Smt. Parul Bansal, Bhopal V. THE ACIT Central-1, Bhopal

ITSSA 28/IND/2017

AI Insights

The case involves appeals by Smt. Parul Bansal against the orders of the Commissioner of Income-tax (Appeals)-3, Bhopal, which upheld the additions made by the Assessing Officer (AO) under section 69B of the Income-tax Act, 1961, for the assessment years 2010-11 and 2011-12. The additions were based on alleged discrepancies between the purchase consideration recorded in the registered documents and the market prices determined by an inspector's report. The Tribunal found that the AO and CIT(A) did not provide sufficient justification for the additions, as the inspector's report was based on hearsay and lacked concrete evidence. Additionally, the Tribunal accepted the agricultural income declared by the assessee, noting that the CIT(A) had accepted similar income in the assessee's husband's case under identical circumstances.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130385 (ITAT-INDORE)
• Duration Of Justice: 6 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 14-02-2017
• Other Referred Cases: CIT Vs. Sadhna Gupta (2013) 352 ITR 595 (Delhi)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Valuation report; Onus to prove
• Section: 131; 132; 143(3); 153A; 69B

Judgement Text

Page 1 of 11 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.27/Ind/2017(AY: 2010-11) IT(SS)A No.28/Ind/2017 (AY:2011-12) Smt.Parul Bansal, 3 rd Floor, Tawa Complex, E-5, Bittan Market, Arera Colony, Bhopal (PAN: AKVPG7378L) बनाम/ Vs. DCIT/ACIT, Central, Bhopal Appellant / Assessee Respondent / Revenue Assessee by Shri Anil Khabya, CA Revenue by Shri P.K.Mishra, CIT DR Date of Hearing 02.08.2023 Date of Pronouncement 28.08.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by a consolidated appeal-order dated 21.12.2016 passed by Commissioner of Income-tax (Appeal)-3, Bhopal [“CIT(A)”], which in turn arises out of a consolidated assessment-order dated 14.03.2014 passed by DCIT-Central, Bhopal [“AO”] u/s 153A read with section 143(3) of Income- tax Act, 1961 [“the act”], the assessee has filed the captioned appeals for assessment-years [“AY”] 2010-11 and 2011-12. Since these appeals arise from a common order of lower-authorities and involve issues of identical nature; they were heard together at the request of parties and are being disposed of by this common order for the sake of convenience and clarity. Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 2 of 11 2. Heard the learned Representatives of both sides at length and case- records perused. 3. The grounds raised by assessee are as under: IT(SS)A No. 27/Ind/2017 for AY 2010-11: 1. That in the facts and circumstances of the case, the Ld. CIT(A) erred in sustaining addition of Rs. 65,00,000/- made by AO on account of alleged difference in purchase consideration recorded in registered document and alleged market price of house at E-3/13, Arera Colony, Bhopal, determined merely on the basis of mere inspector report invoking provisions of section 69B of the Act. 2. That the Ld. CIT(A) erred in holding that the onus lay on appellant, who was purchaser of land by registered sale deed to produce seller of the land before the AO for verification. 3. That the Ld. CIT(A) ought to have deleted the addition of Rs. 65,00,000/- made solely on the basis of the alleged report of departmental inspector valuing fair market value of and treating the same as an admissible evidence when the inspector was not competent person to made valuation of any property under the provisions of Act or Rules and no such report was available on case record. 4. That the Ld. CIT(A) erred in confirming addition of Rs. 60,000/- on account of alleged income from undisclosed sources disbelieving small agriculture income. IT(SS)A No. 28/Ind/2017 for AY 2011-12: 1. That in the facts and circumstances of the case, the Ld. CIT(A) erred in sustaining addition of Rs. 35,00,000/- made by AO on account of alleged difference in purchase consideration recorded in registered document and alleged market price of house at E-2/177, Arera Colony, Bhopal, determined merely on the basis of mere inspector report invoking provisions of section 69B of the Act. 2. That the Ld. CIT(A) erred in holding that the onus lay on appellant, who was purchaser of land by registered sale deed to produce seller of the land before the AO for verification. 3. That the Ld. CIT(A) ought to have deleted the addition of Rs. 35,00,000/- made solely on the basis of the alleged report of Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 3 of 11 departmental inspector valuing fair market value of and treating the same as an admissible evidence when the inspector was not competent person to made valuation of any property under the provisions of Act or Rules and no such report was available on case record. 4. That the Ld. CIT(A) erred in confirming addition of Rs. 60,000/- on account of alleged income from undisclosed sources disbelieving small agriculture income.” 4. Briefly stated the facts are such that a search u/s 132 was conducted upon assessee and other persons of “Bansal Group” of Bhopal pursuant to which assessments were framed u/s 153A/143(3) for AY 2006-07 to 2011- 12. While completing assessments, the AO made certain additions which the assessee contested in first-appeal but could not get desired relief. Thereafter, the assessee has come before us in next-appeals for two assessment-years 2010-11 and 2011-12 on the grounds mentioned above. The grounds raised by assessee in these two appeals are identical except change of figures. Therefore, we proceed to decide grounds of both appeals analogously. Ground No. 1 to 3 of both years: 5. These grounds relate to the addition of Rs. 65,00,000 and Rs. 35,00,000 made by AO in AY 2010-11 and 2011-12 respectively u/s 69B on account of under-disclosed investment in property. 6. Precise facts apropos to these grounds are such that the assessee (Smt. Parul Bansal) and her husband (Shri Anil Bansal) jointly purchased two properties, (i) E-3/13, Arera Colony Bhopal on 06.10.2009 for Rs. 1,50,00,000/-; and (ii) E-2/177, Arera Colony Bhopal on 23.08.2010 for Rs. 80,00,000/-. The AO, on the basis of prevailing market rate obtained from inspector’s report, believed that the assessee had purchased properties for Rs. 2,80,00,000/- and Rs. 1,50,00,000/- respectively. Accordingly, the AO computed under-disclosed investment of Rs. 1,30,00,000/- and Rs. 70,00,000/- and AO made 50% addition in assessee’s hands and 50% Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 4 of 11 addition in her husband’s hands which culminated into addition of Rs. 65,00,000/- and Rs. 35,00,000/- respectively in AY 2010-11 and 2011-12 in the hands of assessee as well as her husband. The assessee contested in first-appeal but the CIT(A) did not grant any relief for this addition. Now, the assessee is against the action of CIT(A). 7. Immediately after explaining this background, Ld. AR for assessee mentioned a very interesting point. He submitted that the first-appeals of assessee and her husband have been decided by CIT(A) differently. While in husband’s case, the CIT(A) deleted the addition, in assessee’s case he has upheld the same addition. The appellate-order pertaining to husband is filed at Page No. 28-90 of Paper-Book dated 03.10.2022 [“Paper-Book-II”]. Ld. AR made a strong submission that there is a clear dichotomy in the approach of first-appellate authority. He submitted that the first-appellate authority was not justified in giving an opposite treatment to assessee when the issue for adjudication was exactly same. Ld. AR submitted that the assessee’s case before us must succeed on this very reasoning and therefore the addition upheld by CIT(A) is wrong which must be deleted. 8. On merit of the issue, Ld. AR drew our attention to Para No. 11 and 14 of assessment-order where the AO has made these additions. Referring to same, Ld. AR submitted that the issue is very simple and does not involve any complexity. He submitted that the assessee has purchased the impugned properties for the consideration mentioned in registered-deeds which is equal to the guidelines value; the assessee has not paid a single penny more or less. He submitted that the AO proceeded on a notion in his mind that the prevailing market prices of properties were more and accordingly issued summons to the sellers but the summons were returned. Then, the AO deputed departmental inspector to serve summons but even the inspector could not serve since he was unable to trace the sellers. Thereafter, the AO got an enquiry conducted through departmental inspector. The inspector, as mentioned by him in his report, collected Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 5 of 11 information from local persons, brokers, etc. and reported that the prevailing price was almost 80% to 100% above the guidelines value. Simply on the basis of inspector’s report, the AO framed a view that the assessee has paid more consideration than what was recorded in registered-deeds. Then, the AO asked the assessee to produce the sellers but finding that the assessee could not produce them, the AO made addition. Ld. AR carried us to the order of CIT(A), Para No. 5 and 6, and demonstrated that the CIT(A) has merely re-produced the assessment-order and given his conclusion in a very short adjudication just by agreeing to what is stated by AO. In this background, Ld. AR raised following contentions: (i) It is contended that the assessee has purchased E-3/13, Arera Colony Bhopal for Rs. 1,50,00,000/- and E-2/177, Arera Colony Bhopal for Rs. 80,00,000/- through registered-deeds, copies of registered-deeds are placed at Page No. 1-12 and 16-22 of Paper-Book-II. Referring to Page No. 1, 5, 16 and 18, Ld. AR demonstrated that the purchase consideration of Rs. 1,50,00,000/- and Rs. 80,00,000/- paid through various cheques/demand-drafts drawn on bank is clearly mentioned in registered-deeds. Ld. AR submitted that the assessee has made only those payments which are mentioned in the registered-deed and there is no on-money payment as alleged by AO. Ld. AR submitted that no material was found to reveal on-money payment despite extensive investigation conducted in search. He submitted that the AO has made addition solely on the basis of inspector’s report. (ii) It is contended that the departmental inspector has no authority or competence to give market valuation. It is the Departmental Valuation Officer (DVO) who is only authorised to carry out the exercise of valuation. Therefore, the report of inspector has no legal sanctity. Furthermore, the said report is placed at Page No. 26 of Paper-Book-II, in which the inspector has made a general mention that he has made enquiry from local persons and brokers. Thus, it is quite manifest that Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 6 of 11 the inspector has suggested 80 to 100% difference on the basis of just hearsay and there is no legal, sound, cogent, fool-proof or acceptable basis. [Ld. AR also pointed out that the AO made a reference dated 02.08.2013 u/s 142A to DVO for valuation of E-3/13, Arera Colony Bhopal, copy placed in Paper-Book-II, Page No. 13-15 but the DVO’s report, if any, has not been used in assessment-order. Hence that reference has become infructuous]. (iii) It is further contended that the inspector’s report was not provided to assessee during assessment-proceeding. It is the assessee’s husband who obtained report through RTI mechanism, the copy of RTI information is filed at Page No. 23 to 23 of Paper-Book-II. (iv) Lastly, reliance is also placed on CIT Vs. Sadhna Gupta (2013) 352 ITR 595 (Delhi) where it was held so: “4. The only point to be considered is whether the valuation rendered by the DVO is to be taken into account or not. It has been argued by the learned counsel for the revenue that the assessing officer was justified in referring the matter to the DVO for an opinion with regard to the fair market value of the property and once that opinion has been rendered, the same has to be taken into account and if that were to be so, the addition of Rs. 2,81,83,000/- would be fully justified. Consequently, it was submitted by the learned counsel for the revenue that the Tribunal had erred in deleting the addition. On the other hand the learned counsel for the respondent referred to a Division Bench decision of this Court in the case of CIT v. Shri Puneet Sabharwal: (2011) 338 ITR 485. In that decision a specific question had been raised as to whether the Income Tax Appellate Tribunal was right in holding that notwithstanding the report of the DVO the revenue had to prove that the assessee had received extra consideration over and above the declared value of the same. That question was answered by this Court in favour of the assessee and against the revenue. The Division Bench in the case of Shri Puneet Sabharwal (supra) had also placed reliance on the decision of Supreme Court in K.P. Varghese (supra) as also on another decision of a Division Bench of this Court in CIT v. Smt. Suraj Devi: (2010) 328 ITR 604 (Delhi) wherein this Court held that the primary burden of proof with regard to concealment of income was on the revenue and it was only when the said burden was discharged that reliance could be placed on the valuation report of the DVO. There are several other decisions of this Court in the same vein. One such case being the case of CIT v. Vinod Singhal: (ITA No.482/2010 decided on 05.05.2010) where, again, reliance was placed on the very same decision of the Supreme Court in K. P. Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 7 of 11 Varghese (supra) and also on a decision of this Court in CIT v. Smt. Shakuntala Devi: (2009) 316 ITR 46. It was observed that there must be a finding that the assessee had received an amount over and above the consideration stated in the sale deed and for this the primary burden was cast on the revenue. It is only when this burden is discharged by the revenue that it would be permissible to rely upon the value as given in the valuation report of the DVO. 5. The law seems to be well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of the DVO cannot form the basis of any addition on the part of the revenue. In the present case there is no evidence other than the report of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the revenue. The appeal is dismissed.” 9. Per contra, Ld. DR for the revenue opposed the submissions of Ld. AR and contended that the revenue appealed against the order of CIT(A) in assessee’s husband’s case but the ITAT has dismissed appeal on low-tax effect. Therefore, Ld. DR contended, the revenue was not satisfied by the decision given by CIT(A) in assessee’s husband. Hence, the husband’s case should not be taken as a guiding precedent for assessee’s case. On merit, Ld. DR contended that the AO initially issued summons u/s 131 to the sellers and even tried to get the summons served through departmental inspector too but the summons could not be served. Only thereafter, the AO obtained inspector-report dated 27.01.2014 and thereafter again required the assessee to produce the sellers vide order-sheet entry dated 07.03.2014 but the assessee did not produce. Therefore, the fault lies on assessee and not on AO. Ld. DR contended that in such a situation, the AO was very much justified to make addition. 10. In rejoinder, Ld. AR submitted that even if the department filed appeal against order of CIT(A) in assessee’s husband’s case, the fact remains that the CIT(A) deleted addition in assessee’s husband’s case but upheld the very same addition in assessee’s case. This is a contradictory approach on the part of CIT(A) without any justifiable reason. Ld. AR contended that the citizens of country expect the authorities at least to be consistent while dealing the same issue. Ld. AR also submitted that the decision of CIT(A) in Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 8 of 11 assessee’s husband’s case is based on a sound reasoning and the same must be applied to assessee’s case too. 11. We have considered rival contentions of both sides and perused the orders of lower-authorities and the documents placed in the Paper-Book to which our attention is drawn. After a careful consideration, we find that the AO himself made a reference to DVO u/s 142A of the act in one of the property purchased by assessee but what happened to that reference and why the DVO’s report was not considered in assessment-order is not known. Be that as it may, we confine to the basis of addition adopted by AO which is un-disputably the inspector’s report. Therefore, we have perused the copy of inspector’s report filed by Ld. AR in Paper-Book and find that the said report is just giving an indication of higher prevailing price on the basis of enquiry made from unnamed local persons and brokers, there is no sound or meritorious basis even in inspector’s report. We agree to Ld. AR’s submission that firstly the inspector has not authority to make valuation of property under any provision of the Act and secondly, the report given by him is also based on hearsay of unnamed local persons/brokers. Therefore, neither we find any legal sanctity nor any merit in the inspector’s report. Then, we find that there is no iota of evidence whatsoever available with the AO revealing on-money payment to sellers. In the present case, the authorities have carried out a search wherein extensive investigations have certainly taken place and yet there is no traces of on-money payment found by them. It is appreciable that AO has made efforts to call for presence of sellers but if the sellers do not come forward, the assessee cannot be presumed to have made on-money payment. In fact, we have perused the registered-deed through which property was purchased and found that the PANs of a few sellers are also mentioned therein. We also find that the assessee has paid full consideration through banking channel and there is no cash payment. Further, it is also not a case of revenue that the purchase consideration paid by assessee was less than the guidelines value. At this juncture, we also take guidance from the newly introduced provision of Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 9 of 11 section 56(2)(vii) where the Govt. has prescribed notional taxation but even under that section, the department has brought tax on difference of actual consideration and guideline value/stamps authority valuation; they are not charging notional tax beyond guideline value. Needless to mention that section 69B of the act does not permit an inference to be drawn from any circumstances or mere suspicion or conjecture; the said section requires accurate establishment, beyond doubt, of actual amount “expended on making investment” which is not recorded in books of account. In the present case, the AO does not have any proof or evidence of ‘amount expended’ by assessee. Therefore, the case of assessee is far from the grip of section 69B. We find that the decision in Sadhna Gupta (supra) is directly applicable to assessee. That brings us to conclude that the addition made by AO and confirmed by Ld. CIT(A) u/s 69B on mere suspicion or conjecture is not sustainable at all. We therefore delete the same and allow assessee’s ground No. 1 to 3 for both years. Ground No. 4 of both years: 12. These grounds relate to the addition of Rs. 60,000/- in each year by non-acceptance of agricultural income declared by assessee. 13. Ld. AR carried us to Para No. 15 of assessment-order and showed that the AO has not accepted the agricultural income shown by assessee for the reason that the assessee did not maintain evidences/details of crops, bills and vouchers of fertilizer and seeds, labour payment, sale-bills of crop, etc. In this regard, Ld. AR firstly submitted that the assessee was owner of (i) 7 acres of agricultural land situated in village – Muneergarh, Tehsil- Goharganj, District-Raisen; and (ii) 3.60 acres of agricultural land situated in Village – Noorganj, Tehsil-Goharganj, District-Raisen. The ownership of these lands is evident from document placed at Page No. 52 to 54 of Paper- Book dated 20.04.2018 [“Paper-Book-I”]. Thus, the total land holding of assessee comes to 10.60 acres. Ld. AR submitted that the assessee could not maintain detailed records of agricultural for the reason that the income Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 10 of 11 generated is very small i.e. just Rs. 60,000/- in a year and practically it is not possible to maintain records for such smaller income. However, Ld. AR raised a plea, which the assessee also made before CIT(A), that in several cases, the department has accepted agricultural income of Rs. 10,000/- per acre, according to which the income to the extent of Rs. 1,00,000/- is also acceptable for 10 acres of land held by assessee but the assessee has just disclosed Rs. 60,000/-. Ld. AR submitted that in the case of assessee’s husband, the CIT(A) has himself accepted, on exactly identical facts, the agricultural income declared by assessee’s husband and deleted the addition made by AO but somehow in the case of assessee, the CIT(A) has not accepted. Finally, Ld. AR prayed to take a judicious view on the point. 14. Per contra, Ld. DR submitted that the question is not whether the assessee declared smaller amount of income or higher amount. If an assessee maintains records to substantiate agricultural income, the department has no hesitation in accepting even higher amount of income but in the present case, the assessee has not maintained any record to prove agricultural income. Therefore, the lower-authorities are very much correct in rejecting agricultural income declared by assessee. 15. We have considered rival submissions of both sides and also perused the documents to which our attention is drawn. We find that the assessee is owner of sufficient land which is not disputed. We also find that the quantum of agricultural income is commensurating with the size of land- holding even if the assessee has not maintained records. We also find a justification in AR’s submission for non-maintenance of records i.e. the income is very low and it is not practicable to maintain records. We have read the order of CIT(A) in assessee’s husband’ case and find that exactly on identical set of facts, the CIT(A) has accepted agricultural income. In these circumstances and having regard to the fact that the controversy involves very smaller amounts, we are inclined to accept the agricultural income Smt. Parul Bansal, Bhopal IT(SS)A Nos. 27 & 28/Ind/2017 A.Ys.2010-11 & 2011-12 Page 11 of 11 declared by assessee. We order the AO to delete additions on this count. Thus, Ground No. 4 of both years are hereby allowed. 16. In the final result, both of these appeals are allowed. Order pronounced in the open court on 28.08.2023. Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 28.08.2023. CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore