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

ITA 3971/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3711 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS PRATIBHA KAUSHIK
• Keywords: Unexplained investment; Value adopted by valuation officer; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A NO. 3971/DEL/09 ASSTT. YEAR 2006-07 INCOME TAX OFFICER, WARD-7(3), ROOM NO. 306, CR BUILDING, NEW DELHI. VS. M/S. SANTOKH SINGH ENTERPRISES PVT. LTD. B-5/133, SAFDARJUNG ENCLAVE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. PRATIBHA KAUSHIK, DR RESPONDENT BY: SHRI RANJAN CHOPRA, CA ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 10 TH JULY, 2009 PASSED FOR ASSTT. YEAR 2006-07. THE SOL ITARY GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERR ED IN DELETING THE ADDITION OF RS. 9,21,500/-. AN IDENTICAL ISSUE IN T HE CASE OF ASSESSEE WAS CONSIDERED IN ASSTT. YEAR 2005-06 WHEREIN TRIBU NAL HAS NOTICED ALL THE FACTS AND CIRCUMSTANCES IN DETAIL. THE ORDER OF THE TRIBUNAL IN ITA NO. 2666/D/08 FOR ASSTT YEAR 2005-06 READ AS UNDER :- ITA NO. 3971/DEL/09 ASSTT.YEAR 2006-07 2. LD. DR SOUGHT ADJOURNMENT ON THE GROUND THAT GR OUND OF APPEAL TAKEN BY THE ASSESSING OFFICER IS NOT PROPER LY WORDED. THE AO HAS CONTENDED IN THE GROUND THAT CIT (A) HAS ERR ED IN DELETING THE ADDITION OF RS. 16,68,000/- MADE BY THE AO ON A CCOUNT OF COMMISSION PAID BY THE ASSESSEE AND FAIL TO FILE AN Y CONFIRMATION FROM THE PARTIES TO SUBSTANTIATE ITS CLAIM. ACCORDI NG TO THE LD. DR THE ADDITION WAS MADE ON ACCOUNT OF INVESTMENT FROM UNDISCLOSED SOURCES AND NOT OUT OF ANY COMMISSION INVESTMENT FR OM UNDISCLOSED SOURCES AND NOT OUT OF ANY COMMISSION P AYMENT. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE DO NOT SEE ANY REASON TO ADJOURN THE HEARING. WE TAKE COGNIZANCE O F THE CONTENTION OF LD. DR AND MODIFY THE GROUND TO THE E FFECT THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 16 ,68,000/- ADDED BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN T HE HOUSE PROPERTY. 3. THE NOTICE SENT TO THE ASSESSEE RECEIVED BACK WI TH THE REMARKS NSP (NO SUCH PERSON). THEREFORE, NO ONE A PPEARED ON BEHALF OF THE ASSESSEE. WE PROCEED TO DECIDE THE AP PEAL EX-PARTE QUA THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY HAS FILED ITS RETURN OF INCOME ON 31 ST OCTOBER, 2005 DECLARING LOSS OF RS. 9,87,453/-. THE ASSESSEE HAS FILED A REVISED CO MPUTATION OF INCOME VIDE LETTER DATED 2.2.2007, IN WHICH BUSINE SS LOSS WAS SHOWN AT RS. 7,14,386/- AND CAPITAL LOSS AT RS. 2,7 3,068/-. THE ASSESSEE COMPANY AT THE RELEVANT TIME WAS ENGAGED I N THE BUSINESS OF CONSTRUCTION OF HOUSE, FLATS ETC. IT HA S PURCHASED A PROPERTY MEASURING 133.33 SQ. YARDS AT 232 KOHAT EN CLAVE, PITAMPURA, DELHI ON 11.6.2004 FOR A CONSIDERATION O F RS. 6 LAKHS. THE ASSESSEE HAS DEMOLISHED THE WHOLE STRUCTURE AND CONSTRUCTED THREE FLOORS I.E. GROUND FLOOR, FIRST FLOOR AND SEC OND FLOOR. THE COST OF CONSTRUCTION WAS SHOWN AT RS. 15,94,394/-. THUS, THE TOTAL COST OF PROPERTY INCLUDING PURCHASE OF BUILDING AT RS. 6 LAKHS + STAMP DUTY RS. 48,000/- + CONSTRUCTION COST OF RS. 15,94 ,394/- WAS SHOWN AT RS. 22,42,390/-. THE ASSESSEE HAD SOLD FIR ST FLOOR ON 21.3.05 FOR RS. 8 LAKHS AND SECOND FLOOR ON 10.2.05 FOR RS. 11 LAKHS, THE GROUND FLOOR WAS NOT SOLD BUT VALUED IN THE CLOSING STOCK AT RS. 4,67,165/-. THE LD. AO MADE A REFERENCE TO T HE ITA NO. 3971/DEL/09 ASSTT.YEAR 2006-07 DEPARTMENTAL VALUATION OFFICER (DVO) TO DETERMINE T HE COST OF PURCHASE OF THE PROPERTY AS WELL AS TO ESTIMATE THE COST OF CONSTRUCTION. THE DVO DETERMINED THE PURCHASE COST AT RS. 22,68,000/- AND ESTIMATED THE COST OF CONSTRUCTION AT RS. 14,87,400/-. THE ASSESSEE HAS SHOWN COST OF PURCHAS E AT RS. 6 LAKHS. THE DIFFERENCE BETWEEN THE ONE DETERMINE BY THE DVO AND SHOWN BY THE ASSESSEE HAS BEEN ADDED IN THE INCOME OF ASSESSEE AS UNEXPLAINED INVESTMENT. IN THIS WAY, AN ADDITION OF RS. 16,68,000/- HAS BEEN MADE. 5. DISSATISFIED WITH THE ADDITION, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE PRODUCED THE SALE TRANSACTIONS OF SIMILARLY SITUATED PROPERTIES WHICH HAVE BEEN NOTICED BY THE LD. CIT(A) ON PAGE 5 OF THE IMPUGNED ORDER :- (I) PROPERTY NO. 146, KOHAT ENCLAVE ONE AND A HALF STOREY BUILDING ON PLOT SIZE-133.33 SQ. YDS ON 30 FT. ROAD FRONT ROW HOUSES SOLD FOR RS. 4 LACS (FOUR LACS ONLY). SALE DEED REG ISTERED ON 17 TH APRIL, 2004. (II) PROPERTY NO. 192, KOHAT ENCLAVE ONE AND A HALF STOREY BUILDING ON PLOT SIZE-133.33 SQ. YDS ON 30 FT. ROAD FRONT-ROW HOUSES SOLD FOR RS. 8 LACS (EIGHT LACS ONLY) SALE DEED REG ISTERED ON 16 TH MARCH, 2006. (III) PROPERTY NO. 294 (GROUND FLOOR), KOHAT ENCLAV E GROUND FLOOR OF BUILDING ON PLOT SIZE 389.62 SQ. YD S 30 FT. ROAD ON EAST & SOUTH, SERVICE LANE ON WEST, FRONT-R OW OF HOUSES SALE DEED REGISTRATION RS. 12 LAKHS (TWELVE LAKHS O NLY) ON 7.3.2005. 6. THE LD. CIT(A) ON THE BASIS OF SALE TRANSACTIONS ARRIVED AT A CONCLUSION THAT AO HAS MADE THE ADDITION ON THE BAS IS OF ESTIMATE OF COST OF PURCHASE BY THE DVO. THE AO FAILED TO BR ING ANY EVIDENCE INDICATING THE FACT THAT ASSESSEE HAS RECE IVED ANYTHING MORE THAN THE ONE DECLARED BY IT IN THE PURCHASE DE ED. THE PRICE DISCLOSED BY THE ASSESSEE IN THE PURCHASE DEED IS I N CONSONANCE WITH THE PRICE FETCHED BY OTHER SIMILARLY SITUATED PROPERTIES. ACCORDING TO THE CIT(A) AO FAILED TO ESTABLISH THAT ASSESSEE HAS MADE UNEXPLAINED INVESTMENT IN THE PROPERTY. 7. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HAVE GONE ITA NO. 3971/DEL/09 ASSTT.YEAR 2006-07 THROUGH THE RECORD CAREFULLY. THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF DVOS REPORT. THERE WAS NO MATER IAL TO SUBSTANTIATE THIS REPORT. ON THE OTHER HAND, ASSESS EE HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS. IT HAS SHOWN THE PURCHASE PRICE AS DISCLOSED IN THE SALE DEED. THIS PURCHASE PRICE IS IN CONSONANCE TO THE PRICE PREVALENT IN THE AREA. AS A GAINST THIS EVIDENCE THE AO COULD NOT BRING ANY EVIDENCE, WHICH CAN SUGGEST THAT ASSESSEE HAS PAID MORE CONSIDERATION THAN THE ONE SHOWN IN THE SALE DEED. THE LD. FIRST APPELLATE AUTHORITY HA S APPRECIATED THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE AN D WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). 8. IN VIEW OF THE ABOVE DISCUSSION, THIS APPEAL OF THE REVENUE IS DISMISSED. 2. IN THE PRESENT ASSTT. YEAR ASSESSEE HAS SOLD TH E GROUND FLOOR WHICH WAS NOT SOLD IN THE ACCOUNTING YEAR RELEVANT TO ASSTT. YEAR 2005-06. IN THAT ASSTT. YEAR ASSESSEE HAS VALUED TH E GROUND FLOOR IN THE CLOSING STOCK AT RS. 4,57,665/-. IN THIS ASSTT. YEAR ASSESSEE HAS SHOLD THE GROUND FLOOR FOR CONSIDERATION OF RS. 5,0 0,000/-. THE AO HAS CONSIDERED THE VALUE OF GROUND FLOOR ON THE BASIS O F DVO REPORT AT RS. 14,21,300/-. ASSESSEE SHOULD HAVE SHOWN THE SAL E PRICE AT THIS VALUE WHICH IS IN CONSONANCE WITH THE REPORT OF THE DVO. HENCE HE MADE AN ADDITION OF RS. 9,21,300/-. IN ASSTT. YEAR 2005-06 WE HAVE CONSIDERED THE REPORT OF THE DVO AND THEREAFTER UPH OLD THE DELETION. THAT VERY REPORT CANNOT BE CONSIDERED WHILE MAKING THE ADDITION IN THIS ASSTT. YEAR. THE MAJOR DIFFERENCE BETWEEN THE ASSESSEE AND THE DVO IS IN RESPECT OF THE VALUE OF LAND ONLY AS FAR AS COST OF ITA NO. 3971/DEL/09 ASSTT.YEAR 2006-07 CONSTRUCTION IS CONCERN ASSESSEE SHOWN THE COST OF CONSTRUCTION AT RS. 15,94,390/- AND DVO ESTIMATED THE COST OF CONST RUCTION AT RS. 14,87,400/-. THERE IS ROUGHLY DIFFERENCE OF ONE LAC ONLY. THE AO CANNOT SUBSTITUTE THE SALE PRICE OF THE GROUND FLOO R ON THE BASIS OF THAT DVOS REPORT WHICH IS NOT BEING RELIED UPON AND CON SIDERED SUFFICIENT IN ASSTT. YEAR 2005-06 IN THE ORDER EXTRACTED SUPRA . LD. CIT(A) HAS ALSO FOLLOWED THE ORDER OF HER PREDECESSOR WHICH HA S BEEN UPHELD BY THE TRIBUNAL IN THE FINDING EXTRACTED SUPRA. CONSID ERING ALL THESE FACTS WE DO NOT FIND ANY MERIT IN THE APPEAL OF REVENUE. IT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.6.2010. SD/- [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.6.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT