Devinder Kumar, v. DCIT CC-10,

ITA 1142/DEL/2008 | 2004-2005
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 114220114 RSA 2008
Assessee PAN OUTIN1995A
Bench Delhi
Appeal Number ITA 1142/DEL/2008
Duration Of Justice 2 year(s) 9 month(s) 28 day(s)
Appellant Devinder Kumar,
Respondent DCIT CC-10,
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 28-01-2011
Date Of Final Hearing 18-05-2010
Next Hearing Date 18-05-2010
Assessment Year 2004-2005
Appeal Filed On 31-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B DELHI) BEFORE SHRI A.D. JAIN AND SHRI R.C. SHARMA ITA NOS. 1141 1142/DEL./08 (ASSESSMENT YEARS: 2001-02 & 2004-05) SHRI DEVINDER KUMAR VS. DCI T CENTRAL CIR. 10 280 TARUN ENCLAVE PITAMPURA NEW DELHI. DELHI. AND ITA NO. 1773(DEL)2008 (ASSESSMENT YEAR : 2004-05) DCIT CENTRAL CIR.10 VS. SHRI DEVINDER KUMAR NEW DELHI. DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VED JAIN & MRS. RANO JAIN CA S RESPONDENT BY: SHRI A.D . MEHROTRA CIT/DR ORDER PER A.D. JAIN J.M . ITA NO. 1141(DEL)2008 : THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 001-02 AGAINST THE CIT(A)S ORDER DATED 12.2.08 TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) [CI T(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. ITA NOS. 1141 1142 & 1773(DEL)08 2 2.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN REASSESSING THE INCOME OF THE APPELLANT UNDER SE CTION 153A OF THE ACT. (II) THAT THE REASSESSMENT FRAMED UNDER SEC. 153A W ITHOUT COMPLYING WITH THE STATUTORY REQUIREMENT AND THE PROCEDURE IS BAD AND AS SUCH THE ASSESSMENT FRAMED IS LIABLE TO BE QUASHED. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING THE ACTION OF THE AO IN MAKING AN ADDITION TO THE EXTENT OF ` 3 89 409/- AS UNDISCLOSED INVESTMENT U/S 69 IN THE PURCHASE OF THE PROPERTY. (II) THAT THE ABOVE ADDITION HAS BEEN MADE WITHOUT THERE BEING ANY MATERIAL OR EVIDENCE ON RECORD REGARDING ANY INVEST MENT HAVING BEEN MADE BY THE APPELLANT OVER AND ABOVE THE AMOUNT STA TED IN THE SALE DEED. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING T HE ACTION OF THE AO IN MAKING A REFERENCE TO THE VALUATION OFFICER. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING T HE ACTION OF THE AO IN RELYING UPON THE VALUATION REPORT AND IGNORING T HE OBJECTION RAISED BY THE APPELLANT. (III) THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FA CTS AND IN LAW IN IGNORING THE SETTLED POSITION OF LAW THAT VALUATION IS AN ART AND AS SUCH THE VALUATION REPORT IS ONLY AN OPINION AND CA NNOT BE THE SOLE BASIS FOR MAKING AN ASSUMPTION THAT THE ASSESSEE HA S MADE INVESTMENT OF THE AMOUNT STATED IN THE VALUATION REPORT. 2. GROUND NOS. 1&5 ARE GENERAL. 3. APROPOS GROUND NO. 2 NO ARGUMENTS HAVE BEEN ADD RESSED BEFORE US ON BEHALF OF THE ASSESSEE. AS SUCH GROUND NO.2 IS REJECTED. ITA NOS. 1141 1142 & 1773(DEL)08 3 4. COMING TO GROUND NO.3 THE ASSESSEES GRIEVANCE IS THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF ` 3 89 409/- AS UNDISCLOSED INVESTMENT IN THE PURCHASE OF PROPERTY WITHOUT TH ERE BEING ANY MATERIAL OR EVIDENCE ON RECORD CONCERNING ANY INVESTMENT HAVING BEEN MADE BY THE ASSESSEE OVER AND ABOVE THE AMOUNT STATED IN THE S ALE DEED. 5. AS PER GROUND NO. 4 THE LD. CIT(A) HAS ERRED I N UPHOLDING THE ACTION OF THE AO IN MAKING REFERENCE TO THE VALUATION OFF ICER FOR VALUATION OF THE PROPERTY AND IN RELYING ON THE VALUATION REPORT OF THE VALUATION OFFICER WHILE IGNORING THE OBJECTIONS RAISED BY THE ASSESSE E. 6. THE FACTS ARE THAT A SEARCH AND SEIZURE OPERATIO N U/S 132 OF THE I.T. ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT ON 7.10.2004 IN THE CASE OF M/S. GRAIN MERCHANT GRO UP OF CASES. THIS INCLUDED THE SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE DEVINDER KUMAR. A NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 13.5.2005. IN RESPONSE THE ASSESSEE FILED A RETUR N OF INCOME AT ` 1 97 240/-. THIS INCOME WAS AS PER THE RETURN ORIGINALLY FILED AND THEREFORE IN THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 153 A OF THE ACT THE ASSESSEE DID NOT DECLARE ANY UNDISCLOSED INCOME. IN THE ASSESSM ENT PROCEEDINGS IT WAS SEEN THAT DURING THE YEAR THE ASSESSEE HAD PURCHAS ED A SHOP AT NOS. 1622 & 1623 (HALF PORTION) CHANDRAWAL ROAD SUBZI MANDI GHANTA GHAR DELHI. ITA NOS. 1141 1142 & 1773(DEL)08 4 ON QUERY THE ASSESSEE SUBMITTED THAT HE HAD PURCHA SED THE PROPERTY AT ` 2 LAKHS. THE AO FOUND THIS STATED INVESTMENT TO BE LOW AS COMPARED TO THE PREVAILING MARKET PRICE TO SUCH A KIND OF PROPERTY. THE AO MADE A REFERENCE U/S 132A OF THE ACT TO THE VALUATION OFFI CER OF THE INCOME TAX DEPARTMENT WHO VALUED THE INVESTMENT IN THE PROPER TY AT ` 7 36 759/-. HE SUBMITTED HIS REPORT DATED 30.6.2006 IN THIS REGARD . THE ASSESSEE SUBMITTED HIS OBJECTIONS TO THIS REPORT VIDE HIS LETTER DATED 15.2.2007 ADDRSSED TO THE AO. IN THE SAID LETTER THE ASSESSEE INTER ALIA CONTENDED THAT THE PROPERTY PURCHASED WAS NOT OCCUPIED BY THE ASSESSEE; THAT TH E VALUATION OFFICER IN SPITE OF INSPECTION OF THE PROPERTY HAD LEFT BLANK POINT NO. 6.5 (REGARDING THE ADVERSE POSSESSION OF THE PROPERTY) IN THE VALU ATION REPORT; THAT THE PROPERTY WAS ONE HALF UNDIVIDED PORTION OF THE INHE RITED PROPERTY BEING IN OCCUPATION OF ONE CO-OWNER; THAT THE ASSESSEE HAD P URCHASED THE SAID PROPERTY FROM THE OTHER CO-OWNER WHO WAS NOT IN OC CUPATION THEREOF; THAT THE ASSESSEE HAD MADE THE PURCHASE WITH THE INTENT ION THAT THE OTHER PORTION WOULD ALSO BE BOUGHT FROM THE OTHER CO-OWNER; THAT HOWEVER THE DEAL COULD NOT MATERIALIZE AND THE ASSESSEE REMAINED UNABLE TO GET THE POSSESSION OF THE HALF PORTION OF THE PROPERTY FROM THE SELLER; THAT EVEN THE ASSESSEES ADVOCATE HAD GIVEN A NOTICE FOR POSSESSION TO THE S ELLER; AND THAT THE ITA NOS. 1141 1142 & 1773(DEL)08 5 VALUATION OFFICER HAD NOT TAKEN THIS INTO CONSIDERA TION FOR VALUATION DESPITE THE AFFIDAVIT GIVEN. 7. THE AO OBSERVED THAT THE VALUATION OFFICER AT SL.NO. 6.5 OF HIS REPORT HAD NOT COMMENTED ABOUT THE ADVERSE OCCUPA NCY OF THE SHOP; THAT THE OBJECTION OF THE ASSESSEE IN THIS REGARD WAS CO RRECT; THAT THE VALUE OF THE PROPERTY CERTAINLY GETS DOWN IF THE SAME IS UNDER THE ADVERSE POSSESSION OF ANY OTHER PERSON; THAT THIS ASPECT HAD NOT BEEN CON SIDERED BY THE VALUATION OFFICER; THAT CONSIDERING THIS ASPECT OF THE OCCUPA NCY OF THE PROPERTY PURCHASED BY THE ASSESSEE THE VALUE OF THE SHOP DE TERMINED BY THE VALUATION OFFICER WAS BEING REDUCED BY 10% I.E. BY AN AMOUN T OF ` 73 675/- ; THAT THUS THE TOTAL INVESTMENT IN THE PURCHASE OF THE P ROPERTY WAS BEING ESTIMATED AT ` 6 63 084/-; AND THAT THEREFORE THE UNEXPLAINED IN VESTMENT IN THE PURCHASE OF THE PROPERTY WORKED OUT AT ` 4 63 084/- WHICH AMOUNT WAS BEING INCLUDED IN THE INCOME OF THE ASSESSEE U/S 6 9 OF THE ACT. 8. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED THE ASSESSEE I S IN APPEAL. 