DCIT, New Delhi V. Smt. Archana Saluja, New Delhi

ITA 47/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0987 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 07-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: R S AHUJA
• Keywords: Unexplained investment; Search and seizure
• Section: 143(2); 139(1); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI R.C.SHARMA, AM AND SHRI GEORGE MATHAN, JM ITA NOS.47/DEL/2009, 48/DEL/2009 & 49/DEL/2009 ASSESSMENT YEARS : 2003-04, 2001-02 & 2002-03 DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-14, NEW DELHI. VS. SMT.ARCHANA SALUJA, H-33, GREEN PARK EXTN., NEW DELHI. PAN NO.AANPS2300L. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S.SAHOTA, SR.DR. RESPONDENT BY : SHRI R.S.AHUJA, CA. ORDER PER R.C.SHARMA, AM : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 16.10.2008, IN THE MATTER OF ORDER PASSED U/S 153A/143(3) FOR THE AY 2001- 02, 2002-03 & 2003-04. 2. IN THESE APPEALS, THE REVENUE HAS CHALLENGED THE ACTION OF CIT(A) FOR DELETING THE ADDITION MADE U/S 69 OF THE IT ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HER RE TURN OF INCOME FOR AY 2003-04 U/S 139(1) DECLARING AN INCOME OF RS.5,17,436/-. S UBSEQUENTLY, A SEARCH AND SEIZURE OPERATION U/S 132 WAS CONDUCTED AT THE RESI DENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 18.10.2005. THE AO NOTED DURING THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD PURCHASED PLOT NO.264, UDYOG VIHAR, GURGAON FROM HSIDC FOR RS.59,46,262/-. THE ASSESSEE HAD SHOWN COST OF CONSTRUCTION ON THE INDUSTRIAL BUILDING ON THIS PLOT AT RS.66,92,422/- AND THUS TH E TOTAL INVESTMENT IN THE PROPERTY WAS DECLARED BY THE ASSESSEE AT RS.1,26,38,685/- IN THREE ASSESSMENT YEARS I.E. AY ITA-47 TO 49/D/2009 2 2001-02, 2002-03 AND 2003-04. THE AO WAS OF THE OP INION THAT TOTAL COST OF CONSTRUCTION SHOWN BY THE ASSESSEE WAS ON THE LOWER SIDE, AND THEREFORE REFERRED THE MATTER TO THE DVO VIDE LETTER DATED 19.11.2007. IT WAS ALSO FOUND THAT THE ASSESSEE HAD SOLD THIS INDUSTRIAL BUILDING DURING T HE FY 2002-03 TO M/S MEHRA BANDHU CREATIONS FOR A CONSIDERATION OF RS.1,30,00, 000/-. THE VALUATION OFFICER INSPECTED THE PROPERTY ON 30.12.2007 AND ESTIMATED THE INVESTMENT IN THE PROPERTY AT RS.1,74,02,862/- AS AGAINST THE TOTAL INVESTMENT DECLARED BY THE ASSESSEE AT RS.1,26,38,685/-. THE YEAR WISE BREAKUP OF THE INV ESTMENT DECLARED BY THE ASSESSEE AND ESTIMATED BY THE DVO IS AS UNDER:- FINANCIAL YEAR COST OF INVESTMENT (RS.) DECLARED BY APPELLANT ESTIMATED BY DVO 2000-01 24,38,259/- 34,32,082/- 2001-02 48,49,354/- 68,80,594/- 2002-03 53,51,073/- 70,90,186/- TOTAL 1,26,38,685/- 1,74,02,862/- 4. WHEN THE ASSESSEE WAS CONFRONTED AS TO WHY THE D IFFERENCE SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT, THE ASSESSEE SUB MITTED BEFORE THE AO THAT THE ASSESSEE HAS SHOWN THE ACTUAL COST OF CONSTRUCTION INCURRED BY THE ASSESSEE AND DULY REFLECTED IN THE BOOKS OF ACCOUNT. IT WAS ALS O SUBMITTED BEFORE THE AO THAT THE PROPERTY WAS SOLD TO M/S MEHRA BANDHU CREATIONS FOR RS.1,30,00,000/- DURING THE FINANCIAL YEAR 2002-03. M/S MEHRA BANDHU CREAT IONS ALTERED AND RENOVATED THE BUILDING STRUCTURE BY CONSTRUCTING PARTITIONS A ND BY AFFIXING GRANITE, TILES, KOTA STONE, DHOLPUR STONE AND SANITARY FITTING AND ELECT RICAL FITTINGS ETC. AND INCURRED INVESTMENT OF RS.58,38,597/-. IF THE AMOUNT OF INV ESTMENT ON IMPROVEMENT INCURRED BY THE PURCHASER M/S MEHRA BANDHU CREATION S AT RS.58,38,597/- IS CONSIDERED, THE TOTAL INVESTMENT IN THE PROPERTY WO RKS OUT AT RS.1,84,77,283/- (RS.1,26,38,6785 + RS.58,38,597/-). IT WAS, THUS, ARGUED BEFORE THE AO THAT THERE ITA-47 TO 49/D/2009 3 WAS NO UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN THE CONSTRUCTION OF THE BUILDING. HOWEVER, THE AO DID NOT ACCEPT THE CONTE NTION OF THE ASSESSEE AND MADE ADDITION U/S 69 IN RESPECT OF THE AMOUNT OF DIFFERE NCE IN DVOS REPORT AND THE DECLARED VALUE OF INVESTMENT BY THE ASSESSEE IN THE RESPECTIVE YEARS. 5. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITI ON AFTER CALLING FOR A REMAND REPORT AND RECORDING A FINDING TO THE EFFECT THAT TOTAL INVESTMENT MADE BY THE ASSESSEE AND THE PURCHASER OF BUILDING EXCEEDED THE TOTAL INVESTMENT ARRIVED AT BY THE DVO. THE CIT(A) ALSO FURTHER RECORDED A FIN DING THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OR EVEN THEREAFTE R SUGGESTING ANY INVESTMENT HAVING BEEN MADE IN THE BUILDING OVER AND ABOVE THE INVESTMENT SHOWN BY THE ASSESSEE. AGGRIEVED BY THIS ORDER OF CIT(A), THE R EVENUE IS IN FURTHER APPEAL BEFORE US. 6. LEARNED DR MR.SAHOTA SUPPORTED THE ADDITION MADE BY AO BY TAKING INTO ACCOUNT ONLY THE COST OF CONSTRUCTION SHOWN BY ASSE SSEE IN HER BOOKS OF ACCOUNT. ON THE OTHER HAND, CONTENTION OF LEARNED AR MR.R.S. AHUJA WAS THAT TOTAL COST INCURRED BY THE ASSESSEE AS WELL AS SUBSEQUENT BUYE R OF BUILDING SHOULD BE TAKEN INTO ACCOUNT INSOFAR AS BOTH THE INVESTMENTS WERE M ADE BEFORE THE DATE OF INSPECTION OF PROPERTY BY DVO. HE FURTHER CONTENDE D THAT AFTER SALE OF BUILDING BY THE ASSESSEE, ANY INVESTMENT MADE AND EXPLAINED FOR SUCH BUILDING TILL DATE OF INSPECTION BY DVO, CANNOT BE BRUSHED ASIDE FOR FIND ING OUT TOTAL INVESTMENT MADE IN THIS BUILDING. OUR ATTENTION WAS ALSO DRAWN BY LEARNED AR TO THE ORDER OF AO WHEREIN NO MENTION OF ANY UNRECORDED EXPENDITURE HA VING BEEN FOUND DURING CORUSE OF SEARCH OR THEREAFTER. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THERE WAS SEARCH U/S 132 OF THE IT ACT ON 18.10.2005. AFTER THE SEARCH, ASSESS EE WAS REQUIRED TO FILE RETURN IN THE PRESCRIBED FORM. THE ASSESSEE FILED RETURN U/S 139(1) READ WITH SECTION 153A. ITA-47 TO 49/D/2009 4 NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE ALONGW ITH DETAILED QUESTIONNAIRE. THE ASSESSEE FILED NECESSARY DETAILS, INFORMATION, DOCUMENTS AS REQUIRED BY THE AO. THE AO OBSERVED IN HIS ORDER THAT IN RESPONSE TO THE NOTICE U/S 142(1), AR OF THE ASSESSEE HAS FILED REPLY ALONGWITH EXPLANATION OF EACH ANNEXURE RELATED TO THE ASSESSEE AND SEIZED/FOUND DURING THE SEARCH OPERATI ON. IN THE ASSESSMENT FRAMED U/S 153A, THE AO OBSERVED THAT ASSESSEE HAS PAID IN STALLMENT FOR PURCHASE OF PROPERTY AT PLOT 264, UDYOG VIHAR, GURGAON AND INCU RRED EXPENDITURE FOR CONSTRUCTION THEREON. TOTAL OF SUCH EXPENDITURE AM OUNTED TO RS.53.51 LAKHS. THE AO OBSERVED THAT THIS AMOUNT APPEARS TO BE ON LOWER SIDE IN RESPECT OF PRIME INDUSTRIAL AREA IN GURGAON. ACCORDINGLY, AO MADE A REFERENCE TO THE DVO VIDE LETTER DATED 19.11.2007. IT WAS CONTENDED BEFORE T HE AO THAT THIS PLOT WAS PURCHASED DIRECTLY FROM THE HSIDC, THEREFORE NO QUE STION ARISES FOR ANY EXTRA PAYMENT. THEREAFTER, THE DVO WAS REQUESTED BY THE AO VIDE LETTER DATED 17.12.2007 TO THE EFFECT THAT THE REQUISITION SENT FOR VALUATION OF THIS PROPERTY MAY BE TREATED AS WITHDRAWN. IN THE MEANTIME, THE DVO HAD COMPLETED THE VALUATION AND REPORTED THE SAME VIDE HIS REPORT DATED 20.12.2 007. THE ASSESSEE HAD SHOWN TOTAL INVESTMENT OF RS.1.26 CRORES IN THE RESPECTIV E THREE YEARS ON THIS BUILDING AGAINST WHICH DVO HAD ESTIMATED VALUE OF INVESTMENT AT RS.1.74 CRORES. WE FOUND THAT ASSESSEE HAS PURCHASED THIS PLOT FROM HS IDC DURING FY 2000-01 FOR AN AMOUNT OF RS.59.46 LAKHS. INDUSTRIAL SHED WAS CONS TRUCTED THEREON BY SPENDING A SUM OF RS.66.92 LAKHS. THE ASSESSEE HAS FURNISHED YEAR-WISE DETAILS OF PAYMENTS MADE FOR PURCHASE OF PLOT AND EXPENDITURE ON CONSTR UCTION ALONGWITH COPY OF ALLOTMENT LETTER AND DETAILS OF CONSTRUCTION EXPENS ES. WE ALSO FOUND THAT ASSESSEE HAS SOLD THIS PROPERTY TO M/S MEHRA BANDHU CREATION S FOR RS.1.30 CRORES DURING FY 2002-03 RELEVANT TO AY 2003-04, WHO HAVE ALTERED THE BUILDING STRUCTURE BY INVESTING FURTHER A SUM OF RS.58.38 LAKHS. THE CON FIRMATION OF SUCH INVESTMENT WAS FILED BEFORE THE AO FOR HIS VERIFICATION AND RE CORD. THUS, THE TOTAL VALUE PAID BY THE ASSESSEE FOR LAND, CONSTRUCTION THEREON AND THE COST OF IMPROVEMENT INCURRED BY M/S MEHRA BANDHU CREATIONS WORKED TO RS .1.84 CRORES, AGAINST WHICH THE DVOS VALUATION OF BUILDING WAS RS.1.74 CRORES. SINCE THE PLOT WAS PURCHASED ITA-47 TO 49/D/2009 5 FROM GOVERNMENT CORPORATION, THERE WAS NO QUESTION OF ANY ADDITIONAL INVESTMENT HAVING BEEN MADE FOR SUCH PLOT. IN THE ASSESSEES BOOKS OF ACCOUNT, COST