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TMI Blog2016 (10) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 52,50,759/-.- Decided in favour of assessee Addition on on-money received over and above, the amounts stated in the sale deed - Held that:- AO failed to bring conclusive evidence on record to say that the assessee has received on-money. It is also pertinent to mention that AO has made an addition of ₹ 1,92,06,000/- in the total income of the assessee. To our mind, the AO has erred in making a separate addition. At the most, it could be part of total sale consideration, and the capital gain ought to be computed on the basis of taking this amount. A thought struck to our mind that let it be inquired again at the level of AO, but when we appraised ourselves about the ultimate tax effect on this exercise, then it revealed that even if for argument sake this amount is added, then, long term capital gain on it will be roughly ₹ 38 lacs. It will be set off against the LTC loss accepted at ₹ 52,50,759/-. The assessee is a salaried person. No carry forward of loss would affect him. Thus, in view of the above discussion, we are of the view that addition of ₹ 1,92,06,000/- is not sustainable in the case of the assessee, because AO failed to bring conclusive ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish average fair market value per sq.meter of the above location as on 1.4.1981. According to the AO, Sub-Registrar has transmitted information, and according to that information, average rate was of ₹ 2/- per sq.meter. The ld.AO accordingly calculated long term capital gain at ₹ 1,64,71,840/-. When the AO has confronted the assessee as to why this calculation should not be adopted, the assessee filed objections. The AO has noticed those objections on page no.4 and 5 of the impugned order. The assessee contended that Civil Sub-Registrar failed to consider the nature of land before adopting average rate. He has also not transmitted information with regard to industrial land sold by the assessee in village Dabhel. Information relates to agriculture land of a different Revenue area. The ld.AO has made reference to Valuation Officer under section 55A of the Income Tax Act. But before the DVO could give his report, he passed assessment order with a condition that since assessment proceeding is going to be time barred, the capital gain computation will be changed subject to report of the DVO. In this way, the ld.AO has made addition of ₹ 1,64,71,840/- in the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make reference to the DVO for the transactions which have been executed before 1.7.2012. He relied upon the decisions of the Hon ble Gujarat High Court in the case of CIT Vs. Gauranginiben S. Shodhan Inld. Vs. CIT, 45 taxmann.com 356 (Guj) and CIT Vs. Manulaben M. Unadkat, 55 taxmann.com 62 (Guj). While taking us through Section 55A, as it was applicable on the date of sale transaction, he contended that reference under section 55A(a) can be made to the DVO, if the AO is of the opinion that value so claimed by the assessee is less than its fair market value. The AO was not possessing any material to say that the value adopted by the assessee as cost of acquisition was less than fair market value, rather, the AO was of the view that it is on the higher side. In such situation, there cannot be any reference to the DVO. Once the assessee was in appeal before the ld.CIT(A) and challenged the very reference to the DVO, then, it was not necessary for the assessee to raise objections in the proceedings under section 154. Apart from this, the ld.CIT(A) failed to take note that scope of proceedings under section 154 is very limited. The AO has to rectify his order as per his finding in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer had not resorted to sub-clause(ii) of clause (b). In any case, clause(b) would apply where clause(a) does not apply since it starts with the expression in any other case . In other words if assessee has relied upon a Registered Valuer s Report, Assessing Officer can proceed only under clause (a) and clause(b) would not be applicable. 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiraben Jayantilal Shah vs. Income-tax Officer and another reported in [2009] 310 ITR 31(Guj).In the said decision, it was held and observed as under:- 10. Under clause(a) of sec. 55A of the Act under the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le price. There is nothing on the record which can suggest to ignore the report of the registered valuer and to adopt the report of the Valuation Officer. Both these persons are technical persons and before accepting the evidence of an expert, there should be corroboration of some other material. Taking into consideration the overall facts and circumstances of the case, we are of the opinion that the Id. Assessing Officer ought to have not made a reference to the DVO for determination of the fair market value of the property in dispute. The report of the DVO alone is not sufficient for estimating the capital gains at ₹ 12,28,9077-. 6. In view of the above, we are in complete agreement with the view taken by the Tribunal. The Tribunal has given cogent and convincing reasons in arriving at the conclusion. Therefore, the present appeal is dismissed. Accordingly, the question posed in this appeal is answered in favour of the assessee and against the revenue. 8. In the light of the above, if we exclude the DVO s report, there is no other evidence available with the AO, except the calculation submitted by the assessee based on an exercise of reverse indexation from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars house no.711/41 situated at Porvorim within area of Socorro village, North Goa. The assessee had sold this bungalow vide sale agreement dated 1.8.2011. It was sold to nine persons and agreement was duly notarized. The assessee has received initial payment in cash, and out of that, ₹ 50 lakhs were deposited. The ld.AO has called for all nine vendees. Out of nine persons, five persons appeared before him, whose statements were recorded by the AO under section 131 of the Act. The AO has observed that these persons were not having documentary evidence, such as, bank statements, source of income etc. in their possession to establish that they have given cash to the assessee. Therefore, the AO did not accept that he has received ₹ 50 lakhs from nine persons towards sale of bungalows. When the assessee asked for cross-examination of Principal Officer of M/s.Alkem Laboratories, the AO has observed that he has issued summons and handed over these summons to the assessee with direction that the assessee should produce the vendee. According to the AO, the assessee failed to produce the vendee, therefore, no cross-examination could be provided to the assessee of the vendee. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual happening of incidences. In such situation, page ought to be read in evidence for charging the assessee with liability. 13. We have duly considered rival contentions and gone through the record carefully. There is no dispute with regard to the fact that the assessee was owner and in possession of survey no.165/1 and 165/2. Land admeasuring 880 sq.meters sold by the assessee vide registered sale deed dated 21.10.2011. The assessee has disclosed total sale consideration at ₹ 1,66,10,000/-. Department was able to lay its hand on a loose paper at the premises of the vendees during survey operation. This page does disclose details of land, area, rate at which land was sold, cash component. Dates mentioned in this page are 01.08.2001 and 31.8.2011. The ld.AO observed that there was some error in mentioning of first date. Assessee sought to cross-examine person who has authored this page. The ld.AO did not make efforts even to know who has authored this page. He took the page as gospel truth. There is no dispute with regard to the proposition that whosoever found in possession of an incriminating material, then, onus was upon him to explain the material. That is, the page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , authored by a third party, could not be considered as a sufficient evidence to accept that assessee has received on-money. This piece of evidence can be a corroborative piece of evidence for confronting the assessee, but it is not a conclusive proof. The assessee has specifically asked for an opportunity to cross-examine Principal Officer of the vendee company. But no such opportunity was granted to the assessee. Hon ble Supreme Court in recent decision passed in the case of M/s.Andaman Timber Industries Vs. Comm. Of Central Excise in Civil Appeal No.4228 of 2006 has dealt with such situation and the Hon ble Court has observed that if statement of a witness is being used by an authority without giving an opportunity to cross-examine to the affected person, then impugned order could be a nullity. The observation of the Hon ble Supreme Court in this connection reads as under: . According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, then that cannot be ground to just ignore their evidence. In that case, notice can be issued in their cases and it could be examined in their cases. These two aspects are totally different to each other. Therefore, in our opinion, the ld.AO was not justified in rejecting the confirmations given by these persons. It is also to be seen as to why the assessee would take money from Daman to Goa for deposing the money in the Goa State Cooperative Bank. The deposits could be there, because bungalow was situated in Goa. No doubt there is no negative equity in law, i.e. if no action was taken in the cases of vendee, it does not mean that the assessee could also be absolved, but had any action was taken against the vendee in whose premises evidence of payment of on-money was allegedly found, the case of the department would be on stronger footing. In spite of inquiry about the status of action taken against the vendee, the department failed to update the Tribunal in this aspect. Therefore, in our opinion, the AO failed to bring conclusive evidence on record to say that the assessee has received on-money. It is also pertinent to mention that AO has made an addition of ₹ 1,92,06,000/ ..... 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