Income Tax Appellate Tribunal - Mumbai
Jainesh Real Estate, Mumbai vs Department Of Income Tax on 19 August, 2015
आयकर अपील य अ
धकरण, मंब
ु ई
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES 'J' MUMBAI
सव ी जी.एस. प न,ू लेखा सद य एवं ी संजय गग , या यक सद य
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.6688/MUM/2012
नधा रण वष /Assessment Year 2009-10
The I TO 1(2)(1), बनाम/ M/s. Jainessh Real Estate Pvt.
Room No.527, 5 t h Floor, Ltd.,
Vs.
Aaykar Bhavan, 16, Khetan Bhavan,
MK Road, Mumbai 400 020 198, J. Tata Road,
Churchgate, Mumbai 20.
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. :AACCJ 0735A
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Appellant by Shri Akhilendra Yadav
Respondent by Shri Hiro Rai
सनु वाई क" तार$ख / Da te o f Hearing : 03/08/2015
घोषणा क" तार$ख /Date of Pronouncement : 19/08/2015
आदे श / O R D E R
PER G.S.PANNU, A.M:
The present appeal is preferred by the Revenue and is directed against the impugned appellate order dated 17/08/2012 passed by Ld. CIT(A)-2, Mumbai pertaining to the assessment year 2009-10 with reference to the assessment order dated 28/12/2011 passed in terms of 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 Assessing Officer of Rs.9,39,61,200/- by invoking section 69B of the Act.
2 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10
3. In brief, the relevant facts are that the respondent assessee purchased a property viz. Unit No.401, Commerze Zone, Yeravada, Pune, from M/s. K. Reheja Corp Pvt. Ltd. vide a purchase agreement dated 24/03/2009 for a consideration of Rs.9,81,60,000/-. In the course of assessment proceedings, the Assessing Officer invoked the provisions of section 69B of the Act and determined an amount of Rs.9,39,61,200/- as value of investment made by the assessee in the aforesaid property which was not recorded 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 assessee has made investments or is found to be owner of any bullion, jewellery or other valuable article, and the Assessing Officer find that the amount expended on making such investments or in acquiring such bullion, jewellery 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 satisfactory, 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 consideration 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 upheld by the CIT(A), was that there was no undervaluation of investment and further that in the absence of any incriminating material to suggest passing of consideration over and above the consideration stated in the purchase deed, the invoking of section69B of the Act was not justified.
3 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10
6. In the above background, we find that the Assessing 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 stamp 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., who had advanced loan of Rs.9,50,00,000/- to the assessee towards purchase of 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 Assessing 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 of the assessee company; the Assessing Officer inferred that stated consideration 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 District Valuation Officer (DVO) to ascertain the value of the property and such report 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 purchase consideration was understated. Ld. Representative for the assessee contended that the valuation report of HDFC Ltd., referred to by the Assessing Officer was quite irrelevant and that it was based on rent capitalization method and has no relation to the consideration paid by the assessee. Our attention was also drawn to the 4 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10 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 that 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 that the purchase deed did not include the acquisition of parking slots. The Ld. Representative for the assessee also clarified that the assessee has not paid 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 reiterated the points raised by the Assessing Officer in the assessment order, which we have already adverted to in the earlier part of the order 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 the purchase deed was undervalued, in as much as the valuation report prepared by HDFC Ltd., showed that the value of the property was much higher than the stated consideration. Ld. DR has relied upon the judgment of Hon'ble Rajasthan High Court in the case of Smt. Amar Kumari Surana vs. CIT, 226 ITR 344(Raj) to contend that circumstantial evidence can be the basis 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 expended 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. So however, section 69B of the Act requires determination of "amount expended on making such investments" which "exceeds the amount recorded in this behalf in the books of account maintained......." It is quite clear that before the rigours of section 69B of the Act get triggered, it is required to be established that an assessee 5 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10 has made investments in acquisition of a property over 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 Hon'ble 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 context of section 69B of the Act is on the Revenue. Therefore, in this background, 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 authorities below as well as the material on record clearly establishes that the Assessing Officer did not have any clinching evidence to suggest that the assessee has paid any consideration for purchase of property over and above the stated consideration. The reference made by the Assessing Officer to the value determined by the stamp valuation authority for the purposes of payment of stamp duty cannot be taken as an evidence to demonstrate that assessee has actually paid any consideration over and above the stated consideration. The reference by the Assessing Officer to valuation contemplated by the lender i.e. HDFC Ltd. is also of no consequence vis-à-vis the controversy before us, in as much as the valuation by HDFC Ltd. is for its own purpose of examining the feasibility of lending money to the assessee for acquisition of the said property. Furthermore, a valuation report, by its very nature, is only an estimation of value, and, at best can be a source for further enquiries but the valuation report by itself cannot be construed as an evidence which establishes understatement of purchase consideration. Hon'ble Delhi High Court in the context of section 69B of the Act in the case of CIT vs. Dinesh Jain HUF,352 ITR 629(Del) as well as Hon'ble Gujarat High Court in the case of CIT vs. Berry Plastics P. Ltd., 217 Taxman 39(Mg.)(Guj) have held that the DVO's 6 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10 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 seller. Therefore, in our view the aforesaid stand of the Assessing Officer has rightly been negated by CIT(A).
10. In so far as third limb of the Assessing Officer's 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 slots were purchased as additional amenity in terms of the purchase deed itself and no separate consideration has been paid for the same. The aforesaid plea of the assessee is found to be in tune with the contents of the purchase agreement dated 24/3/2009, copy of which has also been placed before 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 Revenue on the judgment of Hon'ble Rajasthan High Court in the case of Smt. Amar Kumari Surana vs. CIT(supra) is concerned, the same does not support the instant case of the Revenue; and, rather the Hon'ble Rajasthan High Court has also approved the proposition that the burden is on the Revenue to prove that real investment exceeds the investment shown in the books of account of the assessee in the context of section 69B of the Act. Of course, on facts of the case before it, Hon'ble 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 Hon'ble Rajasthan High Court took consideration the fact that assessee was not able to furnish any credible explanation with regard to the concealment 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 7 आयकर अपील सं. / ITA No.6688/MUM/2012 नधा रण वष /Assessment Year 2009-10 any consideration to the seller over and above the stated consideration. Therefore, the decision of Hon'ble Rajasthan High Court in the case of Smt. Amar Kumar Surana (supra) does not apply to the facts 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.9,39,61,200/-. 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 आदे श क" घोषणा खुले यायालय म+ ,दनांकः 19/08/2015 को क" गई ।
Sd/- Sd/- ( संजय गग / SANJAY GARG) (जी.एस. प नू / G.S.PANNU) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मुंबई Mumbai; ,दनांक Dated 19/08/2015 आदे श क त ल प अ!े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु0त(अपील) / The CIT(A)- 4. आयकर आयु0त / CIT
5. 1वभागीय त न3ध, आयकर अपील$य अ3धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स या1पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ
धकरण, मुंबई / ITAT, Mumbai
व. न.स./Vm, Sr. PS