OF CONSTRUCTION WAS SHOWN AT RS.66.92 LAKHS, THUS THE TOTAL INVESTMENT IN THE PROPERTY IN ASSESSEES BOOKS WORKED OUT TO RS.1.26 CRORES. AFTER THE MATTER WAS REFERRED TO THE DVO, HE INSPECTED THE BUILDING ON 30.12.2007, W HEREAS BUILDING WAS ALREADY SOLD TO M/S MEHRA BANDHU CREATIONS FOR A CONSIDERAT ION OF RS.1.30 CRORES IN FY 2002-03. M/S MEHRA BANDHU CREATIONS HAD MADE INVES TMENT OF RS.58.38 LAKHS ON THE RENOVATION OF THIS BUILDING. THIS INVESTMENT W AS DULY SHOWN BY M/S MEHRA BANDHU CREATIONS IN THEIR BALANCE SHEET FOR THE YEA R ENDING ON 31.3.2003 AND 31.3.2004, I.E. MUCH PRIOR TO THE DATE OF SEARCH AN D INSPECTION OF BUILDING BY DVO. THE AO HAS NOT ACCEPTED THE INVESTMENT MADE B Y M/S MEHRA BANDHU CREATIONS MERELY ON THE PLEA THAT ASSESSEE HAS NOT RAISED SUCH OBJECTION BEFORE THE DVO. SINCE THE REFERENCE MADE TO THE DVO BY THE AO VIDE HIS LETTER DATED 19.11.2007, WAS WITHDRAWN BY THE AO HIMSELF VIDE HI S LETTER DATED 17.12.2007, THERE APPEARS TO BE NO REASON TO ALLEGE THAT ASSESS EE SHOULD HAVE DISCLOSED TO THE DVO REGARDING INVESTMENT MADE BY M/S MEHRA BANDHU C REATIONS. WHEN THE ADDITION WAS MADE BY THE AO, SUFFICIENT DOCUMENTARY EVIDENCE OF INVESTMENT HAVING BEEN MADE BY M/S MEHRA BANDHU CREATIONS WAS BEFORE HIM AND THE SAME CANNOT BE IGNORED FOR ARRIVING AT TOTAL INVESTMENT MADE IN THE BUILDING. AFTER TAKING INTO ACCOUNT THE INVESTMENT MADE BY M/S MEHR A BANDHU CREATIONS WHICH WAS MUCH PRIOR TO THE DATE OF SEARCH, THE TOTAL INV ESTMENT IN THE PROPERTY WORKED OUT AT RS.1.84 CRORES WHICH IS MUCH MORE THAN THE E STIMATE OF BUILDING ARRIVED AT BY THE DVO AT RS.1.74 CRORES. FURTHERMORE, THE REP ORT OF DVO WAS JUST AN OPINION WHICH IS RELEVANT FOR PERSUADING THE AO FOR MAKING FURTHER ENQUIRY TO FIND OUT IF ANY MORE INVESTMENT HAS BEEN MADE BY THE ASS ESSEE. ANYHOW, WHEN THE TOTAL INVESTMENT AS MADE BY THE ASSESSEE AND BY M/S MEHRA BANDHU CREATIONS MUCH BEFORE THE DATE OF SEARCH AND MUCH BEFORE THE DATE OF INSPECTION BY DVO FOR THE PURPOSE OF VALUATION IS MUCH MORE THAN THE ESTI MATED VALUE ARRIVED AT BY THE DVO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF C IT(A) FOR DELETING THE ADDITION MADE ON THE BASIS OF DVOS REPORT. THE FINDINGS RE CORDED BY CIT(A) WITH REGARD ITA-47 TO 49/D/2009 6 TO TOTAL INVESTMENT IN BUILDING IS AS PER MATERIAL ON RECORD, THEREFORE NO INTERFERENCE IS WARRANTED IN THIS FINDING OF CIT(A) WHICH RESULTED INTO DELETION OF ENTIRE ADDITION MADE IN THREE YEARS UNDER CONSIDERA TION. 8. IN THE RESULT, THE APPEALS OF THE REVENUE FOR AL L THE THREE YEARS ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER, 2009. SD/- SD/- (GEORGE MATHAN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :08.10.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR