Asstt. Commissioner of Income Tax, Lucknow V. Nandini Educational & Charitable Trust, Lucknow

ITA 45/LKW/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4310 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OBJECTION FILED
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Charitable institution; Fair market value; Valuation report; Documents seized
• Section: 50C; 133(6); 68; 11; 69

Judgement Text

I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.45/LKW/2015 ASSESSMENT YEAR:2011-12 A.C.I.T., CENTRAL CIRCLE-II, LUCKNOW. VS. NANDINI EDUCATIONAL & CHARITABLE TRUST, B-13, SECTOR-C, ALIGANJ, LUCKNOW. PAN:AABTN3246J (APPELLANT) (RESPONDENT) C.O.10/LKW/2015 ( IN ITA NO.45/LKW/2015) ASSESSMENT YEAR:2011-12 NANDINI EDUCATIONAL & CHARITABLE TRUST, B-13, SECTOR-C, ALIGANJ, LUCKNOW. PAN:AABTN3246J VS. A.C.I.T., CENTRAL CIRCLE-II, LUCKNOW. (APP LICANT ) (RESPONDENT) O R D E R PER P. K. BANSAL, A.M. THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARISE OUT OF THE ORDER OF CIT(A)-III, LUC KNOW DATED 30/09/2014. IN ITS APPEAL, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.53, 00,000/- MADE BY THE A.O. U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN WITHOUT APPRECIATING THE FACT THAT REVENUE BY SHRI O. P. MEENA, CIT, D.R. ASSESSEE BY SHRI P. K. KAPOOR, C. A. DATE OF HEARING 06/06/2016 DATE OF PRONOUNCEMENT 27 / 07 /2016 I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 2 THE A.O. HAS MADE ADDITION IN RESPECT OF CREDITS WH ICH COULD NOT BE EXPLAINED TO THE SATISFACTION OF AO AS REQUIRED U/S 68 OF THE ACT. THE CIT (A) HAS ERRED IN SUBSTITUTING HER OWN SATISFACTION IN PLACE OF A.O.'S SATISFACTION AS REQUIRED U/S 68 OF THE IT ACT 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A)HAS ERRED IN DELETING THE ADDITION OF RS.7,19 ,79,430/- MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED INVESTME NT WITHOUT APPRECIATING THE FACT THAT THE A.O. HAS MADE THE AB OVE SAID ADDITION ON THE BASIS OF THE FACTS OF THE CASE AS T HERE WAS REMARKABLE DIFFERENCE NOT ONLY BETWEEN TOTAL PURCHA SE CONSIDERATION & STAMP VALUE OF ABOVE SAID LAND BUT ALSO BETWEEN RATE OF LAND PURCHASED BY THE ASSESSEE AND THAT OF ANOTHER LAND OF SAME SPECIFICATIONS SOLD BY THE SAM E CONCERN TO THE ANOTHER PERSON. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.40 ,30,899/- MADE U/S 69 OF THE I.T. ACT 1961 ON ACCOUNT OF UNEX PLAINED INVESTMENT IN CONSTRUCTION OF IMMOVABLE PROPERTY WI THOUT APPRECIATING THE FACT THAT THE A.O. HAD REJECTED TH E BOOKS OF THE ASSESSEE PRIOR TO REFERRING THE PROPERTY IN QUE STION TO VALUATION OFFICER AND RECORDED THE REASONS THEREOF ON 27.08.2012 AND ALSO MADE AN ORDER SHEET ENTRY ON 14 .09.2012 ITSELF WITH RESPECT TO REJECTION OF BOOKS OF ACCOUN TS. ACCORDINGLY THE APEX COURTS JUDGMENT IN SARGAM CINEMA VS CIT (2 010) 328 ITR 513 (SC) RELIED UPON BY THE CIT (A) SUPPORTS TH E CASE OF REVENUE. COPY OF NOTE SHEET ATTACHED TO THESE GROUN DS OF APPEAL. 2. IN ITS CROSS OBJECTION THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS: 1. BECAUSE ON THE BASIS OF MATERIAL AND INFORMATIO N ON RECORD, THE LD. 1 ST APPELLATE AUTHORITY SHOULD HAVE, INTER-ALIA, HELD THAT THE ONUS THAT LIED UPON THE ASSESSEE IN T HE MATTER OF PROVING UNSECURED LOANS (TREATED AS CASH CREDIT BY THE ASSESSING OFFICER) STOOD FULLY DISCHARGED AND ACCOR DINGLY THE PROVISION OF SECTION 68 OF THE ACT WERE NOT APPLICA BLE AT ALL, IN RELATION THERETO. 2. BECAUSE PURCHASE OF LAND FOR A CONSIDERATION OF RS.2,68,99,905/-, AS HAD BEEN MADE FROM M/S ANSAL P ROPERTIES I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 3 AND INFRASTRUCTURE LTD. (API) WHO THEMSELVES WERE T HE DEVELOPERS, STOOD FULLY PROVED AND THE CIT(A) SHOUL D HAVE, INTER-ALIA, HELD THAT THERE BEING NO ENABLING PROVI SION UNDER THE ACT, THE ADDITION OF RS.7,19,79,430/- AS HAD BEEN M ADE IN THE ASSESSMENT WAS WHOLLY ILLEGAL. 3. BECAUSE IN RELATION TO AN ADDITION OF RS.40,30,8 99/- REPRESENTING THE ALLEGED DIFFERENCE BETWEEN RS. ESTIMATE OF COST OF CONSTRUCTION AS MADE BY THE DVO IN THE VALUATION REPORT (OBTAINED BY THE ASSESSING OFFICER UNDER SECTION 142A OF THE ACT) 8,63,78,400 DEDUCT: INVESTMENT DECLARED BY THE ASSESSEE AS PER ITS BOOKS OF ACCOUNT 8,23,47,501 40,30,899 BEING LESS THAN 5% OF THE 'ESTIMATE', DESERVED TO B E IGNORED, OTHER GROUNDS APART. 3. GROUND NO. 1 IN REVENUES APPEAL AS WELL AS IN T HE CROSS OBJECTION OF THE ASSESSEE RELATE TO THE SAME ISSUE REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT AMOUNTING TO RS .53 LAC AS CASH CREDIT BUT DELETED BY CIT(A). 4. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE T HAT THE ASSESSING OFFICER NOTED FROM THE SEIZED CPU THAT THE ASSESSEE HAS TAK EN UNSECURED LOANS AMOUNTING TO RS.5,51,20,000/- THEREFORE, THE ASSESS ING OFFICER ASKED THE ASSESSEE TO PROVE THE IDENTITY, CREDITWORTHINESS AN D GENUINENESS OF THESE SUNDRY CREDITORS. THE ASSESSEE SUBMITTED THE DETAI LS OF ALL THE SUNDRY CREDITORS, COPY OF BANK ACCOUNT, COPY OF RETURN IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION, THE DETAILS OF WHIC H ARE GIVEN ON PAGES 4 & 5 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER A FTER MAKING INDEPENDENT INQUIRY BY ISSUING NOTICE U/S 133(6) TO THE LOAN PR OVIDER AND ON THE BASIS OF DOCUMENTS SEIZED AT THE RESIDENTIAL AND BUSINESS PR EMISES, STATEMENT OF THE I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 4 PERSON, TOOK THE VIEW THAT THE ASSESSEE HAS INTRODU CED HIS OWN UNACCOUNTED MONEY IN RESPECT OF THE FOLLOWING PERSO NS: S.NO. NAME OF THE PERSON AMOUNT(RS.) ------- ----------------------------------- ----- -------------------- 2. ARUN SHARMA 4,50,000 19. REGHUVEER SHARMA 4,00,000 25. ROHTAS SHARMA 4,50,000 11. LAKHVINDER SINGH 3,80,000 28. SATYA NARAIN AGARWAL 5,00,000 29. SUKHPAL SINGH 9,00,000 30. SMT. URMILA SHARMA 7,00,000 32. RAJ KUMAR SHARMA 6,00,000 ------------- TOTAL 53,80,000 ------------- 4.1 THE ASSESSING OFFICER WAS NOT SATISFIED WITH TH E EVIDENCE AND THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THESE PAR TIES AND ACCORDINGLY MADE THE ADDITION U/S 68 OF THE ACT RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD M ORE [1971] 82 ITR 540 (SC) AS WELL IN THE CASE OF SUMATI DAYAL VS. CIT 21 4 ITR 801. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO NOTED THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS THAT HE HAD MADE DIRECT INQUIRIES FROM ALL THE EIGHT PERSON S BY SENDING NOTICES U/S 133(6) AND ALL OF THEM HAVE CONFIRMED THE LOAN TRAN SACTION AND IN THIS REGARD HE REFERRED TO PAGE NO. 9 & 10 OF THE ASSESS MENT ORDER AND ULTIMATELY THE CIT(A), AFTER APPRECIATING THE EVIDE NCE OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING AS UNDER: IT IS SEEN THAT ALL THESE LOAN CREDITORS HAVE BEEN FILING THEIR RESPECTIVE ITRS AND WERE ALSO ASSESSED TO INCOME TA X SINCE LAST MANY YEARS. APART FROM THE CONFIRMATIONS PROVIDED T O THE ASSESSING OFFICER, THEY HAVE ALSO CONFIRMED TO THE ASSESSING OFFICER DIRECTLY ALONG WITH DOCUMENTARY EVIDENCE IN SUPPORT OF I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 5 THESE UN-SECURED LOANS, LIKE ITR, BANK STATEMENT, C OMPUTATION OF INCOME, CAPITAL ACCOUNT ETC. FURTHER, IN SUPPORT OF CREDIT WORTHINESS OF THE EIG HT LOAN CREDITORS AND GENUINENESS OF TRANSACTIONS, THE ASSE SSEE HAS ALSO FURNISHED COMPLETE DETAILS OF SOURCES FROM WHE RE THESE EIGHT LOAN CREDITORS HAD GIVEN LOAN TO THE ASSESSEE , EVEN THOUGH, AS PER JUDICIAL PRONOUNCEMENTS, THE ASSESSE E WAS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. THESE DOCUMENTARY EVIDENCES VERY CLEARLY SHOW THAT THE CAPITAL BALANCES AT THE YEAR END WERE MUCH MORE THAN THE AM OUNT OF LOANS GIVEN BY THESE CREDITORS WHICH PROVE THEIR CA PACITY TO GIVE LOAN AND ALSO THEIR CREDIT WORTHINESS. ALTHOUGH THE ASSESSING OFFICER HAS DISALLOWED THE U NSECURED LOAN BUT NO SUCH DISALLOWANCE WAS MADE FOR THE INTE REST ON THESE LOANS. THE ASSESSING OFFICER DID NOT SAY THAT THESE PERSONS ARE BENAMI OF THE ASSESSEE, IN A WAY THE AS SESSING OFFICER ACCEPTED THE INTEREST PAID TO THEM ON THE S AME LOAN WHICH HE HAS DISALLOWED. EVEN THOUGH THE TWO EMPLOY EES WHO GAVE THEIR STATEMENT AT THE TIME OF SEARCH HAS STAT ED THAT THEIR- FINANCIAL MATTERS ARE HANDLED BY THEIR EMPLOYER, BU T THIS IN ITSELF CAN'T BE HELD AGAINST THEM AS THEY ARE FINANCIALLY SOUND AND HAVE BEEN FILING THEIR ITR FOR YEARS IN DEPARTMENT AND HAVE ALSO SHOWN INTEREST ON THESE LOANS. THEREFORE AFTER CONSIDERING THE ABOVE STATED FACTS AND THE DOCUMENTARY EVIDENCES IT IS CLEAR THAT THE CAPITAL BALANCES AT THE YEAR END WERE MUCH MORE THAN THE AMOUNT OF LOAN S GIVEN BY THESE PERSONS WHICH PROVE THEIR CAPACITY TO GIVE LOAN AND THEIR CREDIT WORTHINESS. HENCE, THE ADDITION OF RS. 53,80,000/- IS HEREBY DELETED. THESE GROUNDS OF APPEAL ARE HERE BY ALLOWED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THIS IS THE CASE WHERE THE ASSESSEE HAS DULY DISCHARGED