Usha Rani Talla, New Delhi V. ITO, New Delhi

ITA 5974/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0129 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 16-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAGESH BHEL
• Assessee Lawyers: J P CHANDREKAR
• Keywords: Rejection of books of accounts; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Opportunity of being heard; Principle of natural justice; Additional evidence; Fair market value; Valuation report; Reason to believe; Documents seized
• Section: 142(1); 69; 148; 54

Judgement Text

ITA NO S . 5698 & 5974 /DEL/ 2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 5698 /DEL/201 4 A.Y. : 200 9 - 10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 25(1), ROOM NO. 1705, 17 TH FLOOR, E - 2 BLOCK, CIVIC CENTRE, MINTO ROAD, NEW DELHI VS. SMT. USHA RANI TALLA, B - 5, NEAR DURGA MANDIR, MOTI NAGAR, NEW DELHI 110 015 (PAN: AEBRP3546P) (APPELLANT) (RESPONDENT) AND I.T.A. NO. 5974/DEL/2014 A.Y. : 200 9 - 10 SMT. USHA RANI TALLA, C/O NAGESH BEHL & CO., CHARTERED ACCOUNTANT, 21/25, MOTI NAGAR, NEW DELHI 110 015 (PAN: AEBRP3546P) VS. INCOME TAX OFFICER, WARD 26(2), BLOCK E - 2, CIVIC CENTRE, MINTO ROAD, NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. NAGESH BHEL, CA ASSESSEE BY : SH. J.P. CHANDREKAR, SR. DR DATE OF HEARING : 16 - 6 - 201 5 DATE OF ORDER : 3 0 - 6 - 201 5 ORDER PER H.S. SIDHU : JM TH ESE ARE THE CROSS APPEAL S FILED BY THE REVENUE AND ASSESSEE EMANATE OUT OF THE O RDER PASSED BY THE LD. CIT(A) - X XIV , NEW DELHI PERTAINING TO ASSESSMENT YEAR 200 9 - 10 . SINCE THE ISSUES ARE ITA NO S . 5698 & 5974 /DEL/ 2014 2 COMMON AND IDENTICAL, HENCE, THESE ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUND S RAISED IN THE REVENUE S A PPEAL NO. 5698/DEL/2014 READ AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) HAS ERRED IN: - 1. DELETING THE ADDITION OF RS. 3,53,30,000/ - MADE BY THE AO ON ACCOUNT OF EXPLAINED INCOME. 2. ADMITTING THE ADDITIONAL EVIDENCE WITHOUT GIVING THE OPPORTUNITY TO AO UNDER RULE 46A. 3. DIRECTING THE AO TO CONSIDER CLAIM OF THE ASSESSEE U/S. 54 OF THE I.T. ACT, 1961. 4. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER OR DEMAND ANY GROUND OF APPEAL. 3. TH E GROUNDS RAISED IN THE ASSESSEE S APPEAL NO. 5974/DEL/2014 READ AS UNDER: - 1. THAT CIT(A) ERRED IN PASSING ORDER WITHOUT DISPOSING OFF GROUND NO. 4 OF THE GROUNDS OF APPEAL FILED BEFORE CIT(A) WHEREAS IN THE APPEAL ORDER CIT(A) HAS REPRODUCED GROUND NO. 4 ALSO. ITA NO S . 5698 & 5974 /DEL/ 2014 3 2. THE AO ERRED IN TAKING SALES CONSIDERATION U/S. 48 ON THE BASIS OF M ARKET VALUE AS PER OLD VALUATION REPORT INSTEAD OF ACTUAL SALES CONSIDERATION OF RS. 95,00,000/ - AS PER REGISTERED SALES DEED AND AS SUCH ADDITIONS BE DELETED. 3. THAT EXEMPTION U/S. 54 BE ALLOWED TO THE ASSESSEE IN RESPECT OF RESIDENTIAL PROPERTY PUR CHASED BY THE ASSESSEE. 4. THAT CIT(A) ERRED IN HOLDING THAT CASE OF THE ASSESSEE IS SQUARELY COVERED U/S. 292BB. 5. THE ASSESSEE CRAVES LEAVE TO ADD TO OR AMEND THE AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 4. FIRST WE TAKE UP THE REVENUE S S APP EAL. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY ULS 133 OF THE INCOME TAX ACT WAS CARRIED OUT BY ADIT(LNV. )UNIT - ILL, NEW DELHI ON 06.10.2010 AT THE PREMISES OF MLS VISHAL GOLD AND PRECIOUS STONE PVT. LTD., B - 5, NEAR DURGA MANDIR, MOTI NAGAR, DELHI. DURING THE COURSE OF SURVEY, SEVERAL DOCUMENTS WERE IMPOUNDED FROM THE PREMISES AND AFTER EXAMINATION OF THESE DOCUMENTS, A REPORT WAS PREPARED BY THE ADIT (INV) UNIT - ILL, DELHI AND THE SAME WAS FORWARDED TO THE ASSESSING OFFICER OF THE APPELLANT. AS PER INFORMATION AND DOCUMENTS SEIZED, IT ITA NO S . 5698 & 5974 /DEL/ 2014 4 WAS FOUND THAT THE ASSESSEE HAD MADE INVESTMENT IN THE FOLLOWING PROPERTY : - S.NO. ADDRESS OF PROPERTY DATE OF PURCHASE VALUE (IN RS.) 1. J - 1/161, RAJOURI 19.05.2008 88,58,420/ - GARDEN, NEW DELHI IT WAS ALSO NOTED THAT DURING THE YEAR, THE A SSESSEE HAS ALSO SOLD PROPERTY NO. 20C / 72, WEST PUN J ABI BAGH, NEW DELHI ON 17 - 09 - 2008 FOR RS.95, 00 , 000/ - . A VALUATION REPORT IN RESPECT OF THE SAID PROPERTY WAS IMPOUNDED DURING SURVEY ACCORDING TO WHICH THE VALUE OF PROPER TY IS RS.3.87 CRORES AS ON SEP. 2007 WHEREAS THE SAME HAS BEEN SOLD FOR RS. 95,00,000 / - . THE ASSESSING OFFICER ALSO, VIDE ITS LETTER DATED 01.06.2011 ASKED ASSESSEE TO SHOW CAUSE AS TO WHY THE DIFFERENCE BETWEEN THE VALUATION AND SA L E PRICE BE NOT ADDED T O THE INCOME FOR AY.2009 - 2010 AS UNACCOUNTED RECEIPTS. 4 .1 IN RESPONSE TO THE LETTER DATED 1.6.2011 , THE ASSESSEE SUBMITTED THE COPIES OF PURCHASE DEEDS OF THE AFORESAID PROPERTIES ON 02.09.2011. HOWEVER, THE ASSESSEE DID NOT MAKE ANY SUBMISSION REGARDING THE SOURCE OF INVESTMENT IN THE J - 1/161, RAJOURI GARDEN, NEW DELHI. IN THE ABSENCE OF ANY EXPLANATION FROM THE A SSESSEE ABOUT THE SOURCE OF INVESTMENT IN THE AFORESAID PROPERTY, THE ASSESSING OFFICER FORMED AN OPINION THAT THE INVESTMENTS MADE BY THE ASSE SSEE ARE UNEXPLAINED AND AFTER RECORDING REASON TO BELIEVE , HE ISSUED A NOTICE U/S 148 OF THE I T ACT TO THE ASSESSEE ON ITA NO S . 5698 & 5974 /DEL/ 2014 5 18.01.2012 TO ASSESS THE ESCAPED INCOME. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ORIGINAL RETURN OF INCOME FILED ON 31.03.2010 FOR THE RELEVANT ASSESSMENT YEAR 2009 - 10 MAY BE TREATED AS RETURN. I N RESPONSE TO THE AFORESAID NOTICE. SUBSEQUENTLY NOTICES U/S 143(2) AND 142(1) OF THE I . T. ACT WERE ISSUED TO THE ASSESSEE AND SHE WAS REQ UESTED TO EXPLAIN THE SOURCES OF INVESTMENT IN THE ABOVEMENTIONED PROPERTY. IN COMPLIANCE THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE PURCHASES WERE MA DE THROUGH BANKING CHANNELS AND IN SUPPORT OF HER CONTENTION, SHE SUBMITTED THE COPY OF THE BANK STATEMENT AT BOI KIRTI NAGAR BRANCH AND AXIS BANK, NEW DELHI. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND VIDE LETTER DATED 21.11.2012, HE REFERRED THE MATTER TO THE VALUATION OFFICER FOR ESTIMATION OF VALUE OF FICER FOR ESTIMATION MADE BY THE ASSESSEE IN THE PROPERTY J - 1/161, RAJOURI GARDEN, NEW DELHI U/S. 142A OF THE IT ACT. THE VALUATION OFFICER VIDE HIS LETTER NO. VO - II /ND.IT - 05/142 - A/2012 - 13/23 DATED 20.3.2013 SUBMITTED HIS VALUATION REPORT TO TH E ASSESSING OFFICER IN RESPECT OF PROPERTY J - 1/161 RAJOURI GARDEN, NEW DELHI WHEREIN HE ASSESSED THE VALUE OF SUCH PROPERTY AT RS. 3,53,30,000/ - AGAINST ITS DECLARED VALUE OF RS. 88,60,000 / - . THEREAFTER, THE ASSESSING OFFICER ISSUED A LETTER DATED 21.03.2013 TO THE ASSESSEE AND REQUESTED HER TO EXPLAIN AS TO WHY NOT THE AFORESAID PROPERTY SHOULD BE VALUED AT ITA NO S . 5698 & 5974 /DEL/ 2014 6 RS. 3,53,30,000 / - AS PER THE REPORT OF THE VALUATION OFFICER BY 22.03.2013. THE ASSE SSEE COULD NOT EXPLAIN THE DIFFERENCE IN THE VALUATION OF THE AFORESAID PROPERTY. THEREFORE, THE ASSESSING OFFICER. CONCLUDED THAT THE ASSESSEE FAILED TO EXPLAIN THE INVESTMENTS IN THE PROPERTY BY ESTABLISH I N G THE GENUINENESS AND HER CREDITWORTHINESS AND H E ADDED THE AGGREGATE VALUES OF THE PROPERTY AT RS. 3,53,30,000 / - (I.E. AT J - 1/161, RAJOURI GARDEN, NEW DELHI AT RS. 3,53,30,000 / - AS THE UNEXPLAINED INCOME OF THE ASSESSEE WHICH WAS INVESTED IN AFORESAID PROPERTIES DURING THE RELEVANT ASSESSMENT YEAR. 4 . 2 FURTHER, WITH REGARD TO SALE OF PROPERTY NO. 20C /7 2, WEST PUNJABI B AGH, NEW DELHI, ACCORDINGLY TO THE SALE DEED OF THE SAID PROPERTY THE SALE CONSIDERATION WAS AMOUNTING TO RS.95 LACS. HOWEVER, AS PER INFORMATION RECEIVED FROM ADIT (INV.) UNIT - ILL MARKET VALUE OF SUCH PROPERTY AT THE TIME OF SALE. WAS VALUED AT RS.3.87 CRORES IN VALUATION REPORT. NO EXPLANATION/DOCUMENTARY EVIDENCE IN THIS REGARD HAS BEEN FURNISHED BY THE ASSESSEE. HENCE, LONG TERM CAPITAL GAIN ON THIS PROPERTY FOR THE ASSESSMENT YEAR 200 9 - 2010 IS COMPUTED AS UNDER AND ADDED BACK TO THE TOTAL INCOME OF THE A SSESSEE : - SALES CONSIDERATION (AS PER VALUATION REPORT) 3,87,00,000 LESS: INDEX COST OF AC Q U I SITION ITA NO S . 5698 & 5974 /DEL/ 2014 7 891000*582/259 20,02,170 LONG TERM CAPITAL GAIN 3,66,97,830 4 .3 THERE AFTER, THE AO COMPLETED THE A SSESSMENT U/S 147/143(3) OF THE I T ACT VIDE ORDER DATED 25.03.2013 AT THE TAXABLE INCOME OF RS. 7,48,68,123/ - . 5 . AGGRIEVED BY THE AFORESAID ADDITIONS, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER 26 .8.2014 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6 . AGAINST THE ABOVE ORDER OF THE LD. FIRST APPELLATE AUTHORITY, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . LD. DR RELIED UPON THE ORDER PASSED BY THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. HE FURTHER STATED THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDITION IN DISPUTE ON ACCOUNT OF UNEXPLAINED INCOME WHICH HAS RIGHTLY BEEN MADE BY THE AO. HE FURTHER STATED THAT LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE PRODU CED BY THE ASSESSEE WITHOUT GIVING PROPER OPPORTUNITY TO THE AO WHICH IS CONTRARY TO RULE 46A OF THE INCOME TAX RULES, 1962. THEREFORE, HE REQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) TO DECIDE THE SAME AFRESH, AFT ER GIVING ADEQUATE OPPORTUNITY ON THE ADMISSION OF ADDITIONAL EVIDENCE TO THE AO BEFORE THE LD. CIT(A). HE FURTHER ITA NO S . 5698 & 5974 /DEL/ 2014 8 SUBMITTED THAT LD. CIT(A) HAS WRONGLY GIVEN THE DIRECTIONS TO THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE U/S. 54 OF THE I.T. ACT, 1961 A ND FINALLY HE REQUESTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE DISPUTE ISSUE INVOLVED IN THE REVENUE S APPEAL MAY BE CANCELLED AND THE ORDER OF THE AO MAY BE UPHELD. 8. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE INVOLVED IN THE REVENUE S APPEAL AND STATED THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 3,53,30,000/ - ON ACCOUNT OF UNEXPLAINED INCOME FOR WHICH THE ASSESSEE HAS PRODUCED SUFFICIENT OPPORTUNITY BEFOR E THE REVENUE AUTHORITY. HE FURTHER STATED THAT THE ASSESSEE HAS NOT FILED ANY ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A), THEREFORE, THERE IS NO QUESTION TO GIVING THE OPPORTUNITY TO THE AO UNDER RULE 46 OF THE I.T. RULES, 1962. HE FURTHER STATED THAT T HE SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS RS. 95 LACS. THERE IS NO EVIDENCE ON RECORD AND SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS MORE THAN RS. 95 LACS. THEREFORE, THE ACTUAL SALE CONSIDERATION AS PER SECTION 48 SHOULD BE RS. 95 LACS. LD . COUNSEL OF THE ASSESSEE FURTHER STATED THAT EVEN IF IT IS PRESUMED THAT SALE CONSIDERATION IS AS PER VALUATION REPORT, THEN EXEMPTION U/S. 54 IS ALLOWABLE ON ENTIRE CAPITAL GAIN, AS ASSESSEE HA S INVESTED ENTIRE SALE CONSIDERATION RECEIVED IN NEW PROPERTY . I N SUPPORT OF HIS CONTENTION, HE CITED THE FOLLOWING DECISIONS OF THE HON BLE DELHI HIGH COURT: - ITA NO S . 5698 & 5974 /DEL/ 2014 9 - CIT VS. SMT. NILOFER I. SINGH [2009] 176 TAXMANN 252 (DELHI) - CIT VS. AERENS INRASTRUCTURE & TECHNOLOGY LTD. VS. DCIT [2011] 16 TAXMANN.COM 400 (DELHI ). - CIT VS. ANIL ARORA ITA NO. 340/2015 & CM NO. 9241/2015 VIDE ORDER DATED 22.5.2015. IN VIEW OF ABOVE DISCUSSIONS AND PRECEDENTS, LD. COUNSEL OF THE ASSESSEE REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 9. WE HAVE HEARD BOT H THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE SUBMISSIONS AND PRECEDENTS SUBMITTED BY BOTH THE PARTIES. WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND THE JUDGMEN T RENDERED BY HON BLE DELHI HIGH COURT BY WHICH ISSUE INVOLVED IN GROUND NO. 1 IN THE REVENUE S APPEAL IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. WE FIND THAT IN THE CASE CIT VS. SMT. NILOFER I. SINGH [2009] 176 TAXMANN 252 (DELHI), THE HON BLE HIGH COURT HAS HELD EXPRESSION FULL VALUE OF CONSIDERATION USED IN SECTION 48 DOES NOT HAVE ANY REFERENCE TO MARKET VALUE BUT ONLY TO CONSIDERATION REFERRED TO IN SALE DEEDS AS SALE PRICE OF ASSETS WHICH HAVE BEEN TRANSFERRE D. ITA NO S . 5698 & 5974 /DEL/ 2014 10 10 . 1 WE FURTHER FIND THAT IN THE CASE OF - CIT VS. AERENS INRASTRUCTURE & TECHNOLOGY LTD. VS. DCIT [20 11] 16 TAXMANN.COM 400 (DELHI), THE HON BLE HIGH COURT HAS CONFIRMED THE ORDER OF THE ITAT WHEREIN THE TRIBUNAL DELETED THE ADDITION OF RS. 48,68,774/ - MADE BY THE AO ON ACCOUNT OF DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THE PURCHASE CONSIDERATION SHOWN BY THE ASSESSEE HOLDING THAT THE REFERENCE MADE BY THE AO INVOKING THE PROVISIONS OF SECTION 142A WAS WITHOUT JURISDICTION AND THEREFORE, NO ADDITION COULD HAVE BEEN MADE BY THE AO ON THE BASS OF VALUATION MADE BY THE DVO. 10.2 WE FURTHER FIND FROM THE LATEST DECISION OF THE HON BLE HIGH COURT OF DELHI PASSED IN THE ITA NO. 340/2015 & CM NO. 9241 / 2015 IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANIL ARORA DECIDED ON 22.5.2014 WHEREIN VIDE PARA NO. 8 & 9 OF THE SAID ORDER THE COURT HAS OBSERVED AS UNDER: - 8. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENUE, WE FIND THE CONTENTIONS URGED IN THE APPEAL TO BE WHOLLY MISPLACED. IT IS FAIRLY CONCEDE (AT BAR) BY THE COUNSEL FOR THE REVENUE THAT THE REFERENCE TO DVO FOR ESTIMATION OF THE MARKET VALUE OF THE PROPERTY IN PUNJABI BAGH WAS NOT BASED ON ANY MATERIAL DISCOVERED' OR SEIZED DURING THE SEARCH OPERATIONS. THE COUNSEL, HOWEVER, REFE RRED TO THE CASE OF ANOTHER PROPERTY IN ITA NO S . 5698 & 5974 /DEL/ 2014 11 DISTRICT BADDI (HIMACHAL PRADESH), IN RESPECT OF WHICH DOCUMENTARY EVIDENCE INDICATED UNACCOUNTED CONSIDERATION PAID BY THE ASSESSEE, REFERRED TO BY THE AO IN PARA 4.3 OF HIS ORDER. AT THE SAME TIME, LEARNED COUNSEL ALSO CONCEDED THAT NO ADDITION TO THE TAX LIABILITY OF THE ASSESSEE ON ACCOUNT OF THE SAID OTHER PROPERTY HAS BEEN MADE. THERE IS NO NEXUS BETWEEN THE PROPERTY IN BADDI (HIMACHAL PRADESH) AND THE PROPERTY IN PUNJABI BAGH (WEST). THERE IS UNDOUBTEDLY NO MA TERIAL AVAILABLE TO EVEN REMOTELY REFLECT THAT CONSIDERATION OVER AND ABOVE WHAT WAS SHOWN TO BE PAID IN THE REGISTERED SALE DEED OF THE WEST PUNJABI BAGH PROPERTY WAS MADE OVER TO THE SELLER. IN THESE CIRCUMSTANCES, IT WAS NOT FAIR IN THE FIRST PLACE TO R EFER THE SAID PROPERTY FOR ESTIMATION OF ITS MARKET VALUE BY DVO. 9. THE ASSESSMENT OF THE VALUE BY DVO CANNOT HOLD PRIMACY OVER THE CONSIDERATION FOR WHICH THE PROPERTY WAS ACTUALLY ACQUIRED. IF THERE IS ANY DIFFERENCE IN THE SHARES IN CONSIDERATION BOR NE BY THE FOUR BROTHERS, IT IS MATTER OF THEIR INTER SE UNDERSTANDING. DOUBTS AS TO THE REAL VALUE CANNOT ARISE FROM SUCH FACT ALONE. ITA NO S . 5698 & 5974 /DEL/ 2014 12 10.3 WE FURTHER FIND THAT THE ASSESSEE HAS CONTESTED THAT THE ADDITION OF RS. 3,53,30,000 / - ON ACCOUNT OF UNEXPLAINED INCOME ON THE BASIS OF DVO'S REPORT IS NOT AS PER LAW AND IS LIABLE TO BE DELETED. IT WAS FURTHER OBSERVED THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE HER SUBMISSION DATED 22.11.2012, AN D ON BEING ASKED TO EXPLAIN FURT HER SOURCE OF DEPOSITS IN THE BANK ACCOUNT, THE A SSESSEE EXPLAINED THE SOURCE OF INVESTMENT IN THE AFORESAID PROPERTY AS FOLLOWS: - S.NO . DATE CH. NO. AMOUNT NAME OF THE PARTY PARTICULAR S BANK 1 5.5.2008 01790 3 44,30,000 GAGA N PREET SINGH J - 1/161 RAJOURI GARDEN NEW DELHI AXIS BANK LTD. WEST PUNJAB I BAGH. 2 5.5.2008 01790 4 44,30,000 RISHI PREET SINGH J - 1/161 RAJOURI GARDEN NEW DELHI AXIS BANK LTD. WEST PUNJAB I BAGH. 3 19.5.200 8 PAID BY CASH RS.3,54,400 STAMP DUTY PAID J - 1/161 RAJOURI GARDEN NEW DELHI BOI, KIRITI NAGAR, TOTAL 92,14,400 SHE FURTHER EXPLAINED THE SOURCE OF THE DEPOSITS MADE IN THE AFORESAID BANK ACCOUNT AS FOLLOWS: - ITA NO S . 5698 & 5974 /DEL/ 2014 13 SOURCE OF PAYMENT (RECEIPTS IN BANK) S.NO. DATE CH. NO. AMOUNT NAME NATURE BANK PROPERTY 1 5.5.2008 301651 85,00,000 SALE CONSIDERATION SALE OF PROPERTY 20 - C/72, WEST PUNJABI BAGH AXIS BANK LTD., WEST PUNJABI BAGH, J - 1/161, RAJOURI GARDEN, NEW DELHI 2 6 .5.2008 CASH 3,10,000 CASH DEPOSITED IN AXIS CASH WITHDRAW FROM BOI A/C AXIS BANK LTD., WEST PUNJABI BAGH, J - 1/161, RAJOURI GARDEN, NEW DELHI 3 22 . 4. 200 8 0 00016 26,786 RENT RENT RECD. FROM CARE ZONE FROM DE - 85, TAGORE GARDEN, NEW DELHI AXIS BANK LTD., WEST PUNJABI BAGH, J - 1/161, RAJOURI GARDEN, NEW DELHI 4 26 . 4. 200 8 000005 26,739 RENT RENT RECD. FROM BHARTI CELULER LTD., FROM DE - 85, TAGORE GARDEN, NEW DELHI AXIS BANK LTD., WEST PUNJABI BAGH, J - 1/161, RAJOURI GARDEN, NEW DELHI 5. 19.5.2008 3,50,000 STAMP DUTY CASH WITHDRAWN FROM BOI A/C BOI KIRIT NAGAR J - 1/161, RAJOURI GARDEN, NEW DELHI THE A SSESSEE ALSO SUBMITTED THE COPIES OF BANK STATEMENTS OF THE BOI , KIRTI NAGAR AND AXIS BANK, NEW DELHI 10.4 FROM THE ABOVE CHART, IT IS CLEAR THAT THE A SSESSEE HAD MA DE THE IN VESTMENT IN THE AFORESAID PROPERTIES THROUGH HER BANK ACCOUNTS AT AXIS BANK , WEST KIRTI NAGAR BRANCH, DELHI & BANK OF INDIA, KIRTI N AGAR B RANCH, DELHI. IT WAS EXPLAINED THAT DURING THE ITA NO S . 5698 & 5974 /DEL/ 2014 14 RELEVANT ASSESSMENT YEAR, THE A SSESSEE SOLD A PROPERTY AT 20C / 72, WEST PUNJABI BAQH, NEW DELHI AND UTILIZED THE SALE PROCEEDS FOR THE PURCHASE OF PROPERTY AT J - 1/161, RAJOURI GARDEN, NEW DELHI. HOWEVER, IT SEEMS THAT THE ASSESSING OFFICER HAS IGNORED ALL THE EXPLANATIONS GIVEN BY THE A SSESSEE DURING THE COURSE OF ASSESSMENT . FROM THE ASSESSMENT ORDER, IT IS ALSO EVIDENT THAT THE ASSESSING OFFICER HAS NOT CONTROVERTED THE EXPLANATION GIVEN BY THE A SSESSEE REGARDING THE INVESTMENTS MADE IN THE AFOREMENTIONED PROPERTY. FURTHER, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSES SING OFFICER TO SHOW THAT THE A SSESSEE HAS MADE ANY EXCESS INVESTMENTS IN THE AFORESAID PROPERTY OVER AND ABOVE THE VALUE RECORDED IN THE SALE DEED. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS GROSSLY ERRED IN MAKING ADDITION OF RS.3,53,30 ,OOO / - ON ACCOUNT OF INVESTMENT IN THE PROPERTIES AT J - 1/161, RAJOURI GARDEN, NEW DELHI AND LD. CIT(A) HAS RIGHTLY APPRECIATED ALL THE EVIDENCES FILED BY THE ASSESSEE BEFORE AO. T HE AO WITHOUT BRINGING ANY EVIDENCE ON RECORD OF EXCESS INVESTMENT IN THE PR OPERTIES AT J - 1/161, RAJOURI GARDEN, NEW DELHI OVER AND ABOVE THE VALUE OF INVESTMENT SHOWN IN THE SALE DEED AT RS. 88,59,420 / - HAS REFERRED THE MATTER TO THE D ISTRICT VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF THE PROPERTY. EVEN NO OPPORTUNITY OF BE ING HEARD OR A SHOW CAUSE NOTICE WAS GIVEN TO THE A SSESSEE BEFORE REFERRING THE MATTER TO THE D VO FOR THE ESTIMATION OF THE VALUE OF ITA NO S . 5698 & 5974 /DEL/ 2014 15 INVESTMENT IN THE AFORESAID PROPERTIES AT J - 1/161, RAJOURI GARDEN, NEW DELHI. IN OUR CONSIDERED OPINION, WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD OR ANY EVIDENCE OF EXCESS INVESTMENT THE ASSESSING OFFICER HAD NO POWER TO REFER THE MATTER TO THE D VO AND LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISPUTE. 10 . 5 WE FURTHER OBSERVED THAT THE A SSESSEE HAD SUBMITTED HER BOOKS OF ACCOUNTS EXPLAINING THE SOURCES OF INVESTMENT IN THE AFORESAID PROPERTY AND THE ASSESSING OFFICER HAS GIVEN NO COMMENT OR EVEN REJECTED THE BOOKS OF ACCOUNTS BEFORE MAKING A REFERENCE TO THE D VO FOR ASCERTAINING THE ACTUAL INVESTMENT IN THE AFORE SAID PROPERTY. THE ASSESSING OFFICER HAS NOT EVEN RECORDED ANY REASON FOR REFERRING THE MATTER TO THE D VO FOR THE ESTIMATION OF THE VALUE OF PROPERTY. THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED THE PROVISIONS OF LAW. THE RELEVANT PROVISION SUB - SECTION - T OF SEC.142A READS AS UNDER: - '142A (1) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN SE CTION 69A OR SECTION 698 IS REQUIRED TO BE MADE, THE ASSESS ING OFFICER MAY REQUIRE ITA NO S . 5698 & 5974 /DEL/ 2014 16 THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. 10.6 WE FURTHER FIND THAT THE WORDS MENTIONED IN THE ABOVE MENTIONED SECTION 'WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SEC. 69 IS REQUIRED TO BE MADE . ... ' MEANS THAT A REFERENCE TO THE DVO BE MADE ONLY WHEN A REQUIREMENT IS FELT BY THE ASSESSING OFFICER FOR MAKING SUCH REFERENCE. REQUIREMENT WOULD ARISE OR COULD BE FELT ONLY WHEN THERE IS SOME MATERIAL WITH THE AO TO SHOW THAT WHATEVER AMOUNT THE ASSESSEE HAS SHOWN IS NOT CORRECT OR NOT RELIABLE. THE USE OF THE WORD 'REQUIRE' IS NOT SUPERFLUOUS BUT SIGNIFIES A DEFINITE MEANING WHEREBY SOME PRELIMINARY FORMATION O F MIND BY THE AO IS NECESSARY WHICH REQUIRES HIM TO MAKE A REFERENCE TO D VO ULS 142A. IN OTHER WORDS, IT IS ONLY DURING THE COURSE OF PENDENCY OF THE ASSESSMENT THAT THE AO CAN FRAME HIS MIND TO REFER THE PROPERTY TO D VO. SUCH MIND CAN BE FRAMED IF THERE I S A BASIS TO THINK THAT THE ASSESSEE MAY HAVE UNDERSTATED THE COST OF CONSTRUCTION OR WHATEVER IS DECLARED BY HIM IN THIS REGARD IS NOT BELIEVABLE. LD. CIT(A) HAS RIGHTLY APPRECIATED THE ALL EVIDENCES AS WELL AS PROVISIONS OF LAW AND DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE. 10.7 ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THERE WAS NO REFERENCE WHATSOEVER MADE BY THE AO TO ANY ITA NO S . 5698 & 5974 /DEL/ 2014 17 MATERIAL/EVIDENCE/INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID THAT THE INVESTMENT SHOWN BY THE APPEL LANT WAS UNDERSTATED AND THAT ANYTHING ABOVE WHAT WAS DISCLOSED BY THE APPELLANT. THUS, THE CONDITION PRECEDENT FOR MAKING REFERENCE TO THE DVO BY INVOKING THE PROVISIONS OF SEC. 142A WAS NOT SATISFIED IN THE PRESENT CASE. MOREOVER, ON PERUSAL OF THE ASSES SMENT ORDER, IT IS NOTED THAT NOWHERE THE AO HAS MENTIONED THAT WHAT ARE THE MISTAKES AND UNRELIABILITY HAS BEEN FOUND OUT BY THE AO IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. THUS, THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE BOOKS AS FAR AS RELATED TO T HE INVESTMENT MADE BY THE APPELLANT. IN MY HUMBLE OPINION, THE PROVISIONS OF SEC. 142A CANNOT BE READ IN I SOLATION TO SEC.145. IN OTHER WORDS, IF BOOKS OF ACCOUNT ARE FOUND TO BE CORRECT AND COMPLETE IN ALL RESPECT AND :10 DEFECT IS POINTED OUT THEREIN AND THE INVESTMENT IS RECORDED THEREIN, THEN THE ADDITION ON ACCOUNT OF DIFFERENCE IN INVESTMENT COULD NOT BE MADE EVEN IF A REPORT IS OBTAINED WITHIN THE MEANING OF SEC.142A FROM THE DVO. IT IS BECAUSE THE USE OF THE REPORT OF THE DVO OBTAINED U/S. 142A IS NOT MANDATORY BUT IS DISCRETIONARY AS THE WORD USED IS 'MAY' THEREIN. ACCORDINGLY, IN THE PRE SENT CASE WHEN AO HAS NOT REJECTED THE BOOKS OF ACCOUNT BY POINTING OUT ANY DEFECTS REFERENCE TO THE DVO WILL NOT BE VALID AND, THEREFORE, DVO'S REPORT C OULD NOT BE UTILIZED FOR FRAMING ASSESSMENT EVEN IF SUCH A REPORT IS CONSIDERED TO BE OBTAINED U/S 142A. SINCE REFERENCE TO DVO BEING HELD AS ITA NO S . 5698 & 5974 /DEL/ 2014 18 INVALID, THE ASSESSMENT/REASSESSMENT FRAMED THEREAFTER WOULD ALSO BE INVALID. RELIANCE IN THIS REGARD WAS PLACED ON THE DEC ISION OF I TAT DELHI, IN THE CASE OF AERENS INFRASTRUCTURE & TECHNOLOGY LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX [2010] 3 ITR (TRIB.) 344 (DELHI) WHICH HAS BEEN APPROVED BY HON'BLE DELHI HC IN THE CASE OF COMMISSIONER OF INCOME - TAX DELHI - I, NEW DELHI V. AE RENS INFRASTRUCTURE & TECHNOLOGY LTD. [2011] 16 TAXMANN.COM 400 (DELHI). IT HAS BEEN HELD THAT : - 'WHERE ASSESSING OFFICER MADE REFERENCE TO VALUATION OFFICER IN RESPECT OF A PROPERTY PURCHASED BY ASSESSEE AND THOUGH THERE WAS NO FINDING BY ASSESSING OFFI CER THAT ASSESSEE HAD INCURRED ANY EXPENDITURE IN EXCESS OF WHAT HAD BEEN DECLARED BUT HE HAD REFERRED ISSUE OF VALUATION TO DVO ONLY ON BASIS OF SPECULATION AL L EGING INFORMATION IN FORM OF NEWSPAPER REPORT ABOUT ENHANCED PROPERTY PRICES IN AREA, REFERENCE TO ASSESSING OFFICER AND ADDITION BASED ON HIS REPORT WERE NOT JUSTIFIED. 10.8 ON GOING THROUGH THE RECORDS, WE NOTE THAT THE ASSESSEE - COMPANY HAD DURING THE RELEVANT ASSESSMENT YEAR PURCHASED A PROPERTY IN DELHI FOR A CONSIDERATION OF RS. 11,84,926. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 142A AND SENT THE ISSUE TO THE DVO FOR VALUATION OF THE PROPERTY AT THE FAIR MARKET VALUE. ON THE BASIS OF REPORT OF THE VALUATION OFFICER VALUING THE PROPERTY AT ITA NO S . 5698 & 5974 /DEL/ 2014 19 RS. 60,53,700 THE ASSESSING OFFICER HAD TREATED THE DIFFERENCE BETWEEN THE PURCHASE CONSIDERATION SHOWN BY THE ASSESSEE AND THE FAIR MARKET VALUE AS ON THE DATE OF PURCHASE DETERMINED BY THE OVA AS UNEXPLAINED MONEY PAID BY THE ASSESSEE FOR THE PURCHASE OR THE PROPERTY. 10 .9 WE FURTHER NOT E THAT THERE WAS NO FINDING BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INCURRED ANY EXPENDITURE IN EXCESS OF WHAT HAD BEEN DECLARED BUT HE HAD REFERRED THE ISSUE OF VALUATION TO THE OVA ONLY ON THE BASIS OF SPECULATION AL L EGING INFORMATION IN THE FORM OF NEWSPAPER REPORT ABOUT ENHANCED PROPERTY PRICES IN THE AREA. IN THESE CIRCUMSTANCES, THE REFERENCE MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 142A WAS WITHOUT JUSTIFICATION AND, CONSEQUENTLY, NO ADDITION COULD BE MADE ON THE BAS IS OF VALUATION MADE BY THE DVO. 10 .1 0 TO SUPPORT OUR FINDING, WE PLACE RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT OF INDIA IN THE CASE OF SARGAM CINEMA VS. CIT [2011] 197 TAXMAN 203 (SC) WHEREIN IT WAS HELD AS UNDER: - '4. IN THE PRESENT CASE , WE FIND THAT THE TRIBUNA L DECIDED THE MATTER RIGHTLY IN FAVOUR OF THE ASSESSEE INASMUCH AS THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSING, AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL ITA NO S . 5698 & 5974 /DEL/ 2014 20 VALUATION OFFICER ( D VO) WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED. IN THE PRESENT CASE, A CATEGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE HIGH COURT. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. 5. FOR THE A BOVE REASONS, THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE ORDER PASSED BY THE TRIBUNAL STANDS RESTORED TO THE FILE. ACCORDINGLY, THE ASSESSEE SUCCEEDS. 10 .1 1 WE FURTHER PLACE RELIANCE IN ANOTHER CASE OF ITO VS. RAJESHWAR NATH GUPTA DATED 4.5.2008 IN ITA NO. 4295/D.EI.L2005,THE ITA T, DELHI IN THE CONTEXT OF PROVISIONS OF SEC. 142A OF THE ACT, HELD AS FOLLOWS: '15. A PERUSAL OF THE AFORESAID PROVISIONS SHOWS THAT SECTION 142A IS ATTRACTED, INTER ALIA, WHERE THE ASSESSEE IS FOUND TO HAVE MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNT OR WHERE ANY SUCH INVESTMENT MADE BY HIM IS NOT FULLY DISCLOSED IN THE BOOKS OF AC COUNT. THE CONDITION PRECEDENT FOR MAKING THE REFERENCE BY INVOKING THE PROVISIONS OF SECTION 142A THUS IS THAT THERE SHOULD BE SOMETHING ON RECORD TO SHOW THAT THE ASSESSEE IN THE F IRST PLACE HAS MADE SUCH INVESTMENT OUTSIDE THE BOOKS OR THE I NVESTMENT SO MADE BY HIM IS NOT FULLY ITA NO S . 5698 & 5974 /DEL/ 2014 21 DISCLOSED IN T H E BOOKS OF ACCOUNT AND ONCE THIS CONDITION IS SATISFIED, THE QUANTUM OF SUCH INVESTMENT MADE CAN BE A SCE RTAINED BY THE ASSESSING OFFICER BY MAKING A REFERENCE UNDER SECTION 142A IN ORDER TO MAKE THE ADDITION UNDER SECTION 69 OR 69B, WHICHEVER IS APPLICABLE. IN THE PRESENT CASE, THE RELEVANT PROPERTY WAS PURCHASED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR RS. 15 LAKHS AND THE AMOUNT OF THE SAID CONSIDERATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACC EPTED EVEN BY THE ASSESSING OFFICER IN THE A SSESSMENT. A PERUSAL OF THE ASSESSMENT ORDER, HOWEVER, SHOWS THAT THERE WAS NO REFERENCE WHATSOEVER MADE BY THE AO TO ANY MATERIAL / EVIDENCE / INFORMATION ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SAID CONSIDERATION SHOWN BY THE ASSESSEE HAD ACTUALLY BEEN PAID AS CONSIDERATION. THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE D VO BY INVOKING THE PROVISIONS OF SECTION 142A THUS WAS NOT SATISFIED IN THE PRESENT CASE AND NEITHER THE SAID REFERENCE NOR THE ADDITION MADE ON THE BASIS OF REPORT OBTAINED FROM THE D VO IN RESPONSE TO THE SAID REFERENCE, IN OUR OPINION, WAS SUSTAINABLE IN JAW AS RIGHTLY HELD BY THE LEARNED COMMISSIONER OF INCOME - TAX TAX (APPEALS).' 10.12 WE FURTHER FIND THAT S IMILAR VIE WS WERE TAKEN IN THE CASES OF COMMISSIONER OF INCOME - TAX V. AMBIENCE DEVELOPERS AND INFRASTRUCTURE(P.) LTD, [2012] 25 TAXMANN.COM 210 (DELHI), CIT VS ITA NO S . 5698 & 5974 /DEL/ 2014 22 GULSHAN KUMAR [2002] 257 ITR 703 (DELHI), CIT V. P .V . KALYANASUNDARAM [2007] 294 ITR 49 (SC) SUBHASH CHAN D CHOPRA V. ASST. CIT [2005] 92 TTJ (DELHI) 1087) AND K.P VARGHESE. V. ITO [1981] 131 ITR 597 (SC). 10.13 UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS ERRED IN REFERRING THE MATTER TO THE DVO AND CONSEQUENTLY THE DVO'S REPORT ON THE VALUE OF INVE S TMENT IN THE PROPERTY CANNOT REPLACE THE ACTUAL PURCHASE VALUE SHOWN IN THE PURCHASE DEED OF THE AFORESAID PROPERTY AT J - 1/161, RAJOURI GARDEN, NEW DELHI. HENCE, THE ASSESSING OFFICER HAS ERRED IN ADOPTING THE VALUE OF THE PROP ERTY AT J - 1/161, RAJOURI GARDEN, NEW DELHI ESTIMATED BY THE DVO BY REPLACING THE VALUE SHOWN IN THE PURCHASE DEED. LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED THE ALL EVIDENCES AS WELL AS THE RELEVANT PROVISIONS OF LAW AND DELETED THE ADDITION I N DISPUTE. IT IS FURTHER OBSERVED THAT EVEN AFTER THE RECEIPT OF THE VALUATION REPORT FROM THE DVO, THE ASSESSING OFFICER HAD GIVEN ONLY ONE DAY TIME TO THE APPELLANT TO EXPLAIN THE DIFFERENCE IN THE VALUE OF THE PROPERTY AS ESTIMATED BY THE DVO AND THE V ALUE SHOWN BY HER IN THE PURCHASE DEED. THIS IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. IN THIS REGARD IT IS SEEN THAT THE AO HAD ISSUED A SHOW CAUSE NOTICE DATED 21 - 03 - 2013 FOR SUBMITTING REPLY ON 22 - 03 - 2013 I.E. IMMEDIATELY NEXT DATE, THEREFORE, ASSESS ING OFFICER HAS NOT GIVEN SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT CANNOT ITA NO S . 5698 & 5974 /DEL/ 2014 23 BE SAID THAT BY GIVING OPPORTUNITY OF BEING HEARD FOR HEARING IMMEDIATELY ONE DAY ASSESSING OFFICER HAS DISCHARGED HIS OBLIGATION OF GIVING OPPORTUNITY OF BEING HEAR D. IN THE CASE O F SAHARA INDIA (FIRM) V. COMMISSIONER OF INCOME - TAX, CENTRAL - I [2008] 169 TAXMAN 328 (SC) SUPREME COURT OF INDIA HAS HELD AS UNDER: - 'IT IS TRITE THAT UNLESS A STATUTORY PROVISION EITHER SPECIFICALLY OR BY NECE SSARY IMPLICATION EXCLUDES THE APPLICATION OF PRINCIPLES OF NATURAL JUSTICE, BECAUSE IN THAT EVENT THE COURT WOULD NOT IGNORE THE LEGISLATIVE MANDATE, THE REQ UIREMENT OF GIVING A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE AN ORDER IS MADE, IS GENERALLY READ INTO THE PROVISIONS OF A STATUTE, PARTICULARLY WHEN THE ORDER CAN HAVE ADVERSE CIVIL CONSEQUENCES FOR THE PARTY LIKELY TO BE AFFECTED.' 9.1 4 IN AN ANOTHER CASE TITLE AS ASSISTANT DIRECTOR OF INCOME - TAX, CIRCLE 1 (2), INTERNATIONAL TAXATION, NEW DELHI V. RANJAY GULATI, [2011] 14 TAXMANN.COM 161 (DELHI) ITAT DELHI HAS HE LD AS UNDER: - 'SECTION 50C, READ WITH SECTIONS 45 AND 48, OF THE INCOME - TAX ACT, 1961 - CAPITAL GAINS SPECI AL PROV I SI ON FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES - ASSESSMENT YEAR 2007 - 08 - ASSESSEE SOLD AN INDUSTRIAL PLOT FOR A SUM OF RS. 2.90 CRORES - ASSESSING OFFICER MADE A REFERENCE TO DISTRICT VALUATION OFFICER ( D V O ) TO ITA NO S . 5698 & 5974 /DEL/ 2014 24 ASCERTAIN FAIR MARKET VALUE OF PLOT ON DATE OF SALE WHO ARRIVED AT A VALUATION OF RS. 5.36 CRORES - ASSESSING OFFICER WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO ASSESSEE, ADOPTED VALUATION MADE BY OVA AND, ACCORDINGLY, ENHANCED AMOUNT OF CAPITAL GAIN LIABLE TO TAX - ON AP PEAL, COMMISSIONER (APPEALS) DELETED ADDITION MADE BY ASSESSING OFFICER - IT WAS NOTED FROM RECORDS THAT VALUE OF ASSESSEE'S PROPERTY AS PER CIRCLE RATES WAS RS. 2 CRORES AS AGAINST SALE CONSIDERATION OF RS. 2.90 CRORES ADMITTED BY ASSESSEE - FURTHER, THER E WAS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAD RECEIVED MORE THAN WHAT WAS STATED IN SALE DEED - WHETHER IN AFORESAID CIRCUMSTANCES, ASSESSING OFFICER HAD TO ADOPT AMOUNT RECEIVED BY ASSESSEE AS FULL VALUE OF SALE CONSIDERATION FOR C ALCULATING C APITA L GAIN LIABLE TO TAX - HELD, YES - WHETHER EVEN OTHERWISE, ADOPTION OF REPORT OF OVA WITHOUT PROVIDING AN OPPORTUNITY OF BEING HEARD TO ASSESSEE WAS AGAINST PRINCIPLES OF NATURAL JUSTICE - HELD, YES - WHETHER, CONSEQUENTLY, IMPUGNED ADDITION MADE BY ASSESS ING OFFICER WAS RIGHTLY DELETED - HELD, YES' 10 . 1 5 IN THE B ACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS AS AFORESAID, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) WAS RIGHT IN OBSERVING THAT THE ITA NO S . 5698 & 5974 /DEL/ 2014 25 AO HAS ERRED IN MAKING THE ADDITION RS. 3,53,30 , 0 00 / - ON ACCOUNT OF UNEXPLAINED INCOME OF THE ASSESSEE AND ACCORDINGLY RIGHTLY DIRECTED THE AO TO DELETE THE ADDITION IN DISPUTE, WHICH IN OUR OPINION, DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME. A CCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE STANDS DISMISSED. 1 1 . WITH REGARD TO GROUND NO. 2 REGARDING ADMITTING THE ADDITIONAL EVIDENCE WITHOUT GIVING THE OPPORTUNITY TO AO UNDER RULE 46A IS CONCERNED, WE FIND THAT NO ADDITION AL EVIDENCE HAVE BEEN FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), WHICH REQUIRE D TO BE SENT TO THE AO UNDER RULE 46A AND ALSO IN THE LD. CIT(A) S ORDER THERE WAS NO MENTION ABOUT THE ADMISSION OF ADDITIONAL EVIDENCE, HENCE, THE GROUND NO. 2 IN DISPUTE IN THE REVENUE S APPEAL IS DISMISSED AS SUCH. 1 2 . APROPOS GROUND NO. 3 REGARDING DIRECTING THE AO CONSIDER THE CLAIM OF ASSESSEE U/S. 54 OF THE I.T. ACT, 1961 IS CONCERNED, WE FIND THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSES SEE HAS SOLD A PROPERTY AT 20C/72, WEST PUNJABI NAGAR, NEW DELHI FOR THE CONSIDERATION OF RS. 95,00,000/ - AS PER THE REGISTERED VALUE OF THE PROPERTY (WHEREAS DURING THE COURSE OF SURVEY, THE SAME PROPERTY WAS FOUND TO BE VALUED AT RS. 3,87,00,000/ - BY A REGISTERED VALUER). THE ASSESSEE HAS CLAIMED THAT THE SALE PROCEED OF THE AFORESAID ITA NO S . 5698 & 5974 /DEL/ 2014 26 PROPERTY AT 20C/72, WEST PUNJABI BAGH, NEW DELHI WAS INVESTED IN THE PURCHASE OF PROPERTY IN THE SAME ASSESSMENT YEAR AT J - 1/161, RAJOURI GARDEN, NEW DELHI. WE OBSERV ED THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S. 54 OF THE I.T. ACT IN RESPECT OF CAPITAL GAIN ON THE SALE OF PROPERTY AT 20C/72, WEST PUNJABI BAGH, NEW DELHI. WE FURTHER NOTE THAT THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HON BLE SUPRE ME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383. THE AO HAS NOT CONSIDERED THE CLAIM OF EXEMPTION OF THE ASSESSEE U/S. 54 IN RESPECT OF THE CAPITAL GAIN AROSE IN RESPECT OF THE SALE OF PROPERTY AT 20C/72, WEST PUNJA BI BAGH, NEW DELHI. IN VIEW OF THE ABOVE, IN OUR CONSIDERED OPINION, THE LD. CIT(A) RIGHTLY DIRECTED THE AO TO CONSIDER THE AFORESAID CLAIM OF THE ASSESSEE OF EXEMPTION U/S 54 OF THE I.T. ACT, WHILE COMPUTING THE INCOME OF THE ASSESSEE. WE ALSO FIND C ONSIDERABLE COGENCY IN THE ASSESSEE S COUNSEL THAT LD. DR ITSELF WAS SAYING THAT THE ASSESSEE HAS SOLD ONE PROPERTY AND PURCHASED ANOTHER, THEN THERE IS NO QUESTION WHY EXEMPTION U/S. 54 SHOULD NOT BE GIVEN. IN VIEW ABOVE, WE FIND THAT THE CIT(A) HAS G IVEN A WELL REASONED FINDING ON THE ISSUE IN DISPUTE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DECIDE THE ISSUE NO. 3 AGAINST THE REVENUE. IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. ITA NO S . 5698 & 5974 /DEL/ 2014 27 ASSESSEE S APPEAL NO. 5974/DEL/2014 1 3 . THE BRIEF FACTS ARE SIMILAR AND IDENTICAL, AS EXPLAINED IN REVENUE S APPEAL NO. 5698/DEL/2014 AS AFORESAID, THEREFORE, THERE WE ARE NOT REPEATING THE SAME AGAIN FOR THE SAKE OF BREVITY. 1 4 . AT THE TIME OF HEARING, LD. COUNSEL OF TH E ASSESSEE SH. NAGESH BEHL, STATED THAT ASSESSEE HAS RAISED 5 GROUNDS OF APPEAL. AS REGARDS GROUND NO. 1 IS CONCERNED, HE STATED THAT THE ASSESSEE HAS RAISED THIS GROUND BEFORE THE LD. CIT(A) WHICH HAS NOT BEEN DECIDED BY THE LD. CIT(A) , BUT HE DECIDE D TH E OTHER ISSUES BY PARTLY ALLOWING THE APPEAL FILED BY THE ASSESSEE. ASSESSEE HAS FILED THE APPEAL ON THE ISSUE INVOLVED IN GROUND NO. 5 MENTIONED IN THE ASSESSEE S CROSS APPEAL AND REVENUE HAS FILED THE APPEAL I.E. ITA NO. 5 698/DEL/2014 AND CHALLENGED T HE ADDITION DELETED BY THE LD. CIT(A). HE STATED THAT THE ISSUE IN GROUND NO. 2 TO 4 ARE INTER CONNECTED WITH THE REVENUE S APPEAL AND IF THE REVENUE S APPEAL IS DISMISSED, THEN HE IS NOT PRESSING THE GROUNDS RAISED IN ASSESSEE S APPEAL VIDE GROUND NO. 2 TO 4 . SINCE WE HAVE ALREADY DISMISSED THE REVENUE S APPEAL, HENCE, AS PER THE STATEMENT OF THE LD. COUNSEL OF THE ASSESSEE THAT HE IS NOT PRESSING THE ISSUE INVOLVED IN GROUND NO. 2 TO 4 , IF THE REVENUE S APPEAL IS DISMISSED, THE GROUND NO. 2 TO 4 RAISED IN THE ASSESSEE S APPEAL STANDS DISMISSED, AS NOT PRESSED. ITA NO S . 5698 & 5974 /DEL/ 2014 28 1 5 . AS REGARDS ISSUE INVOLVED IN GROUND NO. 1 IS CONCERNED, WE FIND THAT LD. COUNSEL OF THE ASSESSEE HAS PRAYED TO SET ASIDE THE SAME TO THE FILE OF LD. CIT(A) TO DECIDE THE SAME A FRESH AND LD. DR HAS NO OBJECTION TO THE SAME, HENCE, WE ARE REMITTING BACK THE ISSUE INVOLVED IN GROUND NO. 1 IN THE ASSESSEE S APPEAL TO THE FILE OF THE LD. CIT(A) TO DECIDE THE SAME AFRESH, UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD . 1 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AND ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 3 0 - 6 - 2 01 5 . S D / - S D / - [ J.S. REDDY ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 3 0 / 6 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO S . 5698 & 5974 /DEL/ 2014 29