ITO 21(2)(1), MUMBAI V. JAYANT M THAKUR, MUMBAI

ITA 6590/MUM/2012

• Counselvise Citation: 659019914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: HARIDAS BHAT
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Valuation report
• Section: 50C

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 6590 / / 2012 A.Y. 2008-09 ITA NO. : 6590/MUM/2012 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER 21(2)(1), 505, 5 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI -400 020 VS SHRI JAYANT M. THAKUR, 103, TRIMURTI HEIGHTS, V.N. PURAV MARG, SION, GHUNABHATTI (E), MUMBAI -400 022 PAN: AAAPT 9028 P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURENDRA KUMAR RESPONDENT BY : SHRI HARIDAS BHAT /DATE OF HEARING : 02-01-2014 / DATE OF PRONOUNCEMENT : 08 -01-2014 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE INSTANT APPEAL ARISES FROM THE ORDER OF CIT(A) 32, MU MBAI, DATED 28.08.2012, WHEREIN, THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 53,82, 289/-. MADE U/S. 69B OF THE INCOME-TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DECIDING THE APPEAL BY NOT CONSIDERIN G THE VALUATION REPORT OF THE DVO DETERMINING THE FAIR MARKET OF THE P ROPERTY AT RS. 42,84,000/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE AGREEMEN T OF THE INCOMPLETE ROW HOUSE WAS ENTERED INTO ON 16.11.2007 FO R RS. 18,50,000/- AND THE STAMP DUTY VALUATION DONE ON 15.12 .2007 FOR RS. 75,07,500/-. SHRI JAYANT M. THAKUR ITA NO. 6590/MUM/2012 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE BALANCE SHEET SUBMITTED BY THE ASSESSEE ALONG WITH THE RETURN OF I NCOME DOES NOT SHOW THE AMOUNT OF RS. 55,57,736/- AS THE TOTAL COST OF THE ROW HOUSE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT FIVE ROW HOUSE BU ILT ON A PLOT OF LAND MAY NOT BE OF THE SAME AREA. 2. THE SOLITARY ISSUE INVOLVED IN THE GROUNDS OF APPEAL, AS FILED BY THE ASSESSEE PERTAINS TO THE CORRECTNESS OF THE VALUE OF ONE HOUSE PURCHASED BY THE ASSESSEE. 3. THE FACTS ARE THAT THE ASSESSEE, AN INDIVIDUAL, PURCHAS ED ROW HOUSE NO. 5 AT PARSIK HILL FOR A CONSIDERATION OF RS. 18,50,000/-. IN THE ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED THAT THE SELLER ACQUIRED THE PROPERTY FROM SHRI RAMESH V PANJARI, WHO HAD ACQUIRED 487.13 SQ. MTS. FOR A CONSIDERATION OF RS. 61,00,000/- AND CONSTRUCTE D 5 ROW HOUSES. THE ASSESSEE ACQUIRED ROW HOUSE NO. 5 ADMEASUR ING 200.2 SQ. MTS. 4. ACCORDING TO THE STAMP DUTY VALUATION, THE COST OF TH E PROPERTY WOULD HAVE BEEN RS. 75,07,500/-. THE AO, ON RECEIPT OF THIS VALUATION SHOW CAUSED THE ASSESSEE TO EXPLAIN THE DIFFERENCE OF RS. 56,57,500/-, WHICH HE PROPOSED TO ADD BACK U/S 69B, IF NO REASONABLY ACCEPTED REPLY IS SUBMITTED. 5. THE ASSESSEE MADE HIS SUBMISSIONS TO THE AO WHO DISR EGARDED THE SAME AND REFERRED THE ISSUE TO DVO, WHO DID NOT FURNISH ITS REPOR T. THE AO, AS NOTED IN PARA 5 OF THE ASSESSMENT ORDER OB SERVED THAT SINCE THE ASSESSMENT WAS GETTING TIME BARRED AND THE R EPORT OF THE DVO WAS NOT AVAILABLE. HE, THEREFORE, RELIED ON THE STAMP DUTY VALUATION AND COMPLETED THE ASSESSMENT, MAKING AN ADDITION OF RS. 56,57,500/- (RS. 75,07,500 RS. 18,50,000) U/S 69B OF THE IN COME TAX ACT, 1961. 6. THE ASSESSEE APPROACHED THE CIT(A) AGAINST THE ORDE R, WHEREIN HE CONTENDED THAT ALL THE DETAILS WERE PLACED BEFORE THE AO, WHO IGNORED THE EVIDENCE & RELIED ON THE STAMP DUTY VALUE, TO MAKE THE SHRI JAYANT M. THAKUR ITA NO. 6590/MUM/2012 3 ADDITION. HE ALSO CONTENDED THAT VALUATION OF UNDER STAMP DUTY CANNO T IPSO FACTO BECOME THE BASIS OF VALUATION AND THE VALUE CANNOT BE SUBSTITUTED IN THE ABSENCE OF ANY COGENT REASONS. IT WA S ALSO CONTENDED THAT REFERENCE PROVISIONS OF SECTION 50C IS FOR THE PURPOSES OF DETERMINATION OF CAPITAL GAINS, AND NOT FOR THE PURPOSES OF MAKING ADDITION U/S 69B, AS HELD IN THE CASE OF PUNEET SABHARWA L, REPROTED IN 338 ITR 485 (DEL). 7. THE CIT(A), TAKING INTO CONSIDERATION THE ARGUMENTS OF T HE ASSESSEE, HELD, 3.2 1 HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR A ND PERUSED THE ASSESSMENT ORDER. THE VERY BASIS FOR DOUBTING THE UNDISCLOSED INV ESTMENT IN ROW HOUSE PURCHASED BY APPELLANT IS THE DIFFERENCE BETWEEN THE STAMP VALUATION AND THE AGREEMENT VALUE. THE AO HAS NOT ALL LOOKED INTO AS TO H OW MUCH INVESTMENT WAS REFLECTED IN BOOKS NOR HAS HE CONSIDERED THE FACT THAT IN THE AGREEMENT ITSELF IT IS MENTIONED THAT THE ROW HOUSE WAS BEING SOLD WITH ONLY RCC STRUCTURE AND SOME BRICK WORK AND FURTHER COMPLETION WAS DONE BY ASSESSEE HIMSELF. HENCE, THE COMPARISON ON STAMP VALUATION WHICH IS BASED ON MARKET VALUE OF A COMPLETE AND FINISHED CONSTRUCTION WAS LIKE COMPARING AP PLES WITH ORANGES. MOREOVER THE STAMP VALUATION IS THE MARKET VALUE WHICH CAN BY NO STRETCH OF LOGIC BE APPLIED TO CONCLUDE THE ACTUAL INVESTMENT MADE IN PURCHASING THE PROPERTY. NOTHING HAS BEEN SHOWN BY THE AO TO SUGGES T THAT THERE WAS PAYMENT MADE BY THE ASSESSEE OVER AND ABOVE WHAT HA S BEEN MENTIONED IN THE EVIDENCES. THE PROVISIONS OF SECTION 50C CANNOT BE EXTENDED TO THE CASE OF PURCHASER UNLESS THE FACT OF UNDERSTATEMENT IS ESTABLI SHED BY THE REVENUE AS HELD IN SANGAM TOWERS 31 DTR (JP) TRIBUNAL 172. THE STA MP DUTY RATES ARE THE READY RECKONER RATES APPLICABLE TO PARTICULAR AREA WHER EAS THE ACTUAL CONSIDERATION MAY BE MORE OR LESS THAN THE STAMP VALUAT ION RATES. THE MERE FACT THAT THE PURCHASE CONSIDERATION IS LESS THAN THE STAMP VALUATION RATES DOES NOT BY ITSELF LEADS TO A CONCLUSION THAT THE ASSESSEE HAD PAID THE DIFFERENCE OVER AND ABOVE. IN CASE OF SANJAY CHAWLA 89 ITD 586 (DELHI ), SWAMI COMPLEX P. LTD, 111 TTJ (JP) 531, RADHESHYAM PODDAR, HUF 86 TTJ 538, 103 TTJ 843, 38 SOT 486, IT HAS BEEN HELD THAT EVEN IF THE MARKET VAL UE APPEARS TO BE HIGHER THAN THE CONSIDERATION DECLARED IN THE DOCUMENTS, IT C ANNOT BE ITSELF THE SOLE GROUND FOR TREATING THE DIFFERENCE AS UNEXPLAINED INVES TMENT OF THE ASSESSEE. THE STAMP DUTY VALUATION CANNOT BE TREATED AS PURCHAS E PRICE FOR THE PURPOSE OF ASCERTAINING UNEXPLAINED INVESTMENT, AS HELD IN CHANDNI BHU CHR 323 ITR 510 (P&H), 279 ITR 360 (ALLD), HARLEY STREET PHARMACEUTICALS L TD 38 SOT 486 (AHD) AND AERENS INFRASTRUCTURE AND TECHNOLOGY LTD 3 ITR (T RIB) 344 (DEL), FITWELL LOGIC SYSTEM (P) LTD 1 ITR (TRIB) 286 (DEL), 193 ITR 770 (A LLD), SMT. KUSURN GILANI ITAT DELHI D BENCH REPORTED IN 41- BBCAJ 644. THE DECISIO N OF THE SUPREME COURT IN CASE OF SARGAM CINEMA 328 ITR 513 (SC), DHARI A CONSTRUCTION CO 328 ITR 515 (SC), SMT. SURAJ DEVI 328 ITR 604 (DEL), NAVEE N GERA (DELHI) 328 ITR 516, SMT AMAR KUMARI SURANA 89 TAXMAN 544 (RAJ) SUPPO RT THE VIEW THAT THAT UNLESS THERE IS SOME POSITIVE MATERIAL TO SHOW THAT THER E WAS UNDERSTATEMENT OF INVESTMENT, ADDITION SOLELY ON BASIS OF REPORT OF VALUA TION OFFICER CANNOT BE UPHELD. IN CASE OF DHARIA CONSTRUCTION CO 328 ITR 515 (SC), SMT. SURAJ DEVI 328 ITR 604 (DEL), NAVEEN GERA (DELHI) 328 ITR 516 (DEL), S MT AMAR KUMAR SURANA 89 TAXMAN 544 (RAJ) SUPPORT THE VIEW THAT UNLESS THERE IS SOME POSITIVE MATERIAL TO SHOW THAT THERE WAS UNDERSTATEMENT OF IN VESTMENT, ADDITION SOLELY ON BASIS OF REPORT OF VALUATION OFFICER CANNOT BE UPHELD . IN CASE OF DHARIA CONSTRUCTION CO 328 ITR 515 (SC) IT HAS BEEN HELD THA T REASSESSMENT CANNOT BE MADE MERELY ON THE BASIS OF THE OPINION OF DISTRICT V ALUATION OFFICER. IN THE CASE OF SMT. KUSUM GILANI ITAT DELHI D BENCH REPORTED IN 41-B BCAJ 644 IT HAS BEEN HELD THAT THE PROVISIONS OF SEC. 50C DO NOT APPLY TO THE PURCHASE OF SHRI JAYANT M. THAKUR ITA NO. 6590/MUM/2012 4 THE PROPERTY AND SEC. 69B REQUIRES COLLECTION OF INDEPE NDENT EVIDENCE TO SHOW THAT ANY UNDISCLOSED INVESTMENT WAS MADE BY THE ASSES SEE IN PURCHASE OF PROPERTY. IN THE DECISIONS REPORTED IN 256 ITR 351(MAD) AND 20 DTR (MAD) 113, PUNEET SABHARWAL 338 ITR 485 (DEL) ALSO IT HAS BEEN HELD THAT DVOS REPORT CANNOT BE STRAIGHTAWAY SUBSTITUTED FOR THE ACTUAL CO ST RECORDED IN THE ASSESSEES BOOKS. HENCE THE MERE FACT THAT THE STAMP VALUATION EXCEEDS THE ACTUAL CONSIDERATION BY ITSELF DOES NOT GIVE AUTHORITY T O THE AO TO ARRIVE AT THE SATISFACTION THAT THE INVESTMENT MADE IN THE PROPERTY IS OVER AND ABOVE THE VALUE MENTIONED IN THE RECORDED DOCUMENTS. HENCE THE A DDITION MADE BY AO U/S 69B BY COMPARING THE AGREEMENT VALUE WITH STAMP V ALUATION OR BY THE VALUATION REPORT OF THE VALUATION OFFICER RECEIVED U/S 14 2(2A) IS NOT TENABLE AS PER THE LAW. EVEN COMING TO THE FACTS OF THE CASE, AS EXPLAINED BY THE LD AR EVEN IF THE COST OF CONSTRUCTION OF RS 42,84,000 AS PER VALUATION REPOR T IS ACCEPTED AS CORRECT (WITHOUT PREJUDICE AND ADMITTING THE SAME TO BE APPLICAB LE), THERE IS NO EXTRA INVESTMENT MADE BY THE ASSESSEE IN THE ACQUISITION OF R OW HOUSE BECAUSE THE TOTAL COST WHICH IS APPEARING IN ITS BALANCE SHEET AT RS. 56,57,500/- ALSO INCLUDES THE COST OF LAND AS MENTIONED IN THE REGISTERED AGREEMENT BY WHICH THE SELLER HAD PURCHASED THE LAND ON 24/1/2007. HENCE ON THIS GROUND ALSO THERE REMAINS NO UNEXPLAINED INVESTMENT U/S. 69B. 8. THE CIT(A), THUS, DELETED THE ADDITION OF RS. 56,57,500/-. 9. AGAINST THIS ORDER, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 10. BEFORE US, THE DR REITERATED THE ARGUMENTS OF THE A O AND SUBMITTED, LAND AND CONSTRUCTED AREA, ARE SEPARATE AND IN A PLACE LIKE MUMBAI, IT IS THE LAND VALUE, WHICH IS IMPORTANT FOR TAKING INTO CONSIDERATION. THE LAND COST OF 200.2 SQ. MTS. CANNOT BE COMPREHENDED TO BE RS. 18.50 LACS. HE, THEREFORE, SUPPORT ED THE VALUATION OF STAMP DUTY VALUATION AS DONE BY THE AO AND SUBMITTED THAT THE DVOS REPORT COULD NOT BE IGNORED AT ANY STAGE. 11. THE DR FURTHER SUBMITTED THAT IT IS EXTREMELY DIFFICUL T TO APPREHEND THE PARTIES AT THE TIME OF EXCHANGE OF ON MO NEY. THE DR, THEREFORE, PLEADED THAT THE VALUATION ADOPTED BY THE AO SHOULD BE SUSTAINED. 12. THE AR, ON THE OTHER HAND SUBMITTED COMPLETE DETA ILS WERE SUBMITTED BEFORE THE AO WHICH INCLUDED THE AGREEMENTS, ON THE BASIS OF WHICH THE ASSESSEE ACQUIRED THE ROW HOUSE NO. 5, ADME ASURING 200.2 SQ. MTS. FOR AN AGGREGATE SUM OF RS. 18,50,000/- (APB 28, 29), ON WHICH ONLY SOME BRICK WORK AND RCC WORK HAD BEEN C OMPLETED AND THE BALANCE HAD YET TO BE DONE. SHRI JAYANT M. THAKUR ITA NO. 6590/MUM/2012 5 13. THE AR, SUBMITTED THAT THE CIT(A) HAS TAKEN A VERY REASONABLE VIEW IN COMING TO THE CONCLUSION THAT ADDITION AS MADE BY THE AO HAD TO BE DELETED. 14. WE HAVE HEARD THE ARGUMENTS OF THE CONTENDING PAR TIES AND HAVE PERUSED THE MATERIAL PLACED ON RECORD. THE FIRST INFIRM ITY ON THE PART OF THE AO WAS NOT TO HAVE THE VALUATION DONE, IF IT W AS OBJECTED TO BY THE ASSESSEE, U/S 50C. IN SUCH A CASE, REFERENCE TO THE DVO IS A MUST AND THE VALUATION HAD TO BE DONE IN ACCORDANCE W ITH THE REPORT OF THE DVO. 15. NONE THE LESS, THE REPORT OF DVO WAS RECEIVED D URING THE APPELLATE PROCEEDINGS, WHEREIN, THE VALUATION SUGGESTED BY TH E DVO CAME TO RS. 42,84,000/-, WHICH WAS A STRAIGHT FALL OF VALUATION FROM RS. 75,07,500/- TO RS. 42,84,000/-, WHICH TOO WAS OF A FULLY CONSTRUCT ED STRUCTURE, AS COMPARED TO RAW HOUSE, PURCHASED BY THE ASSESSEE. 16. THESE POINTS ITSELF SUGGEST THAT THE VALUATION ADOPTED BY THE AO SUFFERS FROM DEFECTS. BESIDES THIS, THERE IS NO EVI DENCE TO PROVE ANY INVOLVEMENT OF ON MONEY. IN THESE CIRCUMSTANCES, TH E ARGUMENTS AS ADVANCED BY THE DR, WHICH ARE PRIMARILY BASED ON HEAR SE , DOES NOT INSPIRE CONFIDENCE TO SUSTAIN THE ORDER OF THE AO. 17. WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A) AND REJ ECT THE GROUNDS OF APPEAL, WHICH COLLECTIVELY REPRESENT A SINGLE ISSU E. ACCORDINGLY, THE APPEAL, AS FILED BY THE DEPARTMENT DESERV ES TO BE DISMISSED. 18. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2014. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 8 TH JANUARY, 2014 SHRI JAYANT M. THAKUR ITA NO. 6590/MUM/2012 6 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) ! !' ( ) - 32 MUMBAI / THE CIT (A)-32, MUMBAI. 4) ! !' CITY -21, MUMBAI / THE CIT, CITY-21, MUMBAI, 5) $%& ' () , ! ' , *+, / THE D.R. J BENCH, MUMBAI. 6) &- . COPY TO GUARD FILE. !/)0 / BY ORDER / / TRUE COPY / / 1 / 2 +( ! ' , *+, DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *452 . . * CHAVAN, SR. PS