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TMI Blog2013 (9) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... It is only on the basis of a definite finding of the Assessing Officer to the foregoing effect that a reference can be made to the valuation officer u/s 142A of the Act. It goes without saying that the provisions of Section 142A(1) of the Act are merely machinery provisions and the substantive provisions of Section 69B cannot be overridden by them. In the present case, on the other hand, undisputedly, the Assessing Officer did not have any such material before him, which could form the basis for reference being made to the DVO u/s 142A of the Act, as has been rightly held by the Ld. CIT (A) - Decided against Revenue. Valuation u/s 50C - inclusion of stamp duty in the value - Held that:- it has been correctly found that the Assessing Officer had erred in taking the cost of acquisition without considering the stamp duty towards such cost of acquisition. The sale consideration was also taken at a rate higher than the circle rate. Thus, whereas the stamp duty payable and the correct sale consideration, based on the circle rates, as per the provisions of Section 50C of the Act were to be considered. This error has appropriately been rectified by the Ld. CIT (A) while directing the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Tribunal in Hanemp Properties (P) Ltd. Vs. ACIT [2006] 101 ITD 19 (Delhi). 3. The Ld. CIT(A) has erred in law and on facts in deleting the addition made on account of short term capital gain ignoring the facts that reference was made by the Assessing Officer to the DVO u/ s 142A and not u/ s 50C; and that as per his report there was under-statement in purchase and sale value of the land. 4. The Ld. CIT(A) has erred in law and on facts while giving a blanket judgement to enhance the cost of acquisition of plot by the stamp duty of Rs.1,79,550/- without going into the merits of disallowance stated by the Assessing Officer in the assessment order. 5. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. So far as regards Ground No.1, we find no force therein, since a remand report was duly called for by the Ld. CIT (A) from the Assessing Officer. The order under appeal records that such a remand report dated 08.04.2010 was furnished by the Assessing Officer before the Ld. CIT (A). The assessee filed rejoinder dated 28.04.2010. The Ld. CIT (A) duly took into c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account, being deficient, could not be relied on, as they did not portray the true picture of facts and figures. Thereby the Assessing Officer rejected the assessee's books of account. By virtue of the impugned order, the Ld. CIT (A) deleted the addition made by the Assessing Officer, bringing the department before us by way of Ground No.2. 4. The Ld. DR has contended, while filing written submissions also, that when the Assessing Officer called for evidence from the assessee to support the investment made by the assessee company, the assessee filed as many as ten purchase deeds, cumulatively amounting to Rs. 5,21,44,150/-; that the assessee had accounted for investments at Rs. 522,78,280; that thus, a discrepancy of Rs. 1,34,130/- was noticed; that it was on the basis of this discrepancy that, in order to ascertain the actual value of the investments, the Assessing Officer made a reference u/s 142A of the Act to the valuation officer; that the DVO determined the value of the assessee's investment in lands at Rs. 10,51,69,640/-; that it was thereupon, that a show cause notice was issued by the Assessing Officer to the assessee, asking for the assessee's explanation and it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court considered the questions arising out of the application of the now omitted Section 52 (2) of the Act for determination of capital gain; that the facts of that case, evidently, are entirely different from the present one; that in that case, the assessee had sold his house to his daughter-in-law for the same sum as at which he had purchased it, i.e., Rs. 16,500/-; that in the return, the assessee had not included any amount by way of capital gain in respect of the transfer of the house; that in re-assessment proceedings, the ITO fixed the fair market value of the house at Rs. 65,000/- and assessed the difference of Rs. 48,500/- as capital gain in the assessee's hands, by applying the provisions of the then Section 52 (2) of the Act; that it was in these circumstances, that the Hon'ble Supreme Court held that a fair and reasonable construction of Section 52 (2) of the Act would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would be not applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, is not legally tenable; and that in the present case, the value declared by the assessee is even less than the circle rate and the plots purchased are contiguous and next to a four lane carriage way, justifying the solatium amount. 5. The ld. counsel for the assessee, on the other hand, for this issue, has placed strong reliance on the impugned order. It has been contended that in order to make a reference to the DVO, it is essential for the Assessing Officer to have some material for making such reference; that in the present case, the Assessing Officer did not have any such material before him to make the reference to the DVO and there is nothing on record to show that the Assessing Officer found that the amount of investment made by the assessee exceeded the amount entered in the books of account or that either the assessee did not offer any explanation about such excess amount, or the explanation offered by the assessee was not satisfactory; that therefore, the reference made by the Assessing Officer to the DVO was bad in law; that even in 'K.P. Varghese' (supra), the Hon'ble Supreme Court held that the burden to prove that the consideration for the transfer of a capital as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and so, the onus on the department is deemed to have been discharged. In this regard, it is seen that before making the reference to the DVO, the Assessing Officer examined one of the representatives of the assessee, asking if the sellers could be identified and produced. To this, he expressed his inability. It is seen that in the sale deed (copy at APB 13-36), the name and address of the seller is very much there. This sale deed had been duly produced before the Assessing Officer. The Assessing Officer recorded, u/s 131 of the Act, a statement of Shri Naveen Kumar Goyal, one of the Directors of the assessee company, on 20.08.2009. Therein, a specific question (Question 12) was asked as to if the deponent could identify and produce the sellers of the land. Shri Goyal responded by saying that he could not produce the sellers. Now, when undisputedly, the details of the sellers of the land to the assessee were on record before the Assessing Officer and the Assessing Officer had all power to make inquiry under the Act from such sellers and the Assessing Officer, for reasons best known to him, did not make any such inquiry, the onus on the department to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 12 lac as against purchase cost of Rs. 13,75,550/-. The Assessing Officer observed that since the purchase cost had been understated by an amount of Rs. 29,80,511/-, correspondingly the sale price was also understated by an equal amount of Rs. 29,80,511/-, due to which, according to the Assessing Officer the short-term capital gain of Rs. 29,80,511/- had also been understated by the assessee in its return of income. The Ld. CIT (A) deleted the addition made by the Assessing Officer. 12. In this regard, it has been correctly found that the Assessing Officer had erred in taking the cost of acquisition without considering the stamp duty towards such cost of acquisition. The sale consideration was also taken at a rate higher than the circle rate. Thus, whereas the stamp duty payable and the correct sale consideration, based on the circle rates, as per the provisions of Section 50C of the Act were to be considered. This error has appropriately been rectified by the Ld. CIT (A) while directing the Assessing Officer to recompute the STCG by taking the cost of plot at Rs. 12 lac to include the stamp duty towards the cost of acquisition. The Ld. CIT (A) also correctly directed to apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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