M/s. Southend Enterprises Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3048/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3859 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRUJARI MOHANTY
• Keywords: Rejection of books of accounts; Unexplained investment; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.3048/DEL/2010 ASSESSMENT YEAR : 2003-04 M/S SOUTHEND ENTERPRISES PVT. VS. INCOME TAX OFFICER, LTD., M-75, G.K.-I, WARD-9(1), NEW DELHI NEW DELHI PAN NO.AAGCS 5611 N AND I.T.A. NO.3049/DEL/2010 ASSESSMENT YEAR : 2003-04 M/S SUPERIOR PROMOTERS PVT. VS. INCOME TAX OFFIC ER, LTD., M-75, G.K.-I, WARD-9(4), NEW DELHI NEW DELHI PAN NO.AAGCS 7695 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN, CA RESPONDENT BY : MS. SRUJARI MOHANTY, SR. DR. ORDER PER K.G. BANSAL, AM: THESE TWO APPEALS PERTAIN TO CONNECTED CASES, HAVING COMMO N FACTS. THEREFORE, THE APPEALS WERE ARGUED IN A CONSOLIDATED MANNER BY THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED DR. IN VIEW THEREOF , A CONSOLIDATED ORDER IS PASSED. 2 2. THE LEARNED COUNSEL FURNISHED FACTS IN BRIEF, WHICH AR E MATERIAL FOR DECIDING THE GROUNDS TAKEN IN THE APPEALS. THESE ARE THAT THE TWO C OMPANIES CONSTRUCTED A BUILDING CONSISTING OF BASEMENT, GROUND FLOOR AND FIR ST FLOOR ON A PLOT OF LAND SITUATED IN NITI BAGH, AND ADMEASURING ABOUT 271 .98 SQ. METERS. THE CONSTRUCTION WAS COMPLETED IN THE MONTH OF DECEMBER, 200 1. THE FIRST FLOOR BELONGED TO SOUTHEND ENTERPRISES PRIVATE LIMITED (SOUTHEND FO R SHORT) AND THE BASEMENT AND GROUND FLOOR BELONGED TO SUPERIOR PROMOTERS P RIVATE LIMITED (SUPERIOR FOR SHORT). THE SOUTHEND SOLD ITS PROPERTY, BEI NG THE FIRST FLOOR, IN APRIL, 2002. THE SUPERIOR SOLD THE BASEMENT AND THE GROUND FLOO R IN JUNE, 2002. IN THE CASE OF SUPERIOR, THE ASSESSING OFFICER REFERRED THE VALUATIO N OF LAND AND COST OF CONSTRUCTION IN RESPECT OF BASEMENT AND GROUND FLOOR TO THE DISTRICT VALUATION OFFICER. THIS REPORT WAS USED IN THE CASE OF THE SOUTHEND ALSO. ON THE BASIS OF THE REPORT, THE VALUE OF UNACCOUNTED INVESTMENT IN LAND ALLOC ATED TO THE SOUTHEND WAS QUANTIFIED AT `7,88,778/- AND THE VALUE OF UNACCOUNTED INVESTMENT IN CONSTRUCTION FOR THE FIRST FLOOR WAS QUANTIFIED AT `7,79,455/-. IN THE CASE OF THE SUPERIOR, THE VALUATION REPORT WAS USED TO QUANTIFY THE SALE CONSIDERA TION. 3. AS MENTIONED ABOVE, IN THE CASE OF SOUTHEND, THE UNACCO UNTED INVESTMENT WAS WORKED OUT AT `15,68,233/-, BEING `7,88,778/- IN RESPECT OF LAND AND `7,79,455/- IN RESPECT OF COST OF CONSTRUCTION. THIS AMOUNT WAS ADDED TO THE TOTAL INCOME RETURNED BY THE ASSESSEE, AND THUS, THE SAME WAS ASSES SED AT `15,90,963/-. THE CIT(A) DISMISSED THE APPEAL OF THE AS SESSEE BY INTER ALIA MENTIONING THAT THE GROUND FLOOR AND THE FIRST FLOOR WERE CARBON COPIES OF EACH OTHER AND, THEREFORE, THE VALUATION REPORT APPLIED MUTATIS MUTA NDIS TO THE CASE OF THIS ASSESSEE. 3 3.1 THE LEARNED COUNSEL DREW OUR ATTENTION TOWARDS PAGE NO S.15 TO 36 OF THE PAPER BOOK BEING THE SALE DEED OF FIRST FLOOR BY THE VENDOR , SHRI S.B. SHUGLA IN FAVOUR OF SHRI KARAN CHOPRA WITH THE SOUTHEND ACTING A S A CONFIRMING PARTY, FOR A CONSIDERATION OF `39,00,000/-. THE FACTS REGARDING T HE PROPERTY ARE THAT THE LAND ADMEASURING ABOUT 271.98 SQ. METERS, SITUATED IN THE LA Y OUT PLAN OF THE SUPREME COURT BAR CO-OPERATIVE HOUSING BUILDING SOCIETY LIMITED, IN THE NITI BAGH COLONY, NEW DELHI, WAS ORIGINALLY ALLOTTED BY THE DDA TO SHRI P. K. PILLAI. HE CONSTRUCTED A 2 STOREYED RESIDENTIAL BUILDING ON THIS PLOT OF LAND WITH HIS OWN FUNDS. SHRI PELLAI ALSO GOT CONVERTED THE PROPERTY INTO FREEHOLD PROPERTY IN HIS OWN NAME. HE SOLD THE PROPERTY TO SHRI SHANTI BHUSHAN SHUGLA VIDE REGISTERED S ALE DEED DATED 25.05.1995. SHRI SHUGLA IS THE VENDOR IN THE AGREEMENT OF SALE UNDER CONSIDERATION. HE ENTERED INTO AN AGREEMENT TO SELL THE FI RST FLOOR OF THE PROPERTY ALONG WITH 30% UNDIVIDED, INDIVISIBLE AND IMPARTIBLE O WNERSHIP RIGHTS IN THE LAND TO THE SOUTHEND ON 17.07.2001 TO OWN AND USE THE PROPERTY, O NE SERVANT QUARTER ON THE TERRACE AND RIGHT TO PARK ONE CAR IN THE DRIVEWAY INS IDE THE BUILDING. THE SOUTHEND HAS BEEN NAMED AS CONFIRMING PARTY IN THE AGREEMEN T UNDER CONSIDERATION. THIS PROPERTY HAS BEEN SOLD TO SHRI KARA N CHOPRA, WHO HAS BEEN DESCRIBED AS THE VENDEE IN THE AGREEMENT FOR A CONSIDERATIO N OF `39,00,000/-. THE LEARNED COUNSEL STRESSED THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE ON 17.07.2001. HE REFERRED TO THE VALUATION MADE BY THE DVO IN RESPECT OF PROPERTY SITUATED IN THE BASEMENT AND GROUND FLOOR DATED 20.12.2 005, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS.48 TO 56. THE P ROPERTY HAS BEEN VALUED AS ON 08.07.2002. THE CASE OF THE LEARNED COUNSEL IS THAT THE DATE OF ACQUISITION IS DIFFERENT FROM THE DATE OF VALUATION AND , THEREFORE, THE VALUATION REPORT COULD NOT HAVE BEEN MECHANICALLY USED IN THE CASE OF THE AS SESSEE. FURTHER, THE ASSESSEE HAD PURCHASED THE PROPERTY AND THERE IS NO EVIDENCE ON RECORD THAT ANY AMOUNT OVER AND ABOVE THE AMOUNT MENTIONED IN THE AGREEMENT TO SELL DATED 4 17.07.2001 WAS PAID BY IT. THEREFORE, NO ADDITION COU LD BE MADE MERELY ON THE BASIS OF VALUATION. 