Income Tax Appellate Tribunal - Delhi
Seema Devi Bansal, New Delhi vs Assessee on 29 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: G : NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA No. 342/Del/2012
Assessment Year: 2006-07
Smt. Seema Devi Bansal, Vs. ACIT,
Shop No. 2, Sarbati Building Central Circle-13,
Jawala Heri Market, New Delhi.
Paschim Vihar,
New Delhi - 110 063.
(Appellant) (Respondent)
Appellant by : Shri Ved Jain & Smt. Ranu Jain, Advocate
Respondent by : Shri Ramesh Chand CIT DR
ORDER
PER I.C. SUDHIR, JUDICIAL MEMBER
The assessee has questioned first appellate order on several grounds raising the following issues:-
i) As to whether the Ld. CIT(A) was justified in rejecting the contention of the assessee that the notice issued u/s 153A by the AO is in violation of the provisions of the Act and as such the assessment framed in consequence thereof is bad and liable to be quashed ?
ii) As to whether the Ld. CIT(A) was justified in rejecting the contention of the assessee that the reference to Valuation Officer u/s 142A is bad in law
iii) As to whether the Ld. CIT(A) has erred in confirming the addition of Rs. 1,91,66,900/- as unexplained investment in purchase of property No. 1/60 Punjabi Bagh West, New Delhi.2 ITA No. 342/Del/2012
iv) As to whether the Ld. CIT(A) was justified in upholding the action of the AO in charging interest u/s 234B from the first day of the assessment order and not from the date of regular assessment.
Issue No. i),ii) & iii)
2. The relevant facts are that the Swastik Pipes Group was subjected to search and seizure action u/s 132 of the Act wherein on the basis of sale deed found notices u/s 153A of the Act was issued to the assessee. In response thereto the assessee filed return of income declaring income of Rs. 1,75,825/-. In the sale deed the property No. 1/60, Punjabi Bagh West, New Delhi was shown purchased at a total consideration of Rs. 89,36,318/-. The AO referred the matter u/s 142A of the Act to the District Valuation Officer of the department (in short DVO) in order to determine the true value of investment. The DVO in his report shown the value of the property at Rs. 2,75,68,900/- exclusive of stamp duty and other charges. The assessee had declared this value to be Rs. 84 lacs. A Copy of the said valuation report was supplied to the assessee for her objection. The AO was not satisfied with the objections raised by the assessee and the difference between the amount shown by the assessee and that reported by the DVO was treated as unexplained investment. In result Rs. 1,91,68,900/- was added in this regard to the taxable income of the assessee. The same has been upheld by the Ld. CIT(A). The aggrieved assessee is in appeal before the Tribunal.
3ITA No. 342/Del/2012
3. The contention of the Ld. AR remained that reference to Valuation Officer u/s 142A in absence of any material found was bad in law. He submitted that it is evident from the assessment order that no any material was available on record of the AO to draw an inference that an amount exceeding the same consideration shown in the sale deed was paid. Thus reference to DVO u/s 142A was not valid. In support, he placed reliance on the following decisions :-
CIT vs. Mahesh Kumar (2011) 196 Taxman 415 (Delhi) CIT vs. Shakuntala Devi (2009) 316 ITR 46 (Delhi) DCIT vs. Abhinav Kumar Mittal ITA No. 4460/D/2010 dated 29.6.2012 Seema Gupta vs. DCIT ITA No. 1619/Delhi/2008 dated 22.4.2009 Aneeta Singh vs. ITO 141 TTJ 629 (Delhi) ITO vs. Rajeshwar Nath Gupta, HUF, ITA No. 4295/Del/2005 and CO No. 375/Del/2007 dated 9.5.2008 CIT vs. Dinesh Jain (HUF) and Lata Jain, ITA No. 166/2010 and Ors dated 28th September, 2012(Delhi High Court)
