ITO, New Delhi V. Sh VIjay Kumar Jain., Delhi

ITA 613/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65730 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 30-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Keywords: Unexplained investment; Value adopted by valuation officer; Principle of natural justice; Valuation report
• Section: 56(2); 147; 148

Judgement Text

ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER I.T.A.NO.613/DEL/2012 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, VS SHRI VIJAY KUMAR JAIN, WARD 29(2), 1280, VAK ILPURA, NEAR JAMA MASJID, NEW DELHI. DELHI-110 006 (PAN: AAAPJ1824H) (APPELLANT) (RESPONDENT) APPELLANT BY: DR. B.R.R. KUMAR, SR.DR RESPONDENT BY : SHRI RANJ AN CHOPRA PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XV, NEW DELHI FOR AY 2006-07 PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (FOR BRIEF T HE ACT). 2. THE ONLY GROUND IN THIS APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.15,89,956/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF VARIATION IN VALUATION SHOWN BY THE ASSESSEE AND DETERMINED BY DVO. 3. BRIEF FACTS GIVING RISE TO THIS APPEAL ARE THAT THE ASSESSEES CASE WAS REOPENED U/S 147 AND 148 OF THE ACT AND IN RESPONSE TO NOTICE U/S 148 OF THE ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 2 ACT, THE ASSESSEE SUBMITTED THAT HE HAS FILED HIS R EGULAR INCOME TAX RETURN ON 28.10.2006 AND THE SAME MAY BE TREATED AS RETURN FI LED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE ASSESSING OFFICER NOTED TH AT THE ASSESSEE HAS PURCHASED PROPERTY NO.67/4, MADRAS HOUSE, DARYA GAN J, NEW DELHI. IN PURSUANCE OF NOTICE U/S 148 OF THE ACT, THE ASSESSE E SUBMITTED THAT THE ASSESSEE SOLD PLOT NO.303, PATPARGANJ ON 01.01.2005 FOR A CONSIDERATION OF RS.8,50,000 AND THERE WAS NO CAPITAL GAIN ON THE SA LE OF SUCH FLAT BECAUSE THE ASSESSEE HAD PAID A SUM OF RS.8,65,000 AT THE TIME OF PURCHASE OF FLAT. THE ASSESSEE ALSO SUBMITTED THAT IN REGARD TO FLAT NO. 67/4, MADRAS HOUSE, DARYA GANJ, NEW DELHI FOR A CONSIDERATION OF RS.10,800 FR OM SHRI SURESH BHARGAVA, THE ASSESSEE HAD TAKEN A LOAN OF RS.7 LAK H FROM BHARAT OVERSEAS BANK LTD., ANSARI ROAD, DARYA GANJ, NEW DELHI AND T HE BALANCE AMOUNT WAS PAID BY THE ASSESSEE FROM HIS OWN SOURCES. THE ASSESSING OFFICER FURTHER ISSUED NOTICES ALONG WITH QUESTIONNAIRE TO THE ASSESSEE BUT THE ASSESSEE DID NOT REPLY THE SAME AND THE ASSESSING O FFICER REFERRED THE MATTER TO THE VALUATION OFFICER WHO AFTER GIVING REASONABL E OPPORTUNITY TO THE ASSESSEE VALUED THE FLAT AT RS.25,89,956/- AS ON 11 .08.2008 AGAINST THE DECLARED CONSIDERATION OF RS.10 LAKH BY THE ASSESSE E. FINALLY, THE ASSESSING OFFICER HELD THAT THE BALANCE AMOUNT OF RS.15,89,95 6/- REPRESENTS ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 3 UNEXPLAINED INVESTMENT IN THE PROPERTY AND THE SAME WAS ADDED TO THE RETURNED INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE COMMISSIONER OF INCOME TAX(A) WHICH WAS PARTLY ALLOWED WITH THE FOL LOWING OBSERVATIONS PERTAINING TO UNEXPLAINED INVESTMENT:- ' 6. GROUND NO.5 :- THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 15,89,956/- UNDER THE HEAD UNEXPLAI NED INVESTMENT. 6.1. THE FACTS EMANATING FROM THE ORDER OF THE AO A ND THE SUBMISSIONS OF THE ASSESSEE IS THAT THE ASSESSEE HA D PURCHASED A PROPERTY AT NO. 67/4, MADRAS HOUSE, DAR YA GANJ, NEW DELHI FOR RS 10,00,000/- AND THE AO HAD A SKED FOR THE DETAILS OF THE SOURCE OF THE INVESTMENTS AN D HAD FINALLY REFERRED THE PROPERTY TO THE DVO FOR VALUAT ION ON THE GROUND THAT THERE WAS UNDER-STATEMENT OF INVESTMENT IN THE PROPERTY. THE DVO HAD VALUED THE PROPERTY AT RS 25,89,956/- AND ACCORDINGLY, THE AO HAS MADE THE AD DITION OF RS. 15,89,956/- (RS 25,89,956/- (-) RS 10,00,000 /-) AS UNEXPLAINED INVESTMENTS. 2. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER AND IT IS SUBMITTED THAT THE ASSE SSING OFFICER IS NOT JUSTIFIED TO MAKE THE ADDITION AS TH E ASSESSEE HAD PURCHASED THE PROPERTY FOR RS. 10,00,000/- AND REFLECTED THE SAME IN THE SALE DEED ALSO. IT IS SUBMITTED THA T THE ASSESSING OFFICER HAS MADE THE ADDITION MERELY ON T HE BASIS OF THE DVO REPORT WITHOUT ANY CORROBORATIVE EVIDENC E OF ANY UNEXPLAINED INVESTMENT. IT IS ALSO SUBMITTED TH AT THE DVO HAS MADE THE VALUATION OF THE PROPERTY BY COMPA RING THE SAME WITH OTHER PROPERTIES WHICH ARE NOT OF THE SAME QUALITY OR OF THE SAME LOCALITY. IT IS SUBMITTED TH AT THE AO HAS REFERRED THE VALUATION OF THE PROPERTY TO THE D VO WITHOUT ANY VALID REASONS OR WITHOUT ANY VALID MATE RIALS IN HIS POSSESSION AGAINST THE ASSESSEE AND ALSO WITHOU T ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 4 REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS IN SUPPOR T OF THE CLAIM :- (I) K P VARGHESE VS ITO, 131 ITR 597 (SC) [1981] (II) CIT VS SHIVAKAMI CO P LTD, 159 ITR 71 (SC) [1 986] (III) CIT VS GODAVARI CORP. LTD, 200 ITR 567 (SC) [1993] (IV) SARGAM CINEMA VS CIT, 328 ITR 513 (SC) [2010] (V) CIT VS SMT. SURAJ DEVI, 328 ITR 604 (DEL) [20] 0] (VI) ITO VS VIJETA EDUCATIONAL SOCIETY, 317 ITR 40 5 (AT) (LUCK) [2009] 6.3. THE ASSESSEE ALSO SUBMITTED THAT THE SIMILAR T YPE OF ADDITION WAS MADE IN THE A Y 2004-05 AND THE SAME W AS DELETED BY THE LD.CIT(A) VIDE ORDER DATED 30/11/200 9 IN APPEAL NO. 296/2008-09 AND THE SAME ORDER WAS ALSO CONFIRMED BY THE HON'BLE TRIBUNAL VIDE PARAS-8, 9 & 10 OF THE ORDER DATED 30/07/2010 IN ITA NO. 337/DE1L2010. 6.4. I HAVE CONSIDERED THE ORDER OF THE AO, REMAND REPORT OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FI ND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSE E THAT THERE IS NO MATERIAL EVIDENCE BEFORE THE AO FOR REF ERRING THE CASE TO THE DVO. ALTHOUGH, I HAVE CONFIRMED THE ACT ION OF THE AO IN REOPENING THE ASSESSMENT BUT I DO NOT FIN D ANY SUBSTANTIAL MATERIAL OR ANY CORROBORATIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAS MADE ANY UNEXPLAINED INVESTME NT IN THE PURCHASE OF THE PROPERTY AS ALLEGED AND CLAIMED BY THE AO AND AS SUCH IT IS DIFFICULT TO SUSTAIN THIS ADDI TION. 6.5. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THE AO HAS NOT MADE OUT A CLEAR CASE OF ANY UNEXPLAINED INVESTMENT AGAINST THE ASSE SSEE AND AS SUCH THE ADDITION IS MADE BY THE AO IS APPARENTL Y UNSUSTAINABLE AND ACCORDINGLY, THE SAME IS DELETED. ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 5 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTI ES AND CAREFULLY CONSIDERED THE SUBMISSIONS AND MATERIAL SUBMITTED B EFORE US ON RECORD. 6. LD. DR SUBMITTED THAT DESPITE SEVERAL NOTICES, T HE ASSESSEE DID NOT SUBMIT THE REQUIRED DETAILS AND INFORMATION PERTAIN ING TO THE INVESTMENT IN REGARD TO THE PROPERTY PURCHASE IN DARYA GANJ DURIN G THE YEAR UNDER CONSIDERATION. THEREFORE, DUE TO THIS CONDUCT OF T HE ASSESSEE, THE ASSESSING OFFICER WAS FORCED TO CALL A REPORT FORM THE DVO AN D THE ASSESSING OFFICER RIGHTLY ADDED THE AMOUNT AS UNEXPLAINED INVESTMENT IN THE PROPERTY. LD. DR FURTHER SUBMITTED THAT THE LD. COMMISSIONER OF INCO ME TAX(A) WRONGLY HELD THAT THERE WAS NO MATERIAL EVIDENCE BEFORE THE ASSE SSING OFFICER FOR REFERRING THE CASE TO THE DVO. HE ALSO SUBMITTED T HAT THE LD. COMMISSIONER OF INCOME TAX(A) IGNORED THE REPORT OF THE DVO AND WRONGLY HELD THAT HE HAS NOT FOUND ANY SUBSTANTIAL MATERIAL OR CORROBORA TING EVIDENCE TO SHOW THAT THE ASSESSEE HAS MADE ANY UNEXPLAINED INVESTME NT IN THE PURCHASE OF PROPERTY IN DARYA GANJ. THE DR SUBMITTED THAT WHEN THE ASSESSEE IS NOT COOPERATING WITH THE ASSESSMENT PROCEEDINGS AND NOT REPLYING TO THE NOTICES ISSUED BY THE ASSESSING OFFICER, THEN THE ASSESSING OFFICER HAD NO OPTION BUT TO CALL A VALUATION REPORT FROM THE DVO AND THI S WAS A SUFFICIENT CAUSE BUT THE SAME WAS NOT CONSIDERED BY THE COMMISSIONER OF INCOME TAX(A). ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 6 7. THE ASSESSEES REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER CONDUCTED THE ASSESSMENT IN AN ARBITRARY MANNER AND HE CALLED THE REPORT OF DVO WITHOUT ANY REASONABLE BASIS. THE AR ALSO SUBM ITTED THAT THE ASSESSING OFFICER DID NOT AFFORD AN OPPORTUNITY TO THE ASSESSEE TO CONFRONT THE REPORT OF THE DVO AND HE MADE THE ADDITION VIOL ATING ALL THE ACCEPTED PRINCIPLES OF NATURAL JUSTICE. THE AR SUBMITTED TH AT THE WRONG ACTION OF THE ASSESSING OFFICER WAS RIGHTLY CORRECTED BY THE COMM ISSIONER OF INCOME TAX(A). THEREFORE, THIS APPEAL IS DEVOID OF MERITS . 8. AFTER CAREFUL CONSIDERATION OF THE ABOVE SUBMISS IONS, WE OBSERVE THAT THE AR HAS NOT DISPUTED THE FACT THAT EXCEPT THE LE TTER DATED 06.06.2008, THE ASSESSEE DID NOT SUBMIT ANY INFORMATION OR EXPLANAT ION IN RESPONSE TO THE NOTICES AND QUESTIONNAIRE ISSUED BY THE ASSESSING O FFICER. THE ASSESSING OFFICER HAD NO OPTION BUT TO CALL THE REPORT FROM T HE DVO ABOUT THE VALUATION OF THE PROPERTY PURCHASED BY THE ASSESSEE ON 11.8.2005 TO VERIFY THE CONSIDERATION DECLARED BY THE ASSESSEE. THEREF ORE, WE HOLD THAT THE ASSESSING OFFICER RIGHTLY PROCEEDED TO CALL THE REP ORT FROM THE DVO WITH REGARD TO VALUATION AND VERIFICATION OF THE CONSIDE RATION OF THE PROPERTY PURCHASED BY THE ASSESSEE. AT THE SAME TIME, WE OB SERVE THAT THE AO HAD NOT SUPPLIED THE COPY OF THE DVO REPORT TO THE ASSE SSEE AND DID NOT AFFORD OPPORTUNITY OF HEARING TO THE ASSESSEE PRIOR TO FIN ALIZING THE ISSUE AND THIS IS ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 7 A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. AT THE SAME TIME, WE HAVE NO HESITATION TO HOLD THAT THE ORDER OF THE LD. COM MISSIONER OF INCOME TAX(A) IS NOT A SPEAKING ORDER IN THIS REGARD AND H E HAS NOT GIVEN ANY FINDING SUPPORTED BY DETAILED DISCUSSION AND DELIBE RATIONS. HE SIMPLY MENTIONED THAT HE HAS CONSIDERED THE REMAND REPORT AND SUBMISSIONS AND WITHOUT ANY DETAILED DISCUSSION, HE JUMPED TO THE C ONCLUSION THAT HE FOUND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESS EE THAT THERE WAS NO MATERIAL EVIDENCE BEFORE THE ASSESSING OFFICER FOR REFERRING THE CASE TO THE DVO. 9. AS WE HAVE OBSERVED HEREINABOVE THAT THE ASSESSE E DID NOT COOPERATE AND REPLIED TO THE QUESTIONNAIRE AND NOTICES OF THE ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER PROCEEDED TO CALL A REPORT FROM THE DVO FOR VERIFICATION OF THE CONSIDERATION DECLARED BY THE A SSESSEE BUT THE SAME WAS NOT CONFRONTED TO THE ASSESSEE U/S 142A(3) OF THE A CT. WE ALSO OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) IN PARA 6.4 SIMPL Y MENTIONED THAT HE DID NOT FIND ANY SUBSTANTIAL OR CORROBORATING EVIDE NCE THAT THE ASSESSEE HAS MADE ANY UNEXPLAINED INVESTMENT BUT WE ARE UNABLE T O SEE ANY REASONING TO SUPPORT THESE FINDINGS IN THE IMPUGNED ORDER. 10. THE ASSESSEES REPRESENTATIVE SUBMITTED A COPY OF ITAT H BENCH IN ASESSEES OWN CASE IN ITA NO.337/DEL/2010 FOR AY 20 04-05 DATED ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 8 30.07.2010 WHEREIN WHILE DELETING GROUND RELATED TO ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN PURCHASE OF PROPERTY, IT WAS HELD AS UNDER:- 8. THE NEXT GROUND IS AGAINST THE CIT (A)S ORDER IN DELETING THE ADDITION OF RS.12,00,000/-MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF PR OPERTY BEING FLAT NO. 303, MAYURDHAWAJ APARTMENT, PATPAR G ANJ, DELHI. AS AGAINST RS.8,00,000/- SHOWN AS CONSIDERAT ION IN THE PURCHASE DEED ON ACCOUNT OF PURCHASE OF FLAT NO. S- 303, MAYURDHAWAJ APARTMENTS, PATPAR GANJ, DELHI FROM ONE MR. PRAMOD GUPTA, THE AO HAD TAKEN THE CONSIDERATION AM OUNT AT RS.20,00,000/- ON THE BASIS OF VALUATION REPORT OF THE VALUATION OFFICER OBTAINED U/S 142A OF THE ACT. THE AO, THEREFORE, MADE THE ADDITION OF DIFFERENCE OF RS.12 ,00,000/- AS UNEXPLAINED INVESTMENT IN THE PROPERTY. THE AO FURT HER STATED THAT THE ASSESSEE DID NOT COOPERATE WITH THE VALUAT ION OFFICER IN SPITE OF 3 OPPORTUNITIES GIVEN BY HIM. HOWEVER, ON APPEAL, THE LD. CIT (A) DELETED THE ADDITION BY OBSERVING T HAT THE AO HAS FAILED TO BRING ANY COGENT MATERIAL OF UNDER VA LUATION OF THE PROPERTY SO AS TO CALL FOR ANY ADDITION ON THAT ACCOUNT. 9. THE LD. DR MERELY RELIED UPON THE AOS ORDER. TH E LD. COUNSEL FOR THE ASSESSEE RELIED UPON HIS SUBMISSION S MADE BEFORE THE AO AS WELL AS BEFORE THE CIT (A). 10. BOTH THE PARTIES WERE HEARD AND MATERIAL ON R ECORD WAS PERUSED. IT IS A CASE OF PURCHASE OF PROPERTY BY RE GISTERED SALE DEED. A COPY OF SALE DEED OF PROPERTY PURCHASED BY THE ASSESSEE IS PLACED BEFORE US. IN THE PURCHASE DEED, IT HAS BEEN CLEARLY MENTIONED THAT THE SELLER HAS SOLD THE PROP ERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS.8,00,000/-. IT I S NOT THE CASE OF THE AO THAT THE ASSESSEE HAS MADE FURTHER INVEST MENT IN THE PROPERTY BY WAY OF ANY ADDITIONAL CONSTRUCTION OR IMPROVEMENT TO THE HOUSE PURCHASE DEED IS BELOW THE PRICE FIXED BY THE GOVERNMENT FOR THE STAMP DUTY PURPOSES . THE AO HAS MERELY MADE THE ADDITION ON THE BASIS OF VAL UATION REPORT SUBMITTED BY THE VALUATION OFFICER BUT NO MA TERIAL HAS ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 9 BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESS EE HAS PAID ANY AMOUNT OVER AND ABOVE THE AMOUNT MENTIONED IN T HE SALE AGREEMENT. THE AO HAS NOT EXAMINED THE SELLER BEFOR E MAKING ANY ADDITION ON ACCOUNT OF ADDITIONAL CONSIDERATION PAID BY THE ASSESSEE OVER AND ABOVE THE AMOUNT MENTIONED IN THE SALE AGREEMENT. IN THIS VIEW OF THE MATTER, WE THEREFORE , FIND THAT THE CIT (A) HAS RIGHTLY DELETED THE ADDITION ON THI S COUNT. THE ORDER OF THE CIT (A) IS THUS UPHELD. 11. ON BARE READING OF ABOVE ORDER, WE OBSERVE THAT THE ISSUE WAS RELATED TO THE PROPERTY FLAT NO. S-303, MAYURDHAWAJ APARTME NTS, PATPAR GANJ, DELHI, BUT THE ISSUE IN THE PRESENT APPEAL IS RELAT ED TO THE PROPERTY PURCHASED BY THE ASSESSEE BEARING FLAT NO. 67/4, MADRAS HOUSE , DARYA GANJ, NEW DELHI. FURTHERMORE, THE ASSESSEE FILED A COPY OF S ALE DEED RELATED TO PROPERTY PURCHASED DURING THE AY 2004-05 BEFORE ITA T E BENCH BUT ON CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BE LOW, WE OBSERVE THAT THE ASSESSEE HAS NOT FILED A COPY OF THE REGISTERED SAL E DEED IN HIS FAVOUR EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE US. 12. IN VIEW OF ABOVE PECULIAR FACTS AND CIRCUMSTANC ES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER CALLED A DVO REPORT ON C OMPELLING CIRCUMSTANCES AND AT THE SAME TIME, THE ASSESSING OFFICER DID NOT CONFRONT THE SAME TO THE ASSESSEE AS PER PROVISIONS OF SECTION 142A(3) OF TH E ACT. WE ALSO OBSERVE THAT THE IMPUGNED ORDER IS CRYPTIC AND NOT WELL-REA SONED. THEREFORE, WE FIND IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH A ITA NO.613/DEL/2012 ASSTT.YEAR: 2006-07 10 DIRECTION TO DECIDE THE ISSUE DE NOVO FOLLOWING THE PROVISIONS OF SECTION 142A, INTER ALIA PROVISIONS OF SECTION 56(2) OF THE ACT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.2012. SD/- SD/- (SHAMIM YAHYA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 19TH OCTOBER 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR