ITO, New Delhi V. Sh. Upende Kumar Gupta, Delhi

ITA 4531/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0087 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA SENIOR
• Assessee Lawyers: P K JAIN
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Fair market value; Corroborative evidences; Valuation report
• Section: 50C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.4531/DEL./2013 (ASSESSMENT YEAR : 2010-11) ITO, WARD 28 (2), VS. SHRI UPENDER KUMAR GUPTA, NEW DELHI. 4273, GALI BHAIRON NAI SARAK, DELHI 110 006. (PAN : AAEPG6222A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.K. JAIN, ADVOCATE REVENUE BY : SHRI P. DAM KANUNJNA, SENIOR DR DATE OF HEARING : 01.06.2015 DATE OF PRONOUNCEMENT : 03.06.2015 O R D E R PER GEORGE GEORGE K., JM : THIS APPEAL, AT THE INSTANCE OF THE DEPARTMENT, IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X XV, NEW DELHI DATED 28.05.2013. THE RELEVANT ASSESSMENT YEAR IS 2010-11 . 2. THE REVENUE HAS RAISED SIX GROUNDS. GROUNDS NO. 1 & 2 RELATE TO THE ISSUE WHETHER THE CIT (A) IS JUSTIFIED IN ALLOWING THE APPEAL AND DIRECTING THE ASSESSING OFFICER TO REFER THE CASE FOR VALUATI ON OF PROPERTY TO THE DVO AND THEREAFTER MAKE AN ASSESSMENT AS PROVIDED U NDER SECTION 50C(2) AND 50C(3) OF THE INCOME-TAX ACT, 1961. GROUNDS NO .3, 4 & 5 RELATE TO ITA NO.4531/DEL./2013 2 THE ISSUE WHETHER THE CIT (A) IS JUSTIFIED IN DELET ING THE ADDITION OF RS.14,00,000/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNEXPLAINED CASH CREDITS. GROUND NO.6 RELATES TO THE DELETION OF ADDITION OF RS.2,57,500/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISBELIEVING THE COST OF IMPROVEMENT INCURRED ON PROPERTIES WHIC H WAS SOLD. 3. WE SHALL TAKE UP THE ISSUES GROUND-WISE AS UNDER . GROUNDS NO.1 & 2 4. THE ASSESSEE HAD SOLD A PROPERTY. THE CONSIDERA TION SHOWN IN THE SALE DEED WAS RS.15,00,000/-. WHILE COMPUTING THE CAPITAL GAINS, THE ASSESSEE HAS TAKEN THE SALE CONSIDERATION AT RS.15, 00,000/-. THE ASSESSING OFFICER COMPUTED THE CAPITAL GAINS AFTER TAKING THE CIRCLE RATE/STAMP DUTY VALUATION WHICH WAS AT RS.28,40,000/- AS PROVIDED U /S 50C OF THE ACT. THEREFORE, THE ASSESSING OFFICER HAS MADE AN ADDITI ON OF RS.13,40,000/- (RS.28,40,000/- MINUS RS.15,00,000/-). 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT (A). IT WAS SUBMITTED BEFORE THE CIT (A) THAT THE FAIR MARK ET VALUE OF THE PROPERTY AS PER VALUATION REPORT IS ONLY RS.15,00,000/-. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD OBJECTED TO THE ADOPTION OF THE CI RCLE RATE/STAMP DUTY VALUATION BEFORE THE ASSESSING OFFICER VIDE HIS LET TER DATED 01.01.2013. THEREFORE, IT WAS SUBMITTED THAT THE VALUATION OF T HE PROPERTY WAS TO BE REFERRED TO THE DVO AND ASSESSMENT IS TO BE COMPLET ED SUBSEQUENT TO THE RECEIPT OF THE VALUATION REPORT OF THE DVO. THE CI T (A) DIRECTED THE ITA NO.4531/DEL./2013 3 ASSESSING OFFICER TO REFER THE IMPUGNED PROPERTY FO R VALUATION TO THE DVO AND ON RECEIPT OF THE VALUATION REPORT, COMPLETE TH E ASSESSMENT. THE RELEVANT FINDING OF THE CIT (A) READS AS UNDER :- 4.4. IT IS APPARENT FROM THE ORDER OF THE AO THAT THE AO HAS FOLLOWED THE DEEMING PROVISIONS OF SECTION 50C (1) WITHOUT FOLLOWING THE OTHER PROVISION U/S 50C(2) AN D HAS NOT REFERRED THE VALUATION OF THE PROPERTY TO THE D VO WHEN THE ASSESSEE HAD OBJECTED AND THE ASSESSEE HAD IN F ACT PLEADED BEFORE THE AO IN THE LETTER DATED 01/01/201 3 THAT THE VALUATION OF THE PROPERTY MAY BE REFERRED TO TH E DVO AND THE VALUATION OF THE DVO SHOULD BE ADOPTED AS PROVIDED U/S 50C(1), 50C(2) & 50C(3). AFTER CONSID ERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF TH