HIS ONU S AS LIE ON HIM. THE ASSESSEE HAS SUBMITTED THE EVIDENCE TO PROVE THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. NOT ONLY THIS , THE ASSESSING OFFICER HAD MADE THE INQUIRY BY ISSUING NOTICE TO EACH OF T HE CREDITOR U/S 133(6) OF I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 6 THE ACT. IN THE INQUIRY SO MADE, EACH OF THE CREDI TOR HAS CONFIRMED THE LOAN BEING ADVANCED TO THE ASSESSEE. ALL THE PARTIES AR E THE INCOME TAX ASSESSEE. THE CAPITAL BALANCE AT THE YEAR END IN R ESPECT OF EACH OF THE CREDITOR IS MUCH MORE THAN THE AMOUNT ADVANCED TO T HE ASSESSEE. THIS PROVES THEIR CREDITWORTHINESS. THE AMOUNT HAS BEEN PAID BY EACH OF THE CREDITOR TO THE ASSESSEE HAS NEVER BEEN DENIED BY T HESE PARTIES OR BY THE ASSESSEE. THE COPY OF THEIR RETURN, CASH AND BANK BALANCE AT THE END OF EACH YEAR WERE ALSO FILED. IN VIEW OF THIS FACT, W E DO NOT FIND THAT THIS IS A FIT CASE WHICH WARRANT OUR INTERFERENCE. THE CIT(A ), IN OUR OPINION, HAS RIGHTLY DELETED THE ADDITION AFTER APPRECIATING ALL THE RELEVANT EVIDENCE. LEARNED D. R. EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT BRING TO OUR KNOWLEDGE ANY CO GENT MATERIAL OR EVIDENCE WHICH MAY COMPEL US TO INTERFERE IN THE FI NDING OF CIT(A). WE ACCORDINGLY DISMISS THE GROUND TAKEN BY THE REVENUE . SINCE WE HAVE ALREADY DISMISSED THE GROUND OF THE REVENUE THEREFO RE, THE GROUND OF THE CROSS OBJECTIONS STANDS DISPOSED OF AS INFRUCTUOUS. 6. GROUND NO. 2 OF THE REVENUES APPEAL RELATES TO THE DELETION OF ADDITION OF RS.7,19,79,430/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT. 7. THE ASSESSEE, IN ITS CROSS OBJECTION, HAS ALSO T AKEN GROUND NO. 2 ON THE SIMILAR ISSUE BY STATING THAT THE CIT(A) SHOULD HAVE, INTER ALIA, HELD THAT THERE BEING NO ENABLING PROVISION UNDER THE I.T. AC T FOR MAKING THE ADDITION OF RS.7,19,79,430/-. 8. THE FACTS RELATED TO THIS ISSUE ARE THAT THE ASS ESSING OFFICER NOTED THAT THE ASSESSEE HAS PURCHASED A PLOT OF LAND FOR THE CONSTRUCTION OF G. D. GOENKA SCHOOL FOR RS.2,68,99,905/- AGAINST THE CIRC LE RATE OF RS.9,99,79,343/-. THE ASSESSING OFFICER THEREFORE, TOOK THE VIEW THAT HUGE I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 7 DISCOUNT OF RS.9,19,79,430/- WAS GIVEN TO THE ASSES SEE. THE ASSESSING OFFICER ALSO NOTED THAT INQUIRIES WERE ALSO MADE FR OM M/S ANSAL PROPERTIES & INFRASTRUCTURE LIMITED REGARDING THE DETAILS OF COM MERCIAL PLOTS SOLD FROM 01/01/2010 TO 31/12/2010 IN SECTOR-B, SUSHANT GOLF CITY, SULTANPUR ROAD, LUCKNOW AND AS PER THE INFORMATION PROVIDED BY M/S ANSAL PROPERTIES & INFRASTRUCTURE LIMITED, THE ASSESSEE HAS PURCHASED THE SAID PLOT OF LAND @RS.1,322.22 DPER SQ. YARDS WHEREAS THE OTHERS HAD TO PAY MUCH HIGHER RATES OF RS.4218.75 AND RS.2,450/- PER SQ. YARDS ON LY THEREFORE, THE ASSESSING OFFICER TOOK THE VIEW THAT IN THE CASE OF THE SELLER, THE PROVISION OF SECTION 50C WOULD HAVE BEEN DEFINITELY ATTRACTED AND THE ADDITION BE MADE IN THE HANDS OF THE SELLER. THE ASSESSING OFF ICER THEREFORE, WAS OF THE VIEW THAT THE PURCHASER MIGHT HAVE PAID HUGE UNACCO UNTED MONEY FOR THE PURCHASE OF LAND AND ACCORDINGLY MADE THE ADDITION OF RS.7,19,79,430/-. 9. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT( A) DELETED THE ADDITION BY OBSERVING AS UNDER: FROM THE ABOVE STATED FACTS IT IS OBSERVED THAT TH E ADDITION OF RS.7,19,79,4207- WHICH IS THE DIFFERENCE BETWEEN CI RCLE RATE OF THE LAND, AND PURCHASE CONSIDERATION HAS BEEN MADE MERELY ON CONJECTURES AND SURMISES WITHOUT BRINGING OUT ANY C ONTRARY MATERIAL TO SHOW THAT ANY SUM OVER AND ABOVE THE PU RCHASE CONSIDERATION STATED/DECLARED IN THE REGISTERED SAL E DEED HAS BEEN PAID TO THE SELLER. IT IS IMPORTANT TO NOTE TH AT THE ASSESSING OFFICER HIMSELF HAS MADE THE ENQUIRY FROM THE SELLER NAMELY M/S. ANSAL PROPERTY & INFRASTRUCTURES LTD. A S A RESULT OF THIS DIRECT ENQUIRY MADE BY THE ASSESSING OFFICER, AS IS CLEAR FROM THE FACT STATED ABOVE AS WELL AS FROM THE ASSE SSMENT ORDER ITSELF, THAT THE ASSESSEE HAS PAID A SUM OF RS.2,68,99,905/- ONLY TO THE SELLER FOR PURCHASE OF LAND. IN FACT THE ASSESSING OFFICER MERELY RAISED A PRESUMPTION W ITHOUT BRINGING OUT ANY MATERIAL ON RECORD WHICH COULD GO TO SHOW THAT THE APPELLANT HAD ACTUALLY MADE THE PAYMENT FO R THE PURCHASE OF THE SAID LAND OVER AND ABOVE THEN WHAT HAS BEEN STATED/DECLARED IN THE SALE DEED. I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 8 MOREOVER, THIS IS A SEARCH CASE AND NO INCRIMINATIN G MATERIAL HAS BEEN FOUND AND SEIZED, REGARDING IT DURING THE COURSE OF SEARCH, HENCE IN ABSENCE OF ANY INCRIMINATING MATER IAL NO ADDITION CAN BE MADE IN VIEW OF THE HON'BLE ITAT, D ELHI BENCH 'F', VIDE ORDER DATED 20.06.2013 PASSED IN ITA NO. 2637/DEL/2010, IN THE CASE OF ACIT VS. PACL INDIA L TD AND MGF AUTOMOBILES IN ITA NO. 4212 & 4213/DEL/201L. THEREF ORE, AFTER CONSIDERING THE ABOVE STATED FACTS THE ADDITI ON OF RS.7,19,79,430/- IS HEREBY DELETED. THESE GROUNDS O F APPEAL ARE HEREBY ALLOWED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS THE PAPER BOOK FILED BEFORE US AS WAS REFERRED TO DURING THE COURS E OF HEARING. WE DO NOT FIND ANY PROVISION UNDER THE INCOME TAX ACT DURING THE IMPUGNED ASSESSMENT YEAR THAT IN CASE THE ASSESSING OFFICER FINDS THAT THE ASSESSEE HAS PURCHASED THE LAND LESS THAN THE CIRCLE RATE FO R THE PURPOSE OF STAMP DUTY, THE ADDITION HAS TO BE MADE IN THE HANDS OF T HE PURCHASER FOR THE DIFFERENCE. THE PROVISIONS OF SECTION 56(2)(VII) W HICH WERE INSERTED WITH EFFECT FROM 01/10/2009 ARE APPLICABLE TO AN INDIVID UAL OR HUF. THE SAID PROVISION ALSO MAKES LIABLE AT THE TIME AN INDIVIDU AL OR HUF WHO RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1 ST DAY OF OCTOBER, 2009 ANY IMMOVABLE PROPERTY WITHOUT CONSID ERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS RS.50,000/-, THE STAMP DUTY VALUE OF SUCH PROPERTY HAS TO BE TREATED TO BE THE INCOME OF SUCH INDIVIDUAL OR HUF. THE PROVISION OF SECTION 56(2)(VII)(B) WHICH RELATES TO IMMOVABLE PROPERTY HAS BEEN AMENDED AND THE AMENDMENT HAS BEEN MADE BY FIN ANCE ACT, 2013. THE AMENDED PROVISIONS ARE APPLICABLE WITH EFFECT F ROM 01/04/2014. THE AMENDED PROVISION STATES AS UNDER: (VII) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAM ILY RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 9 (A) ANY SUM OF MONEY, WITHOUT CONSIDERATION, THE AG GREGATE VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE W HOLE OF THE AGGREGATE VALUE OF SUCH SUM ; (B) ANY IMMOVABLE PROPERTY (I) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY ; (II) FOR A CONSIDERATION WHICH IS LESS THAN THE STA MP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION : PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXIN G THE AMOUNT OF CONSIDERATION FOR THE TRANSFER OF IMMOVAB LE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF THIS SUB-CLAUSE : PROVIDED FURTHER THAT THE SAID PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THERE IN, OR A PART THEREOF, HAS BEEN PAID BY ANY MODE OTHER THAN CASH ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFER O F SUCH IMMOVABLE PROPERTY. 10.1 THE ASSESSEE HAS BEEN ASSESSED NEITHER AS AN I NDIVIDUAL NOR AS HUF. THE AMENDED PROVISION, AS REPRODUCED HEREIN ABOVE, ARE APPLICABLE FROM 01/04/2014 IN THE CASE OF THE ASSESSEE. THE ASSESS EE HAS PURCHASED THE LAND FROM M/S ANSAL PROPERTIES AND INFRASTRUCTURE L TD. ON 28/04/2010 I.E. MUCH PRIOR TO 01/04/2014. THEREFORE, THE CASE OF T HE ASSESSEE WILL NOT FALL WITHIN THE PURVIEW OF SECTION 56(2)(VII) OF THE ACT . WE ALSO NOTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BY OBSERVIN G AT PAGE NO. 16 OF ITS ORDER, SINCE THE PROVISIONS OF SECTION 50C WOULD HA VE BEEN APPLIED IN THE CASE OF THE DEVELOPER I.E. THE SELLER IN THIS CASE, THEREFORE, THE ASSESSEE WOULD HAVE PAID HUGE UNACCOUNTED MONEY FOR THE PURC HASE OF SAID LAND. NO DOUBT, NO EVIDENCE WAS BROUGHT ON RECORD OR PLAC ED BEFORE US BY THE I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 10 REVENUE WHICH MAY PROVE THAT THE ASSESSEE HAS PAID THE CONSIDERATION ACTUALLY MORE THAN WHAT HAS BEEN RECORDED IN THE BO OKS OF ACCOUNT. 10.2 WE MAY RECOLLECT THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF K. P. VARGHESE VS. INCOME TAX OFFICER [1981] 131 ITR 597 (SC). EARLIER THERE WAS SECTION 52 UNDER THE I.T. ACT WHICH WAS O MITTED BY THE FINANCE ACT, 1987 WITH EFFECT FROM 01/04/88. THE HEAD OF T HE SECTION WAS CONSIDERATION FOR TRANSFER IN CASES OF UNDERSTATEM ENT. WHILE DEALING WITH THE PROVISION OF SECTION 52(2), THE HON'BLE SUPREME COURT IN THE SAID DECISION HELD THAT SECTION 52(2) CAN BE INVOKED ONL Y WHERE THE CONSIDERATION FOR THE TRANSFER OF A CAPITAL ASSET H AS BEEN UNDERSTATED BY THE ASSESSEE, OR, IN OTHER WORDS, THE FULL VALUE OF THE CONSIDERATION IN RESPECT OF THE TRANSFER IS SHOWN AT A LESSER FIGURE THAN THAT ACTUALLY RECEIVED BY THE ASSESSEE, AND THE BURDEN OF PROVING SUCH UNDERSTATE MENT OR CONCEALMENT IS ON THE REVENUE. THE SUB-SECTION HAS NO APPLICATION IN THE CASE OF AN HONEST AND BONA FIDE TRANSACTION WHERE THE CONSIDERATION R ECEIVED BY THE ASSESSEE HAS BEEN CORRECTLY DECLARED OR DISCLOSED BY HIM. I N VIEW OF THE MANDATE LAID DOWN IN THE SAID DECISION, THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS PAID CONSIDERATION MUCH MORE THAN WHAT HAS BEEN STATED IN THE BOOKS OF ACCOUNT. WE HAVE GONE THROUGH THE ORD ER OF THE ASSESSING OFFICER BUT COULD NOT LAY OUR HAND TO ANY PIECE OF EVIDENCE WHICH MAY SPEAK OF THAT THE ASSESSEE HAS ACTUALLY PAID THE CONSIDER ATION MUCH MORE THAN WHAT HAS BEEN STATED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN VIEW OF THIS FACT, WE DO NOT FIND ANY ILLEGALITY OR INFIRMI TY IN THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.7,19,79,430/-. ACCORDI NGLY, GROUND NO. 2 TAKEN BY THE REVENUE STANDS DISMISSED WHEREAS GROUND NO. 2 TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTION STANDS ALLOWED. 11. GROUND NO. 3 OF THE REVENUES APPEAL RELATES TO THE DELETION OF ADDITION OF RS.40,30,899/- MADE BY THE ASSESSING OF FICER BY APPLYING THE I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 11 PROVISIONS OF SECTION 69 OF THE ACT. THE FACTS REL ATED TO THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS M ADE INVESTMENT IN THE CONSTRUCTION OF BUILDING. THE ASSESSING OFFICER RE FERRED THE MATTER TO VALUATION OFFICER U/S 142A AFTER REJECTING THE BOOK S OF ACCOUNT RELATED TO THE CONSTRUCTION FOR DETERMINING THE COST OF CONSTR UCTION. THE D.V.O. VIDE HIS LETTER DATED 23/11/2012 ESTIMATED THE COST OF C ONSTRUCTION AT RS.8,63,78,400/- WHILE THE ASSESSEE HAS DECLARED TH E COST OF CONSTRUCTION IN HIS BOS AT RS.8,23,47,501/-. THE ASSESSING OFFICER , AFTER NOTING THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNT WITH REGARD TO THE CONSTRUCTION OF THE BUILDING AND HAS ALSO NOT FURNI SHED COMPLETE BILLS AND VOUCHERS, MADE THE ADDITION OF RS.40,30,899/-. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE S AID ADDITION BY OBSERVING AS UNDER: EVEN ON THE MERIT, THE APPELLANT HAS A STRONG CASE AT THE APPELLANT HAS POINTED VARIOUS DEFECTS IN THE VALUAT ION REPORT AS EVIDENT FROM PAGE 24 OF THIS APPEAL ORDER, WHICH HA S NOT BEEN ADJUDICATED BY THE ASSESSING OFFICER. FURTHER, THE D.V.O. REPORT DOES NOT SAY THAT THERE AN EXTRA INVESTMENT OVER AND ABOVE THE DECLARED AMOUNT. HIS REPORT IS ONLY AN ESTIMATE OF THE FAIR MARKET VALUE AND NOT A N ESTIMATE OF INVESTMENT. DVO'S VALUATION REPORT IS BASED ON FAIR MARKET VALUATION AND THIS FAIR MARKET VALUE IS RELEVANT FO R WEALTH TAX PURPOSES BUT UNDER SECTION 69 THE TERM USED IS UNEX PLAINED INVESTMENT IN THE PROPERTY. U/S 69 OF THE I.T. ACT ONLY UNEXPLAINED INVESTMENT CAN BE ADDED NOT THE FAIR MA RKET VALUATION FOR EG. IF THE INVESTMENT IN THE BUILDING WAS RS.1,00,000 IN APRIL, 2003 AND NOW THE FAIR MARKET VALUATION OF THE SAME BUILDING IN DECEMBER, 2003 BECOMES RS.1,45 ,000/-, THEN NO ADDITION CAN BE MADE OF RS.45,000/-. AFTER CONSIDERING THE ABOVE FACTS AND THE VARIOUS C ASE LAWS THE APPEAL OF THE APPELLANT IS ALLOWED AND THE ADDIT ION OF RS.40,30,899/- IS HEREBY DELETED. I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 12 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT IN THIS CASE THE ASSESSEE HAS SHOWN THE COST OF CONSTRUCTIO N OF THE BUILDING IN HIS BOOKS OF ACCOUNT AT RS.8,23,47,501/- WHILE THE D.V. O., TO WHOM THE ASSESSING OFFICER REFERRED THE MATTER U/S 142A, HAS ESTIMATED THE COST OF CONSTRUCTION AT RS.8,63,78,400/-. THE ASSESSING OF FICER MADE THE ADDITION OF RS.40,30,899/- I.E. THE DIFFERENCE BETWEEN THE T WO. WE NOTED THAT THE DIFFERENCE IN THIS CASE IS ONLY 4.67% IF WE COMPARE BOTH THE ESTIMATED COST AND THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. THE ESTIMATE IS ALWAYS AN ESTIMATE AND IT CANNOT BE SUBSTITUTED IN PLACE OF ACTUAL. ESTIMATE ALWAYS INVOLVES CERTAIN GUESS WOR K AND IS BEING COMPUTED BY APPLYING CERTAIN THEORETICAL PARAMETERS AND COMP ONENTS. THE ACTUAL EXPENDITURE REPRESENTS THE EXPENSES WHATEVER HAS BE EN ACTUALLY INCURRED. THERE IS BOUND TO BE DIFFERENCE BETWEEN ESTIMATE AN D ACTUAL. ESTIMATES ARE ALWAYS A GUIDING FACTOR TO ASCERTAIN WHAT EXPENDITU RE SHOULD HAVE BEEN INCURRED BUT CANNOT SUBSTITUTE THE ACTUAL EXPENDITU RE. WE NOTED THAT IN THIS CASE THE DIFFERENCE BETWEEN THE ACTUAL COST AND THE ESTIMATE IS ONLY 4.67%. THIS DIFFERENCE, IN OUR OPINION, IS A REASONABLE DI FFERENCE. UNDER SECTION 69, NO DOUBT ADDITION HAS TO BE MADE IN CASE THE ASSESS EE HAS INVESTED FUNDS MORE THAN WHAT HAS BEEN RECORDED IN THE BOOKS OF AC COUNT BUT THE PRIMARY ONUS IS ON THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE HAS ACTUALLY INVESTED MORE THAN WHAT HAS BEEN RECORDED IN THE BO OKS OF ACCOUNT. ONCE THE ASSESSING OFFICER DISCHARGES HIS ONUS, THE ONUS GETS SHIFTED ON THE ASSESSEE. NO DOUBT THE ASSESSING OFFICER CAN MAKE REFERENCE TO THE VALUATION OFFICER. SUB SECTION (1) OF SECTION 142A ITSELF STATES THAT THE ASSESSING OFFICER CAN MAKE A REFERENCE TO ESTIMATE THE VALUE. THEREFORE, THE VALUE WORKED OUT BY THE ASSESSING OFFICER IS AN ESTIMATE AND NOT THE ACTUAL. WE NOTED THAT IN THIS CASE THE DIFFERENCE IS NOT MUCH AND IS EVEN LESS THAN 5% WHICH, IN OUR OPINION, IS BOUND TO HAP PEN WHENEVER AN I.T.A. NO.45/LKW/15 C.O.NO.10/LKW/2015 ASSESSMENT YEAR:2011-12 13 ESTIMATE IS MADE. IN VIEW OF THIS FACT, WE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION. THUS, GROUND NO. 3 OF THE R EVENUE STANDS DISMISSED. SINCE WE HAVE DISMISSED GROUND NO. 3 OF THE REVENUE THEREFORE, THE GROUND TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTIONS BECOM ES INFRUCTUOUS. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED WHILE THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2016) SD/. SD/. ( MAHAVIR PRASAD ) ( P. K. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:27/07/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR