ITO, New Delhi V. Smt. Sadhana Gupta, New Delhi

ITA 5266/DEL/2010

• Counselvise Citation: 526620114 RSA 2010
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN KAULI
• Keywords: Unexplained investment; Fair market value; Valuation report
• Section: 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 5266(DEL)/2010 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, S MT. SADHNA GUPTA, WARD 20(2), NEW DELHI. VS. C-4, GAN PATI APARTMENTS, 6, ALIPUR ROAD, CIVIL LINES, DELHI-54. PAN: AALPG0502A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NIRANJAN KAULI, CIT,DR RESPONDENT BY : SHRI PIYUSH KAUSHIK, ADVOCATE DATE OF HEA RING : 21.11.2011 DATE OF PRO NOUNCEMENT : 30.11.2011 ORDER PER K.G. BANSAL : AM THE REVENUE HAS TAKEN UP THREE SUBSTANTIVE GROUND S IN THIS APPEAL. THE REAL GRIEVANCE IS PROJECTED IN GROUND NO. 1 TH AT ON FACTS AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITI ON OF RS. 2,81,83,000/- MADE BY THE AO U/S 69B READ WITH SECTION 142A OF THE INCOME-TAX ACT, 1961 (THE ACT). IN THE OTHER GROUNDS, IT IS MEN TIONED THAT HE FAILED TO APPRECIATE THE FACT THAT THE AO WAS BOUND TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER U/S 142A. IT I S ALSO MENTIONED THAT THE LD. CIT(APPEALS) WRONGLY RELIED ON JUDGMENTS DELIVERED PRIOR TO ITA NO. 5266(DEL)/2010 2 INTRODUCTION OF SECTION 142A BY FINANCE (NO. 2) ACT, 2004 RETROSPECTIVELY WITH EFFECT FROM 15.11.1972. 2. THE FACTS OF THE CASE ARE THAT THE ASSESS EE FILED HER RETURN ON 31.07.2007 DECLARING INCOME OF RS. 2,338/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 18.03.2009. NOTICES U/S 14 3(2) WERE ALSO ISSUED ON 18.07.2008 AND 24.07.2008. 2.1 IN THE ASSESSMENT MADE U/S 143(3), THE AO HAD MADE AN ADDITION OF RS. 2,81,83,000/- U/S 69B OF THE ACT. THE E NQUIRY WAS INITIATED ON THE BASIS OF AIR THAT SHE PURCHASED A PROPERTY ON 03.05.2006 FOR A SUM OF RS. 42.50 LAKH AND AGAIN ON 03.11.2006 FOR SIM ILAR CONSIDERATION OF RS. 42.50 LAKH. IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED PROPERTY SITUATED AT 2-B, GOELA LANE, UNDERHILL ROAD, CIVIL LINES, D ELHI FOR A SUM OF RS. 59.50 LAKH ON 03.05.2006. THE PURCHASE CONSIDER ATION AMOUNTED TO RS.8,500/- PER SQ. YD. THE RATE APPEARED TO BE TOO LOW AND, THEREFORE, THE VALUATION WAS REFERRED TO THE DVO. HE VA LUED THE FAIR MARKET VALUE AT RS. 3,41,33,000/- AGAINST THE DECLARED COST OF RS. 59.50 LAKH. THE DIFFERENCE OF RS. 2,81,83,000/- WAS BROUGHT T O TAX BY INVOKING THE PROVISIONS CONTAINED IN SECTION 69B. ITA NO. 5266(DEL)/2010 3 2.2 BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTE D THAT THE ASSESSEE DID NOT INVEST ANY AMOUNT OVER AND ABOVE THE AMOUNT ME NTIONED IN THE SALE DEED. NO SUCH FINDING HAS BEEN RECORDED BY THE D VO. THE AO CAN INVOKE THE PROVISION CONTAINED IN SECTION 69B O NLY IF HE FINDS THAT THE AMOUNT INVESTED EXCEEDS THE AMOUNT RECORDED IN T HIS BEHALF. NO SUCH FINDING HAS BEEN GIVEN BY THE AO. THUS, IT WAS ARGUED THAT THERE WAS NO MATERIAL BEFORE THE AO TO COME TO A CONCLUSION T HAT ANY AMOUNT OVER AND ABOVE THE AMOUNT STATED IN THE SALE DEED WAS IN VESTED BY HER. THE LD. CIT(APPEALS) CONSIDERED THE FACTS AND SUBMISSIO NS MADE BEFORE HIM. HE REFERRED TO THE DECISION IN THE CASE OF K.P. VERGHESE, 131 ITR 597, RENDERED IN RESPECT OF COMPUTATION OF CAPITAL GAI NS. IT IS MENTIONED THAT THE ADDITION HAS BEEN MADE ENTIRELY ON THE BAS IS OF VALUATION REPORT. IN THIS REPORT, TWO COMPARABLE SALE INSTANCES HAV E BEEN CITED. ONE OF THE SALE INSTANCE IS IN RESPECT OF THE PROPERTY IN CI VIL LINES, HOWEVER, THE SALE WAS EFFECTED ON 31.07.1996, I.E., 10 YEARS PRIO R TO THE YEAR UNDER CONSIDERATION. THE OTHER SALE INSTANCE IS OF MO DEL TOWN AREA WHICH IS LOCATED QUITE FAR OFF FROM CIVIL LINES. THEREF ORE, HE CAME TO THE CONCLUSION THAT NONE OF THE INSTANCES WERE COMPAR ABLE TO THE PROPERTY ACQUIRED BY THE ASSESSEE. COMING TO THE LEGAL GR OUND, AN ANALOGY WAS ITA NO. 5266(DEL)/2010 4 DRAWN FROM THE DECISION IN THE CASE OF K.P. VE RGHESE THAT IT IS FOR THE REVENUE TO BRING SOME EVIDENCE ON RECORD TO SHOW THAT THE PURCHASE CONSIDERATION HAS BEEN UNDER-STATED, FAILING WHIC H THE PROVISION U/S 69B WILL NOT BE APPLICABLE. RELIANCE WAS ALSO PLACE D ON THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF KAMA L KISHORE CHANDAK VS. ITO, (2006) 10 SOT 43 (JODH.) AND DINESH JAIN, (2 009) 34 SOT 444 (DEL) TO THE EFFECT THAT WHERE THERE IS NO EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAD ACTUALLY UNDER-STATED ITS INVESTMEN T, NO ADDITION COULD BE MADE MERELY ON THE BASIS OF FAIR MARKET VALUE. FINALLY, IT HAS BEEN HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE AD DITION ON THE FACTS OF THE CASE. 3. WHILE THE LD. DR RELIED ON THE ASSESSMENT OR DER, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE LD. CIT(APPEALS). 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE HAD SHOWN PURCHASE CONSIDERATION OF A PROPERTY AT RS. 59.50 LAKH. A REFERENCE WAS MADE TO THE DVO AS THE PURCHASE CONSIDERATION APPEARE D TO BE TOO LOW. THE DVO VALUED THE PROPERTY AT RS. 3,41,33,000/-. THE DIFFERENCE IN THE TWO ITA NO. 5266(DEL)/2010 5 AMOUNTS OF RS. 2,81,83,000/- HAS BEEN ADDED TO TH E INCOME OF THE ASSESSEE BY RELYING ON THE PROVISION CONTAINED IN SECTION 69B. ALTHOUGH A NUMBER OF CASES HAVE BEEN CITED BEFORE US, WE FIND THAT THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS IN ITA NOS. 689 TO 703/2010 DATED 18.08.2011, A COPY OF WHICH HAS BEEN PLACED BEFORE US. THE JUDGMENT READS AS UNDER:- PRESENT: MS. SURUCHI AGGARWAL, SR. STANDING COUN SEL FOR THE REVENUE MR. PIYUSH KAUSHI, ADVOCATE FOR T HE RESPONDENT/ASSESSEE IT 689/2010 ITA 690/2010 ITA702/2010 ITA703/2010 (COMMON ORDERS) IN ALL THESE CASES, ASSESSMENT WAS CARRIED O UT UNDER SECTION 153A OF THE INCOME-TAX ACT PURSUANT TO SEAR CH AT THE PREMISES OF THE ASSESSEES CARRIED OUT BY THE DE PARTMENT UNDER SECTION 132 OF THE ACT. WHILE CARRYING OU T THE ASSESSMENT, THE ASSESSING OFFICER FOUND THAT ONE OF THE PROPERTIES, I.E., 101, GROUND FLOOR, BANGALA SAHIB ROAD, NEW DELHI, WAS ACQUIRED BY SHRI BHAGIRATH AGRAWAL AND SURAJ DEVI AT A COST OF RS. 62,50,000/-. THIS PROPERTY WAS RENTED TO INDIAN OVERSEAS BANK. THE SAID PROPERTY WAS PURCH ASED IN THE JOINT NAMES WITH DIFFERENT SHARES GIVEN TO DIFFERENT ASSESSEES. THE MATTER WAS REFERRED TO THE VALUAT ION CELL OF THE DEPARTMENT UNDER SECTION 142(1A) OF THE ACT. T HE VALUER VALUED THE PROPERTY AT MUCH HIGHER RATE THAN THE CONSIDERATION SHOWN IN THE SALE DEED AND ON THE BASIS ADDITION S WERE MADE IN THE HANDS OF ALL THESE ASSESSEE, UNDER SECTION 69 OF THE ACT AS UNEXPLAINED INVESTMENT. ITA NO. 5266(DEL)/2010 6 THESE ADDITIONS WERE DELETED BY THE CIT(A) A ND THE ORDER OF THE CIT(A) HAS BEEN AFFIRMED BY THE ITAT. VID E IMPUGNED ORDER THE ITAT DECIDED THE CASES OF ALL JOINT OWNERS WHO PURCHASED THE SAID PROPERTY WHICH INCLUDES SMT. SURAJ DEVI, SHRI SUSHIL KUMAR AGGARWAL, LATE SHRI SHIV NARAIN AGGARWAL ETC. THE DEPARTMENT HAD FILED APPEAL IN THE CA SE OF SMT. SURAJ DEVI UNDER SECTION 260-A OF THE ACT TO THI S COURT WHICH WAS REGISTERED AS ITA 811/2010 AND HAS BEEN DISM ISSED BY A DIVISION BENCH OF THIS COURT VIDE ORDERS DATED 1 3 TH AUGUST, 2010. FOLLOWING THAT ORDER, APPEALS OF OTHER C O- OWNERS/ASSESSEES I.E., ITA 1551/2010, ITA 1370/201 0 AND ITA 1660/2010 WERE ALSO DISMISSED. SIMILAR IS THE DECISION IN THE CASE OF CIT VS. PUNEET SABHARWAL, DATED 03.12.2010, 2011-TIOL-348-HC-DEL-IT. IT HAS BEEN HELD THAT IN ABSENCE OF ANY EVIDENCE COMING INTO POSSESSION REGARDING PAYMENT OF EXTRA PURCHASE CONSIDERATION, THE TRIBUNAL WAS RIGHT IN HOLDING THAT NO ADDITION CAN BE MADE NOTWITHSTANDING THE REPORT OF THE DVO. 4.1 RELYING ON THESE JUDGMENTS, IT IS HELD THAT THE LD. CIT(APPEALS) WAS RIGHT IN DELETING THE ADDITION. 5. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO. 5266(DEL)/2010 7 COPY OF THE ORDER FORWARDED TO:- 1. SMT. SADHNA GUPTA, NEW DELHI. 2. ITO, WARD 20(2), NEW DELHI. 3. CIT 4. CIT(A) 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.