4. The Ld. AR submitted further that an addition can be made u/s 69 B of the Act in respect of actual investment not disclosed and not on the basis of value of investment. He submitted that no material was brought on record by the AO in support that assessee had actually paid excess amount than that shown as sale consideration in the sale deed. He submitted that there was no cross verification of the seller nor any statement was recorded that the assessee had made excess payment. He submitted further that no proceedings u/s 153C/148 of the Act was 4 ITA No. 342/Del/2012 initiated against the seller. He contended that if valuation report is ignored then there is no material whatsoever with the AO to make the addition in question. The purchase amount made by the assessee is evident by the sale deed duly registered with the sub Registrar a Government Officer having statutory power. It is important evidence and in absence of some positive evidence the same cannot be ignored . In support he placed reliance on the following decisions K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) CIT vs. Smt. Nilofer Singh in 309 ITR 233 (Delhi) Dev Kumar Jain vs. ITO 309 ITR 240 (Delhi) CIT vs. Gulshan Kumar 257 ITR 703 (Delhi) CIT vs. Jaipur Golden Transport Company ITA No. 1387/2010 dated 9.9.2010 (Delhi High Court) CIT vs. Suraj Devi 328 ITR 604 (Delhi) CIT vs. Bajarang Lal Bansal 335 ITR 572 (Delhi) CIT vs. Puneet Sabharwal 338 ITR 485 (Delhi)
5. Ld. AR also referred page No. 24 to 26 of the paper book i.e copy of questionnaire dated 30.8.2010 issued to the assessee wherein vide question No. 17 the AO had asked to explain the document seized from the premises and complete details of investment in the property alongwith the source. The same was replied by the assessee explaining the source of investment, a copy thereof has been made available at page Nos. 29 to 42 of the paper book. The AO 5 ITA No. 342/Del/2012 however preferred to make addition of the amount in difference between the sale consideration shown in the sale deed seized and that estimated by the DVO. The Ld. AR submitted further that the Ld. CIT(A) has also conveniently ignored the amendment made in section 50C of the Act which is to be used for computing capital gain in the hands of the seller on the basis of circle rate and this provision even at present does not allow to use that rate for the purpose of computing investment by the purchaser. In this regard, reliance on the decision of Ahmadabad Bench of the Tribunal in the case of ITO vs. Harley Street Pharmaceuticals Ltd. 38 SOT 486 (Ahd) and on the decision of Delhi Bench of Tribunal in the case of Anilesh Enterprise (P) Ltd. vs. ITO IT No. 2044/D/2010 dated 9.7.2010.
6. The Ld. DR on the other hand tried to justify the orders of the authorities below on the issue. He submitted that the assessee did not maintain account, hence cited decisions by the Ld. AR are not applicable in the case of assessee. He pointed out further that during the course of assessment proceedings despite specific question raised like question No. 6,7 & 17 by the AO explaining the source of investment, the assessee had furnished a vague reply. He submitted that investment in renovation might have been also made after purchasing the property long back. He submitted that sale deed found during the course of search was an incriminating document and the assessee was supposed to explain the source of investment made in the purchase of the said property. He 6 ITA No. 342/Del/2012 submitted further that in the search huge undisclosed income was declared by the group including assessee. He pointed out further that the decision of Hon'ble Delhi High Court in the case of CIT vs. Dinesh Jain (supra) relied upon by the Ld. AR is relating to the reference made in a case in the provisions of Wealth Tax Act hence the same is not applicable in the present case. Ld. DR placed reliance on the decisions followed by the Ld. CIT(A) which are as under :-
Smt. Kiran Lata vs. ITAT 177 Taxman 318 ITR 34 Uttrakhand High Court ITO Vs. Balram Jhanwar 123 TTJ (Jd) 1717 DCIT vs. Shubbam Industries 104 ITD 126 CIT vs. Om Prakash Bagria 155 Taxman 427 (MP) Malik Bros. Pvt. Ltd. vs. CIT 162 Taxman 43 Chardam Sukhani Vs. CIT 152 Taxman 87 (Raj.)
