ITO 1(2)(1), MUMBAI V. JAINESH REAL ESTATE, MUMBAI

ITA 6688/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100779 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 07-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Fair market value; Valuation report
• Section: 143(3); 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI . . , , BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 THE ITO 1(2)(1), ROOM NO.527, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 / VS. M/S. JAINESSH REAL ESTATE PVT. LTD., 16, KHETAN BHAVAN, 198, J. TATA ROAD, CHURCHGATE, MUMBAI 20. ./ ./ PAN/GIR NO. :AACCJ 0735A ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI AKHILENDRA YADAV RESPONDENT BY SHRI HIRO RAI ' #$ / DATE OF HEARING : 03/08/2015 ' #$ / DATE OF PRONOUNCEMENT : 19/08/2015 / O R D E R PER G.S.PANNU, A.M: THE PRESENT APPEAL IS PREFERRED BY THE REVENUE A ND IS DIRECTED AGAINST THE IMPUGNED APPELLATE ORDER DATED 17/08/2012 PAS SED BY LD. CIT(A)-2, MUMBAI PERTAINING TO THE ASSESSMENT YEAR 2009-10 WI TH REFERENCE TO THE ASSESSMENT ORDER DATED 28/12/2011 PASSED IN TERMS O F SECTION 143(3) OF THE INCOME TAX ACT, 1961(THE ACT). 2. IN THIS APPEAL THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER OF RS.9,39,61,200/- BY INVOKING SECTION 69B OF THE ACT . . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 2 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RESPO NDENT ASSESSEE PURCHASED A PROPERTY VIZ. UNIT NO.401, COMMERZE ZONE, YERAVADA, PUNE, FROM M/S. K. REHEJA CORP PVT. LTD. VIDE A PURCHASE AGREEMENT DAT ED 24/03/2009 FOR A CONSIDERATION OF RS.9,81,60,000/-. IN THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SE CTION 69B OF THE ACT AND DETERMINED AN AMOUNT OF RS.9,39,61,200/- AS VALUE O F INVESTMENT MADE BY THE ASSESSEE IN THE AFORESAID PROPERTY WHICH WAS NOT R ECORDED IN THE BOOKS OF ACCOUNT. THUS, AN ADDITION OF RS.9,39,61,200/- WAS MADE BY INVOKING SECTION 69 OF THE ACT. 4. SECTION 69B OF THE ACT PROVIDES THAT WHERE AN AS SESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE OWNER OF ANY BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE ASSESSING OFFICER FIND THAT THE A MOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWE LLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTO RY, THEN THE ASSESSING OFFICER IS EMPOWERED TO DEEM SUCH EXCESS AMOUNT AS INCOME OF THE ASSESSEE. NOTABLY, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS INVOKED SECTION 69B OF THE ACT ON THE GROUND THAT THE PURCHASE CONSIDERATI ON OF RS.9,81,60,000/- REFLECTED IN THE PURCHASE AGREEMENT WAS UNDERVALUED TO THE EXTENT OF RS.9,39,61,200/-. 5. THE STAND OF THE ASSESSEE, WHICH HAS BEEN UPHEL D BY THE CIT(A), WAS THAT THERE WAS NO UNDERVALUATION OF INVESTMENT AND FURTHER THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL TO SUGGEST PA SSING OF CONSIDERATION OVER AND ABOVE THE CONSIDERATION STATED IN THE PURCH ASE DEED, THE INVOKING OF SECTION69B OF THE ACT WAS NOT JUSTIFIED. . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 3 6. IN THE ABOVE BACKGROUND, WE FIND THAT THE ASSESS ING OFFICER HAS BASED THE ADDITION ON THREE FACTORS. FIRSTLY, AS PER THE ASSESSING OFFICER THE FAIR MARKET VALUE OF THE PROPERTY AS DETERMINED BY THE S TAMP VALUATION AUTHORITY FOR CALCULATING PAYMENT OF STAMP DUTY WAS RS.19,21 ,21,200/-, WHICH WAS HIGHER THAN THE STATED CONSIDERATION. SECONDLY, AS PER THE ASSESSING OFFICER THE HOUSING DEVELOPMENT FINANCE CORPORATION LTD., W HO HAD ADVANCED LOAN OF RS.9,50,00,000/- TO THE ASSESSEE TOWARDS PURCHASE O F THE IMPUGNED PROPERTY HAD VALUED THE PROPERTY AT RS.13.74 CRORES, WHICH ALSO HIGHER THAN THE STATED VALUE OF THE TRANSACTION. THIRDLY, AS PER THE ASS ESSING OFFICER THE PURCHASE AGREEMENT DID NOT INDICATE THE PURCHASE OF 55 NOS . OF PARKING SLOTS, WHEREAS THE LEAVE AND LICENCE AGREEMENT ENTERED INTO BY THE ASSESSEE INDICATED THAT SUCH PARKING SLOTS WERE AT THE EXCLUSIVE DISPOSAL O F THE ASSESSEE COMPANY; THE ASSESSING OFFICER INFERRED THAT STATED CONSIDE RATION DID NOT INCLUDE THE VALUE PAID FOR THE PARKING SLOTS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ALSO MADE A REFERENCE TO THE DIS TRICT VALUATION OFFICER (DVO) TO ASCERTAIN THE VALUE OF THE PROPERTY AND SUCH RE PORT WAS AWAITED TILL THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. FOR ALL THE ABOVE REASONS, THE ASSESSING OFFICER TREATED THE STATED CONSIDERATION IN THE PURCHASE DEED AS UNDERVALUED, AND ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY DETERMINED BY THE STAMP VALUATION AUTHORITY AT RS.19,21,21,200 /- AS ACTUAL MARKET VALUE OF THE INVESTMENT AND ACCORDINGLY, THE UNDERVALUED COMPONENT OF RS.9,39,61,200/- ( I.E. RS.19,21,21,200 MINUS RS.9, 81,60,000/-) WAS ASSESSED AS UNEXPLAINED INCOME SECTION BY APPLYING 69B OF THE ACT. 7. BEFORE CIT(A) AS WELL AS BEFORE US, THE PLEA OF THE ASSESSEE HAS BEEN THAT THERE WAS NO MATERIAL TO ESTABLISH THAT THE PU RCHASE CONSIDERATION WAS UNDERSTATED. LD. REPRESENTATIVE FOR THE ASSESSEE C ONTENDED THAT THE VALUATION REPORT OF HDFC LTD., REFERRED TO BY THE ASSESSING OFFICER WAS QUITE IRRELEVANT AND THAT IT WAS BASED ON RENT CAPITALIZATION METHO D AND HAS NO RELATION TO THE CONSIDERATION PAID BY THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TO THE . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 4 CONTENTS OF THE PURCHASE DEED DATED 24/03/2009, A COPY OF WHICH IS PLACED AT PAGES 1 TO 66 OF THE PAPER BOOK TO POINT OUT T HAT THE SAME INCLUDED ACQUISITION OF 55 NOS. OF CAR PARKING SLOTS AT THE STILT LEVEL AND, THEREFORE, THE ASSESSING OFFICER WAS FACTUALLY WRONG IN STATING T HAT THE PURCHASE DEED DID NOT INCLUDE THE ACQUISITION OF PARKING SLOTS. THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO CLARIFIED THAT THE ASSESSEE HAS NOT P AID ANY ADDITIONAL CONSIDERATION TOWARDS THE PURCHASE OF THE PARKING SLOTS OTHER THAN THE AMOUNT STATED IN THE PURCHASE DEED. 8. LD. DR APPEARING FOR THE REVENUE HAS PRIMARILY R EITERATED THE POINTS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, WHICH WE HAVE ALREADY ADVERTED TO IN THE EARLIER PART OF THE OR DER AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. THE LD. DR SUBMITTED THAT THERE WAS CIRCUMSTANTIAL EVIDENCE TO SHOW THAT THE CONSIDERATION STATED IN T HE PURCHASE DEED WAS UNDERVALUED, IN AS MUCH AS THE VALUATION REPORT PR EPARED BY HDFC LTD., SHOWED THAT THE VALUE OF THE PROPERTY WAS MUCH HIGH ER THAN THE STATED CONSIDERATION. LD. DR HAS RELIED UPON THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. AMAR KUMARI SURANA VS. CIT, 226 ITR 344(RAJ) T O CONTEND THAT CIRCUMSTANTIAL EVIDENCE CAN BE THE BA SIS TO INFER UNDERVALUATION OF THE PROPERTY. 8.1 THE CRUX OF THE CONTROVERSY IN THE PRESENT CASE REVOLVES AROUND INVOKING OF SECTION 69B OF THE ACT BY THE ASSESSING OFFICER. AS NOTED EARLIER, THE PURPORT OF SECTION 69B OF THE ACT IS TO TAX THE AMOUNT EXP ENDED BY THE ASSESSEE IN MAKING INVESTMENT IN AN ASSET WHICH IS OVER AND ABOVE THE AMOUNT STATED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. S O HOWEVER, SECTION 69B OF THE ACT REQUIRES DETERMINATION OF AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS WHICH EXCEEDS THE AMOUNT RECORDED I N THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED. IT IS QUITE CLEAR THAT BEFORE THE RIGOURS O F SECTION 69B OF THE ACT GET TRIGGERED, IT IS REQUIRED TO BE ESTABLISHED THAT AN ASSESSEE . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 5 HAS MADE INVESTMENTS IN ACQUISITION OF A PROPERTY O VER AND ABOVE THE AMOUNTS STATED IN THE BOOKS OF ACCOUNT. THE PHRASEOLOGY OF SECTION 69B OF THE ACT SUPPORTS THE PREMISE THAT THE ONUS TO SHOW THAT THE ASSESSEE HAS INVESTED ANY AMOUNT IN EXCESS OF AMOUNT RECORDED IN THE BOOKS OF ACCOUNT IS ON THE ASSESSING OFFICER. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PUNIT SUBHARWAL, 338 ITR 485(DEL) HAS LAID DOWN THAT THE PRIMARY BURDEN OF PROVING UNDERSTATEMENT OR CONCEALMENT IN THE CONT EXT OF SECTION 69B OF THE ACT IS ON THE REVENUE. THEREFORE, IN THIS BACKGROU ND, WHAT IS REQUIRED TO BE DETERMINED IN THE PRESENT CASE IS AS TO WHETHER THE ASSESSING OFFICER HAS DISCHARGED SUCH A BURDEN. 9. THE FACTS, AS EMERGING FROM THE ORDERS OF THE AU THORITIES BELOW AS WELL AS THE MATERIAL ON RECORD CLEARLY ESTABLISHES THAT THE ASSESSING OFFICER DID NOT HAVE ANY CLINCHING EVIDENCE TO SUGGEST THAT THE ASS ESSEE HAS PAID ANY CONSIDERATION FOR PURCHASE OF PROPERTY OVER AND ABO VE THE STATED CONSIDERATION. THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSES OF PAYME NT OF STAMP DUTY CANNOT BE TAKEN AS AN EVIDENCE TO DEMONSTRATE THAT ASSESS EE HAS ACTUALLY PAID ANY CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATI ON. THE REFERENCE BY THE ASSESSING OFFICER TO VALUATION CONTEMPLATED BY THE LENDER I.E. HDFC LTD. IS ALSO OF NO CONSEQUENCE VIS--VIS THE CONTROVERSY BE FORE US, IN AS MUCH AS THE VALUATION BY HDFC LTD. IS FOR ITS OWN PURPOSE OF EX AMINING THE FEASIBILITY OF LENDING MONEY TO THE ASSESSEE FOR ACQUISITION OF TH E SAID PROPERTY. FURTHERMORE, A VALUATION REPORT, BY ITS VERY NATUR E, IS ONLY AN ESTIMATION OF VALUE, AND, AT BEST CAN BE A SOURCE FOR FURTHER ENQ UIRIES BUT THE VALUATION REPORT BY ITSELF CANNOT BE CONSTRUED AS AN EVIDENC E WHICH ESTABLISHES UNDERSTATEMENT OF PURCHASE CONSIDERATION. HONBLE DELHI HIGH COURT IN THE CONTEXT OF SECTION 69B OF THE ACT IN THE CASE OF C IT VS. DINESH JAIN HUF,352 ITR 629(DEL) AS WELL AS HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. BERRY PLASTICS P. LTD., 217 TAXMAN 39(MG.)(GUJ) HAV E HELD THAT THE DVOS . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 6 ESTIMATION OF FAIR MARKET VALUE CANNOT BE ACCEPTED AS A CONCLUSIVE EVIDENCE FOR ESTABLISHING THAT ANY ADDITIONAL CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATION HAS PASSED BETWEEN A BUYER AND SELL ER. THEREFORE, IN OUR VIEW THE AFORESAID STAND OF THE ASSESSING OFFICER HAS R IGHTLY BEEN NEGATED BY CIT(A). 10. IN SO FAR AS THIRD LIMB OF THE ASSESSING OFFICE RS STAND RELATING TO THE 55 NOS. CAR PARKING SLOTS IS CONCERNED, WE FIND THAT THE ASSESSEE HAD CLARIFIED BEFORE THE ASSESSING OFFICER ALSO THAT PARKING SLO TS WERE PURCHASED AS ADDITIONAL AMENITY IN TERMS OF THE PURCHASE DEED IT SELF AND NO SEPARATE CONSIDERATION HAS BEEN PAID FOR THE SAME. THE AFOR ESAID PLEA OF THE ASSESSEE IS FOUND TO BE IN TUNE WITH THE CONTENTS OF THE PURCHA SE AGREEMENT DATED 24/3/2009, COPY OF WHICH HAS ALSO BEEN PLACED BEFOR E US IN THE PAPER BOOK. THEREFORE, WE FIND NO ERROR ON THE PART OF CIT(A) IN NEGATING THE AFORESAID STAND OF THE ASSESSING OFFICER . 11. IN SO FAR AS THE RELIANCE PLACED BY THE REVENU E ON THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. AM AR KUMARI SURANA VS. CIT(SUPRA) IS CONCERNED, THE SAME DOES NOT SUPPORT THE INSTANT CASE OF THE REVENUE; AND, RATHER THE HONBLE RAJASTHAN HIGH COU RT HAS ALSO APPROVED THE PROPOSITION THAT THE BURDEN IS ON THE REVENUE TO P ROVE THAT REAL INVESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE BOOKS OF ACCOUN T OF THE ASSESSEE IN THE CONTEXT OF SECTION 69B OF THE ACT. OF COURSE, ON F ACTS OF THE CASE BEFORE IT, HONBLE HIGH COURT FOUND IT FIT TO UPHOLD THE STAND OF THE REVENUE THAT ASSESSEE HAD ACTUALLY INVESTED IN PURCHASE OF LAND OVER AND ABOVE THE AMOUNT SHOWN IN THE BOOKS OF ACCOUNT. IT IS ALSO NOTABLE THAT THE HONBLE RAJASTHAN HIGH COURT TOOK CONSIDERATION THE FACT THAT ASSES SEE WAS NOT ABLE TO FURNISH ANY CREDIBLE EXPLANATION WITH REGARD TO THE CONCEAL MENT OF ACTUAL CONSIDERATION. SO HOWEVER, IN THE PRESENT CASE WE HAVE ALREADY FOUND THAT THE AO DOES NOT HAVE ANY INCRIMINATING MATERIAL TO SHOW THAT THE ASESSEE HAS PAID . / ITA NO.6688/MUM/2012 / ASSESSMENT YEAR 2009-10 7 ANY CONSIDERATION TO THE SELLER OVER AND ABOVE THE STATED CONSIDERATION. THEREFORE, THE DECISION OF HONBLE RAJASTHAN HIGH C OURT IN THE CASE OF SMT. AMAR KUMAR SURANA (SUPRA) DOES NOT APPLY TO THE FAC TS OF THE PRESENT CASE. 12. ON THE BASIS OF AFORESAID DISCUSSION, ON FACTS AND IN LAW WE FIND NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER FOR INVOKING SECTION 69B OF THE ACT IN ORDER TO MAKE AN ADDITION OF RS.9,39,61,20 0/-. THUS, THE CONCLUSION DRAWN BY CIT(A) IS HEREBY AFFIRMED AND THE REVENUE FAILS. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/08/2015 ' *+ ,- 19/08/2015 ' SD/- SD/- ( / SANJAY GARG ) ( . . / G.S.PANNU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * MUMBAI; , DATED 19/08/2015 ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0# ( ) / THE CIT(A)- 4. 0# / CIT 5. 12 #34 , $ 34 , * / DR, ITAT, MUMBAI 6. 5 / GUARD FILE. / BY ORDER, 1# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , * / ITAT, MUMBAI . . ./ VM , SR. PS