ITO, New Delhi V. M/s. Tarini International Pvt. Ltd, New Delhi

ITA 3910/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3427 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 15-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: SM MATHUR
• Keywords: Fair market value; Valuation report
• Section: 143(3); 69B; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 3910(DEL)/2009 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/S TARINI INTERNATIONAL PVT. LTD., WARD 16(1), NEW DELHI. VS. D-2, AM AR COLONY, LAJPAT NAGAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. CHAND, SR. DR RESPONDENT BY: SHRI S.M. MATHUR, C.A. ORDER PER K.G. BANSAL : AM THIS APPEAL EMANATES FROM THE ORDER OF THE CIT( APPEALS)-XIX, NEW DELHI, PASSED ON 15.07.2009 IN APPEAL NO. 2 28/2008-09 AND IT PERTAINS TO ASSESSMENT YEAR 2006-07. THE REVEN UE HAS TAKEN TWO GROUNDS IN THE APPEAL TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN HOLDING THAT CONDITIONS PRESCRIBED U/S 142A OF T HE INCOME-TAX ACT, 1961, DO NOT EXIST AND DELETING THE ADDITION OF RS. 1 9,31,108/- MADE BY THE AO BY INVOKING THE PROVISION CONTAINED U/S 69B OF T HE ACT, WHILE THE SAME WAS MADE ON THE BASIS OF EXPERT REPORT OF THE DV O. ITA NO. 3910(DEL)/2009 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 30.11.2006 DECLARING TOTAL INCOME OF RS. 2,87,680/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT O N 30.12.2008 AT TOTAL INCOME OF RS. 22,18,800/- BY MAKING AN ADDITIO N OF RS. 19,31,108/-, REPRESENTING THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE PROPERTY DETERMINED BY THE DVO AT RS. 33,31,108/- AND THE PURCHASE CONSIDERATION OF RS. 14.00 LAKH PAID BY THE ASSE SSEE. THIS ADDITION WAS DELETED BY THE LD. CIT(APPEALS) BY HOLDING THA T (I) THE PRE-CONDITIONS MENTIONED IN SECTION 142A FOR MAKING A REFERENC E TO THE VALUATION OFFICER ARE NOT SATISFIED, AND (II) THERE IS N O EVIDENCE ON RECORD THAT ANY AMOUNT ABOVE RS. 14.00 LAKH WAS PAID BY THE ASSE SSEE BY WAY OF PURCHASE CONSIDERATION. 3. BEFORE US, THE LD. DR REFERRED TO PARAGRAPH 7.3 OF THE IMPUGNED ORDER, IN WHICH IT HAS BEEN MENTIONED THAT (I) T HE AO HAS NOT FOUND ANY DEFECTS IN THE BOOKS OF ACCOUNT, AND (II) THE VA LUATION OFFICER HAS CONSIDERED CASES WHICH ARE NOT COMPARABLE TO THE PROPERTY PURCHASED BY THE ASSESSEE. THE ORDER WAS ASSAILED ON BOTH T HE GROUNDS BY REFERRING TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. AMAR KUMARI SURANA VS. CIT (1997) 226 ITR 344; AND HONBLE UTTRANCHAL ITA NO. 3910(DEL)/2009 3 HIGH COURT IN THE CASE OF CIT & ANOTHER VS. BHAVA NI SHANKAR VYAS (2009) 311 ITR 8. IT WAS HIS CASE THAT THER E WAS A WIDE DIFFERENCE BETWEEN THE STATED CONSIDERATION AND THE FAIR MARKET VALUE OF THE PROPERTY ESTIMATED BY THE DVO. THEREFORE, IT WAS ARGUED THAT THE ORDER OF THE LD. CIT(APPEALS) MAY BE REVERSED AND THA T OF THE AO MAY BE RESTORED. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(APPEALS). 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE QUESTIONS BEFORE THE HONBLE UTT RANCHAL HIGH COURT WERE AS FOLLOWS:- 1. WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT, THE AO WAS NOT JUSTIFIED IN MAKING REF ERENCE TO DEPARTMENTAL VALUATION OFFICER, IGNORING THE RETRO SPECTIVE EFFECT OF THE PROVISIONS OF SECTION 142A OF THE I NCOME-TAX ACT, 1961? 2. WHETHER IT IS MANDATORY TO REJECT THE BOOKS O F ACCOUNT BEFORE MAKING REFERENCE U/S 13(1)(D)? THE DECISION OF THE COURT IS THAT SECTION 142A C ONFERS FULL POWERS ON THE AO TO CALL FOR A REPORT FROM THE VALUATION OFFICE R. FOR THE SAKE OF READY ITA NO. 3910(DEL)/2009 4 REFERENCE, THE RELEVANT PORTION OF THE JUDGMENT A T PLACITUM 16 IS REPRODUCED BELOW:- THEREFORE, ON A PERUSAL OF SECTION 144 READ WIT H SECTION 145 AND SECTION 142A AS WELL AS SECTION 131(1)(D) OF THE INCOME-TAX ACT, WE ARE OF THE CONSIDERED VIEW THAT INCOME- TAX APPELLATE TRIBUNAL WAS NOT JUSTIFIED IN HOLDIN G THAT WITHOUT REJECTING THE BOOKS OF ACCOUNT THE ASSESSING OFFI CER WAS NOT JUSTIFIED IN MAKING REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER. FOR THE SAME LOGIC, WE ALSO HOLD THA T IT IS NOT MANDATORY FOR THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT FIRST BEFORE MAKING REFERENCE UNDER SECTION 131(1)(D) OF THE ACT OR CALLING FOR A REPORT OF VALUER UNDER SECTION 142A OF THE ACT. 4.1 THE ONLY EFFECT OF THIS JUDGMENT IS THAT W HEN THE AO HAD DOUBT ABOUT THE PURCHASE CONSIDERATION, HE CAN REFER THE MATTER TO OBTAIN THE REPORT OF THE VALUATION OFFICER. HOWEVER, THAT DO ES NOT MEAN THAT SUCH A REPORT HAS TO BE FOLLOWED IN MAKING THE ASSESSMEN T OR THAT THE ESTIMATE OF THE DVO CAN BE SUBSTITUTED IN PLACE OF THE PURCH ASE CONSIDERATION WITHOUT EXISTENCE OF ANY OTHER CIRCUMSTANCE BELIEING THE PURCHASE CONSIDERATION. 4.2 THE PRINCIPAL QUESTION IN THE CASE OF SMT. AMAR KUMAR SOORANA (SUPRA) WAS WHETHER, ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL WAS LEGALLY JUSTIFIE D IN HOLDING THAT THE SUM OF RS. 23,400/- COULD BE CONSIDERED AS UNEXP LAINED INVESTMENT OF THE ITA NO. 3910(DEL)/2009 5 ASSESSEE AND THAT THE SAME REPRESENTED THE INCO ME OF THE ASSESSEE FROM UNDISCLOSED SOURCES DURING THE RELEVANT ACCOUNTIN G YEAR? THE HONBLE COURT CAME TO THE CONCLUSION THAT THE PURCHASE CO NSIDERATION SHOWED BY THE ASSESSEE WAS RS. 36/- PER SQ. YD., WHICH WA S ROUGHLY HALF OF THE PREVALENT MARKET RATE IN THE SAME AREA, WHICH W AS IN THE VICINITY OF RS. 60/- OR RS. 75/- PER SQ. YD. IN VIEW THEREOF, IT WAS HELD THAT A REASONABLE INFERENCE CAN BE DRAWN THAT PURCHAS E CONSIDERATION WAS NOT PROPERLY RECORDED IN THE BOOKS OF ACCOUNT AND TH E SALE DEED. THEREFORE, THE ADDITION MADE U/S 69B WAS UPHELD. FOR TH E SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW:- IT IS TRUE THAT THE BURDEN IS ON THE DEPARTMENT TO ESTABLISH THE FACT THAT THE PROPERTY HAS BEEN SOLD FOR A L ESSER CONSIDERATION THAN THE MARKET VALUE. IT IS ALS O TO BE ESTABLISHED THAT THE ACTUAL CONSIDERATION IS MO RE THAN THE CONSIDERATION SHOWN IN THE ACCOUNT BOOKS/SALE D EED. IN THE CASE OF K.P. VARGHESE [1981] 131 ITR 597 (SC), THEIR LORDSHIPS HAVE OBSERVED THAT BEFORE INVOKING