAS NOT ACCEPTABLE. THE OBJECTION FILED BY THE ASSESSEE WAS FORWARDED TO THE DVO VIDE LETTER DATED 28-12-20 07 FOR HIS COMMENTS AND SENDING HIS FINAL REPORT. SINCE THE ASSESS MENT WAS GETTING BARRED BY LIMITATION ON 31-12-2007, THE DIFFERENCE O F RS.1,00,34,940/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE, SUBJECT TO ANY ADDITION OR REDUCTION IN THE VALUATION BY THE DVO. A MERE GLANCE AT THE ASSESSME NT ORDER REVEALS THAT THE AO DID NOT ADVERT TO THE ISSUES RAISED BY THE ASSESSEE IN THEIR REPLY DATED 28.12.2007 . 3. ON APPEAL, THE ASSESSEE SUBMITTED THAT THEY HAD SUBMITTED A DETAILED REPLY TO AO ON 28-12-2007 IN PURSUANCE TO THE SHOW CAUSE NOTICE, WHEREIN IT WAS POINTED OUT THAT THE ID. DV O IGNORED THE FACT THAT 3 ITA NO.3021/AHF/2009 3 THE TRANSFEROR AND THE TRANSFEREE WERE MEMBERS OF TH E SAME FAMILY AND THE PLOTS WERE IRREGULAR IN SHAPE; OUT OF THE TOTAL AREA OF TH E PLOTS, ABOUT 1,071 SQ. MTS. FELL WITHIN THE AREA COVERED BY ALIGNMENT FOR PROPOSED ROA D WIDENING BY THE LOCAL AUTHORITY. HOWEVER, THE DVO IGNORED THIS FACT AND NO DEDUCTION HAD BEEN MADE BY HIM ON ACCOUNT OF SUCH ALIGNMENT FOR PROPOSED ROAD WI DENING BY THE LOCAL AUTHORITY. BESIDES REGISTERED VALUER'S REPORT WAS SUBMITT ED TO THE DVO AND IT WAS ALSO POINTED OUT THAT ABOUT 890 SQ. MTS. OUT OF TOTAL AREA OF PLOTS WAS UNDER THE POSSESSION OF 8 DIFFERENT OCCUPANTS OF HUTMENTS. INTER ALIA , IT WAS MENTIONED THAT THE SALE INSTANCES REFERRED TO BY THE DVO IN HIS VALUA TION REPORT WERE NOT COMPARABLE SINCE THE SIZE OF THE PLOTS REFERRED TO BY HI M WERE VERY SMALL PLOTS OF LAND ADMEASURING ONLY 66.88 SQ. MTS. WHEN COMPARED TO T HE SIZE OF APPELLANT'S TWO PLOTS MEASURING 3,532.34 SQ. MTS AND 743.65 SQ. MTS.. WHILE POINTING OUT THE INSTANCES OF THE SALE RATES AT THE RELEVANT TIME FOR TH E PLOTS LOCATED WITHIN THE SAME AREA , THE ASSESSEE CONTENDED THAT THE SALE RATE OF R S.453/- PER SQ.MTR. SHOWN BY THE ASSESSEE WAS REASONABLE .INTER ALIA, THE ASSE SSEE RELIED UPON DECISIONS IN COMMISSIONER OF INCOME TAX V/S. MEERUT CEMEN T CO. (P) LTD. (2006) 202 CTR (ALL) 506.;COMMISSIONER OF INCOME TAX V/S. WEST ERN ESTATES (1994) 209 ITR343(CAL);COMMISSIONER OF INCOME TAX V/S. PRATAPSIN GH AMROSINGH RAJENDRA SINGH (1993) 200 ITR 788 (RAJ); COMMISSIONER OF INCOME TAX V/S. LAKHPAT FILM EXCHANGE (2002) 173 CTR (RAJ) 94;INCOME T AX OFFICER V/S. PRAVINCHANDRA GIRDHARLAL (1999) 63 TTJ .(AHD) 357 AND CONTENDED THAT UNLESS THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED, NO ADDI TION COULD BE MADE ON THE BASIS OF THE REPORT OF THE DVO. THE ASSESSEE ADDED THAT THE STAMP DUTY AUTHORITY HAD ALSO ACCEPTED THE PURCHASE CONSIDERATION SHO WN BY THE ASSESSEE FOR THE IMPUGNED PROPERTY OF RS.16,00,000/- & RS.3,00 ,000/- TO BE FAIR AND PROPER AND AS PER THE READY RECKONER OF THE STAMP DUTY AUTHOR ITY I.E. 'JANTRI', THE MARKET VALUE OF THE SAID PROPERTY WAS RS.210/- PER SQUA RE METRE AS AGAINST WHICH THE ASSESSEE HAD SHOWN TO HAVE PURCHASED THE PROPERTY AT THE RATE OF RS.453/- PER SQUARE METRE. IN THE LIGHT OF THESE SUBMISSI ONS, THE LD. CIT(A) WHILE OBSERVING THAT THE AO DID NOT CONSIDER THE REPLY DAT ED 28.12.2007 OF THE ASSESSEE AT ALL WHILE FRAMING THE ASSESSMENT, DELET ED THE ADDITION IN THE FOLLOWING TERMS:- 4 ITA NO.3021/AHF/2009 4 3. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I AGRE E WITH THE APPELLANT'S VIEW FOR THE FOLLOWING REASONS: A) THE APPELLANT HAS PURCHASED THESE PROPERTIES. DURING THE SEARCH, NO EVIDENCE WAS FOUND INDICATING THAT THE APPELLANT HAS PAID OVER AND ABOVE THE PURCHASE PRICE. AS PER HON'BLE AHMEDABAD BEN CH'S DECISION IN -THE .CASE OF ACIT VS SHRI BALKRISHAN PODDAR ITA NO.3412 TO 3414/AHD/2008 FOR A.YS.2000-01, 2003-04 & 2005-06 DT D 12.6.2009, NO SUCH ADDITION CAN BE MADE ON THE BASIS OF DVO'S REPORT W HEN NO EVIDENCE IS FOUND IN THE SEARCH AND NO MATERIAL IS AVAILABLE WI TH THE A.O. FOR MAKING REFERENCE TO THE DVO. B) THE APPELLANT'S SUBMISSION THAT THE PLOT NO.3 & 4 DO NOT BELONG TO THE APPELLANT, IS NOT CONTROVERTED BY THE ASSESSING OFFICE R. THE EVIDENCE FURNISHED BY THE APPELLANT SHOW THAT THEY DO NOT BELO NG TO THE APPELLANT. C) THE VALUATION OFFICER AS WELL ASSESSING OFFICER HAS NOT CONSIDERED THE OBJECTION OF THE APPELLANT WHICH IS MAINLY THAT PLO T ARE OF IRREGULAR SIZE, THERE ARE ENCROACHMENT IN THE SHAPER OF EIGHT HUTMENTS, ETC. FURTHER, THE DETAILED SUBMISSIONS OF THE APPELLANT SHOWS THAT PURCHASE WAS MADE AT THE PREVAILING RATE AND RATE APPLIED BY THE DVO WAS NOT PROPER AND COMPARABLE. THE PURCHASE PRICE WAS WITHIN THE JANTRI RA TES AND ACCEPTED BY THE STAMP DUTY AUTHORITIES. IN VIEW OF THESE FACTS, IT IS HELD THAT ACTION OF THE A. O. WAS NOT PROPER AND THE ADDITION IS DELETED. 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST TH E AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE AO. ON THE OTHER HAND , THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT( A) WHILE CONTENDING THAT JANTRI RATES FOR THE PLOTS IN THE S AME AREA WERE BELOW THE PRICE PAID BY THE ASSESSEE FOR THE AFOR ESAID PLOTS. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY , NO EVIDENCE WAS FOUND DURING THE SEARCH THAT THE ASSESSEE PAID OVER AND ABOVE THE PURCHASE PRICE FOR THE AFORESAID PLOTS WHILE IT HAS NEITHER BEEN CONTROVER TED BEFORE THE LD. CIT(A) NOR EVEN BEFORE US THAT THE PLOT NOS.3 & 4 DID NOT BELONG TO THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE EVID ENCE FURNISHED BY THE ASSESSEE REFLECTED THAT THESE DID NOT BELON G TO THE 5 ITA NO.3021/AHF/2009 5 ASSESSEE. AS IS APPARENT, ADDITION HAS BEEN MADE O NLY ON THE BASIS OF DIFFERENCE IN COST OF PLOTS AS PER REPORT OF DV O AND THE COST AS SHOWN BY THE ASSESSEE. THE LD. CIT(A) AFTER ANALYSI NG THE REPORTS OF THE DVO OBSERVED THAT THE PURCHASE PRICE WAS WITHIN THE JANTRI RATES AND ACCEPTED BY THE STAMP DUTY AUTHORITIES AND ACCO RDINGLY, DELETED THE ADDITION. IT MAY BE MENTIONED THAT APART FROM T HE VALUATION REPORT, NO OTHER CORROBORATIVE EVIDENCE SUGGESTING UNDISCLOSED INVESTMENT HAS BEEN BROUGHT TO OUR NOTICE BY THE RE VENUE. IT IS WELL SETTLED THAT THE PRIMARY BURDEN OF PROOF TO ESTABL ISH UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT I S ONLY WHEN SUCH BURDEN IS DISCHARGED THAT IT WOULD BE PERMISSI BLE TO RELY UPON THE VALUATION REPORT OF THE DVO. [K.P. VARGHESE VS . ITO,131 ITR 597(SC); CIT VS. SMT. SHAKUNTALA DEVI, 224 CTR (DEL ) 79 ; CIT VS. MANOJ JAIN (2006) 200 CTR (DEL) 327]. IN ANY CASE, THE OPINION OF THE DVO, PER SE, IS NOT AN INFORMATION AND CANNOT B E RELIED UPON WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED - WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. IN THIS CONNECTION ,HONB LE SUPREME COURT IN THEIR DECISION DATED 19TH OCT., 2009 IN CI VIL APPEAL NO. 6973 OF 2009 HAVE HELD AS UNDER: DELAY CONDONED. LEAVE GRANTED. IN THE PRESENT CASE, WE FIND THAT THE TRIBUNAL DECI DED THE RIGHTLY IN FAVOUR OF THE ASSESSEE IN AS MUCH AS THE TRIBUNAL C AME TO THE CONCLUSION THAT THE ASSESSING AUTHORITY COULD NOT H AVE THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) WITHOUT BO OKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE HIGH COUR T. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REP ORT OF THE DVO WAS MISCONCEIVED . 5.1 EARLIER ALSO SIMILAR VIEW WAS TAKEN IN CIT V. PRATAPSINGH AMROSINGH RAJENDRA SINGH AND DEEPAK KUMAR, 200 ITR 788(RAJASTHAN) AND CIT VS. MEERUT CEMENT CO.(P) LTD . (2006) 202 CTR (ALL) 506. IN THE CASE UNDER CONSIDERATION, THE RE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT THE AO EXAMINED THE B OOKS OF 6 ITA NO.3021/AHF/2009 6 ACCOUNTS OR HAD ANY MATERIAL IN HIS POSSESSION WHI CH COULD LEAD TO A PRIMA FACIE CONCLUSION THAT BOOKS OF ACCOUNTS DI D NOT REFLECT TRUE COST OF THE AFORESAID PLOTS. EVEN BEFORE US NO SUC H MATERIAL HAS BEEN REFERRED TO BY THE LD. DR. NO DOUBT, IF BOOKS OF ACCOUNT HAVE BEEN PROPERLY MAINTAINED WHEREIN ALL DETAILS HAVE B EEN RECORDED BY THE ASSESSEE DULY SUPPORTED BY VOUCHERS/DOCUMENTS A ND NO DEFECTS ARE POINTED OUT AND THE BOOKS ARE NOT REJECTED, THE RESULT SHOWN BY THEM IS BOUND TO BE ACCEPTED. IN THE CASE UNDER CON SIDERATION , THERE IS NO COGENT OR TANGIBLE MATERIAL OR EVIDENCE MUCH LESS ANY INCRIMINATING EVIDENCE TO COME TO A CONCLUSION THA T THE ASSESSEE SPENT MORE THAN WHAT THEY CLAIMED FOR THE RELEVANT INVESTMENT IN PLOTS .IN THESE CIRCUMSTANCES , WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NOS. 1 TO 3 IN THIS APPEAL ARE DISMISSED. 6. IN VIEW OF OUR FINDINGS IN RELATION TO GROUN D NOS. 1 TO 3 IN THE APPEAL, ISSUE RAISED IN GROUND NO.4 BECOMES PURE LY ACADEMIC, ESPECIALLY WHEN NO SUCH SPECIFIC FINDINGS HAVE BEEN RECORDED BY THE LD. CIT(A) NOR THE LD. DR MADE ANY SUBMISSIONS ON T HIS ASPECT. CONSEQUENTLY, GROUND NO. 4 IS ALSO DISMISSED. 7. GROUND NOS. 5 & 6 BEING MERE PRAYER NOR ANY SU BMISSIONS HAVING BEEN MADE BEFORE US ON THESE GROUNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 10-06-2011 SD/- SD/- ( T K SHARMA ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 10 -06-2011 7 ITA NO.3021/AHF/2009 7 COPY OF THE ORDER FORWARDED TO: 1. SMT. KALI PARAS SHAH, 63, ADARSH SOCIETY, ATHWAL INES, SURAT 2. ACIT, CENTRAL CIRCLE-2, SURAT 3. CIT CONCERNED 4. CIT(A)-II, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD