Sh. Dharam Pal Gandhi, Ludhiana V. Addl. CIT, R-VI, Ludhiana

ITA 335/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0001 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Unexplained investment; Valuation report; Reason to believe
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA, CHANDIGARH BEFORE SHRI. SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.335/CHD/2018 ASSESSMENT YEAR: 2008-09 SHRI DHARAM PAL GANDHI VS. THE ADDL. CIT 560-LSE BUILDING, FEROZE GANDHI RANGE-VI MARKET, LUDHIANA LUDHIANA PAN NO. ABWPG3067A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. ASHWANI KUMAR RESPONDENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 09/08/2018 DATE OF PRONOUNCEMENT : 18/09/2018 ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-4, LUDHIANA DT. 25/01/2018. 2. ONLY ONE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER: THAT ORDER PASSED UNDER SECTION 250(6) OF THE INCO ME TAX ACT, 1961 BY THE LD. CIT(A)-4, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ADDITION OF RS. 5,17,200/- MADE BY THE LD. AO ON ACCOUNT OF ALLEGED INVESTMENT IN THE PURCHASE OF PR OPERTY NOT DISCLOSED FULLY IN THE BOOKS OF ACCOUNTS. 3. BRIEF FACTS OF THE CASE AS ENUMERATED IN THE ORD ER OF THE LD. CIT(A) ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR TH E A.Y. 2008-09 ON 29.09.2008 DECLARING AN INCOME OF RS. 1,54,68,950/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD PURCHASED A PROPERTY AND INVESTMENT ON ACCOUNT OF PURCHASE WAS SHOWN AT RS.8,50,000/- IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SINCE THE RESIDENTIAL AREA IN QUESTION WAS AN UPMARKET LOCALI TY AND AS PER LOCAL INQUIRIES CONDUCTED BY THE INCOME TAX INSPECTOR, TH E PREVAILING RATES IN BHAI RANDHIR SINGH NAGAR RANGED FROM RS.40,000 TO R S.45,000 PER SQ. YARD, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT IN VESTMENT IN THE PROPERTY IN QUESTION WAS SUPPRESSED AND NOT FULLY REFLECTED IN THE. BOOKS OF 2 ACCOUNT OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 142A OF THE ACT AND REFERRED THE PROPERTY TO THE VALUATION CELL FOR MAKING VALUATION OF THE PROPERTY . THE ASSESSEE WAS SHOWCAUSED TO EXPLAIN THE DIFFERENCE IN VALUES OF I NVESTMENT AS DETERMINED BY THE VALUATION CELL AND THOSE SHOWN BY THE ASSESSEE. BEING UNSATISFIED WITH THE EXPLANATION OFFERED BY THE AS SESSEE, THE ASSESSING OFFICER AFTER GIVING CREDIT OF AN AMOUNT OF RS.2,73 ,800/- SPENT ON CONSTRUCTION OF THE BUILDING IN QUESTION DURING THE A.Y. 2009-10, RE- ESTIMATED THE VALUE OF THE BUILDING AT RS. 13,67,20 0/-. THE DIFFERENCE IN THE VALUE SO ARRIVED BY THE ASSESSING OFFICER AND T HAT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS WORKED OUT AT RS.5,17,200/- WHICH WAS ADDED BACK TO THE RETURNED INCOME OF THE ASSESS EE BY INVOKING THE PROVISIONS OF SECTION 69B OF I.T.ACT, 1961. THE ASS ESSMENT WAS COMPLETED ON 30.12.2010 U/S 143(3) OF I.T. ACT, 1961. 4. BEFORE US, LD. AR ARGUED THAT THERE IS NO DIFFER ENCE IN THE CONSIDERATION PAID BY THE ASSESSEE AND THE VALUE AD OPTED BY THE STAMP DUTY AUTHORITY OF THE STATE GOVERNMENT, HENCE NO AD JUSTMENT OR ADDITION BY REFERRING TO THE DVO IS NOT REQUIRED PRIMARILY. WHILE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 5. FROM THE FACTS WE FIND THAT THE PROPERTY IN QUES TION WAS REFERRED TO THE DVO ON THE PREMISE THAT THE COST OF THE LAND IN QUESTION WAS APPROXIMATELY RS. 40,000/- YARD AS PER THE LOCAL EN QUIRIES. THE DVO IN THE REPORT HAS CONSIDERED THE VALUE OF THE LAND AT CIRC LE RATE SO THERE IS NO DISPUTE AS FAR AS THE COST OF LAND IS CONCERNED. TH E DIFFERENCE IN THE VALUE OF BUILDING AS PER THE ASSESSEE AND THE RATE DETERMINED BY THE DVO IS DUE TO DIFFERENCE IN THE METHODOLOGY ADOPTED NAM ELY STRAIGHT LINE METHOD (SLM), WRITTEN DOWN METHOD (WDM). THE ONLY DISPUTE IS REGARDING THE VALUATION METHOD WHEREIN BOTH THE MET HODS ARE ACCEPTABLE METHODS. THE ASSESSING OFFICER MADE ADDI TION BASED ON THE VALUATION REPORT SUBMITTED BY THE DVO WHICH IS PURE LY ON AN ESTIMATE BASIS. THE ASSESSING OFFICER DID NOT HAVE ANY OTHER MATERIAL TO PROVE ANY UNDISCLOSED INCOME INVESTED IN THE PROPERTY. SINCE THE ADDITION MADE IS SOLELY ON ESTIMATE BASIS WITHOUT ANY OTHER CORROBOR ATIVE MATERIAL OF 3 UNEXPLAINED INVESTMENT, WE HEREBY DELETE THE ADDITI ON MADE BY THE ASSESSING OFFICER. 6. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (DR. B.R.R . KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18/09/2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR