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TMI Blog2014 (4) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is more than the consideration paid in the two instances cited by the assessee in Chhatarpur itself stands unrebutted on record - the DVO’s report the reliance has been placed on the transaction at Satbari, Mehrauli whereas the assessee’s transaction was at Chhatarpur the properties cannot be said to be identically situated in the absence of any factual arguments by the Revenue qua their similarity - Apart from that the circle rate for the relevant period has also been taken into consideration by the CIT(A) which stand un assailed - None of the relevant findings have been assailed nothing is placed to show that on the dissimilarity in the property considered by the DVO and the similarity in the 2 instances cited by the assessee in support of its claim is wrong on facts – Decided against Revenue. Jurisdiction of the AO to make addition – Absence of any incriminating documents during search u/s 132 of the Act – Held that:- The decision in LMJ International Ltd. vs JCIT [2007 (12) TMI 237 - ITAT CALCUTTA-E] followed - where the return of income has been processed u/s 143(1) or an assessment has been completed u/s 143(3) it cannot be said that the assessments are pending and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case are that the Search Seizure operation u/s 132 was conducted on 23.02.2006 and again on 10.05.2007 in M/s Flex/Uflex Group of cases. In response to notice u/s 153A return declaring an income of Rs.24,27,240/- was filed on08.02.2008. The record shows that the original return of income in this case was filed on 29.09.2003 declaring an identical income. The case was taken up for scrutiny. The source of income declared by the assessee was found to salary derived from M/s Flex Industries Ltd. as a Director and income from Capital Gains (Long Term Capital loss carried forward) and income from other sources. The AO in his order passed by section 153A r.w.s 143 proceedings observed that the assessee had purchased land measuring 4.4583 Acres situated in Chhaterpur, Mehrauli, New Delhi through 7 separate sale deeds executed in the month of July 2002. The particulars of the sellers of the land and the amounts mentioned in the sale deeds as per record were as under :- Name of the Sellers Amount M/s Seth Brothers 18,80,000/- Chand Seth HUF 13,63,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deeds in respect of property located at Chhatarpur in support of her contentions. 2.2. The record shows that the AO rejected these objections on account of the following reasoning:- 6. I have carefully considered the contentions put forth on behalf of the assessee. However, I do not agree with these contentions on the following grounds:- i. Payments made to vendors by way of pay orders at some point of time does not rule out the possibility of making additional separate payments either at that time or before or after such time towards purchase of the impugned land. ii. It is common knowledge that in the transactions involving purchase of immovable property between private parties, the actual consideration is much more than the consideration reflected in the sale deeds the actual. iii. For assessing the cost of land, the DVO had obviously to rely upon a comparable instance. Further, the case ngers when another authority i.e Appropriate Authority has also agreed to and approved the comparable instance. iv. The land purchased by the assessee is subsequent to the transactions involved in the comparable instance. Therefore, the value of land should be more in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid out of undisclosed sources. Accordingly an addition of Rs.1,60,11,000/- is made to the total income declared by the assessee as unexplained investment u/s 69 of the Income Tax Act, 1961. 3. Aggrieved by this the assessee came in appeal before the CIT(A) raising the following grounds :- 2. The Ld. AO is wrong on facts as well as in law to add a sum of Rs.1,60,11,000/- on account of unexplained investment U/s 69 of the Income Tax Act, 1961 on the basis of Valuation Report of District Valuation Officer. 3. The addition made by Ld. AO in the Assessment U/s 153A is not qua search material, therefore, Ld. AO had no jurisdiction to make addition without any indiscriminating documents/material found during the search u/s 132. 3.1. The objections of the assessee before the First Appellate Authority, assailing the report of the DVO are recorded in para 3.1 the same is extracted hereunder for ready-reference:- 3.1. During the Appellant Proceedings, the Appellant vide detailed submissions filed on 11.05.2011 inter-alia submitted as follows:- The DVO, while determining the market value of the land as 31st July 2002, without applying his mind to the location, size etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the value adopted between seller and buyer of the property is adequate or not. This price need not necessarily be a market price. Hence, adopting a price which in the opinion of appropriate authority is not inadequate cannot be called as a fair market rate. It was also submitted by the Appellant that during the course of assessment proceedings, the assessee had furnished to the AO copies of two sale deeds in respect of property located at Chhatarpur. These sale transactions were between independent parties (other than Assessee). These two sale deeds were executed on 11th February 2002. These two sale deeds at placed at pages 167 to 213 of the Paper Book. As per the first sale deed dated 11th February,2002 (Pages 167 to 189 of the Paper Book), the sale price per bigha amounts to Rs.3,33,3801-.As per the second sale deed dated 11th February, 2002 (Pages 190 to 213 of the Paper Book),the sale consideration amounts to Rs.3,33,742/- per bigha. The amount of Rs.1.13 crore as admitted by the appellant ultimately translates into Rs 4.70 lakhs per bigha. In nutshell, it is submitted that two comparable sale instances of property located at Chhatarpur itself wherein the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abdicated his responsibility in giving concrete findings as required by Section 69 of the Act. It is trite law that the appellant cannot prove an inactive fact. 3.2. The assessee further assailed the application of section 69 on facts. Reliance was also placed upon the judgement of the Apex Court in the case of K.P.Varghese vs ITO 131 ITR 597 (SC) for the proposition that corroborative evidences needs to be brought on record to indicate that a larger amount has been spend on the acquisition of the property. It was submitted that although the said judgement was in the context of capital gains however it would apply in equal force to the provisions of section 69 as the principle was that what in fact never accrued or was never received cannot be computed as capital gain . 3.3. Reliance was also placed upon CIT vs Mahesh Kumar 2010-TIOL-606-HCDEL- IT and in the case of Smt. Suraj Devi 2010-TIOL-596-Del-IT. 4. Considering these arguments the CIT(A) qua Ground No-2 raised before him directed the AO to delete the said addition vide para 4. Qua Ground No.-3 before him he further confirmed his view vide para 5 and decided the issue in assessee s favour. 4.1. Aggrieved by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et the finding. It may not be out of place to reproduce Ground No-2 before the CIT(A) and his finding thereon for a proper appreciation of the view being taken :- 2. The Ld. AO is wrong on facts as well as in law to add a sum of Rs.1,60,11,000/- on account of unexplained investment U/s 69 of the Income Tax Act, 1961 on the basis of Valuation Report of District Valuation Officer. 4. Finding on Ground No.-2 I have carefully considered the observation of the AO, submissions made and judicial pronouncements relied upon by the Appellant. It is a fact on record that the appellant was subjected to two consecutive searches U/s 132 and the present assessment order passed U/s 153A read with Section 143(3) has been a result of these searches. The observation of the AO does not refer to any incriminating evidence found during the search or even otherwise indicating that any additional/unrecorded payment other than what is paid and disclosed in the sale deed executed between the Appellant and Sellers has passed hands. The two independent instances of sales in the same vicinity in which the land purchased by the appellant is situated have also been perused from which it is apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch have to be satisfied while invoking Sec. 142A and Sec. 69 of the Act. The AO except adopting the value estimated by DVO has done nothing more to discharge his onus in order to satisfy these two conditions. The reliance placed by the appellant on the judgments in the two cases of the jurisdictional High Court viz. CIT vs. Mukesh Kumar reported in 201O-TIOL- 606-HC-DEL-IT CIT vs. Smt. Suraj Devi 2010-TIOL-596-DEL-IT have also been examined. In Mahesh Kumar's case, search operations were conducted u/s 132 of the Act, reference was made u/s 142A and Section 69 was applied for determining the income and the High Court after noticing the judgment in the case of K.P. Varghese vs. ITO, 131 ITR 597 held as under: 8. 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 it would be permissible to rely upon the valuation given by the DVO. (See K.P. Varghese vs. ITO, 131 ITR 597, CIT vs. Shakuntala Devi, (2009) 316 ITR 46 and ITA No. 482/2010 decided by this Court on 5th May, 2010). 9. Further the Supreme court in its order dated 16th February, 2010 in Civil App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of the above finding shows that the impugned order has been passed on the reasoning that despite being subjected to two consecutive searches nothing has been found and the assessment u/s 153A read with section 143(3) the department even before us has failed to refer to any incriminating evidence found during the search indicating any unrecorded payment having been paid apart from the payment made in the disclosed sale deed. No such effort has been made before us. Similarly qua the two independent sales in the same vicinity wherein the price paid by the assessee is more than the consideration paid in the two instances cited by the assessee in Chhatarpur itself stands unrebutted on record. Qua the DVO s report the reliance has been placed on the transaction at Satbari, Mehrauli whereas the assessee s transaction was at Chhatarpur the properties cannot be said to be identically situated in the absence of any factual arguments by the Revenue qua their similarity. Moverover the instance cited was in the context of the power given to Appropriate Authority to buy the property under chapter XXC as such not necessary an exact indicator with certainly as to the fair market price. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the above decisions has submitted that the issue on addition of Rs.1,60,11,000/- on account of unexplained investment u/s 698 of the IT Act based on the valuation of the land purchased during the relevant assessment year cannot be subjected to further adjudication and consequent addition in face of the fact that no incriminating document/material with reference to the said purchases have been found during the course of the two searches conducted on the appellant. 5.1. Finding on Ground No-3 I have carefully perused the decisions relied upon by the appellant which are squarely applicable to the facts of the appellant s case. Therefore, while on merits the addition has already been directed to be deleted in Ground No.2 it is additionally held that even on this technical ground there is no case for making an addition to income. Accordingly the appellant succeeds in Ground No.3. 8.2. Thus in view of the fact where the factual position has not been disputed by the Revenue the ground raised deserves to be dismissed as no infirmity in the reasoning has been pointed out to upset the conclusion. Accordingly facts remaining unassailed and no contrary decision having been cited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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