THE POWERS UNDER SUB-SECTION (2) OF SECTION 52 OF THE INCO ME-TAX ACT, 1961, THE BURDEN IS ON THE REVENUE TO PROVE THAT THE ACTUAL CONSIDERATION WAS MORE THAN DISCLOSED BY THE AS SESSEE. BUT THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT THIS BURDEN MAY BE DISCHARGED BY ESTABLISHING THE FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS NOT CORRECTLY D ECLARED OR DISCLOSED THE CONSIDERATION RECEIVED OR PAID BY H IM. AS STATED ABOVE IN THE LOCALITY OF C-SCHEME, JAIPUR, THE ADJOINING PLOTS WERE SOLD AT THE RATE OF RS. 60 OR RS. 75 PER SQ. YD. AND IF WE TAKE THE ESTIMATED RATE TAKEN BY THE ITA NO. 3910(DEL)/2009 6 APPELLATE ASSISTANT COMMISSIONER AND THE TRIBUNAL, THE RATE OF PLOT IN QUESTION COMES TO RS. 36 PER SQ. YD ., THAT IS, ROUGHLY HALF OF THE PREVALENT MARKET RATE IN T HE AREA. ADMITTEDLY, NO REASON HAS BEEN SHOWN BY THE AS SESSEE AS TO WHY THE PLOT OF LAND HAS BEEN SOLD TO HER F OR HALF OF THE MARKET RATE. NOR ANY OTHER REASON HAS BEEN SHO WN TO THE INCOME-TAX OFFICER AT THE TIME OF ASSESSMENT. EV EN, IN SPITE OF SPECIFIC QUERY, THE ASSESSEE FAILED TO POI NT OUT ANY MISTAKE/LACUNA IN ASCERTAINING THE VALUE OF THE PLOT OF LAND BY THE VALUER. IN THESE CIRCUMSTANCES, THE ONL Y REASONABLE INFERENCE THAT CAN BE DRAWN IS THAT THE ASSESS EE HAS SHOWN LESS AMOUNT IN THE ACCOUNT BOOKS AND SALE DEED T HAN THE ACTUAL CONSIDERATION PAID. CONSIDERING THE COMP ARABLE CASES AND THE FACTS OF THE CASE, WE FIND NO GROUND T O INTERFERE IN THE ADDITION MADE UNDER SECTION 69B OF THE ACT , 1961. 4.3 THE FACTS OF THIS CASE ARE DISTINGUISHABLE . THE FACTS ARE THAT THE PROPERTY WAS PURCHASED FOR A CONSIDERATION OF R S. 14.00 LAKH. THE ASSESSEE FILED A COPY OF VALUATION REPORT FROM TH E APPROVED VALUER, WHERE THE VALUATION OF THE PROPERTY STOOD AT RS. 13,97 ,000/-. AS AGAINST THAT, THE DVO VALUED THE PROPERTY AT RS. 33,31,108/-. THE AO HAS NOT FURNISHED ANY REASON AS TO WHY THE VALUATION MADE BY THE DVO IS PREFERABLE TO THE VALUATION MADE BY THE APPROVED VALUER. THUS, THE VALUATION MADE BY THE DVO CANNOT BE ACCEPTED AS IT IS AS THERE IS A DIFFERING REPORT OF ANOTHER EXPERT IN THE MATTER. FURTHER, THERE IS NO EVID ENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS MADE INVESTMENT EXCEEDING RS. 14.00 LAKH IN THIS PROPERTY, THE ONUS OF WHICH IS ON THE REVENUE I N TERMS OF SECTION 69B, WHICH STARTS WITH THE WORDS WHERE IN ANY FINAN CIAL YEAR THE ASSESSEE ITA NO. 3910(DEL)/2009 7 HAD MADE INVESTMENT. IN ABSENCE OF ANY EVIDE NCE REGARDING ANY FURTHER INVESTMENT MADE BY THE ASSESSEE AND EXISTENCE OF TWO CONTRADICTORY REPORTS, WE ARE OF THE VIEW THAT THE LD. CIT(A PPEALS) WAS RIGHT IN DELETING THE ADDITION MADE BY THE AO. 5. IN THE RESULT, THE APPEAL IS ALLOWED AS INDI CATED ABOVE. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 3 0TH JULY, 2010. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 30TH JULY, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- M/S TARINI INTERNATIONAL PVT. LTD., NEW DELHI. ITO, WARD 16(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.