7. In the rejoinder the Ld AR asserted that the amount declared in sale deed was not added by the AO on account of unexplained / undisclosed income but addition has been made u/s 69B of the Act on the amount in difference between the sale consideration shown in the sale deed and that reported by the DVO.
8. Having gone through the orders of the authorities below, material available on record and the decisions relied upon, we find that there is no dispute that addition on account of investment in the property No. 1/60, Punjabi Bagh West, 7 ITA No. 342/Del/2012 New Delhi was made on the amount in difference between that shown in the sale deed and that estimated by the DVO.
9. Again undisputedly there is no material on record except the DVO report that assessee had paid higher amount over and above the sale consideration shown in the sale deed seized during the course of search. We find that an identical issue has been decided by the Hon'ble Delhi High Court in favour of the assessee in the case of CIT vs. Dinesh Jain HUF and Another (Supra) wherein also an addition u/s 69B of the Act at Rs. 1,38,26,450/- was made. The assessee questioned the addition made u/s 69B of the Act. The matter was ultimately traveled to the Hon'ble Jurisdictional High Court on the issue as to whether the Tribunal had erred in deleting the addition made by the AO on account of unexplained investment in rent yielding property by applying the provision of Rule 3 of Past B of 3rd schedule to the Wealth Tax Act ? It was also a case of search u/s 132 of the Act wherein investment in various properties by the assessee on the basis of seized material was revealed. The AO was of the view that the assessee must have invested more than what was disclosed in the sale document which attracted the provision of section 69B of the Act. He called upon the assessee to explain the position. The assessee denied investing anything over and above the amount declared in the document. The AO however concluded that the fair market value of the property should be estimated in accordance with the Rule 3 of schedule iii to the Wealth Tax Act 1957. The AO 8 ITA No. 342/Del/2012 estimated the value of the property at Rs. 82,87,500/- and held that that is the valuation of the amount which the assessee must have paid. The difference between the value of the property calculated in accordance with the Rule and the amount shown in the sale document came to Rs. 65,32,500/- which was assessed as unexplained investment u/s 69B . Similar addition was made in respect of another property by the assessee and total addition was made u/s 69B at Rs. 1,38,26,450/-. After detailed discussion and consideration of the provisions u/s 69B of the Act and the decisions cited, the Hon'ble High Court has decided the issue in favour of the assessee. The relevant concluding para No. 15 of the decision of Hon'ble High Court in the said case is being reproduced hereunder :-
15. Since the entire case has proceeded on the assumption that there was under statement of the investment, without a finding that the assessee invested more than what was recorded in the books of accounts, we are unable to approve off the decision of the Income Tax authorities. Section 69B was wrongly invoked. The order of the Tribunal is approved , the substantial question of law is answered in the negative, in favour of the assessee and against CIT."
10. In preceding para No. 14 of the decision, the Hon'ble High Court has also taken the kind note of the decision of the Hon'ble Supreme Court in the case of Lal Chand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) wherein the Hon'ble Supreme Court has been pleased to disapprove the practice of making additions in the assessments on mere suspicion and surmise or by taking note of the notorious pracatices prevailing in the trade circles. 9 ITA No. 342/Del/2012
11. Again in the case of CIT vs. Jaipur Golden Transport Company Appeal No. 1387/2010 dated 9th September, 2010, relied by the Ld. AR the Hon'ble Delhi High Court while approving the order of the Tribunal has been pleased to hold that it is a settled law that in the absence of any incriminating evidence that anything has been paid over and above the stated amount, the primary burden of proof is on the revenue to show that there has been an under statement or concealment of income. It has been held further that it is only when such burden has been discharged, it would be permissible to rely upon the valuation given by the DVO. In this decision a reference of its earlier decision by the Hon'ble High Court in the case of CIT vs. Suraj Devi , (supra) has been made expressing the similar view. In that case also no evidence much less incriminating evidence was found as a result of the search to suggest that the assessee had made any payment over and above the consideration mentioned in the registered purchase deed. Similar facts were there in the case of CIT vs. Bajrang Lal Bansal (supra) relied upon by the Ld. AR. In that case also no evidence much less incriminating evidence was found as a result of the search to suggest that the assessee had made any payment over and above the consideration mentioned in the return of the assessee. The Hon'ble Delhi High Court was pleased to hold that it is settled law that the primary burden of proof to prove understatement or concealment of income is on the revenue and it is only when such burden is discharged that would be permissible to rely upon the valuation given by the DVO. Similarly in 10 ITA No. 342/Del/2012 the case of CIT vs. Puneet Sabharwal (supra) the AO solely relying upon the report of the DVO had made addition. There was admittedly no evidence or material in the possession of the AO to come to the conclusion that assessee had paid extra consideration over and above what was stated in the sale deed. The Hon'ble High Court was pleased to hold that the primary burden of proof to prove understatement or concealment of income is on the revenue and it is only when such burden the discharged that it would be permissible to rely upon the valuation given by the DVO. It was further held that the opinion of the valuation officer, per se, was an opinion and could not be relied upon without the books of accounts being rejected. The Delhi Bench of the Tribunal in the case of DCIT vs. Abhinav Kumar Mittal (supra) where nothing to suggest that any incriminating document was found and seized during the course of search or survey in the premises of the group on the basis of which it could be said that the cost of construction shown by the assessee was understatement and The AO had made reference u/s 142A to the DVO and added the amount in difference, it was held that a reference u/s 142A of the Act is invalid in the absence of material found during the course of search. Almost similar are the facts of the present case before us. We thus respectfully following the above decisions on an identical issues decide the issues decide in favour of the assessee with this finding that the AO was not justified in making reference u/s 142A of the Act to the DVO to determine the valuation of investment made in the 11 ITA No. 342/Del/2012 property in question in absence of any material found during the course of search showing that the assesee had invested over and above the amount what was shown in the sale deed and secondly in making the addition on the amount in difference found between that shown in the sale deed and that determined by the DVO as undisclosed income u/s 69 B of the Act in the assessment u/s 153 A of the Act.
12. So far the decisions relied upon by the Ld. DR are concerned these are not helpful to the revenue as they are having distinguishable facts. In the case of Smt. Kiran Lata vs ITAT (supra) there was an admission by the assessee that the amounts are not complete and more amount could have been spent in the construction of the building. In the case of ITO vs. Balram Jhanwar (supra) at the time of survey books of accounts were not complete and in the return also it was not indicated as to whether the books were maintained, therefore reference u/s 142A was held to be right. In the case of DCIT vs. Shubham Industries the issue was recalling of the order by the Tribunal in view of the amendment made to the Act by exception of section 142A of the Act. In the case of CIT vs. Om Prakash Bagria (supra) the issue was regarding application of amended section 142A in respect of assessment made on or before 30.9.2004. Again in the case of Malik Brothers Pvt. Ltd. vs. CIT (supra) there was no issue of violation u/s 142A of the Act. The related grounds involving the issues are thus allowed. In 12 ITA No. 342/Del/2012 the result the AO is directed to delete the addition made u/s 169B of the Act at Rs. 1,91,68,000/- on account of undisclosed income.
Issue No. 4
13. The issue is regarding charging of interest u/s 234B of the Act. The contention of the assessee remained that in the case of a reassessment proceedings u/s 153 A the interest u/s 234B in view of the provisions of sub section (3) of section 234B is leviable from the date of the regular assessment and not from the first day of the assessment order. Since the issue raised is consequential in nature it does not need independent adjudication in view of the above finding on issues Nos. 1 to 3.
14. Consequently appeal is allowed.
Order pronounced in the open court on 28th February, 2013.
sd/- sd/-
(SHAMIM YAHYA) ( I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 28th February, 2013
*Veena
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Deputy Registrar, ITAT