2019 (12) TMI 142 - AT - Income Tax

Unexplained investment u/s 69 - HELD THAT - It is an established fact that nothing incriminatory was found in respect of the property purchased by the assesses during the search. Further, there is no evidence on record to show that the property at A-25/9, Kachnar Marg is similar in all respect of the property purchased by assessee. There in nothing wrong in the CIT(A) believing the confirmation issued by the Axis Bank that the property was provided as a collateral security and for such purpose, the valuation was done by M/s M.L.Aggarwal/Arun Aggarwal at higher price. Revenue failed to bring on record any material assailing the correctness of the findings of the ld. CIT(A) on this aspect. In so far as the valuation report of M/s M.L.Aggarwal/Arun Aggarwal cannot be a yardstick for the purpose of determination of the proper value is concerned, findings of the learned CIT(A) are legal and do not invite any interference. On this premise, we dismiss the grounds of appeal of the revenue. Now coming to the grievance of assesses that the purpose of submitting copy of sale deed of the adjoining plot at 3, Round No. G-4, DLF-1 at the rate of ₹ 20,460/- per sq. was only to demolish the contention of the AO as to the higher valuation but not to establish the valuation of the property purchased by the assesseee at ₹ 20,000/- per sq. Mt. We find some force in this submission made by the assesses because the property purchased by them is altogether different from the property covered by such sale deed which shows the value of the property at plot No.3 at ₹ 20,460/- per sq. Mt. Further, the valuation report of the property dated 1.12.2011 shows the same at ₹ 18,200/- per sq. Mt. Out of these two documents learned CIT(A) had taken the one which shows higher price. There is no reason for the CIT(A) to choose that particular document when the other one is also available. Difference in the value of the property purchased by assesses and the adjoining one, we are inclined to accept the contention of the assessees. We, therefore, direct the AO to delete the addition of ₹ 8 lacs each also. As such appeals of ground of assesses appeals are allowed.

Summary

Issues:
Appeals filed by Revenue and two assessees against separate orders of the ld. Commissioner of Income Tax (Appeals). Valuation of property discrepancy leading to unexplained investment under section 69 of the Income-tax Act. Dispute regarding the correct valuation of property for determining capital gains.

Analysis:

1. Valuation Discrepancy and Unexplained Investment:
The case involved four appeals arising from discrepancies in the valuation of a property leading to unexplained investments under section 69 of the Income-tax Act. The property in question was purchased by a mother and son duo, and the valuation discrepancy arose from a search operation on a related group of cases. The Assessing Officer (AO) inferred unaccounted investment based on the valuation report prepared for a bank loan. However, the assessees contended that the valuation was inflated for loan purposes and not indicative of the actual sale consideration.

2. Assessment by CIT(A) and Revenue's Appeal:
The Commissioner of Income Tax (Appeals) considered various evidences, including valuation reports and submissions by the assessees. The CIT(A) concluded that there was no direct evidence of unaccounted investment for property acquisition. The CIT(A) rejected the valuation done for bank purposes and relied on a different valuation document to determine the correct investment amount. Consequently, the CIT(A) sustained a reduced addition of unexplained investment, which led to appeals from both the Revenue and the assessees.

3. Arguments and Decision:
The Revenue contended that the CIT(A) erred in deleting the addition based on the valuation report, supported by a similar property valuation during the search. The assessees argued that the valuation discrepancy was adequately explained, and the property in question was different from the one seized during the search. The Tribunal analyzed the evidence and found no incriminatory material related to the property purchased by the assessees during the search. The Tribunal upheld the CIT(A)'s decision to reject the valuation report for bank loan purposes and directed the deletion of the additional unexplained investment amount.

In conclusion, the Tribunal dismissed the Revenue's appeals and allowed the appeals of the assessees, emphasizing the importance of accurate valuation in determining unexplained investments under the Income-tax Act.