E VIEW THAT THE AO HAS NOT FOLLOWED THE COMPLETE PROVISION S OF SECTION 50C(2) AND ACCORDINGLY, THE AO IS DIRECTED TO REFER THE VALUATION TO THE DVO AND MAKE THE ASSESSMENT AS PROVIDED U/S 50C(1), 50C(2) & 50C(3) AND AS SUCH TH E ALTERNATE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFOR E US. 7. LD. DR RELIED ON THE ASSESSMENT ORDER. ON THE O THER HAND, THE AR REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME-T AX AUTHORITIES AND PLACED RELIANCE ON THE FINDINGS OF THE CIT (A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF MATERIAL PLACED ON RECORD, I T IS CLEAR THAT ASSESSEE HAD FILED OBJECTIONS AGAINST ADOPTION OF THE CIRCLE RATE/STAMP DUTY VALUATION BEFORE THE ASSESSING OFFICER (THE OBJECTIONS FILED BY THE ASSESSEE DATED 01.01.2013 PLACED AT PAGES 43 44 OF THE PAPER BOO K FILED BY THE ASSESSEE.). WHEN ASSESSEE HAS FILED OBJECTIONS BEF ORE THE ASSESSING ITA NO.4531/DEL./2013 4 OFFICER THAT CIRCLE RATES ARE ABOVE THE FAIR MARKET VALUE, THE ASSESSING OFFICER WAS DUTY BOUND TO REFER THE IMPUGNED PROPER TY FOR VALUATION TO THE DVO BEFORE PROCEEDING TO MAKE AN ASSESSMENT OF LONG TERM CAPITAL GAINS. THE CIT (A) HAS ONLY DIRECTED THE ASSESSING OFFICER TO REFER THE MATTER FOR VALUATION TO THE DVO AND THEREAFTER CONCLUDE THE AS SESSMENT. THE DIRECTIONS OF THE CIT (A) HAS LEGAL SANCTITY BY VAR IOUS JUDICIAL PRONOUNCEMENTS, INCLUDING THE JUDGMENT OF THE HONB LE MADRAS HIGH COURT IN THE CASE OF N MEENAKSHI VS. ACIT REPORTED IN 326 ITR 229. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE O RDER OF CIT (A) ON THIS SCORE AND WE UPHOLD THE DIRECTIONS OF THE CIT (A) A S CORRECT AND IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. G ROUNDS NO.1 & 2 ARE REJECTED. GROUNDS NO.3, 4 & 5 9. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS .14,00,000/- BY OBSERVING AS UNDER :- 7. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS NOTICED THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.6,00,000/- ON 11.02.10, RS 3,00,000/- ON 12.02. 10 AND A SUM OF RS 5,00,000/- ON 13.02.10 IN HIS SAVING A/C NO 0221053000019589 WITH SOUTH INDIAN BANK LTD CHANDNI CHOWK NEW DELHI. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF DEPOSIT IN HIS SAVING BANK ACCOUNT. THE A SSESSEE VIDE HIS LETTER DATED 30 TH OCTOBER 2012 SUBMITTED THAT THE CASH DEPOSITED IN ACCOUNT REPRESENT THE ADVANCE REC EIVED FOR AND ON BEHALF OF MRS. ANJANA GUPTA FOR PROSPECT IVE SALE OF PROPERTY. THE ASSESSEE WAS FURTHER ASKED TO PROD UCE ITA NO.4531/DEL./2013 5 CONFIRMATION OF THE SAME FROM PROSPECTIVE BUYER VID E ORDER SHEET ENTRY DATED 17.12.2012. HOWEVER THE ASSESSEE HAS FAILED TO PRODUCE ANY CONFIRMATION. HENCE IN THE AB SENCE OF ANY CONFIRMATION THE SUM OF RS.14,00,000/- IS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS U/S 68 OF INCOME TAX ACT 1961. 10. ON FURTHER APPEAL, THE ADDITION MADE BY THE ASS ESSING OFFICER WAS DELETED BY THE CIT (A). THE RELEVANT FINDINGS OF T HE CIT (A) READ AS FOLLOWS :- 6.3. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABL E MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE AO IS NO T JUSTIFIED TO MAKE THE ADDITION OF THE CASH DEPOSITS WITHOUT CONSIDERING THE SIMULTANEOUS OR CORRESPONDING CASH WITHDRAWALS WHICH ARE FOR THE PURPOSE OF BUSINESS. IT IS NOT UNCOMMON FOR THE BUSINESS PEOPLE TO MAKE FREQUENT C ASH DEPOSITS AND WITHDRAWALS IN THE BANK ACCOUNTS AS PE R THE REQUIREMENT OF BUSINESS CONVENIENCE. AFTER CONSIDER ING ALL THE CASE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO PROPER JUSTIFICATION FOR MAKI NG THE ADDITION OF RS 14,00,000/- OF THE CASH DEPOSITS AND ACCORDINGLY, THE ADDITION MADE BY THE AO IS DELETED . 11. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. 12. THE LD. DR STRONGLY SUPPORTED THE ASSESSMENT OR DER. ON THE OTHER HAND, THE AR RELIED ON THE FINDINGS OF THE CIT (A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CASH DEPOSITED OF RS.14,00,000/- IN AS SESSEES ACCOUNTS WERE DULY AND FULLY EXPLAINED IN THE CASH FLOW STATEMENT WITH SUPPORTING EVIDENCE CONSISTING OF ASSESSEES BANK STATEMENTS A ND THE SALE DEED EXECUTED BY THE ASSESSEE AS GENERAL POWER OF ATTORN EY FOR HIS WIFE, ITA NO.4531/DEL./2013 6 ANJANA GUPTA. THE COPIES OF THE CASH FLOW STATEMEN T, BANK STATEMENT AND VARIOUS SALE DEEDS ARE PLACED ON RECORD. THE RECEI PT OF SALE CONSIDERATION IN CASH IS DULY SUPPORTED BY THE SALE DEEDS. THERE FORE, THE ADDITION OF RS.14,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT IS UNWARRANTED AND CIT (A) WAS JUSTIFIED IN DELETING THE SAME. IT IS ORDERED ACCORDINGLY. GROUNDS NO.3, 4 & 5 ARE REJECTED. GROUND NO.6 14. THE ASSESSEE HAS SOLD SEVERAL PROPERTIES AND AL SO CLAIMED COST OF IMPROVEMENT ON THESE PROPERTIES. THE COST OF IMPRO VEMENT CLAIMED WAS RS.5,15,000/-. THE ASSESSING OFFICER DISALLOWED 50 % OF THE COST OF IMPROVEMENT WHILE COMPUTING THE LONG TERM CAPITAL G AINS AND HENCE, MADE AN ADDITION OF RS.2,57,500/-. THE RELEVANT FINDING OF THE ASSESSING OFFICER IN MAKING THE ADDITION READS AS FOLLOWS :- 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED TO HAVE GOT R ENOVATION DONE IN PROPERTY NO.4279, GALI BHAIRAV, NAI SARAK, DELHI AMOUNTING TO RS.2,65,000/- AND PROPERTY NO. 1374, MALIWARA, VAIDWARA, NAI SARAK, DELHI-110006 AMOUNTI NG TO RS.2,50,000/-, TOTALING TO RS.5,15,000/-. THE AR OF THE ASSESSEE WAS ASKED TO FURNISH THE DOCUMENTARY EVIDE NCE / BILLS & VOUCHERS OF THESE EXPENSES. IN RESPONSE TO THIS, THE AR OF THE ASSESSEE HAS FURNISHED RECEIPTS ON PLAIN PAPER FROM SHRI DAULAT RAM SAINI S/O SHRI SUKHLAL SAINI R /O VILLAGE KESRI PURA, TEHSIL BASWA, DISTT. DOSA, RAJA STHAN AND CLAIMED THAT THE PAYMENT WERE MADE TO SHRI DAUL AT RAM SAINI FOR CARRYING RENOVATION WORK INCLUDING TH E COST OF MATERIAL. THE STATEMENT OF SHRI DAULAT RAM SAINI WAS RECORDED ON OATH ON 05.03.2013 WHICH IS PLACED ON R ECORD HOWEVER, THE STATEMENT OF SHRI DAULTAT RAM SAINI WA S NOT SATISFACTORY. THE EVIDENCE PRODUCED BY THE AR IS ITA NO.4531/DEL./2013 7 INSUFFICIENT AND NOT RELIABLE, HENCE IN ORDER TO CO VER THE POSSIBLE LEAKAGE OF REVENUE 50% OF THE AMOUNT CLAIM ED WHICH COMES TO RS.2,57,500/- IS DISALLOWED ON ACCOU NT OF NON PRODUCTION OF COMPLETE BILLS AND VOUCHERS. 15. THE CIT (A) DELETED THE ADDITION BY OBSERVING A S UNDER :- 7.3. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSION OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE AO IS NOT J USTIFIED TO DISALLOW THE CLAIM COST OF IMPROVEMENT WITHOUT ANY VALID REASONS AND ACCORDINGLY, THE ADDITION MADE BY THE A O IS DELETED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CONFIRMATION OF EXPENSES ON IMPROVEMEN T OF PROPERTY BEFORE ITS SALE HAS BEEN PLACED ON RECORD AND STATEMENT OF SHRI DAULAT RAM SAINI WAS RECORDED ON OATH. CONFIRMATION AND STATEMENT H AS BEEN REJECTED BY THE ASSESSING OFFICER ON THE GROUND NOT SATISFACTO RY, INSUFFICIENT AND NOT RELIABLE WHICH ARE VAGUE AND BASED ON SURMISES AND CONJECTURES. THEREFORE, THE CIT (A) IS JUSTIFIED IN DELETING THE SAME. HENCE, GROUND NO.6 RAISED BY THE REVENUE IS REJECTED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 RD DAY OF JUNE, 2015. SD/- SD/- (N.K. SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.4531/DEL./2013 8 DATED THE 3 RD DAY OF JUNE, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.