M/s. Shivraj Properties Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 3857/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2741 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 12-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Search and seizure; Principle of natural justice; Fair market value; Valuation report
• Section: 153A; 133(6); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G , NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SMT. B EE NA PILLAI , JUDICIAL MEMBER ITA NO. 3 857 /DEL/201 6 AY: 20 10 - 11 M/S SHIVRAJ PROPERTIES P.LTD. VS. DY.CIT, CENTRAL CIRCLE 31 PLOT J - 1/B - 1, MOHAN COOP. INDUSTRIAL AREA NEW DELHI MATHURA ROAD DELHI 110 044 (APPELLANT) (RESPONDENT) APPELLAN T BY : SH. AJAY VOHRA, SR. ADV. , SH. GAURAV JAIN, ADV. & SH. ANKIT GUPTA, C.A. RESPONDENT BY : SH. S.S.RANA , CIT( D.R. ) DATE OF HEARING : 1 3 TH APRIL, 2017 DATE OF PRONOUNCEMENT : 11 TH JULY, 2017 ORDER PER R.K. PANDA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31 ST MARCH, 2016 OF THE LD. CIT(A) - 13 , NEW DELHI RELATING TO THE ASSESSMENT YEAR (A.Y.) 20 10 - 11 . ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 2 2 . FACTS OF THE CASE I N BRIEF ARE THAT THE ASSESSEE BELONGS TO THE RADICO KHAITAN GROUP OF CASES AND IS ENGAGED IN THE BUSINESS ACTIVITIES OF DEALING IN REAL ESTATE, SHARES AND ALSO OF PROVIDING LOANS. A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CARRIED OUT IN THE RADICO KHAITAN GROUP OF CASES ON 15 TH FEBRUARY, 2011 DURING WHICH DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED FROM DIFFERENT PREMISES OF THE RADICO KHAITAN GROUP. IN RESPONSE TO NOTICE U/S 153C OF THE ACT R.W.S. 153A OF THE ACT ISSUED ON 3 RD SEPTEMBER, 2012, THE ASSESSEE FILED ITS RETURN OF INCOME ON 16 TH OCTOBER, 2012 DECLARING TOTAL INCOME OF NIL . 2.1. THE ASSESSING OFFICER (A.O.) OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED OUT AT VARIOUS PREMISES OF THE GROUP, PAGES 1 - 4 OF ANNEXU RE A - 2 SEIZED FROM CORPORATE OFFICE AT MOHAN CO - OPERATIVE SHOWS THAT M/S SHIVRAJ PROPERTIES PVT. LTD. HAD EXECUTED AN AGREEMENT TO SELL WITH M/S RADICO KHAITAN LTD. DT. 3.2.2009 AS PER WHICH A PROPERTY OWNED BY THE FORMER MEASURING 20723.31 SQ. F T. S ITUATED AT A - 41, 6 TH FLOOR, SECTOR 62, NOIDA WAS TO BE SOLD TO THE LATTER FOR RS13.45 CRORES. HOWEVER, AS PER PAGES 55 - 58 OF SAME ANNEXURE, IT WAS SEEN THAT THE SAME PROPERTY IS SOLD BY M/S SHIVRAJ PROPERTIES PVT.LTD. TO A PARTY, M/S MACKSON CREATIONS P .LTD. ON 1.7.2009 BY A MOU, FOR A CONSIDERATION OF RS.8.5 CRORES ONLY. HE, THEREFORE, ASKED THE ASSESSEE TO FURNISH COMPLETE DETAILS AND ALSO TO RECONCILE THE DIFFERENCE WITH CORRESPONDING ENTRIES IN THE BOOKS OF ACCOUNTS. IN THE MEAN TIME THE A.O. AL SO MADE SOME VERIFICATION U/S 131(1) AND 133(6) OF THE ACT IN THE CASE OF M/S MA CKSON ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 3 CREATION