3.2 COMING TO THE ESTIMATION OF COST OF CONSTRUCTION, IT IS SUBMITTED THAT THE VALUE ESTIMATED BY THE DVO AS ON 08.07.2002 IN RESPECT OF GROU ND FLOOR IN THE CASE OF THE SUPERIOR HAS BEEN ADOPTED BY THE ASSESSING OFFICER. THE FACT OF THE MATTER IS THAT THE PROPERTY OF THE ASSESSEE WAS NOT INSPECTED BY THE D VO. THE ASSESSEE ALSO DOES NOT KNOW THE ADDITIONS MADE TO THE PROPERTY BY THE V ENDEE. THE ASSESSEE HAS ALSO GOT THE PROPERTY VALUED AS ON 08.07.2002 BY SHRI B .P. SINGH, THE APPROVED VALUER, WHOSE REPORT HAS BEEN PLACED IN THE PAPER BOOK ON P AGES 38 TO 44. ACCORDING TO THIS REPORT DATED 13.03.2006, THE VALUE OF THE PROPORTIONATE LAND HAS BEEN ESTIMATED AT ABOUT `30.19 LACS AND THE COST OF CON STRUCTION AT ABOUT `8.98 LACS. THE TOTAL VALUE OF THE PROPERTY HAS BEEN ESTIMATED A T `39.18 LACS. THIS IS THE FAIR MARKET VALUE AND THE VALUATION IS IN CONSONANCE OF THE SALE CONSIDERATION OF `39 LACS. IT IS ARGUED THAT NO ADDITION COULD HAVE BEEN M ADE EITHER IN RESPECT OF THE PROPORTIONATE VALUE OF THE LAND OR THE COST OF THE CONST RUCTION. 3.3 IN REPLY, THE LEARNED DR RELIED ON THE ORDER OF THE LEAR NED CIT(A) AND SUBMITTED THAT IF THE YEAR OF ADDITION HAS BEEN WRONGLY TAKEN BY THE ASSESSING OFFICER, THE TRIBUNAL MAY DIRECT HIM TO MAKE THE ADDITIO N IN THE TOTAL INCOME OF THE AGGREGATE ASSESSMENT. FOR THE SAKE OF READY REFERENCE, THE FI NDINGS OF THE LEARNED CIT(A) ARE REPRODUCED BELOW:- HOWEVER THIS CONTENTION OF THE AR HAS NO SUBSTANCE AS THE AO HAS ALREADY BROUGHT ON RECORD THAT THE FIRST FLOOR OF C -30 NEETI BAGH ,NEW DELHI IS A CARBON COPY (ZEROX COPY) OF THE PROPERTY ON THE GROUND FLOOR. IT IS PERTINENT TO NOTE HERE THAT WITH REFERENCE TO BU ILDING THERE HAS TO BE AN ELEMENT OF CONSISTENCY IN QUALITY IN TERMS OF CEMEN T, BRICKS, IRON ETC. IT IS NOT AN INDIVIDUAL/RETAIL PRODUCTS WHICH IS PLACED S EPARATELY. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY DETAILS AND VOUCHERS ETC. TO ESTABLISH THAT 5 AO'S OBSERVATIONS REGARDING FIRST AND GROUND FLOOR BEING ZEROX COPY OF EACH OTHER, IS INACCURATE. THE GROUND FLOOR AND THE FIRST FLOOR MAY BE AREAS BELONGING TO TWO DIFFERENT COMPANIES, WHICH ARE TW O DIFFERENT LEGAL ENTITY HOWEVER, THERE IS NO DENYING THE FACT THAT T HE TWO FLOORS ARE CARBON COPIES OF EACH OTHER IN TERMS OF SIZE, MATERIAL AND FINISH. THE CONSTRUCTION IS COMPOSITE ACTIVITY AND AS SUCH THE AR'S CLAIM TH AT 'GROUND FLOOR HAS NO RELATION WITH FIRST FLOOR' CANNOT BE ACCEPTED. THE FLOORS MAY BELONG TO TWO DIFFERENT COMPANIES HOWEVER THE SAME ARE IDENTICAL IN TERMS OF DESIGN, MATERIAL AND CONSTRUCTION. HENCE AO'S ACTION OF MAK ING USE OF THE DVO'S REPORT FOR GROUND FLOOR FOR 1ST FLOOR IS UPHELD. AR'S CONTENTION THAT THE AO HAS NOWHERE RECORDED AN Y INDEPENDENT FINDING AS REGARDS THE VALUATION OF PROPERTY INDICA TING ANY FAULT IS NOT ACCEPTABLE IN VIEW OF THE FACTS DISCUSSED AT LENGTH IN THE ASSESSMENT ORDER. INSTEAD OF DUPLICATING THE EXERCISE OF IDENTICAL MA PS AND IDENTICAL MATERIAL BEING VALUED BY THE DVOS, AO HAS RIGHTLY USED THE V ALUATION REPORT FOR THE GROUND FLOOR FOR 1ST FLOOR, AS PROPERTY IS THE SAME. THE PLOT AND THE PREMISES IS THE SAME. THERE IS ELEMENT OF CONTINUIT Y AS CONSTRUCTION IS A CONTINUES ACTIVITY, KEEPING IN MIND THE STRENGTH OF BUILDING AND ITS FINISHED LOOK. F)THE APPELLANT HAS PLEADED THAT THE SALE CONSIDERA TION WAS RECEIVED BEFORE SUB-REGISTRAR WHO IS A GOVT. OFFICE AND HENCE THE S ALE PRICE OF THE PROPERTY HAS TO BE VALUED AT RS. 39 LAKHS. HOWEVER, IT IS A WELL-KNOWN FACT THAT SALE CONSIDERATION OF EACH PROPERTY VARIES FRO M PROPERTY TO PROPERTY AND DEPENDING ON THE MARKET CONDITIONS. IT IS ALSO WELL ESTABLISHED THAT THERE IS OFTEN SUPPRESSION OF A SALE CONSIDERATION AND HENCE THE CONCEPT OF CIRCLE RATE HAS BEEN APPLIED. G)AR HAS SUBMITTED THAT THE AD HAS ERRED IN NOT EXA MINING THE PURCHASER. HOWEVER, THIS IS NEITHER CALLED FOR, NOR NECESSARY IN VIEW OF THE EVIDENCE AND REASONS FOR ADDITION RECORDED IN THE ASSESSMENT ORDER. H) THE AR HAS PLACED RELIANCE IN THE CASES OF CIT V S. CALCUTTA DISCOUNT CO. 91 ITR 8 & CIT VS. A RAMAN AND CO. 67 ITR L1(SC ). HOWEVER THESE CASES ARE DISTINGUISHED FROM THAT OF THE ASSESSEE A S THESE CASES PERTAIN TO THE CONCEPT OF NOTIONAL INCOME. (I) AR HAS CONTENDED THAT ASSESSING OFFICER ERRED I N REJECTING BOOKS OF ACCOUNTS AND HOLDING THAT THE PURCHASES WERE NOT AL L REFLECTED IN THE BOOKS OF ACCOUNTS. HOWEVER, THIS CONTENTION OF THE ASSESS EE CANNOT BE ACCEPTED IN VIEW OF THE SPECIFIC OBSERVATION OF THE ASSESSIN G OFFICER BROUGHT ON 6 RECORD AND ADMITTED BY THE ASSESSEE VIDE LETTER DAT ED 10.10.05 WHEREIN HE PLEADED THAT NOT EVEN MONTH WISE PURCHASES COULD BE ARRIVED AT FROM THE BOOKS OF ACCOUNT. ALL PURCHASE NEED TO BE METICULOU SLY REFLECTED IN THE BOOKS. HENCE AR'S CONTENTION THAT SECTION 145 COULD NOT BE INVOKED, IS WITHOUT JUSTIFICATION AND THAT THERE WAS OMISSION O N THE PART OF THE ASSESSEE, IS UNACCEPTABLE. IT IS HELD THAT ASSESSIN G OFFICER RIGHTLY REJECTED THE BOOKS OF ACCOUNT. J)AR HAS CONTENTED THAT' THERE WERE NUMBER -OF ITEM S WHICH HAVE BEEN ADDED BY THE BUYER IN THE LAST THREE YEARS EVER SIN CE THEY PURCHASED PROPERTY'. HOWEVER EITHER DURING ASSESSMENT OR APPE LLATE PROCEEDINGS NO LIST .HAS BEEN GIVEN OF THESE CHANGES WHICH ARE CLA IMED TO BE MADE BY THE PURCHASER. THIS IS A GENERAL CLAIM BY THE ASSESSEE. IN ANY CASE, NO STRUCTURAL CHANGE CAN BE MADE EXTENSIVELY ON THE FI RST FLOOR OF THE PROPERTY. AR HAS GIVEN NO PROOF OF ANY SPECIFIC CHANGES ATTRI BUTED TO THE PURCHASER. HENCE THIS OBJECTION CANNOT BE SUSTAINED. K) THE AR HAS CLAIMED THAT BEING IN THE CONSTRUCTIO N BUSINESS, ASSESSEE IS EXPERT OF PURCHASING THE CONSTRUCTION MATERIAL AT B ARGAIN PRICE. HOWEVER IN PRACTICAL TERMS, EVERY PERSON SEEKS A BARGAIN RE GARDING THE CONSTRUCTION MATERIAL. AR HAS GIVEN NO PROOF OF ANY PURCHASES MA DE BELOW THE MARKET PRICE. L)AR HAS STATED THAT THE VALUATION REPORT IS WITH R EFERENCE TO SALE ON 8TH FEB,2002 AND THE PURCHASE WAS MADE ON 19. 7.2001 TH ERE IS ONLY 5 MONTHS DIFFERENCE AND PROPERTY PRICES DURING THIS P ERIOD WERE NOT VERY VOLATILE. HENCE THE STAND OF THE AO REGARDING THE S AME IS CONFIRMED. IN VIEW OF THE ABOVE DISCUSSION: IT IS HELD THAT AS SESSING OFFICER RIGHTLY INVOKED SECTION 145(2). HE HAS RIGHTLY MADE AN ADDI TION ON ACCOUNT OF COST OF LAND & ON OTHER ACCOUNT. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION S MADE BEFORE US. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ACQUIRED A P ROPERTY ON17.07.2001. THE PROPERTY WAS RECONSTRUCTED/DEVELOPED AND SOLD ON 19.0 4.2002. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS UNDER-STATED TH E COST OF ACQUISITION IN THE PROPORTIONATE LAND BY AN AMOUNT OF `7,88,778/-. THIS HAS BEEN DONE ON THE 7 BASIS OF VALUATION REPORT IN THE CASE OF THE SUPERIOR WHO HELD A PROPORTIONATE RIGHT IN THE SAME LAND TO THE EXTENT OF 40%. THE ASSESSING OF FICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT ANY AMOUNT MORE THAN THE AMOUNT M ENTIONED IN THE PURCHASE CONSIDERATION WAS PAID BY THE ASSESSEE. FURTHER , THE ASSESSING OFFICER HAS COMPUTED UNDISCLOSED INVESTMENT IN THE COST OF CONST RUCTION OF THE PROPERTY AT `7,79,455/-. THIS AMOUNT HAS BEEN ARRIVED AT ON THE BA SIS OF THE VALUATION OF THE GROUND FLOOR OF THE PROPERTY OWNED BY THE SUPERIOR. NO INDEPENDENT VALUATION HAS BEEN MADE IN RESPECT OF THE PROPERTY HELD BY THE ASSESSEE AT FI RST FLOOR AND THE SERVANT QUARTER ON THE TERRACE. THE LEARNED CIT(A) HAS HEL D THAT THE CONSTRUCTION ON GROUND FLOOR AND FIRST FLOOR IS IDENTICAL. THE LAND IS THE SAME AND, THEREFORE, THE VALUATION REPORT IN THE CASE OF THE SUPERIOR CONSTITUTED T HE RIGHT BASIS FOR ARRIVING AT THE COST OF THE LAND AND THE COST OF CONSTRUCTION. 4.1 FROM THE FACTS FURNISHED ABOVE, IT IS CLEAR THAT TH E ASSESSING OFFICER DID NOT HAVE ANY FACTS ON RECORD THAT PURCHASE CONSIDERATION OF THE LAND OR THE COST OF CONSTRUCTION WAS UNDER-REPORTED BY THE ASSESSEE. IN FACT , HE HAD NO OCCASION TO FORM THE PRIMA FACIE BELIEF AS NO REFERENCE WAS MADE TO THE D VO. FURTHER, THE ASSESSEE ACQUIRED THE RIGHT IN LAND ON 17.07.2001, WHILE THE DVO VALUED THE LAND AS ON 08.07.2002. THEREFORE, THE VALUATION MADE IS OF A DIFFERENT DATE. IN ANY CASE, THERE IS A DIFFERENCE BETWEEN THE COST OF ACQUISITION A ND THE FAIR MARKET VALUE OF A PROPERTY. THE FAIR MARKET VALUE CANNOT BE MECHANIC ALLY SUBSTITUTED IN PLACE OF COST IN ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THA T HIGHER PRICE WAS PAID BY THE ASSESSEE. SIMILARLY, THE REFERENCE FOR VALUATION OF THE COST COULD BE MADE ONLY ON PRIMA FACIE BELIEF THAT IT HAS BEEN UNDERSTATED IN THE BOOK S. THERE IS NO SUCH EVIDENCE ON RECORD. AT THE SAME TIME, THE ASSESSEE HAS FILED A VALUATION REPORT OF THE PROPERTY, MADE BY THE APPROVED VALUER AS ON 08.07.200 2, AT `39.18 LACS, WHICH IS IN CONSONANCE OF THE SALE PRICE OF `39,00,00 0/- REALIZED BY THE ASSESSEE 8 ON 19.04.2002. THE LEARNED CIT(A) HAS NOT FURNISHED AN Y COGENT ARGUMENT TO DISBELIEVE THIS REPORT, WHICH IS ALSO MADE BY AN EXPERT IN THE FIELD. IN VIEW OF THIS REPORT, IT CANNOT BE SAID THAT THE COST OF ACQUISITION AND CONSTRUCTION WAS SUPPRESSED BY THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDITIONS MADE BY THE ASS ESSING OFFICER. 4.2 THE LEARNED DR HAS ALSO SUBMITTED THAT IF UNDISCLO SED INVESTMENT HAS BEEN ASSESSED IN A WRONG YEAR, THE TRIBUNAL MAY ISSUE A DIRECT ION TO ASSESS THE SAME IN THE RIGHT YEAR. FROM THE DISCUSSION MADE BY US, IT IS CLEAR THAT WE HAVE NOT COME TO ANY FIRM CONCLUSION REGARDING UNDISCLOSED INVESTMENT I N THE PROPERTY. THEREFORE, WE ARE NOT IN A POSITION TO ISSUE SUCH DIRECTION. WE M AY ONLY ADD THAT THE ASSESSING OFFICER IS FREE TO DEAL WITH THE ISSUE AS PER LA W. 5. COMING TO THE CASE OF THE SUPERIOR, THE FACTS ARE THAT THIS ASSESSEE A CONNECTED CONCERN. IT ACQUIRED RIGHTS IN THE BASEMENT AN D GROUND FLOOR ALONG WITH PROPORTIONATE RIGHTS IN THE LAND. THE ASSESSING OFFIC ER HAS MENTIONED THAT THE ASSESSEE AND THE SOUTHEND ARE CLOSELY HELD COMPANIES. THEY H AVE COMMON MANAGEMENT AND SHAREHOLDERS WITHIN THE SAME FAMILY. BOTH THE COMPANIES ARE OPERATING FROM THE SAME PREMISES AND M-75, GREATER KAILASH -I, NEW DELHI. HE IS OF THE VIEW THAT THE PURCHASE AND THE SALE OF ONE PROPERTY HAS BEEN DELIBERATELY BROKEN UP INTO TWO PARTS, BEING BASEMENT AND GROUND FLO OR IN THE CASE OF THE ASSESSEE AND FIRST FLOOR IN THE CASE OF THE SOUTHEND. THE D VO DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY OWNED BY THE ASSESSEE AT `74,71 ,700/- AGAINST THE SALE CONSIDERATION OF `55,00,000/-. HE VALUED THE PROPER TY AT BASEMENT AT `22,50,600/- AND THE PROPERTY AT GROUND FLOOR AT `52, 21,100/- WHILE THE ASSESSEE DECLARED SALE CONSIDERATION IN RESPECT OF BASEMENT AT `15, 00,000/- AND FIRST FLOOR AT `40,00,000/-. AFTER HEARING THE ASSESSEE, THE DIFFERENCE OF `19,71,700/- WAS 9 ADDED TO THE TOTAL INCOME AS UNACCOUNTED SALE CONSIDERATI ON. THIS ADDITION HAS BEEN CONFIRMED BY THE LEARNED CIT(A) BY MENTIONING THAT REG ULAR BOOKS OF ACCOUNT WERE NOT MAINTAINED, THE LABOUR EXPENSES CANNOT BE VERIFIED ET C. THEREFORE, IT HAS ALSO BEEN HELD THAT THE REFERENCE WAS RIGHTLY MADE TO THE DVO . 5.1 BEFORE US, THE LEARNED COUNSEL REFERRED TO TWO SALE DEEDS P LACED IN THE PAPER BOOK FROM PAGE NOS.50 TO 136. THE FIRST SALE DEED, BETWEEN PAGE NOS.50 TO 84 IS IN RESPECT OF THE BASEMENT SOLD TO MRS. MANJEET KAU R AND DR. K.M. SINGH FOR A CONSIDERATION OF `15,00,000/-. THE SALE DEED HAS BEEN SI MILARLY WORDED AS THE SALE DEED IN THE CASE OF THE SOUTHEND. THE SECOND SALE DEED IS IN RESPECT OF SALE OF THE GROUND FLOOR TO DR. K.M. SINGH AND MRS. MANJEET KAU R FOR A CONSIDERATION OF `40,00,000/-. THUS, THE CONSIDERATION IN RESPECT OF BO TH THE PROPERTIES WORKS OUT TO `55,00,000/-. THE CASE OF THE LEARNED COUNSEL IS THAT THE SALE CONSIDERATION HAS BEEN ALTERED WITHOUT ANY EVIDENCE ON RECORD TO THE EFFECT THAT ANY AMOUNT OVER AND ABOVE MENTIONED IN THE SALE DEEDS WAS RECEIVED BY THE ASSESSEE. IN REPLY, THE CASE OF LEARNED DR IS THAT NO RECORD HAS BEEN MAINTAINED IN RESPECT OF THE COST OF CONSTRUCTION AND, THEREFORE, IT BECAME NECESSARY TO FIND THE FAIR MARKET VALUE OF THE PROPERTY. 5.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUB MISSIONS. THE FACTS ARE THAT THE ASSESSEE COMPANY SOLD THE BASEMENT AND GROUND FLOOR TO MRS. MANJEET KAUR AND DR. K.M. SINGH FOR A TOTAL CONSIDERATION OF `55,00,000/-. THE ASSESSING OFFICER REFERRED THE MATTER TO THE VALUATION CELL, WHICH DETERMINED THE FAIR MARKET VALUE AS ON DATE OF SALE AT `74,71,700/-. THE DIFFERENCE OF `19,71,700/- HAS BEEN ADDED TO THE INCOME HAS UNDECLARED SALE CONSIDERATION. TH IS ACTION HAS BEEN CONFIRMED BY THE LEARNED CIT(A) BY MAKING THE FOLLOWING REMARKS:- AR HAS ARGUED THAT PURCHASER HAS NOT BEEN EXAMINED BY TH E ASSESSING OFFICER. HOWEVER, THIS IS NEITHER OF ANY IMPOR TANCE OR 10 RELEVANCE IN VIEW OF THE FACTS BROUGHT ON RECORD BY THE A SSESSING OFFICER. THE EXAMINATION OF THE PURCHASER IS UNCALLED FO R. THE SALE PRICE MENTIONED IN THE REGISTERED DEED, CANNOT BE TAKEN AS THE CONCLUSIVE PROOF AS THE SAME IS MUTUALLY AGREED AT THE CO NVENIENCE OF THE ASSESSEE AND /THE PURCHASER AND LEAVES THE ISSUE REGARDING INVESTMENT UNDER VARIOUS HEAD, UNEXPLAINED IN VIEW OF THE DVOS REPORT. IT IS HELD THAT, ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS BECAUSE /THE SAME WERE NOT MAINTAINED IN THE R EGULAR COURSE OF BUSINESS AND BILLS/VOUCHERS WERE NOT PRODUCED AT ANY STAGE TO VERIFY RECORDING MADE IN A LUMP SUMP MANNER IN THE SO CALLED BOOKS OF ACCOUNT. IT HAS ALSO BEEN VERIFIED D URING THESE PROCEEDINGS THAT THE ASSESSEE DID NOT MAINTAIN RECORDS RELA TING TO WORK IN PROGRESS. THE LABOUR EXPENSES CANNOT BE VERIFIED ALONG WITH MATERIAL CONSUMED AND AS SUCH THIS SHOWS THAT BOOKS O F ACCOUNTS WERE NOT MAINTAINED IN A REGULAR MANNER. THE ASSESSEE CLAIM ED TO HAVE SUBMITTED DETAILS OF MATERIAL USED BUT NO BILLS/VOU CHERS OF PURCHASE, HAVE BEEN GIVEN AND HENCE THE RECORDINGS MADE ARE OF NO USE. IT IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS. THE PROPERTY WAS SOLD AND POSSESSION WAS HANDED OVER IN FEB., 2002 AND THE COST OF CONSTRUCTION IN THE VALUATION REP ORT HAS BEEN WORKED OUT AT MARKET VALUE AS ON 8 TH JULY, 2002 I.E. GAP OF ABOUT 4 MONTHS. IT IS PERTINENT THAT NO MAJOR ESCALATION IN T HE PRICE HAD TAKEN PLACE IN THE SAID PERIOD AND AS SUCH ARS OBJECTION REGA RDING TIME GAP, IS NOT ACCEPTABLE. HENCE, IT IS HELD THAT THE ASSES SING OFFICER HAS RIGHTLY MADE THE REFERENCE TO THE VALUATION OFFICER. DURING THESE PROCEEDINGS AND DURING APPELLATE PROCEEDINGS, THE ASSESSEE HA S GIVEN NO DOCUMENTS TO CONTRADICT THE VALUATION OFFICER S FINDINGS. BOOKS OF ACCOUNT HAVE RIGHTLY BEEN REJECTED IN VIEW OF TH E ABOVE DISCUSSION AND STAND OF THE ASSESSING OFFICER IS CONFI RMED IN TOTO. 5.3 THERE IS NO EVIDENCE ON RECORD THAT THE ASSESSEE RECEIVED ANY AMOUNT OVER AND ABOVE THE CONSIDERATION STATED IN THE REGISTERED SALE DEED S. SECTION 48 OF THE ACT REGARDING MODE OF COMPUTATION PROVIDES THAT THE COM PUTATION OF CAPITAL GAINS SHALL BE MADE ON THE BASIS OF FULL VALUE OF THE CONSIDER ATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. THE WORDS USED ARE THE CONSIDERATION 11 RECEIVED AND ACCRUING AND NOT THE WORDS FAIR MARKET VA LUE. THEREFORE, IN ABSENCE OF ANY EVIDENCE THAT THE CONSIDERATION ACTUALLY R ECEIVED BY THE ASSESSEE WAS MORE THAN THE CONSIDERATION MENTIONED IN THE SALE DEEDS, THE COMPUTATION OF CAPITAL GAINS COULD NOT BE MADE ON THE BASIS OF THE FAI R MARKET VALUE OF THE PROPERTY. THIS DECISION FINDS SUPPORT FROM THE DECISI ON IN THE CASE OF K.P. VARGHESE VS. INCOME TAX OFFICER 131 ITR 597 (SUPREME COURT) AND C IT VS. SHAKUNTALA DEVI (2009) 316 ITR 46 (DELHI). 6. IN RESULT, BOTH THE APPEALS ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31.05.20 11. SD/- SD/- ( RAJPAL YADAV ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 31.05.2011. NS COPY FORWARDED TO:- 1. M/S SOUTHEND ENTERPRISES & M/S SUPERIOR PROMOTERS PVT. LTD . M-75, G.K.-I, NEW DELHI. 2. INCOME TAX OFFICER, WARD 9(1) AND 9(4) RESPECTIVELY, NEW DELHI. 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).