S PVT.LTD. AND OTHERS AND OBSERVED THAT M/S MA CKSON PROPERTIES P.LTD. HAS PURCHASED THE PROPERTY UNDER CONSIDERATION FROM THE ASSESSEE IN THE FINANCIAL YEAR ( F.Y.) 2009 - 10 AT A PRICE OF RS.8,15,00,000/ - EXCLUDING STAMP DUTY . HE ALSO ISSUED A LETTER TO THE A.O. OF M/S MACKSON PROPERTIES PVT. LTD. TO ASCERTAIN THE CORRECT VALUE OF THE PROPERTY. THE INCOME TAX OFFICER (ITO), WARD 6(1), NEW DELHI V IDE LETTER D ATED 13.03.2013, SENT THE VALUATION REPORT IN RESPECT OF PROPERTY IN QUESTION ACCORDING TO WHICH THE DVO HAS VALUED THE PROPERTY AT RS.8,31,07,000/ - AS ON 30.10.2009 AS AGAINST THE CLAIM ED SALE VALUE SHOWN IN THE REGISTERED SALE DEED BY THE ASSESSE E OF RS. 8,15,00 , 000/ - ACCORDING TO THE A.O. THE VALUE ASCERTAINED BY DVO U / S 55A OF THE ACT IS MORE THAN THE CLAIMED VALUE BY THE ASSESSEE BY AN AMOUNT OF RS. 16,07,000 / - . HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DIFFERENCE IN THE VALUE, AS DETERMINED BY THE DVO, SHOULD NOT BE CONSIDERED AS UNACCOUNTED SALE CONSIDERATION RECEIVED BY THE ASSESSEE OUT OF THAT SALE. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVING T HAT THE DVO HAS ASCERTAINED AND ASSESSED THE VALUE OF THE PROPERTY AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS AND MATERIALS GATHERED FOR ARRIVING AT THE FAIR MARKET VALUE (FMV) OF THAT PROPERTY AS ON 30.10.2009 , THE A.O. MADE ADDITION OF RS.16 , 07,000 / - BEING THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE ASSESSEE AND THE VALUE DETERMINED BY THE D.V.O. AS UNACCOUNTED SALE CONSIDERATION RECEIVED BY THE ASSESSEE. ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 4 3. BEFORE THE LD. CIT(A) THE ASSESSEE CHALLENGED THE ADDITION OF RS.16,07,000/ - MADE BY THE A.O. IT WAS SUBMITTED THAT THE SALE OF THE PROPERTY BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION TO M/S MACKSON PROPERTIES PVT.LTD. WAS FOR A CONSIDERATION OF RS.8.15 CRORES. THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY IN RE SPECT OF THE SAID PROPERTY WAS RS.5,19,81,480/ - . AS SUCH THE SALE CONSIDERATION AS PER THE REGISTERED SALE DEED FAR EXCEEDS THE STAMP DUTY VALUE OF THE SAID PROPERTY, AND, THEREFORE, NO ADDITION IS CALLED FOR. IT WAS SUBMITTED THAT THE A.O. HAD MADE THE ADDITION ON ACCOUNT OF SALE CONSIDERATION RECEIVED BY THE ASSESSEE. A LTHOUGH A SEARCH HAD TAKEN PLACE IN THIS CASE, HOWEVER, NO EVIDENCE OF RECEIPT OF ANY UNACCOUNTED MONEY I.E. CONSIDERATION IN EXCESS OF THE VALUE MENTIONED IN THE REGISTERED SALE DEED H AS BEEN FOUND IN THE SEARCH. RELYING ON VARIOUS DECISIONS, IT WAS SUBMITTED THAT THERE CANNOT BE ADDITION ON ESTIMATE BASIS IN CASE OF SEARCH ASSESSMENT. 4 . SO FAR AS THE ADDITION MADE BY THE A.O. ON THE BASIS OF THE REPORT OF THE DVO IS CONCERNED, IT W AS ARGUED THAT THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. VASUDEV CONSTRUCTIONS, REPORTED IN 363 ITR 247 HAS HELD THAT WHERE DURING THE SEARCH NO INCRIMINATING MATERIAL WAS FOUND AND THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AND THE COST SHOWN IN ACCOUNTS IS LESS THAN 15%, ADDITION ON THE BASIS OF REPORT OF THE DVO IS NOT JUSTIFIED. IT WAS ARGUED THAT SINCE IN THE PRESENT CASE THE DIFFERENCE BETWEEN THE VALUE AS PER THE DVO S REPORT AT RS.8,31,07,000/ - AND THE SAL E VALUE SHOWN AS ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 5 PER THE REGISTERED SALE DEED AT RS.8,15,00,000/ - IS LESS THAN 2% OF THE AMOUNT SHOWN IN THE ACCOUNTS, THEREFORE, NO ADDITION IS CALLED FOR. 5 . WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE FURTHER ARGUED THAT THE PROPERTY DOES NOT FORM PART OF THE CAPITAL ASSET AND THE SAME IS BUSINESS ASSET AS THE ASSESSEE IS ENGAGED IN BUYING AND SELLING OF REAL ESTATE PROPERTIES. THE A.O. HAS MERELY TREATED THE DIFFERENCE IN THE VALUE AS PER SALE DEED AND VALUE AS PER DVO AS UNACCOUNTED SALE CONSIDERATION RECEIVED BY THE ASSESSEE WITHOUT MAKING REFERENCE TO ANY PROVISION OF THE ACT UNDER WHICH SUCH ADDITION HAS BEEN MADE. NO EVIDENCE WHATSOEVER WAS FOUND WHI CH CONFIRMS THE RECEIPT OF THE EXCESS SALE CONSIDERATION. 6 . THE ASSESSEE ALSO TOOK A LEGAL GROUND BEFORE THE LD. CIT(A) CHALLENGING THE VALIDITY OF THE ASSESSMENT U/S 153C R.W.S. 153A OF THE ACT ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH WHICH PERTAINS TO THE ASSESSEE. 7 . HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. NOT ONLY HE CONFIRMED THE ADDITION MADE BY THE A.O. BUT HE ALSO ISSUED AN ENHANCEMENT NOTICE TO THE ASSESSEE ASKING HIM TO EXPLAIN AS TO WHY THERE IS MUCH VARIATION IN THE SALE CONSIDERATION OF THE PROPERTY AGREED ON 3 RD FEB.,2009 AND ON 1.7.2009/30 TH OCTOBER,2009 AND THEREFORE WHY THE SALE CONSIDERATION OF PROPERTY INITIALLY AGREED UPON PLUS AMOUNT INCURRED ON THE RENOVATION / REPAIR AT RS. 1.53 CRORE S SHOULD NOT BE TAKEN AT RS. 1 4.98 CRORE S. R EJECTING THE VARIOUS EXPLANATION S GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 6 ALLEGED SALE VALUE OF THE PROPERTY OFFERED BY THE ASSESSEE AT RS. 8.15 CRORES DOES NOT SHOW THE MARKET VALUE OF THE PROPERTY WHICH IS MUCH LESS THAN THE AGREED SALE CONSIDERATION OF RS. 13.45 CRORES WITH RADICO KHAITAN, WHICH IS A GROUP COMPANY IN WHICH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AND THE INCRIMINATING DOCUMENTS DATED 3RD FEBRUARY , 2009 WAS ALSO FOUND AND SEIZED , HE ENHANCED THE INCOME OF THE ASSESSEE BY RS.6,66,93,021/ - . WHILE DOING SO, T HE LD. CIT(A) HELD THAT THE EXCESS OF ALLEG ED SALE CONSIDERATION OF RS. 8.15 CRO RES AGAINST EARLIER ACTUAL SALE PRICE AGR EED UPON AT RS.13.45 CRORES CLEARLY ESTABLISH THE SUPPRESSION OF SALE VALUE IN ORDER TO AVOID TAX LIABILITY . HE ACCORDINGLY ADOPTED THE SALE CONSIDERATION AT RS.13.45 CRORES WHICH WAS AGREED UPON AS PER AGREEMENT TO SELL DT. 3 RD FEB.,2009 AGAINST WHICH THE ADVANCE OF RS.13 CRORES WAS RECEIVED ON 3 RD FEB.,2009. HE ALSO ADDED THE RENOVATION/REPAIR EXPENSES INCURRED BY THE ASSESSEE AT RS.1.53 CRORES TO THE SALE PRICE. ACCORDINGLY THE SALE CONSIDERATION OF THE PROPERTY WAS TAKEN BY THE LD.CIT(A) AT RS.14,98,00,021/ - AND THE INCOME W AS ENHANCED AT RS.6,66,93,021/ - . 8 . A GGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE ASSESSEE IS AN APPEAL BEFORE US ON THE FOLLOWING GROUND S. 1. THAT THE C OMMISSIONER OF INCOME - TAX (A) [ CIT(A)] ERRED ON FACTS AND IN LAW IN NOT HOLDING THAT THE ASSESSMENT ORDER DATED 28.03.2013 PASSED UNDER SECTION L53C WAS BEYOND JURISDICTION, BAD IN LAW AND VOID AB - INITIO SINCE NO SATISFACTION AS REQUIRED IN LAW WAS RECORDED BY THE ASSESSING OFFICER IN T HE CASE OF M/S RADICO KHAITAN LTD., BEING THE PERSON SEARCHED UNDER SECTION 153A, NOR ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 7 WAS ANY SATISFACTION RECORDED BY THE ASSESSING OFFICER IN THE CASE OF THE APPELLANT COMPANY BEFORE INITIATION OF PROCEEDINGS UNDER SECTION 153C OF THE INCOME - TAX ACT, 19 61 ('THE ACT'). 1.1. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE APPELLANT TO RAISE ADDITIONAL GROUND OF APPEAL AS REGARDS THE ISSUE OF LACK OF JURISDICTION, WHICH GOES TO THE ROOT OF THE MATTER AND DISPOSING OFF THE APPEAL IN UNDUE HAST E AND IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 3. THAT THE C1T(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN SUBSTITUTING THE ACTUAL/APPARENT SALE CONSIDERATION OF THE PROPERTY HELD AS STOCK IN TRADE, WITH THE ALLEGED FAIR MARKET VALUE OF SUCH PROPERTY (DETERMINED BY THE ASSESSING OFFICER ON THE BASIS OF REPORT OF DVO) AND MAKING ADDITION OF RS. 1 6,07,000 / - TO BUSINESS INCOME, ON THAT BASIS. 2.1. THAT THE C I T(A) ERRED ON FACTS AND IN LAW IN INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT AND ENHANCING THE ADDITION OF RS.16,07,000 / - MADE IN THE ASSESSMENT ORDER BY RS.6,66,93,021/ - , BY SUBSTITUTING THE ACTUAL SALE CONSIDERATION WITH RS.14,98,00,021 / - , BEING THE AGGREGATE OF THE PROPOSED CONSIDERATION AS PER AN UNEXECUTED MEMORANDUM OF UNDERSTANDING ENTERED INTO BETWEEN THE APPELLANT COMPANY AND M/S RADICO KHAITAN LTD AND THE AMOUNT REIMBURSED BY THE APPELLANT COMPANY TO M/S RADICO KHAITAN LTD ON ACCOUNT OF FURNISHING OF OFFICE, ALLEGING THE SAID AMOUNT TO BE TH E ACTUAL SALE CONSIDERATION OF THE PROPERTY. 2.2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN, (I) UPHOLDING THE AFORESAID ADDITION OF RS.16,07,OOO/ - AND (II) ENHANCING THE SAME BY RS.6,66,93,021/ - , DEHORS ANY INCRIMINATING MATERIAL/EVIDENCE FOUND IN THE COURSE OF SEARCH EVIDENCING RECEIPT OF ANY SALES CONSIDERATION OVER AND ABOVE THE AMOUNT STATED IN THE REGISTERED SALE DEED, WHICH WAS HIGHER THAN THE CIRCLE RATE, NOT APPRECIATING THAT THE SAME WAS BEYOND JURISDICTION AND SCOPE OF ASSESSMENT UNDER SECTION 153C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR AMEND ANY OR ALL OF AFORESAID GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 9 . LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DID NOT PRESS THE GROUNDS OF APPEAL NUMBER S 1 AND 1.1 FOR WHICH THE LD.D.R. HAD NO OBJECTION . A CCORDINGLY THESE G ROUND S ARE DISMISSED AS NOT PRESSED . ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 8 10 . S O FAR AS THE REMAINING G ROUNDS ARE CONCERNED , THE LD. C OUNSEL FOR THE ASSESSEE STRONGLY CHALLENGE D THE ORDER OF LD. CIT(A) IN ENHANCING THE INCOME OF THE ASSESSEE BY RS. 6 , 66 , 93 , 021 APART FROM SUSTAINING THE ADDITION OF RS.16,07,000/ - MADE BY THE A SSESSING O FFICER . HE SUBMITTED THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND THE TRANSACTION WAS A RECORDED TRANSACTION AND NOTHING WAS HIDDEN . HE SUBMITTED THAT R ADICO KHAITAN LIMITED IS A GROUP CONCERN WHERE AS THE PROPERTY FINALLY SOLD TO M/S MACKSON CREATIONS PVT.LTD. IS NOT A GROUP COMPANY NOR ANY DIRECTOR S ARE RELATED . HE SUBMITTED THA T THE PROPERTY WAS PURCHASED DURING MARCH , 2007 FOR A CONSIDERATION OF RS. 6.17 CRORE AND THE PROPERTY WAS AGREED TO BE SOLD TO M/S RADICO CREATIONS PVT.LTD. FOR CONSIDERATION OF RS.13.45 CRORE S AS PER SALE AGREEMENT DATED 3RD FEBRUARY , 2009 . H OWEVER T HE SAID AGREEMENT WAS NOT FINALLY ACTED UPON AS THE EMPLOYEES OF RADICO KHAITAN RESISTED FOR SHIFTING OF ITS REGISTERED OFFICE TO NOIDA BECAUSE OF INCONVENIENCE IN TRANSPORT . T HEREFORE THE SALE AGREEMENT WAS NOT FINALLY ACTED UPON AND THE PROPERTY WAS NOT PURCHASED BY RADICO KHAITAIN. ON ACCOUNT OF THE CANCELLATION OF AGREEMENT THE AMOUNT GIVEN AS ADVANCE BY M/S RADICO KHAITAN WAS REFUNDED TO THEM . S INCE RADICO KHAITAN LIMITED AND ASSESSEE BEING GROUP COMPANIES THE VALUE OF THE AGREEMENT WAS FIXED INTERNAL LY WITHOUT ANY REFERENCE TO THE MARKET VALUE OF THE SET PROPERTY . S UBSEQUENTLY WHEN THE PROPERTY WAS SOLD TO M/S MACKSON CREATIONS PVT.LTD. THE SA M E WAS BASED ON THE PREVAILING MARKET PRICE AND ACCORDINGLY IT WAS SOLD FOR A CONSIDERATION O F RS. 8.15 CRORES WHICH ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 9 W AS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE COMPANY . R EFERRING TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA DISCOUNT CO.LTD. REPORTED IN 91 ITR 8, HE SUBMITTED THAT THE HON BLE SUPREME COURT IN T HE SAID DECISION HAS HELD THAT WHERE THE TRADER TRANS FERS GOODS TO ANOTHER TRADER AT A PRICE LESS THAN MARKET PRICE AND THE TRANSACTION IS A B ONAFIDE ONE , THE TAX AUTHORITIES CANNOT TAKE THE MARKET PRICE IGNORING THE REAL PRICE TO ASCERTAIN THE PROFIT FROM THE TRANSACTION . IT WAS FURTHER HELD THAT THE ASSESSEE CAN ARRANGE HIS AFFAIRS SO AS TO MINIMISE HIS TAX BURDEN. R EFERRING TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. A.RA MAN & CO. REPORTED IN 67 ITR 11, HE SUBMITTED THAT TH E HON BLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT THE LAW DOES NOT OBLIGE A TRADER TO MAKE MAXIMUM PROFIT THAT HE CAN OUT OF HIS TRADING ACTIVITY . I NCOME WHICH ACCRUED TO A TRADER BUT HAS NOT BEEN EARNED, IS NOT MADE TAXABLE AS INCOME ACCRUED TO HIM. THEREFORE THE LD. CIT(A) WAS NOT JUSTIFIED IN ADOPTING THE VALUE OF THE PROPERTY AT RS.14,98,00,021/ - . FURTHER WHEN THE DVO HAS VALUED THE PROPERTY AT RS.8,37,07,000/ - THE LD. CIT(A) WAS ALSO NOT JUSTIFIED IN TAKING THE MARK ET VALUE AT RS.14,98,00,021/ - . HE SUBMITTED THAT ALTHOUGH A SEARCH HAD TAKEN PLACE THE SEARCH PARTY COULD NOT FIND ANY MATERIAL AGAINST THE ASSESSEE THAT IT HAD RECEIVED ANY UNACCOUNTED MONEY OR CONSIDERATION FOR TRANSFERRING THE PROPERTY AT RS.8.15 CROR ES AS AGAINST RS.13.45 CRORES AGREED UPON BETWEEN THE ASSESSEE AND RADICO KHAITAN LTD. AS PER SALE AGREEMENT DT. 3 RD FEB., 2009. ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 10 10 .1 . R EFERRING TO THE PROVISIONS OF SECTION 43 CA HE SUBMITTED THAT THE SAID SECTION REFERS TO THE SPECIAL PROVISION FOR FULL VALUE OF SALE CONSIDERATION FOR TRANSFER OF AN ASSET OTHER THAN C APITAL A SSET IN CERTAIN CASES . HOWEVER THIS SECTION WAS INS ERTED BY THE F INANCE ACT , 2013 WITH EFFECT FROM 1 . 4 . 2014 . T HEREFORE , THIS PR OVISION IS NOT APPLICABLE TO THE ASSESSEE COMPANY . R EFERRING TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. SMT.ANITA RANI REPORTED IN 392 ITR 501 HE SUBMITTED THAT THE HON BLE DELHI HIGH COURT IN THE SAID DECISION HAS HELD THAT IN ABSENCE OF SEIZURE OF ANY NEW MATERIAL DURING THE COURSE OF SEARCH , CONSIDERATION DISCLOSED BY THE ASSESSEE HAS TO BE ACCEPTED AND FRESH EXAMINATION FOR VALUATION OF THE PROPERTY IS NOT JUSTIF IED. HE ALSO REFERRED TO THE DEC ISIONS OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RRJ SECURITIES LTD. REPORTED IN 380 ITR 612 AND IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE AO AND ENHANCED BY THE LD. CIT (A) SHOULD BE DELETED. 11 . LD.D.R. ON THE OTHER HAND STRONG LY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT WHEN THE ASSESSEE HAS AGREED TO SELL THE PROPERTY TO RADICO KHAITAN AT RS.13.45 CRORES AND HAS INCURRED HUGE EXPENSES OF RS.1.53 CRORES TOWARDS RENOVATION AND REPAIRS OF THE SAID PROPERTY , IT IS NOT UNDERSTOOD AS TO WHY THE SAID PROPERTY WAS SOLD TO ANOTHER PARTY FOR CONSIDERATION OF RS.8,15,00,000/ - ONLY . HE SUBMITTED THAT THERE IS STRONG DOCUMENTARY EVIDENCE ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 11 FOUND IN SHAPE OF A GREEMENT TO SELL THE PROPERTY TO M./S RAD ICO KHAITAN THAT THE VALUE OF THE PROPERTY WAS RS.13.45 CRORE S. LD. CIT(A) HAD GIVEN JUSTIFIABLE REASONS AS TO WHY THE PROPERTY VALUE SHOULD BE CONSIDERED AT RUPEES 14.98 CRORE S WHICH INCLUDES THE ORIGINAL AGREE D PRICE FOR SALE PLUS THE RENOVATION EXPENSES , THEREFOR E, THE ORDER OF THE LD. CIT(A) SHOULD BE UP HELD AND THE GROUND RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 1 2 . W E HAVE CONSIDERED THE R IVAL ARGUMENTS MADE BY BOTH THE SIDE S , P ERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE . WE HAVE ALSO CONSIDERED THE VARIOUS DE CISIONS CITED BEFORE US. W E FIND THAT THE ASSESSEE HAS EXECUTED AN AGREEMENT TO SELL THE PROPERTY CORENTHUM AGREED TO BE SOLD AT R S.1 3.45 CRORE S AS PER THE SALE AGREEMENT DATED 3RD FEBRUARY , 2009 . THE SAID PARTY SUBSEQUENTLY INCURRED EXPENSES TOWARDS RENOVATION AND REPAIRS AMOUNTING TO RS. 1.53 CRORES . IT HAD ALSO RECEIVED AN AMOUNT OF RS. 13 CRORES AS ADVANCE ON 3RD FEBRUARY , 2 009 ITSELF . H OWEVER THE ASSESSEE ENTERED INTO ANOTHER AGREEMENT WITH M/S MACKSON ON 1ST JULY , 2009 FOR THE SAME PROPERTY AGREEING TO SELL AT A CONSIDERATION OF RS. 8.50 CRORES AND ADVANCE OF RS. 4 CRORES WAS ALSO RECEIVED AND ACCEPTED BY THE ASSESSEE IN JUNE , 2009 . THE SALE DEED WAS EXECUTED ON 30TH OCTOBER , 2009 FOR A SALE CONSIDERATION OF RS. 8.15 CRORES WITHOUT M ENTIONING ANY REASONS IN THE DOCUMENT FOR ACCEPTING LESSER AMOUNT BY RS. 35 LAK HS ES AS AGAINST AGREED CONSIDERATION OF RS. 8.50 CRORES ON 1ST JULY , 2009 . W E FIND THE A.O. ON THE ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 12 BASIS OF D VO S REPORT MADE AN ADDITION OF RS.16,07,000/ - BEING THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE DVO AT RS.8,31,07,000/ - AND SALE CONS IDERATION OF RS.8.15 CRORES. WE FIND IN APPEAL THE LD. CIT(A) APART FROM SUSTAINING THE ADDITION MADE BY THE A.O. AT RS.16,07,000/ - ENHANCED THE INCOME OF THE ASSESSEE BY RS.6,66,93,021/ - BEING THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY HIM AT RS.14,9 8,0 0,021/ - AND THE VALUE ADOPTED BY THE A.O. IT IS THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO ESTABLISH THAT THE ASSESSEE HA S INDEED RECEIVED ANY EXTRA MONEY AND THAT THE PAR TY TO WHOM THE PROPERTY WAS SOLD IS NOT RELATED TO THE ASSESSEE . A CCORDING TO HIM NOTHING INCRIMINATING WAS FOUND DURING THE COURSE OF SEARCH , ALL THE TRANSACTIONS ARE DULY RECORDED IN THE BOOKS OF ACCOUNT S AND THEREFORE , NO ADDITION IS CALLED FOR IN THE INSTANT CASE . WE FIND SOME FORCE IN THE ARGUMENT S OF THE LD.C OUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT THAT WHILE THE ASSESSEE AND RADICO KHAITAN LTD. BELONG TO THE SAME GROUP, HOWEVER, THE COMPANY M/S MACKS ON CREATIONS PVT.LTD. DOES NOT BELONG TO THE SAME GROUP AND IS AN OUTSIDER COMPANY. NO EVIDENCE WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH TO SHOW THAT THE ASSESSEE HAS IN FACT RECEIVED SOMETHING EXTRA TH A N WHAT HAS BEEN SHOWN TO HAVE BEEN RECEIVE D O N ACCOUNT OF SALE OF THE PROPERTY . THE ASSESSEE ALSO HAS GIVEN JUSTIFIABLE REASONS AS TO WHY THE AGREEMENT WITH RADICO KHAITAN WAS NOT ACTED UPON ON THE GROUND THAT THE EMPLOYEES OF RADICO KHAITAN LIMITED RE SISTED TO GO TO THE NEW PLACE BECAUSE OF INCONVENIEN CE IN TRANSPORT . FURTHER THE A.O. ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 13 HAD VERIFIED U/S 131 (1) AND 133(6) OF THE ACT IN CASE OF M/S MACKSON CREATIONS P.LTD. AND OTHERS ACCORDING TO WHICH THEY HAVE PURCHASED THE PROPERTY CORENTHEM FROM M/S SHIV RAJ PROPERTIES PVT.LTD. IN THE FINANCIAL YEAR 2009 - 10 AT RS.8.15 CRORES. THE DVO VIDE HIS REPORT HAS ALSO ASCERTAINED THE VALUE OF THE PROPERTY AT RS.8,31,07,000/ - AS ON 30 TH OCTOBER,2009. UNDER THESE CIRCUMSTANCES AND IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH TO ESTABLISH THAT THE ASSESSEE HA S RECEIVED ANYTHING OTHER THAN WHAT HAS BEEN DISCLOSED , WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. CIT(A) IN ENHANCING THE INCOME OF THE ASSESSEE BY RS.6,66,93,021/ - . ACCO RDINGLY, THE SAME IS DIRECTED TO BE DELETED. 1 3 . S O FAR AS THE VALUE DETERMINED BY THE A O IS CONCERNED IT IS AN ADMITTED FACT THAT AS AGAINST THE SALE CONSIDERATION OF RS.8.15 CRORES THE DVO HAD DETERMINED THE VALUE OF THE PROPERTY AT RS.8,31,07,000/ - . ALTHOUGH THE ASSESSEE HAD AGREED TO SELL THE PROPERTY TO M/S MACKSON CREATIONS PVT.LTD. AT RS.8.5 CRORES, HOWEVER, THE PROPERTY WAS FINALLY SOLD AT RS.8.15 CRORES. NO REASON WHATSOEVER HAS BEEN GIVEN AS TO WHY THE PROPERTY WAS SOLD AT A LESSER PRICE. THERE IS ALSO NO REASON GIVEN BY THE ASSESSEE SO AS TO JUSTIFY THAT THE VALUE ADOPTED BY THE DVO IS ERRONEOUS. UNDER THESE CIRCUMSTAN CES WE HOLD THAT THE PROVISIONS OF S.50C WILL BE APPLICABLE AND THE VALUE ADOPTED BY THE A.O. AT RS.8,31,07,000/ - AS AGAINST RS.8.15 CRORES ADOPTED BY THE ASSESSEE AS SALE CONSIDERATION IS JUSTIFIED. SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR THE ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 14 ASS ESSEE THAT THE PROPERTY IS ITS STOCK IN TRADE AND THEREFORE PROVISIONS OF S.50C ARE NOT APPLICABLE IS CONCERNED, WE FIND THAT THE ASSESSEE IN ITS COMPUTATION OF TOTAL INCOME HAS DECLARED THE INCOME FROM CORENTHUM AS INCOME FROM HOUSE PROPERTY. THEREFO RE, ALTHOUGH THE SAID PROPERTY HAS BEEN SHOWN IN THE BALANCE SHEET AS STOCK IN TRADE, BUT THE CONDUCT OF THE ASSESSEE WHILE COMPUTING THE TAXABLE INCOME SHOWS THAT THE PROPERTY IS A CAPITAL ASSET SINCE RENTAL INCOME IS OFFERED TO TAX FROM SUCH PROPERTY AS INCOME FROM HOUSE PROPERTY . THEREFORE THE ARGUMENTS OF LD. COUNSEL FOR THE ASSESSEE THAT PROVISIONS OF S.50C ARE NOT APPLICABLE TO THE FACTS OF THE CASE IS INCORRECT. IN THIS VIEW OF THE MATTER THE ADDITION SUSTAINED BY LD. CIT(A) IS RESTRICTED TO RS. 16,07,000/ - AS DETERMINED BY THE A.O. AND THE INCOME ENHANCED BY LD. CIT(A) IS DELETED. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 1 4 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2017. SD/ - SD/ - ( BEENA A. PILLAI ) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: THE 11 TH JULY, 2017 * MANGA ITA NO. 3857/DEL/2016 A.Y. 2010 - 11 SHIVRAJ PROPERTIES PVT.LTD., DELHI 15 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES NEW DELHI