9. BEFORE US CHALLENGING THE IMPUGNED ORDER THE L EARNED COUNSEL FOR THE ASSESSEE HAS ARGUED THAT THE AO WRONGLY MADE THE AD DITION ON THE BASIS OF THE VALUATION OFFICERS VALUATION CONCERNING THE PR OPERTY PURCHASED BY THE ASSESSEE. IT HAS BEEN ARGUED THAT THE ASSESSEE PUR CHASED THE PROPERTY BY WAY ITA NOS. 1141 1142 & 1773(DEL)08 6 OF A REGISTERED SALE DEED. THE CONSIDERATION PAID FOR THE SAID PURCHASE WAS AS PER THE SALE DEED. NO INCRIMINATING MATERIAL WH ATSOEVER WAS FOUND DURING THE SEARCH. ADDITION CAN BE MADE U/S 153A OF THE ACT ONLY WITH REFERENCE TO MATERIAL FOUND DURING THE SEARCH. I T HAS BEEN CONTENDED THAT THE AO WRONGLY REFERRED THE MATTER TO THE VALUATION OFFICER DESPITE THERE BEING NO MATERIAL AGAINST THE ASSESSEE AND WRONGLY MADE THE ADDITION ONLY ON THE BASIS OF THE VALUATION OFFICERS REPORT. R ELIANCE HAS BEEN PLACED ON THE DELHI BENCH TRIBUNAL ORDERS IN SEEMA GUPTA V. DCIT ITA NO. 1619(DEL)08 ORDER DATED 22.04.2009 SMT. BALESHWA RI DEVI V. DCIT ITA NO. 1775(DEL)08 ORDER DATED 26.05.2009 ITO V. RA JESHWAR NATH GUPTA HUF ITA NO. 4295(DEL)2005 AND C.O. NO. 375(DEL)200 7 ORDER DATED 9.05.2008. RELIANCE HAS ALSO BEEN PLACED ON THE DE CISION OF THE HONBLE RAJASTHAN HIGH COURT IN CIT V. LAXMI NARAYAN SAHA VAN ITA NO. 18 OF 2008 ORDER DATED 4.2.2008. IT HAS BEEN CONTENDED THAT ADDITION U/S 69B OF THE I.T. ACT UNDER WHICH SECTION THE ADITION HAS B EEN MADE THOUGH WRONGLY MENTIONED AS HAVING BEEN MADE UNDER SECTION 69 OF T HE ACT CAN ONLY BE MADE IN RESPECT OF THE ACTUAL INVESTMENT UNDER DISC LOSED AND NOT ON THE BASIS OF THE VALUE OF INVESTMENT. NO MATERIAL WAS BROUGH T BY THE AO TO SUPPORT THE ASSUMPTION THAT THE ASSESSEE HAD ACTUALLY PAID THE AMOUNT ADDED. THERE WAS NO CROSS VERIFICATION FROM THE SELLER AND NO ST ATEMENT IN THIS REGARD WAS ITA NOS. 1141 1142 & 1773(DEL)08 7 RECORDED. NO PROCEEDINGS WERE INITIATED AGAINST TH E SELLER U/S 153 C/148 OF THE I.T. ACT. THE SALE DEED AND THE CONSIDERATION PAID WERE WITNESSED BY AUTHORITIES WHICH WERE GOVERNMENT AUTHORITIES. TH E ADDITION WAS MADE MERELY ON SURMISES AND CONJECTURES. IT HAS BEEN CO NTENDED THAT ADDITION OF ONLY THE AMOUNT ACTUALLY SPENT OR INVESTED CAN BE M ADE AND NO PRESUMPTION CAN BE DRAWN AGAINST THE PURCHASER/ASSESSEE IN THE ABSENCE OF ANY PROVISION TO THAT EFFECT IN THE ACT. IT HAS BEEN CONTENDED T HAT THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER IS WRONG. IT HA S BEEN POINTED OUT THAT THE OBJECTIONS RAISED BY THE ASSESSEE ARE AT PAGES 25 TO 31 OF THE ASSESSEES PAPER BOOK (APB FOR SHORT). IT HAS BEEN CONTEND ED THAT WHILE ACCEPTING THE CONTENTION OF THE ASSESSEE REGARDING ADVERSE OC CUPANCY OF THE PROPERTY PURCHASED THE AO HIMSELF MADE REDUCTION OF 10% OF THE VALUATION WHEREAS HE WRONGLY BRUSHED ASIDE THE OTHER OBJECTIONS ON T HE GROUND THAT THE VALUATION OFFICER IS A TECHNICAL PERSON. IT HAS BE EN CONTENDED THAT THE LD. CIT(A) AGAIN DECIDED AGAINST THE ASSESSEE ONLY ON T HE BASIS OF SURMISES AND CONJECTURES GIVING JUST AN ARBITRARY DISCOUNT OF 1 0% ON THE VALUE ADOPTED BY THE AO. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION SINCE THERE WAS NO MATERIAL FOR CO NFIRMING THE SAME. IT HAS BEEN CONTENDED THAT IF THE ORDERS OF THE AUTHORITIE S BELOW ARE ALLOWED TO BE SUSTAINED IT WOULD VIRTUALLY AMOUNT TO LAYING DOWN THAT WHERE AN ASSESSEE ITA NOS. 1141 1142 & 1773(DEL)08 8 PURCHASES A PROPERTY FOR THE PURPOSE OF ASSESSMENT THE VALUE OF THE INVESTMENT TO BE TAKEN WILL NOT BE THE ACTUAL AMOUN T PAID BUT THE AMOUNT WHICH IS THE FAIR VALUE OF THE INVESTMENT AS ON TH AT DATE AS DECIDED BY THE VALUER. IT HAS BEEN CONTENDED THAT THERE IS NO PRO VISION UNDER THE ACT SUPPORTING SUCH A WEIRD PROPOSITION. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) ERRED IN IGNORING THE AMENDMENT MADE TO SECT ION 50C OF THE ACT WHICH IS TO BE USED FOR COMPUTING THE CAPITAL GAIN IN THE HANDS OF THE SELLER ON THE BASIS OF THE CIRCLE RATE. IT HAS BEEN CONTE NDED THAT THE SAID PROVISION EVEN AS OF NOW DOES NOT ALLOW USE OF SUCH A RATE F OR THE PURPOSE OF COMPUTING INVESTMENT BY THE PURCHASER. IT HAS BEEN CONTENDED THAT HAD THE INTENTION OF THE LEGISLATURE BEING OTHERWISE IT W OULD HAVE ITSELF PROVIDED IN SECTION 50C THAT THE DIFFERENCE IN THE CIRCLE RATE VALUE AND THE CONSIDERATION DISCLOSED SHALL BE TAKEN TO BE UNEXPLAINED INVESTME NT. IT HAS BEEN CONTENDED THAT OTHERWISE TOO IF THE VALUATION REPO RT IS IGNORED THERE IS NO MATERIAL WHATSOEVER TO SUSTAIN THE ADDITION. IT HA S BEEN CONTENDED THAT THE TRANSACTION OF PURCHASE BY THE ASSESSEE IS EVIDENCE D BY THE SALE DEED WHICH HAS BEEN DULY REGISTERED BEFORE THE SUB-REGISTRAR WHO IS A GOVERNMENT OFFICER HAVING STATUTORY POWER. IT HAS BEEN CONTEN DED THAT THE AUTHORITIES BELOW HAVE ERRED IN IGNORING THE SALE DEED TO WHIC H DOCUMENTARY EVIDENCE ITA NOS. 1141 1142 & 1773(DEL)08 9 THERE IS NO COUNTER EVIDENCE. IT HAS BEEN CONTENDE D THAT IN THE FACE OF THE SAID SALE DEED THERE WAS NO OCCASION TO DRAW ANY P RESUMPTION AGAINST THE ASSESSEE AS HAS BEEN ILLEGALLY DONE BY THE AUTHORI TIES BELOW. RELIANCE HAS ALSO BEEN PLACED ON THE FOLLOWING CASE LAWS:- 1. K.P. VERGHESE V. ITO 131 ITR 597(SC); 2. CIT V. SMT. NILOFER SINGH 309 ITR 233(DEL); 3. DEV KUMAR JAIN V. ITO 309 ITR 240 (DEL); 4. CIT V. GULSHAN KUMAR 257 ITR 703(DEL); 5. ASHOK SONI V. ITO 102 TTJ(DEL)964 WHEREIN HANE MP PROPERTIES LTD. V. ACIT 101 ITD 19(DEL) [RELIED O N BY THE LD. CIT(A)] HAS BEEN CONSIDERED AND DISTINGUISHED AS C ONTRARY TO INTER ALIA C.B. GAUTAM V. UNION OF INDIA & ORS. 199 ITR 530(SC). 10. ON THE BASIS OF THE ABOVE SUBMISSIONS THE LEAR NED COUNSEL FOR THE ASSESSEE HAS SOUGHT THE ORDER UNDER APPEAL TO BE SE T ASIDE AND THE CLAIM OF THE ASSESSEE TO BE ACCEPTED BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 11. THE LEARNED DR ON THE OTHER HAND HAS STAUNCHL Y SUPPORTED THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT AS RIGH TLY HELD BY THE LD. CIT(A) THE VALUE OF ` 2 LAKHS FOR THE PURCHASE OF THE PROPERTY BY THE ASSESSEE AS TRIED TO BE MADE OUT BY THE ASSESSEE DOES NOT REPRESENT THE FULL CONSIDERATION OF THE PURCHASE; THAT THE AO WAS THE REFORE JUSTIFIED TO REFER THE MATTER TO THE VALUATION OFFICER WHO DETERMINED THE VALUE OF THE PROPERTY AT ` 7 36 759/- BY CONSIDERING THE LAND COST AND THE COS T OF CONSTRUCTION THEREON; THAT AS A COMPARABLE CASE TH E DEPARTMENTAL VALUATION ITA NOS. 1141 1142 & 1773(DEL)08 10 OFFICER TOOK INTO CONSIDERATION A NEARBY PROPERTY LOCATED AT SRINAGAR EXTN. THE SALE WHEREOF HAD TAKEN PLACE ON 11.12.95 FOR ` 23 71 000/-; THAT THE SAID SALE PERTINENTLY HAD BEEN MADE BY THE DELHI DEVELOPMENT AUTHORITY IN AN OPEN AUCTION; THAT MOREOVER THE PROPERTY IN THA T INSTANCE WAS LOCATED IN A RESIDENTIAL COLONY WHEREAS THE PROPERTY PURCHASED BY THE ASSESSEE WAS A COMMERCIAL ONE; THAT THE AO WAS REASONABLE ENOUGH I N ALLOWING A MARGIN OF 10% AND THEREBY REDUCING A SUM OF ` 73 675/- FOR THE FACTOR OF ADVERSE OCCUPANCY OF THE PROPERTY PURCHASED BY THE ASSESSEE . IT HAS BEEN CONTENDED THAT SECTION 142 A OF THE ACT PROVIDES FOR REFERENC E TO THE VALUATION OFFICER FOR THE PURPOSE OF MAKING THE ASSESSMENT; THAT TH E AO MADE THE REFERENCE FOR THIS VERY PURPOSE AND THEREFORE THE REFERENCE WAS WELL IN ACCORDANCE WITH THE PROVISIONS OF SECTION 142 A OF THE ACT; AN D THAT FOR MAKING SUCH A REFERENCE THERE IS NO CONDITION PRESCRIBED THAT IT MUST BE ESTABLISHED THAT THERE WAS AN UNDERSTATEMENT OF THE PURCHASE CONSIDE RATION. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) CORRECTLY FOLLOWED TH E DECISION OF THE HONBLE DELHI BENCH OF THE TRIBUNAL IN HANEMP PROPERTIES L TD. (SUPRA) WHEREIN IT HAS BEEN HELD INTER ALIA THAT TO SAY THAT THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE DISCLOSED CONSIDERATION IS NO EVIDENC E AT ALL AND THAT THE REVENUE MUST HAVE PRIMARY EVIDENCE OF ON MONEY HAVI NG EXCHANGED HANDS IS TO PUT A BURDEN ON THE REVENUE WHICH IS OBVIOUSL Y MOST UNLIKELY TO BE ITA NOS. 1141 1142 & 1773(DEL)08 11 DISCHARGED. IT HAS BEEN CONTENDED THAT THE ASSESSE E HAS REMAINED UNABLE TO EXPLAIN BY ANY EVIDENCE WHATSOEVER AS TO WHY THE C ONSIDERATION PAID BY HIM FOR THE PURCHASE OF THE PROPERTY WAS AT A PRICE LESSER THAN THAT AT WHICH THE DELHI DEVELOPMENT AUTHORITY HAD SOLD THE PROPER TY IN THE COMPARABLE CASE REFERRED TO BY THE AO AND THE ASSESSEE HAS ALS O FAILED TO DEMONSTRATE THAT THE SHOP PURCHASED BY HIM WAS IN A MORE DISADV ANTAGEOUS POSITION THAN THE PROPERTY SOLD BY THE DELHI DEVELOPMENT AUTHORIT Y; THAT IN FACT THE ASSESSEE MISERABLY FAILED TO ESTABLISH THAT THE CON SIDERATION OF ` 2 LAKHS PAID BY HIM FOR THE PURCHASE OF THE SHOP WAS ACTUALLY T HE TRUE CONSIDERATION PAID. IT HAS BEEN CONTENDED THAT FURTHER EVEN ON BEING A SKED TO DO SO BY THE LD. CIT(A) THE ASSESSEE COULD NOT FILE ANY SALE INSTAN CE IN THAT AREA FAVOURABLE TO THE ASSESSEE EITHER IN THE SAME PERIOD OR SUBS EQUENTLY. IT HAS BEEN CONTENDED THAT THE CONSIDERATION IN THE ASSESSEES TRANSACTION WAS THEREFORE EVIDENTLY UNDERSTATED SO AS TO ESCAPE FROM TAX IN CIDENCE AS RIGHTLY OBSERVED BY THE LD. CIT(A). IT HAS BEEN CONTENDED THAT THE AUTHORITIES BELOW HAVE GIVEN DUE WEIGHTAGE TO THE CIRCUMSTANTIA L EVIDENCE WEIGHING AGAINST THE ASSESSEE AND THEREFORE IT DOES NOT LI E IN THE MOUTH OF THE ASSESSEE TO SAY THAT THE ORDER UNDER APPEAL IS WRON G. IT HAS BEEN CONTENDED THAT MOREOVER THE PROPERTY PURCHASED BY THE ASSESS EE WAS A COMMERCIAL PROPERTY WHEREAS THAT CONSIDERED FOR COMPARISON WA S A RESIDENTIAL PROPERTY ITA NOS. 1141 1142 & 1773(DEL)08 12 THE SALE WHEREOF CAME ABOUT IN 1995 AND THAT TOO B Y A GOVERNMENT AGENCY I.E. THE DELHI DEVELOPMENT AUTHORITY. IT HAS BEEN CONTENDED THAT AS SUCH THE ASSESSEE HAS NO CASE THAT THE COMPARISON TO TH E PROPERTY SOLD BY THE DELHI DEVELOPMENT AUTHORITY WAS NOT APT. IT HAS BE EN CONTENDED THAT THE LD. CIT(A) TOO WAS REASONABLE ENOUGH IN ALLOWING A RELI EF OF 10% OVER AND ABOVE THAT ALLOWED BY THE AO THEREBY GIVING A FURT HER BENEFIT OF ` 73 675/- TO THE ASSESSEE AS WEIGHTAGE FOR ADVERSE OCCUPANCY OF THE SHOP PURCHASED BY HIM. 12. ON THE BASIS OF THESE CONTENTIONS THE LD. DR H AS REQUESTED FOR DISMISSAL OF THE ASSESSEES APPEAL. 13. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT THE AO AT THE VERY OUTSET WENT WRONG IN MAKING A REFERENCE TO THE VALUATION OFFICE R CONCERNING THE VALUATION OF THE PROPERTY PURCHASED BY THE ASSESSEE AND THAT THE LEARNED CIT(A) ERRED IN UPHOLDING SUCH ACTION OF THE AO. THE ASSESSEE MAINTAINS THAT IN THE SEARCH CONDUCTED ON THE ASSESSEE NO IN CRIMINATING MATERIAL WHATEVER WAS FOUND; THAT THE ASSESSEE HAD PURCHASED THE PROPERTY THROUGH A REGISTERED SALE DEED AND THE CONSIDERATION PAID FOR SUCH PURCHASE HAS NOT BEEN SHOWN TO BE ANY DIFFERENT FROM THAT MENTIONED IN THE SALE DEED I.E. ` 2 00 000/-; AND THAT AS SUCH THE AO DID NOT HAVE I N HIS POSSESSION ANY ITA NOS. 1141 1142 & 1773(DEL)08 13 MATERIAL SO AS TO ENABLE HIM TO MAKE THE REFERENCE OF THE PROPERTY TO THE VALUATION OFFICER. 14. SECTION 142A OF THE INCOME TAX ACT IS THE GOVER NING SECTION IN THIS REGARD DEALING WITH THE POWER OF THE VALUATION OFF ICER TO MAKE AN ESTIMATE OF THE VALUE OF INVESTMENT IN CERTAIN CASES. IT WO ULD BE APPROPRIATE TO REPRODUCE HERE SECTION 142A(1) WHICH IS RELEVANT F OR OUR PRESENT PURPOSES:- 142A(1) : FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT WHERE AN ESTIMATE OF THE VALUE OF A NY INVESTMENT REFERRED TO IN SECTION 69 OR 69B OR THE VALUE OF AN Y BULLION JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN SECTION 69 A OR SECTION 69B (OR FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SU B-SECTION (2) OF SECTION 56) IS REQUIRED TO BE MADE THE AO MAY REQU IRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPOR T THE SAME TO HIM. 15. AS PER SECTION 69 OF THE ACT WHERE THE ASSESSE E HAS MADE UNEXPLAINED INVESTMENT THE VALUE OF THE INVESTMENT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. SECTION 69 READS AS F OLLOWS:- 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PREC EDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS W HICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT IF ANY MAINTAINE D BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLAN ATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANA TION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE IN COME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. ITA NOS. 1141 1142 & 1773(DEL)08 14 16. A PERUSAL OF SECTION 69 OF THE ACT SHOWS THAT I T IS ONLY WHERE THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDE D IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS NO EXPLANATION TO OFFE R ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND BY THE AO TO BE SATISFACTORY THAT THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. IT IS FOR THE PURPOSE OF SUCH DEEMING THAT A REFERENCE U/S 142A MAY BE MA DE BY THE AO TO THE VALUATION OFFICER TO MAKE AN ESTIMATE OF THE VALUE OF THE INVESTMENT. HOWEVER THE FIRST AND FOREMOST REQUIREMENT OF SECT ION 69 IS THAT THE INVESTMENT IN QUESTION HAS NOT BEEN RECORDED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. IN THE PRESENT CASE IT IS NOT THE CASE O F EITHER OF THE AUTHORITIES BELOW THAT THE VALUE OF THE INVESTMENT IN THE PURC HASE OF THE PROPERTY AT ` 2 00 000/- HAS NOT BEEN RECORDED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. RATHER THE RECITAL IN THE ASSESSMENT ORDER IS AS F OLLOWS:- .DURING THE YEAR THE ASSESSEE PURCHASED A S HOP AT NO. 1622 AND 1623 (HALF PORTION) AT CHANDRAVAL ROAD SU BZI MANDI GHANTA GHAR DELHI. IT WAS STATED BY THE ASSESSEE THAT HE HAS INVESTED ONLY A SUM OF ` 2 00 000/- IN PURCHASE OF THE PORTION OF THE SHOP UNDER REFERENCE. THE INVESTMENT IN THE PURCH ASE OF THE PROPERTY WAS CONSIDERED LOW AS COMPARED TO THE PREVAILING MA RKET PRICE FOR SUCH KIND OF PROPERTY. A REFERENCE U/S 142A WAS M ADE TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT 17. SECTION 69B OF THE I.T. ACT READS AS UNDER: ITA NOS. 1141 1142 & 1773(DEL)08 15 69B WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS M ADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION JEWELLE RY OR OTHER VALUABLE ARTICLE AND THE ASSESSING OFFICER FINDS THAT THE A MOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLIO N JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOU T SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YE AR. 18. AS PER SEC. 69B OF THE ACT IT IS ONLY WHERE TH E ASSESSEE INTER ALIA HAS MADE INVESTMENTS AND THE AO FINDS THAT THE AMOUNT E XPENDED ON MAKING SUCH INVESTMENT EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT FOUND BY THE AO TO BE SATISFACTORY THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. 19. IT IS APPARENT FROM A READING OF THE RELEVANT P ORTION OF THE ASSESSMENT ORDER AS EXTRACTED IN PARA 16 ABOVE THAT THE AO DID NOT RECORD ANY FINDING TO THE EFFECT THAT THE INVESTMENT MADE BY THE ASSES SEE IN THE PURCHASE OF THE PROPERTY WAS NOT DISCLOSED/RECORDED FULLY IN THE BO OKS OF ACCOUNT. THEREFORE ON THIS BASIC SCORE ITSELF THE REFERENC E TO THE VALUATION OFFICER IS UNSUSTAINABLE SECTION 69B OF THE ACT NOT BEING APP LICABLE. THE AO HAS ALSO NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE INV ESTMENT WAS EITHER MADE OUTSIDE THE BOOKS OF ACCOUNT OR IT WAS NOT FULLY D ISCLOSED IN THE BOOK. IT IS ITA NOS. 1141 1142 & 1773(DEL)08 16 ONLY THE VALUATION OFFICERS REPORT WHICH HAS BEEN RELIED ON TO CANVASS THAT THE ASSESSEE HAD MADE INVESTMENT WHICH WAS BEING CO NSIDERED AS LOW VIS-- VIS THE PREVAILING MARKET RATE. THIS IS UNDOUBTED LY IMPERMISSIBLE IN LAW. ONCE THE REFERENCE ITSELF COULD NOT HAVE BEEN MADE FOR THE VALUATION OFFICER TO ESTIMATE THE VALUE OF THE INVESTMENT THE REPORT OF THE VALUATION OFFICER COULD NOT AT ALL FORM THE BASIS OF ARRIVING AT THE CONCLUSION OF LOW/UNDERVALUED INVESTMENT. 20. IN M/S. RAJESHWAR NATH GUPTA HUF (SUPRA) UN DER SIMILAR CIRCUMSTANCES THE REFERENCE TO THE VALUATION OFFIC ER WAS HELD TO BE BAD. IT WAS OBSERVED INTER ALIA AS FOLLOWS:- 15. A PERUSAL OF THE AFORESAID PROVISIONS SHOWS T HAT SECTION 142A IS ATTRACTED INTER ALIA WHERE THE ASSESSEE IS FOUND TO HAVE MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNT OR WHERE AN Y SUCH INVESTMENT MADE BY HIM IS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. THE CONDITION PRECEDENT FOR MAKING THE REFERENCE BY INV OKING THE PROVISIONS OF SECTION 142A THUS IS THAT THERE SHOUL D BE SOMETHING ON RECORD TO SHOW THAT THE ASSESSEE IN FIRST PLACE HAS MADE SUCH INVESTMENT OUTSIDE THE BOOKS OR THE INVESTMENT SO M ADE BY HIM IS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT AND ONCE TH IS CONDITION IS SATISFIED THE QUANTUM OF SUCH INVESTMENT MADE CAN BE ASCERTAINED BY THE AO BY MAKING A REFERENCE U/S 142A IN ORDER TO M AKE THE ADDITION U/S 69 OR 69B WHICHEVER IS APPLICABLE. IN THE PRE SENT CASE THE RELEVANT PROPERTY WAS PURCHASED BY THE ASSESSEE DUR ING THE YEAR UNDER CONSIDERATION FOR ` 15 LAKHS AND THE AMOUNT OF THE SAID CONSIDERATION WAS PAID OUT OF ITS DISCLOSED SOURCES AS ACCEPTED EVEN BY THE AO IN THE REASSESSMENT. A PERUSAL OF THE A SSESSMENT ORDER HOWEVER SHOWS THAT THERE WAS NO REFERENCE WHATSOEV ER MADE BY THE AO TO ANY MATERIAL/EVIDENCE/INFORMATION ON THE BASI S OF WHICH IT COULD BE SAID THAT THE SAID CONSIDERATION SHOWN BY THE ASSESEE WAS UNDERSTATED AND THAT ANYTHING ABOVE WHAT WAS DISCLO SED BY THE ITA NOS. 1141 1142 & 1773(DEL)08 17 ASSESSEE HAD ACTUALLY BEEN PAID AS CONSIDERATION. THE CONDITION PRECEDENT FOR MAKING A REFERENCE TO THE DVO BY INVO KING THE PROVISIONS OF SECTION 142A THUS WAS NOT SATISFIED I N THE PRESENT CASE AND EITHER THE SAID REFERENCE NOR THE ADDITION MADE ON THE BASIS OF REPORT OBTAINED FROM THE DVO IN RESPONSE TO THE SAI D REFERENCE IN OUR OPINION WAS SUSTAINABLE IN LAW AS RIGHTLY HELD BY THE LEARNED CIT(A). 21. FURTHER THE CONTENTION OF THE ASSESSEE HAS BEE N THAT THIS BEING A SEARCH CASE THE REFERENCE TO THE VALUATION OFFICER COULD HAVE BEEN MADE ONLY IF SOME MATERIAL HAD BEEN FOUND DURING THE SEA RCH. 22. HERE ALSO THE ASSESSEE HAS A CASE. THE ASSES SMENT ORDER DOES NOT MAKE MENTION OF ANY MATERIAL HAVING BEEN FOUND DURI NG THE SEARCH CONDUCTED ON THE ASSESSEE. THE FIRST PARA OF THE ASSESSMENT ORDER READS AS FOLLOWS:- A SEARCH AND SEIZURE OPERATION U/S 132 OF THE I.T. ACT 1961 WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTME NT ON 7.10.2004 IN THE CASE OF M/S. GRAIN MERCHANTS GROUP OF CASES. IT INCLUDED THE RESIDENTIAL PREMISES OF SH. DEVINDER KUMAR AT NO. 2 80 TARUN ENCLAVE PITAM PURA DELHI. A NOTICE U/S 153A OF T HE I.T. ACT WAS ISSUED TO THE ASSESSEE SH. DEVINDER KUMAR ON 13.05 .2005. IN RESPONSE TO THE SAID NOTICE RETURN WAS FILED ON 18 .08.2005 WHEREIN THE INCOME WAS RETURNED AT ` 1 97 240/- WHICH IS AS PER THE RETURN ORIGINALLY FILED ON 16.10.2001 WITH ITO WARD 29(1) NEW DELHI. HENCE THE ASSESSEE DID NOT DECLARE ANY UNDISCLOSED INCOME. 23. NOW OBVIOUSLY WHEN NO MATERIAL HAS BEEN FOUND IN THE SEARCH THE REFERENCE TO THE VALUATION OFFICER IS INCOMPETENT. ITA NOS. 1141 1142 & 1773(DEL)08 18 24. IN K.P. VERGHESE V. ITO 131 ITR 597(SC) IT WAS HELD THAT THE BURDEN TO PROVE THAT THE CONSIDERATION FOR THE TRAN SFER OF A CAPITAL ASSET HAS BEEN UNDERSTATED BY THE ASSESSEE OR THAT THE FULL VALUE OF THE CONSIDERATION IN RESPECT OF THE TRANSFER HAS BEEN SHOWN AT A LESS ER FIGURE THAN THAT ACTUALLY RECEIVED BY THE ASSESSEE IS ON THE DEPARTMENT. 25. IN M/S. RAJESHWAR NATH GUPTA HUF (SUPRA) ALS O IT WAS UNDER SIMILAR CIRCUMSTANCES THAT THE ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE. 26. IN CIT V. GULSHAN KUMAR(DECD.)(THROUGH L/R) 2 57 ITR 703(DEL) APPLYING K.P. VERGHESE V. ITO(SUPRA) IT WAS HELD THAT WHERE THE ASSESSEE HAD SOLD SHARES OF EMPLOYEES DEALERS AND CLOSE REL ATIVES AT COST PRICE AND THERE WAS NO EVIDENCE THAT THE ASSESSEE HAD RECEIVE D MORE THAN THE DECLARED VALUE DIRECTLY OR INDIRECTLY SECTION 52 OF THE AC T DEALING WITH CONSIDERATION FOR TRANSFER IN CASE OF UNDERSTATEMENT WAS NOT APP LICABLE AND THAT THE ASSESSMENT OF DEEMED CAPITAL GAIN WAS NOT VALID. 27. IN CIT V. SMT. NILOFER I. SINGH 309 ITR 233( DEL) IT HAS BEEN HELD INTER ALIA THAT FULL VALUE OF CONSIDERATION DOES N OT REFER TO MARKET VALUE BUT ONLY TO CONSIDERATION SPECIFIED IN THE SALE DEED. IN THE PRESENT CASE EVEN OTHERWISE THE DEPARTMENT HAS NOT BEEN ABLE TO SHOW ANY PURCHASE PRICE OVER AND ABOVE THAT STATED IN THE REGISTERED SALE D EED AS HAVING BEEN PAID BY THE ASSESSEE. ITA NOS. 1141 1142 & 1773(DEL)08 19 28. IN DEV KUMAR JAIN V. ITO & ANOTHER 309 ITR 2 40(DEL) IT WAS HELD THAT WHERE THERE WAS NO EVIDENCE THAT THE ASSE SSEE RECEIVED CONSIDERATION IN EXCESS OF THAT SHOWN IN THE AGREEM ENT TO SELL THERE WAS NO NECESSITY TO COMPUTE THE FAIR MARKET VALUE FOR CAPI TAL GAINS AND THAT THE FULL VALUE OF THE SALE CONSIDERATION WAS TO BE TAKEN INT O ACCOUNT. 29. IN VIEW OF THE PRECEDING DISCUSSION THE LD. CI T(A) HAS CLEARLY ERRED IN HOLDING THAT THE AO WAS WITHIN HIS JURISDICTION TO INVOKE THE PROVISIONS OF SECTION 142A OF THE ACT IN THIS CASE. THERE IS N O DENYING THE FACT THAT THE AO CAN SEEK THE HELP OF A SPECIALIST TO DETERMINE T HE CORRECT VALUE. HOWEVER AS DISCUSSED HEREINBEFORE THE PRIMARY CON DITION OF SECTION 69B NEEDS TO BE MET FIRST SO AS TO ENABLE THE INVOCATI ON OF SECTION 142A OF THE ACT. TO REITERATE THE AO CAN MAKE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER FOR THE PURPOSE OF MAKING ASSES SMENT OR REASSESSMENT ONLY WHERE THE ASSESSEE HAS MADE INVESTMENT WHICH ARE NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. SANS THE FULFILLMENT OF THIS CONDITION OF SECTION 69B SECTION 142A CANNOT BE TAKEN RECOURSE TO PART ICULARLY WHEN AFTER THE PHRASE FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT IT HAS BEEN ENACTED THAT WHERE AN ESTIMATE O F THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69B.IS REQUIRE D TO BE MADE. SINCE SECTION 69B ENVISAGES ONLY VALUE OF INVESTMENT NOT FULLY RECORDED IN THE ITA NOS. 1141 1142 & 1773(DEL)08 20 BOOKS OF ACCOUNT TO BE DEEMED TO BE THE ASSESSEES INCOME WHERE THERE IS NO FINDING THAT THE INVESTMENT MADE BY THE ASSESSEE DOES NOT STAND FULLY RECORDED IN THE BOOKS OF ACCOUNT OBVIOUSLY THE VA LUE OF SUCH INVESTMENT WOULD NOT REQUIRE TO BE ESTIMATED AS SUCH VALUE CA NNOT BE DEEMED TO BE THE INCOME OF THE ASSESSEE AND IT IS THEREFORE THAT T HE PROVISIONS OF SECTION 142A CANNOT BE INVOKED IN SUCH A CASE. 30. THE LD. CIT(A) HAS FURTHER ERRED IN OBSERVING T O THE EFFECT THAT SINCE SECTION 142A ONLY REFERS TO FOR THE PURPOSE OF MAK ING ASSESSMENT OR REASSESSMENT THE AO CAN REQUISITION THE DEPARTMEN TAL VALUATION OFFICER TO ESTIMATE THE VALUE OF THE PROPERTY AND HENCE BEFOR E MAKING SUCH A REFERENCE UNDERSTATEMENT OF PURCHASE CONSIDERATION IS NOT REQUIRED TO BE ESTABLISHED. THERE IS NO QUESTION OF THE UNDERSTA TEMENT OF PURCHASE CONSIDERATION REQUIRING TO BE ESTABLISHED BEFORE MA KING THE REFERENCE. RATHER THE REQUIREMENT IS THAT THE AO BE IN POSSE SSION OF SOME MATERIAL SHOWING THAT THE INVESTMENT WAS NOT FULLY DISCLOSED IN THE BOOKS. AS HELD IN M/S. RAJESHWAR NATH GUPTA HUF (SUPRA) IT IS ONLY THEN THAT THE QUESTION OF ASCERTAINING SUCH INVESTMENT BY MAKING A REFERENCE U/S 142 A WOULD CROP UP. MOREOVER IT CANNOT BE GAINSAID T HAT K.P. VARGHESE(SUPRA) STILL HOLDS THE FIELD AND THE ONU S OF THE DEPARTMENT TO ITA NOS. 1141 1142 & 1773(DEL)08 21 PROVE OVERSTATEMENT OF SALE CONSIDERATION HAS NOT BEEN DISCHARGED IN THIS CASE. 31. APROPOS RELIANCE BY THE LD. CIT(A) ON HANEMP P ROPERTIES P. LTD. V. ACIT 101 ITD 19(DEL) IT MAY BE POINTED OUT THAT T HE SAID DECISION IS NOT APPLICABLE TO THE PRESENT CASE IN VIEW OF ASHOK S ONI V. ITO 102 TTJ(DEL)964 WHEREIN IT IS HELD THAT: FROM THE FACTS AVAILABLE ON RECORD IT IS CLEAR THA T THE SALE CONSIDERATION AS PER THE REGISTERED DOCUMENT WAS ON LY A SUM OF ` 18 LAKHS. THERE WAS NO MATERIAL AVAILABLE WITH THE A O TO SHOW THAT THE ASSESSEE RECEIVED MUCH MORE THAN THE SUM SHOWN IN T HE REGISTERED DOCUMENTS. AFTER DELETION OF S. 52 W.E.F. ASSTT. YEAR 1988-89 IT IS NOT POSSIBLE FOR THE AO TO ADOPT THE MARKET VALUE OR AN Y OTHER VALUE OTHER THAN THE APPARENT CONSIDERATION FOR SALE. AS ALREA DY OBSERVED THERE IS NO EVIDENCE BEFORE THE REVENUE AUTHORITIES TO SH OW OR SUSPECT THAT THE SALE VALUE DECLARED IN THE INSTRUMENT OF TRANSF ER WAS UNDERSTATED AND THAT CONSIDERATION OVER AND ABOVE WHAT WAS STAR TED IN THE INSTRUMENT OF TRANSFER HAD PASSED BETWEEN THE PARTI ES. THEREFORE THE ACTION OF THE AO IN SUBSTITUTING THE FULL VALUE OF THE CONSIDERATION RECEIVED BY THE FAIR MARKET VALUE AS STATED BY THE DVO IN HIS REPORT WAS NOT IN ACCORDANCE WITH LAW. IN THE CIRCUMSTANC ES THERE WAS NO CAPITAL GAIN WHICH COULD BE BROUGHT TO TAX IN THE H ANDS OF THE ASSESSEE. 32. IT WAS ALSO HELD THAT:- 8. WE MAY MENTION HERE THAT THE DECISION IN THE CASE OF C.B. GAUTAM V. UNION OF INDIA & ORS. (1992) 108 CTR (SC) 304 R/W (1993) 110 CTR (SC) 179 : (1993) 199 ITR 530 (SC) WAS TEN DERED IN THE CONTEXT OF PROVISIONS OF CHAPTER XX-C OF THE I.T. A CT WHEREBY THE REVENUE HAD A PRE-EMPTIVE RIGHT TO PURCHASE AN IMMO VABLE PROPERTY FOR THE CONSIDERATION STATED IN AN AGREEMENT FOR TR ANSFER BETWEEN THE PARTIES IN CERTAIN CIRCUMSTANCES. THE OBSERVATION S OF THE BENCH ARE CONTRARY TO THE VARIOUS JUDICIAL PRONOUNCEMENTS LAI D DOWN BY HONBLE SUPREME COURT IN THE CASES REFERRED TO ABO VE. WE ARE ITA NOS. 1141 1142 & 1773(DEL)08 22 THEREFORE BOUND TO FOLLOW THE DECISION OF THE HON BLE SUPREME COURT. AS ALREADY OBSERVED BY US THERE IS NO EVIDENCE BEF ORE THE REVENUE AUTHORITIES TO SHOW OR SUSPECT THAT THE SALE VALUE DECLARED IN THE INSTRUMENT OF TRANSFER WAS UNDERSTATED AND THAT CON SIDERATION OVER AND ABOVE WHAT WAS STATED IN THE INSTRUMENT OF TRAN SFER HAD PASSED BETWEEN THE PARTIES. WE THEREFORE HOLD THAT THE ACTION OF THE AO IN SUBSTITUTING THE FULL VALUE OF THE CONSIDERATION RE CEIVED BY THE FAIR MARKET VALUE AS STATED BY THE DVO IN HIS REPORT WAS NOT IN ACCORDANCE WITH LAW. IN THE CIRCUMSTANCES WE HOLD THAT THERE WAS NO CAPITAL GAIN WHICH COULD BE BROUGHT TO TAX IN THE H ANDS OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 33. IN THE CASE OF A RELATED ASSESSEE MAHESH KUMA R A SIMILAR DECISION OF THE CIT(A) STANDS SET ASIDE BY THE TRIBUNAL WHILE A LLOWING THE ASSESSEES APPEAL VIDE ORDER (COPY PLACED ON RECORD) DATED 25 .6.09 IN ITA NOS. 1785 AND 1042(DEL)2008. THEREIN IT WAS INTER ALIA O BSERVED AS FOLLOWS:- 6. AFTER CONSIDERING BOTH THE SIDES AT LENGTH WE ARE OF THE VIEW THAT DURING THE SEARCH OPERATION NO MATERIAL IN RESPEC T OF THE INVESTMENT IN THE PLOTS REFERRED TO THE VALUATION OFFICER WAS FOUND AND SEIZED. THERE WAS NO EVIDENCE GATHERED DURING THE SEARCH OP ERATION THAT ASSESSEE HAS INVESTED MORE THAN THE VALUE DECLARED IN THE REGISTERED SALE DEED. THE COMPARABLE INSTANCES TAKEN BY THE VALUATION OFFICER WERE SITUATED FAR AWAY FROM THE LOCATION OF THESE P LOTS. THESE PLOTS ARE LOCATED IN SECTOR 8 OF DWARKA AND WERE ALSO HAV ING NOT ONLY LOCATIONAL DISADVANTAGE BUT ALSO THE DEVELOPMENT OF THAT AREA WAS NOT AS WELL DEVELOPED AS THE COMPARABLE INSTANCES TAKEN BY THE VALUATION OFFICER FOR THE PROPERTY SITUATED IN JANAK PURI AN D VIKAS PURI NEW DELHI. THERE WAS ALSO DISADVANTAGE IN RESPECT OF NOISE AND DISTURBANCES WHICH THE VALUATION OFFICER HIMSELF HA S NOTED THAT THE PROPERTIES ARE SITUATED NEAR THE AIRPORT AND RAILWA Y TRACK. THIS ISSUE ALSO STANDS COVERED IN FAVOUR OF THE ASSESSEE IN VI EW OF THE DECISION OF ITAT IN ITO V. RAJESHWAR NATH GUPTA IN ITA NO. 4295 (DEL)2005 DATED 9.5.2008 WHICH HAS ALSO BEEN REAFFIRMED IN TH E DECISION OF ITAT G BENCH IN ITA NO. 1619(DEL)2008 DATED 22.4.2009 IN SMT. SEEMA GUPTA WHERE THE ITAT HELD AS UNDER:- ITA NOS. 1141 1142 & 1773(DEL)08 23 5. LEARNED DR COULD NOT PRODUCE ANY MATERIAL WHIC H COULD REQUIRE VALUATION OF THE PROPERTY TO BE REFERRED TO VALUATION OFFICER UNDER SECTION 142A OF THE ACT. IN THESE CI RCUMSTANCES ON THIS GROUND ALONE THE ADDITION CANNOT BE MADE A ND THE ORDER IS TO BE VACATED. WE MAY ALSO POINT OUT THAT THE COMPARABLE CASE REFERRED TO BY THE DISTRICT VALUATI ON OFFICER FOR THE PURPOSES OF VALUATION HAS BEEN FOUND BY THE CIT(APPEALS) TO BE NOT A COMPARABLE ONE AS IT WAS I N RESPECT OF A PROPERTY LOCATED AT SHRI RAM ROAD WHICH IS 9 KMS. AWAY FROM THE PROPERTY OWNED BY THE ASSESSEE. EVEN THOU GH THE CIT(APPEALS) ADOPTED A ROUGH ESTIMATE OF ` 13 000/- PER SQ.MTR. WHICH HAS NO BASIS AND ON THAT GROUND ALSO NO ADDI TION CAN BE MADE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE C IT(APPEALS) AS WELL AS THAT OF THE AO AND ALLOW THE ASSESSEES APPEAL AND DISMISS THE APPEAL OF THE REVENUE. 7. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES AN D PLEADINGS AND THE CASE LAW RELIED UPON WE ARE OF THE VIEW T HAT THE ORDERS OF THE LOWER AUTHORITIES DESERVE TO BE SET ASIDE AND WE DO SO AND ALLOW THE APPEAL OF THE ASSESSEE AND DISMISS THE APPEAL OF TH E REVENUE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. 34. RAJESHWAR NATH GUPTA (SUPRA) AND SMT. SEEMA GUPTA(SUPRA) IT IS SEEN WERE FOLLOWED THEREIN. 35. THE SAID TRIBUNAL ORDER IN MAHESH KUMAR HAS N OT BEEN SHOWN TO HAVE BEEN SET ASIDE ON APPEAL. THE FACTS HEREIN A S NOTED ARE EXACTLY SIMILAR TO THE ONES PRESENT THERE. 36. FURTHER IN CIT V. VINOD SINGHAL THE HONBLE DELHI HIGH COURT VIDE DECISION DATED 5.5.10 (COPY PLACED ON RECORD) IN ITA NO. 482/2010 ITA NOS. 1141 1142 & 1773(DEL)08 24 HAS HELD THAT WHERE THE TRIBUNAL DECIDING AGAINST THE REVENUE HELD THAT THE ADDITION COULD NOT BE MADE ONLY ON THE BASIS OF THE DVOS REPORT UNLESS AND UNTIL THERE WAS EVIDENCE TO SHOW THAT SOMETHING OVE R AND ABOVE THE AMOUNT SHOWN IN THE REGISTERED SALE DEED HAD BEEN PAID BY THE ASSESSEE TO THE SELLER RELYING ON K.P. VERGHESE V. ITO 131 ITR 597(SC) AND CIT V. SHAKUNTALA DEVI 316 ITR 46(DEL) THE TRIBUNAL HAD MERELY FOL LOWED THE LAW SETTLED BY THE HONBLE SUPREME COURT AND THE HONBLE DELHI HIG H COURT. 37. IN SHAKUNTALA DEVI (SUPRA) IT WAS HELD THAT THERE MUST BE A FINDING OF THE REVENUE THAT THE ASSESSEE HAD RECEIVED AMOU NTS OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE DEED; THAT THIS IS THE PRIMARY BURDEN CAST ON THE REVENUE AND IT IS ONLY WHEN SUCH BURDEN IS DISC HARGED THAT IT WOULD BE PERMISSIBLE TO ADOPT THE VALUATION AS GIVEN BY THE DVO; AND THAT IN THE ABSENCE OF THE BURDEN OF THE REVENUE HAVING BEEN DI SCHARGED IT IS NOT PERMISSIBLE IN LAW TO MAKE ANY INFERENCE AGAINST TH E ASSESSEE. 38. IN THE PRESENT CASE AS OBSERVED THE REVENUE H AS FAILED TO DISCHARGE ITS PRIMARY ONUS OF PROVING THAT THE ASSESSEE HAD R ECEIVED ANY AMOUNT OVER AND ABOVE THE CONSIDERATION OF ` 2 00 000/- AS STATED IN THE SALE DEED. SANS SUCH DISCHARGE OF ONUS BY THE REVENUE IN KEEPING W ITH K.P. VERGHESE (SUPRA) AND SHAKUNTALA DEVI (SUPRA) BESIDES VARI OUS OTHER DECISIONS ON THE ITA NOS. 1141 1142 & 1773(DEL)08 25 ISSUE INCLUDING THOSE CONSIDERED HEREIN THERE WAS NO OCCASION TO ADOPT THE VALUATION GIVEN BY THE DVO. 39. THE LD. CIT(A) WITHOUT BEING IN POSSESSION OF MATERIAL AGAINST THE ASSESSEE OBSERVED INTER ALIA AS FOLLOWS:- IT IS EVIDENT THAT TO THE CONVENIENCE OF BOT H THE CONSIDERATION WAS UNDERSTATED WITH A VIEW TO ESCAP E FROM TAX INCIDENCE. AS DISCUSSED ABOVE THE ASSESSEE CANNOT CONTEND THAT THE REVENUE SHOULD ACCEPT WHATEVER CONSIDERATION IS (SI C) SHOWN IN THE BOOKS BY HIM DISREGARDING THE CIRCUMSTANTIAL EVIDEN CES WHICH ARE WEIGHING AGAINST HIM. THE ARGUMENTS PUT FORTH BY THE ASSESSEE AS REGARDS TO EXISTENCE OF ANY MATERIAL TO SHOW THAT E XTRA CONSIDERATION HAS EXCHANGED HANDS IN ORDER TO ESTIMATE THE INVEST MENT AS PER THE MARKET VALUE IS CONCERNED IT IS NOT POSSIBLE IN EV ERY INSTANT TO HAVE A DIRECT EVIDENCE RELATING TO UNDERSTATEMENT OF CONSI DERATION. THE VALUATION OFFICER HAS RIGHTLY ADOPTED THE RATE BY T AKING THE VALUE OF THE PROPERTY SOLD IN THE OPEN AUCTION. IT GIVES A REASONABLE VALUE FOR COMPARISON. 40. NOW OBVIOUSLY THE AFORESAID OBSERVATIONS OF T HE LD. CIT(A) ARE NOT IN CONSONANCE WITH THE LAW SETTLED INTER ALIA IN K.P VERGHESE (SUPRA) AND SHAKUNTALA DEVI (SUPRA). TO REITERATE IN THE A BSENCE OF ANY MATERIAL REGARDING THE ASSESSEE HAVING RECEIVED ANY ON MONEY OR CONSIDERATION OVER AND ABOVE THAT STATED IN THE SALE DEED NO PRESUMPT ION CAN BE DRAWN AGAINST THE ASSESSEE MUCH LESS CAN ANY ADDITION BE MADE. 41. FURTHER THE LEARNED COUNSEL FOR THE ASSESSEE H AS DRAWN OUR ATTENTION TO THE ASSESSEES OBJECTIONS AGAINST THE VALUERS R EPORT. THESE OBJECTIONS WERE SUBMITTED BY THE ASSESSEE BEFORE THE AO VIDE L ETTER DATED 15.2.07. A ITA NOS. 1141 1142 & 1773(DEL)08 26 COPY THEREOF IS PLACED AT PAGES 25 TO 30 OF THE APB . PAGE 31 OF THE APB COMPRISES AN AFFIDAVIT OF THE ASSESSEE DEPOSING TH AT HE PURCHASED ONE HALF UNDIVIDED PORTION OF THE SHOP NO. 1622 & 1623 GHAN TAGHAR DELHI VIDE SALE DEED DATED 10.11.2000; THAT THE ASSESSEE HAD N OT INCURRED ANY EXPENDITURE ON ALTERATION/RENOVATION/ADDITION ETC. OF THE SAID PROPERTY AS HE WAS NOT ABLE TO GET THE PROPERTY DIVIDED FROM OTHER JOINT HOLDERS AND TO TAKE POSSESSION THEREOF. 42. THE ASSESSEE IN HIS AFORESAID LETTER DATED 15. 2.07 FILED BEFORE THE AO OBJECTED INTER ALIA AS FOLLOWS:- 1. THAT THE BASE OF THE VALUATION REPORT IS TOTALL Y WRONG ARBITRARY AND WITHOUT ANY GROUND REALITIES. 2. THAT THE LD. VALUATION OFFICER IS WRONG IN CONSIDER ING SALE INSTANCE OF PROPERTY AT SHRI NAGAR EXTENSION DELHI WHICH IS FAR AWAY FROM THE CONCERNED PROPERTY. THE SALE INSTAN CE HAS NO CO- RELATION WITH THE CONCERNED PROPERTY. 3. THAT THE SALE INSTANCE IS DDA PROPERTY WHEREAS THE CONCERNED PROPERTY IS OLD PROPERTY IN OLD CITY HAVING INFERIO R INFRASTRUCTURES. 4. THAT THE LD. VALUATION OFFICER IS WRONG IN CONSIDER ING ADJUSTMENTS IN COMPARISON TO THE SALE INSTANCE I.E. THE CONCERNED PROPERTY IS BETWEEN OTHER PROPERTIES WHEREAS INSTAN T PROPERTY IS CORNER PROPERTY AND THAT TOO FACING PARKS ON TWO SI DES. IN NORMAL COURSE THE PROPERTY IS AT PREMIUM OF 10% IF CORNER PROPERTY AND FURTHER 10% PREMIUM IF FACING PARKS AN D IF FACING 2 SIDES ARE PARK THEN IT IS PRIME PROPERTY AND WEIGHT AGE SHOULD BE GIVEN MORE THAN 50%. 5. THAT THE LD. VALUATION OFFICER IS WRONG IN CONSIDER ING THE CONCERNED PROPERTY AS COMMERCIAL PROPERTY WHEREAS T HE ITA NOS. 1141 1142 & 1773(DEL)08 27 CONCERNED PROPERTY IS RESIDENTIAL PROPERTY AND BEIN G MISUSED AS COMMERCIAL PROPERTY AND ADJUSTMENT TO THE TUNE OF + 50% IS WRONG. 6. THAT THE LD. VALUATION OFFICER HAS ERRED IN COMPLET ION OF CONSTRUCTION IN 1956 WHEREAS THE FATHER OF SELLER P URCHASED THIS PROPERTY IN 1956 WHICH WAS BUILT LONG BACK I.E. BEF ORE 1947 AND THE DEPRECIATED COST OF CONSTRUCTION IS NIL ON THE DATE OF PURCHASE. 7. THAT THE CONCERNED PROPERTY IS NOT OCCUPIED BY THE ASSESSEE AND THE LD. VALUATION OFFICER IN SPITE OF INSPECTION LE FT THE POINT NO. 6.5 BLANK. THE SAID PROPERTY IS HALF UNDIVIDED PO RTION OF THE INHERITED PROPERTY BEING IN OCCUPATION OF ONE CO-OW NER. THE ASSESSEE PURCHASED THE SAID PROPERTY FROM OTHER CO- OWNER WHO IS NOT IN OCCUPATION OF SAID PROPERTY WITH THE INTENTI ON THAT THE OTHER PORTION WILL BE BOUGHT FROM OTHER CO-OWNER BU T UNFORTUNATELY THE DEAL COULD NOT MATERIALIZE AND TH E ASSESSEE IS NOT ABLE TO GET THE POSSESSION OF HALF PORTION FRO THE SELLER. EVEN THE ASSESSEES ADVOCATE GAVE NOTICE FOR POSSESSION TO THE SELLER FOR GETTING POSSESSION. PHOTOCOPY OF SAID NOTICE IS ENCLOSED HEREWITH. THE LD. VALUATION OFFICER HAS NOT CONSI DERED THE SAME FOR VALUATION IN SPITE OF AFFIDAVIT GIVEN IN THIS R ESPECT. PHOTOCOPY OF AFFIDAVIT IS ENCLOSED HEREWITH. 8. FURTHER THE CONCERNED PROPERTY IS NOT COVERED UNDE R SEC. 142A OF THE INCOME TAX ACT 1961 AS IT REFERS TO ONLY TH OSE PROPERTIES OR INVESTMENTS WHICH ATTRACTS THE PROVISIONS OF SEC TION 69 OR SECTION 69B OR BULLION JEWELLERY OR OTHER VALUABLE ARTICLES REFERRED TO IN SECTION 69A OR 69B OF THE INCOME TAX ACT 1961. 43. THE AO REDUCED THE VALUE OF THE PROPERTY AS DE TERMINED BY THE VALUATION OFFICER BY 10% I.E. BY AN AMOUNT OF ` 73 675/- OBSERVING THAT THE PROPERTY WAS IN ADVERSE POSITION AND WAS NOT IN TH E POSSESSION OF THE ASSESSEE WHICH FACT HAD NOT BEEN COMMENTED UPON B Y THE VALUATION OFFICER ITA NOS. 1141 1142 & 1773(DEL)08 28 IN HIS REPORT. HOWEVER THE OTHER OBJECTION RAISED BY THE ASSESSEE AS NOTICED ABOVE WERE NOWHERE DEALT WITH BY THE AO. IT WOULD BE APPROPRIATE TO REPRODUCE HEREUNDER THE RELEVANT PORTION OF THE AS SESSMENT ORDER IN THIS REGARD:- DURING THE YEAR THE ASSESSEE PURCHASED A SHOP AT NO. 1622 & 1623 (HALF PORTION) AT CHANDRA VAL ROAD SUBJI MANDI GH ANTA GHAR DELHI. IT WAS STATED BY THE ASSESSEE THAT HE HAS I NVESTED ONLY A SUM OF ` 2 00 000/- IN PURCHASE OF THE PORTION OF THE SHOP U NDER REFERENCE. THE INVESTMENT IN PURCHASE OF PROPERTY WAS CONSIDER ED LOW AS COMPARED TO THE PREVAILING MARKET PRICE FOR SUCH KI ND OF PROPERTY. A REFERENCE U/S 142A WAS MADE TO THE VALUATION OFFICE R OF THE INCOME TAX DEPARTMENT. THE VALUE OF INVESTMENT IN THE PR OPERTY UNDER REFERENCE WAS DETERMINED AT ` 7 36 759/- BY THE DEPARTMENTAL VALUATION OFFICER AS PER HIS REPORT DATED 30.06.200 6. VIDE LETTER DATED 16.11.2006 THE ASSESSEE WAS ASKED TO SUBMIT THE OBJECTIONS IF ANY WITH REGARD THE VALUE DETERMINED BY THE VALUAT ION OFFICER. THE ASSESSEE VIDE HIS LETTER DATED 15.02.2007 SUBMITTED HIS OBJECTIONS. THE OBJECTIONS SUBMITTED BY THE ASSESSEE HAVE BEEN CONSIDERED. THE SAME ARE NOT ACCEPTABLE. HOWEVER THE ASSESSEE HA D SUBMITTED IN HIS LETTER DATED 15.02.2007 AT S.NO. 7 THAT:- THE CONCERNED PROPERTY IS NOT OCCUPIED BY THE ASSE SSEE AND THE LD. VALUATION OFFICER IN SPITE OF INSPECTION LE FT THE POINT NO. 6.5 BLANK. THE SAID PROPERTY IS HALF UNDIVIDED PO RTION OF THE INHERITED PROPERTY BEING IN OCCUPATION OF ONE CO-OW NER. THE ASSESSEE PURCHASED THE SAID PROPERTY FROM OTHER CO- OWNER WHO IS NOT IN OCCUPATION OF SAID PROPERTY WITH THE INTE NTION THAT THE OTHER PORTION WILL BE BOUGHT FROM OTHER CO-OWNER B UT UNFORTUNATELY THE DEAL COULD NOT MATERIALIZE AND TH E ASSESSEE IS NOT ABLE TO GET THE POSSESSION OF HALF PORTION FROM THE SELLER. EVEN THE ASSESSEES ADVOCATE GAVE NOTICE FOR POSSE SSION TO THE SELLER FOR GETTING POSSESSION. PHOTOCOPY OF SAID N OTICE IS ENCLOSED HEREWITH. THE LD. VALUATION OFFICER HAS NOT CONSIDERED THE SAME FOR VALUATION IN SPITE OF AFFID AVIT GIVEN IN THIS RESPECT. PHOTOCOPY OF AFFIDAVIT IS ENCLOSED H EREWITH. ITA NOS. 1141 1142 & 1773(DEL)08 29 AFTER GOING THROUGH THE VALUATION REPORT IT IS SEE N THAT THE VALUATION OFFICER AT SL. NO. 6.5 OF HIS REPORT HAS NOT COMMEN TED UPON ABOUT THE ADVERSE OCCUPANCY OF THE SHOP. THE OBJECTION OF T HE ASSESSEE IN THIS REGARD APPEARS CORRECT. THE VALUE OF THE PROPERTY CERTAINLY GETS DOWN IF THE SAME IS UNDER ADVERSE POSSESSION OF AN Y OTHER PERSON. THIS ASPECT HAS NOT BEEN CONSIDERED BY THE VALUATIO N OFFICER. CONSIDERING THIS ASPECT OF OCCUPANCY OF THE PROPERT Y PURCHASED BY THE ASSESSEE THE VALUE OF THE SHOP DETERMINED BY THE VA LUATION OFFICER IS REDUCED BY 10% I.E. BY AN AMOUNT OF ` 73 675/-. THUS THE TOTAL INVESTMENT IN PURCHASE OF THE PROPERTY UNDER REFERE NCE IS ESTIMATED AT ` 6 63 084/-. THEREFORE THE UNEXPLAINED INVESTME NT IN PURCHASE OF PROPERTY I.E. SHOP WORKS OUT AT ` 4 63 084/-. THE SAME IS BEING INCLUDED IN THE INCOME OF THE ASSESSEE U/S 69 OF TH E I.T. ACT 1961. AFTER DISCUSSION AND CONSIDERING THE DETAILS FILED THE INCOME OF THE ASSESSEE IS WORKED OUT AT ` 6 60 324/- WHICH INCLUDES UNEXPLAINED INVESTMENT OF ` 4 63 084/- U/S 69 OF THE I.T. ACT 1961. 44. THE LD. CIT(A) GRANTED A FURTHER REDUCTION OF 1 0% TO THE ASSESSEE. HE TOO HOWEVER NEITHER DEALT WITH THE FACT THAT THE AO HAD NOT MET WITH OBJECTIONS RAISED BY THE ASSESSEE NOR DID HE HIMSE LF DEEM IT APPROPRIATE TO DO SO. 45. THE MERE FACT THAT THE VALUATION OFFICER IS A T ECHNICAL PERSON AND BASING THE ADDITION SOLELY ON THE VALUATION OFFICER S REPORT IS THUS ENTIRELY UNSUSTAINABLE. 46. FURTHER IF THE ACTION TAKEN BY THE AUTHORITIES BELOW WERE TO BE RATIFIED IT WOULD AMOUNT TO HOLD THAT IN THE CASE OF EVERY PURCHASE OF PROPERTY IT WOULD NOT BE THE ACTUAL AMOUNT PAID BY THE PURCHASER WHICH WOULD BE TAKEN AS VALUE OF INVESTMENT FOR THE PURPO SES OF ASSESSMENT BUT ITA NOS. 1141 1142 & 1773(DEL)08 30 THE FAIR VALUE OF THE INVESTMENT ON THE RELEVANT DA TE AS DECIDED BY THE DEPARTMENTAL VALUATION OFFICER. THERE IS NO PROVIS ION IN THE ACT REQUIRING SUCH A COURSE TO BE ADOPTED AND THEREFORE OBVIOUS LY SUCH A PRESUMPTUOUS VIEW WOULD BE ENTIRELY UNSUSTAINABLE IN THE EYE OF LAW. 47. SECTION 50 C OF THE I.T. ACT IS A SPECIAL PROVI SION ENACTED FOR THE FULL VALUE OF THE CONSIDERATION IN CERTAIN CASES. IT IS THIS PROVISION WHICH IS TO BE INVOKED IN ORDER TO COMPUTE CAPITAL GAINS IN THE HA NDS OF A SELLER ON THE BASIS OF CIRCLE RATE. SECTION 50C OF THE ACT ALSO DOES NOT TALK OF THE PURCHASER I.E. THE WORDS USED THEREIN ARE CONSIDERATION REC EIVED AND NOT CONSIDERATION PAID. NO OTHER PROVISION WHICH CAN WORK TO THE DETRIMENT OF THE ASSESSEE IN THE PRESENT CASE HAS BEEN BROUGHT TO OUR NOTICE. 48. NOW COMING TO THE COMPARABLE CASES QUA THE PR OPERTY TRANSACTED IN THE VALUATION OFFICER CONSIDERED A SALE INSTANCE OF A PROPERTY AT SRINAGAR EXTN. DELHI. THIS PROPERTY HAD BEEN SOLD BY THE DDA. THE LEARNED COMMISSIONER (A) HAS HELD THAT THE ASSESSEE REMAINE D UNABLE TO SHOW THAT THE SHOP ACQUIRED BY HIM WAS IN A POSITION WHICH WA S DISADVANTAGEOUS AS COMPARED TO THE PROPERTY AS SOLD BY THE DDA. HOWEV ER WHILE OBSERVING SO THE LD. CIT(A) HAS FAILED TO CONSIDER THE FACT THAT THE ASSESSEE VIDE LETTER DATED 15.2.2007 (SUPRA) HAS RAISED HIS POINTED OBJ ECTIONS TO THE SAID SALE INSTANCE BY DDA IN SRINAGAR EXTN. DELHI. HE HAD SP ECIFICALLY CONTENDED IN ITA NOS. 1141 1142 & 1773(DEL)08 31 HIS OBJECTIONS THAT THE SALE INSTANCE REFERRED TO B Y THE VALUATION OFFICER WAS NOT A PROPER COMPARABLE CASE SINCE IT WAS AN INSTA NCE OF SALE OF PROPERTY SITUATED FAR AWAY FROM THE PROPERTY IN WHICH THE AS SESSEE HAD TRANSACTED; THAT THE SAID SALE INSTANCE HAD NO CO-RELATION WITH THE PROPERTY TRANSACTED IN BY THE ASSESSEE; AND THAT THE SALE INSTANCE WRONGLY RELIED ON WAS A DDA PROPERTY WHEREAS THE PROPERTY TRANSACTED IN BY THE ASSESSEE WAS AN OLD PROPERTY IN THE OLD CITY HAVING INFERIOR INFRASTRU CTURE. 49. THESE OBJECTIONS HAVE NOT BEEN SHOWN TO HAVE B EEN DEALT WITH AND DISPOSED OF EITHER BY THE AO OR BY THE LD. CIT (A) . RATHER THE LD. CIT (A) HAS AND IN OUR OPINION UNREASONABLY SO TRIED TO FOIST THE ONUS ON TO THE ASSESSEE BY SAYING THAT THE VALUATION OFFICER WAS R IGHT IN ADOPTING THE RATE TAKEN FOR THE VALUE OF THE PROPERTY SOLD BY THE DDA IN AN OPEN AUCTION. IT HAS NOT BEEN REBUTTED THAT THE SALE INSTANCE RELIED ON AS A COMPARABLE CASE IS NOT IN FACT COMPARABLE IN VIEW OF THE OBJECTIONS SPECIFICALLY RAISED BY THE ASSESSEE TO THE EFFECT THAT THAT SALE INSTANCE WAS CONCERNING A PROPERTY DISTINCTLY LOCATED TO THE PROPERTY IN WHICH THE ASS ESSEE HAD TRANSACTED. THE LD. CIT(A) HAS STRESSED THAT THAT SALE WAS A SALE B Y THE DDA A GOVERNMENT AGENCY. HOWEVER AS TO HOW THAT SALE WAS COMPARABL E TO THE TRANSACTION ENTERED INTO BY THE ASSESSEE HAS NOWHERE BEEN SHOW N. ITA NOS. 1141 1142 & 1773(DEL)08 32 50. FURTHER STILL THOUGH THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY SALE INSTANCE WHICH COULD HAVE BEEN TAKEN AS A COMPARABL E CASE THIS BY ITSELF IS NOT A FACTOR AGAINST THE ASSESSEE PARTICULARLY WHE N FIRSTLY THE CONSIDERATION AS MENTIONED IN THE SALE DEED HAS NOT BEEN SHOWN TO BE UNTRUE AS WELL AS THE FACT THAT THE COMPARABLE CASE SOUGHT TO BE RELIED O N BY THE DEPARTMENT AGAINST THE ASSESSEE AS SEEN HEREINABOVE IS NOT A T ALL A COMPARABLE CASE. 51. THUS THOUGH THE LD. CIT(A) HAS OBSERVED THAT T HE ASSESSEE CANNOT CONTEND THAT THE REVENUE SHOULD ACCEPT WHATEVER CON SIDERATION HAS BEEN SHOWN BY HIM IN THE BOOKS BY DISREGARDING THE CIRCU MSTANTIAL EVIDENCE WHICH IS WEIGHING AGAINST HIM IT HAS NOT BEEN BROU GHT OUT BY THE LD. CIT(A) AS TO WHAT CIRCUMSTANTIAL EVIDENCE IS EXISTING AGAI NST THE ASSESSEE. MOREOVER AS NOTED IN VIEW OF THE DIRECT DOCUMENTA RY EVIDENCE IN THE SHAPE OF THE SALE DEED ENTERED INTO BY THE ASSESSEE REMAI NING UNHINGED THERE IS NO QUESTION OF GOING INTO ANY CIRCUMSTANTIAL EVIDENCE AND EVEN OTHERWISE THERE IS NO CIRCUMSTANTIAL EVIDENCE WEIGHING AGAINS T THE ASSESSEE AS WE HAVE DISCUSSED ABOVE. THEREFORE THE VALUE OF THE TRANSACTION OF PURCHASE OF PROPERTY AS SHOWN IN THE SALE DEED HAS TO BE A CCEPTED AS IT IS. 52. IN VIEW OF THE ABOVE DISCUSSION THE GRIEVANCE OF THE ASSESSEE BY WAY OF GROUND NOS. 3&4 IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. ITA NOS. 1141 1142 & 1773(DEL)08 33 53. HENCE ITA NO. 1141(DEL)08 FILED BY THE ASSESSE E FOR ASSESSMENT YEAR 2001-02 IS PARTLY ALLOWED AS ABOVE. ITA NO. 1142(DEL)2008: 54. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2004-05 TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2.(I)ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING T HE ACTION OF THE AO IN REASSESSING THE INCOME OF THE APPELLANT UNDER SE C. 153A OF THE ACT. (II) THAT THE REASSESSMENT FRAMED U/S 153A WITHOUT COMPLYING WITH THE STATUTORY REQUIREMENT AND THE PROCEDURE IS BAD AND AS SUCH THE ASSESSMENT FRAMED IS LIABLE TO BE QUASHED. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING TH A CTION OF THE AO IN MAKING AN ADDITION TO THE EXTENT OF ` 50 93 620/- AS UNDISCLOSED INVESTMENT UNDER SEC. 69 IN THE PURCHASE OF THE PRO PERTY. (II) THAT THE ABOVE ADDITION HAS BEEN MADE WITHOU T THERE BEING ANY MATERIAL OR EVIDENCE ON RECORD REGARDING ANY INVEST MENT HAVING BEEN MADE BY THE APPELLANT OVER AND ABOVE THE AMOUNT STA TED IN THE SALE DEED. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE AO IN MAKING A REFERENCE TO THE VALUATION OFFICER. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE A CTION OF THE AO IN RELYING UPON THE VALUATION REPORT AND IGNORING THE OBJECTION RAISED BY THE APPELLANT. ITA NOS. 1141 1142 & 1773(DEL)08 34 (III) THAT THE LD. CIT(A) HAS ERRED BOTH ON FACT S AND IN LAW IN IGNORING THE SETTLED POSITION OF LAW THAT VALUATION IS AN ART AND AS SUCH THE VALUATION REPORT IS ONLY AN OPINION AND CA NNOT BE THE SOLE BASIS FOR MAKING AN ASSUMPTION THAT THE ASSESSEE HA S MADE INVESTMENT OF THE AMOUNT STATED IN THE VALUATION REPORT. 5. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTE RNATIVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS E RRED BOTH ON FACTS AND IN LAW IN CALCULATING THE RELIEF GIVEN @ 10% O F ` 8 58 480/- WHICH HAS TO BE ` 9 62 120/- I.E. 10% OF ` 96 21 200/-. 55. GROUND NO.1 IS GENERAL. 56. APROPOS GROUND NO.2 NO ARGUMENTS HAVE BEEN ADD RESSED BEFORE US ON BEHALF OF THE ASSESSEE. AS SUCH GROUND NO.2 I S REJECTED. 57. COMING TO GROUND NO.3 THE ASSESSEES GRIEVANCE IS THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF ` 50 93 620/- AS UNDISCLOSED INVESTMENT U/S 69 IN THE PURCHASE OF PROPERTY WITH OUT THERE BEING ANY MATERIAL OR EVIDENCE ON RECORD CONCERNING ANY INVES TMENT HAVING BEEN MADE BY THE ASSESSEE OVER AND ABOVE THE AMOUNT STATED IN THE SALE DEED. 58. AS PER GROUND NO. 4 THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE AO IN MAKING REFERENCE TO THE VALUATION OFF ICER FOR VALUATION OF THE PROPERTY AND IN RELYING ON THE VALUATION REPORT OF THE VALUATION OFFICER WHILE IGNORING THE OBJECTIONS RAISED BY THE ASSESSE E. 59. THE FACTS ARE THAT A SEARCH AND SEIZURE OPERATI ON U/S 132 OF THE I.T. ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT ITA NOS. 1141 1142 & 1773(DEL)08 35 ON 7.10.2004 IN THE GRAIN MERCHANT GROUP OF CASES. THIS INCLUDE THE SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE SHRI DEVINDER KUMAR. A NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESS EE ON 13.5.2005. IN RESPONSE THE ASSESSEE FILED A RETURN OF INCOME AT ` 7 71 660/-. THIS WAS AS PER THE RETURN ORIGINALLY FILED AND THEREFORE IN THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 153 A OF THE ACT THE ASSESSEE DID N OT DECLARE ANY UNDISCLOSED INCOME. IN THE ASSESSMENT PROCEEDINGS IT WAS SEEN THAT DURING THE YEAR THE ASSESSEE HAD PURCHASED TWO INDUSTRIAL PLOTS AT GREA TER NOIDA. THE ASSESSEE STATED HIS INVESTMENT AT ` 22 24 100/- AND ` 14 45 000/- IN PURCHASE OF PLOT NO. 13 AND PLOT NO. 25 IN BLOCK-I SITE 5 GREATER NOIDA U.P. RESPECTIVELY. THE SAID INVESTMENT HAVING BEEN CONSIDERED BY THE A O TO BE SUBSTANTIALLY LOW THE AO MADE A REFERENCE U/S 142A OF THE ACT TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT WHO VALUED THE TWO IN DUSTRIAL PLOTS AT ` 52 51 200 AND ` 43 70 000/- RESPECTIVELY. HE SUBMITTED HIS REPOR TS DATED 29.06.06 AND 31.7.2006 IN THIS REGARD. THE ASSESS EE SUBMITTED HIS OBJECTIONS TO THESE REPORTS VIDE HIS LETTER DATED 2 3.3.2007. THE AO REJECTED THESE OBJECTIONS OBSERVING THAT THE VALUATION OFFI CER WHO WAS A TECHNICAL OFFICER WHILE DETERMINING THE VALUE OF THE PLOTS H AD CONSIDERED ALL THE ASPECTS RAISED BY THE ASSESSEE IN HIS SUBMISSIONS. THE OBJECTIONS RAISED BY THE ASSESSEE WERE THAT: ITA NOS. 1141 1142 & 1773(DEL)08 36 1. THAT THE LD. VALUATION OFFICER HAS ERRED IN TAK ING UPSIDC RATES FOR ALLOTMENT OF LAND RATHER THAN THE MARKET RATES ON WHICH THE ORIGINAL ALLOTTEE CAN SELL. THE MARKET RATES WERE LOWER THAN THE RATES OF UPSIDC DUE TO MANY FACTORS LIKE: A) THE PERSON WHO GOT THE ALLOTMENT FROM UPSIDC COULD NOT START THE PRODUCTION/INSTALL THE UNIT DUE TO SOME PROBLEMS S ELLS THE LAND IN THE MARKET AT LOWER RATES THAN THE PREVAILING RATES OF UPSIDC AS IF HE SURRENDERS THE LAND TO UPSIDC THEN HE WILL RECEI VE BACK ORIGINAL RATE AND THAT TOO AFTER DEDUCTION. B) THE MARKET RATES OF LAND WERE LOWER AS THERE WAS NO SCARCITY OF LAND BECAUSE UPSIDC WAS STILL INVITING APPLICATIONS FOR ALLOTMENT OF LAND AS EVIDENT FROM THE VALUATION OFFICERS REP ORT BY QUOTING THE RATES OBTAINED FROM UPSIDC. C) THE MARKET RATES OF LAND WERE LOWER THAN UPSIDC RAT ES AS THE UPSIDC ALLOTS LAND ON INSTALLMENT BASIS. AS ILLUS TRATION A COPY OF ALLOTMENT OF LAND BY UPSIDC AT GREATER NOIDA IS ENCLOSED HEREWITH. THE 25% OF THE AMOUNT HAS TO BE PAID IM MEDIATELY ANT 75% OF THE AMOUNT HAS TO BE PAID IN FIVE YEARS AS P ER PARA 1 OF PAGE 2 OF THIS ALLOTMENT LETTER. BUT WHEN THE PL OT IS PURCHASED FROM MARKET FULL PAYMENT HAS TO BE MADE AND THE IN TEREST FACTOR IS CONSIDERED IN DETERMINATION OF MARKET PRICE. D) THE MARKET RATE OF LAND WAS FURTHER REDUCED BY TRAN SFER FEE CHARGED BY UPSIDC. WHENEVER THE SELLER SELLS THE LAND THE TRANSFER FEE IS CHARGED AS PER RATES PRESCRIBED BY UPSIDC. IN THE CASE OF THESE PLOTS THE TRANSFER FEE TO THE TUNE O F ` 6 56 400/- AND ` 3 80 000/- HAS BEEN LEVIED ON THE RESPECTIVE PLOTS. II. THE LD. VALUATION OFFICER HAS ERRED IN CONSIDE RING RATES OF UPSIDC FOR THE M/O OCT. 2003 WHEREAS THE PURCHASE W AS MADE IN THE M/O JULY/AUGUST 2003 WHEN THE DEAL WAS STRUCK AS E VIDENT FROM THE DATES OF ADVANCE PAID ON 1/8/2003 WRITTEN IN THE AG REEMENT OF PLOT NO. 25 (COPY ENCLOSED). THE RATES ADOPTED BY THE L D. VALUATION OFFICER WERE HIGH AND HAS NO CO-RELATION WITH RATE S OF JULY 2003. THE LD. VALUATION OFFICER HAS CONSIDERED RATE OF ` 1400/- PER SQ MTR. ITA NOS. 1141 1142 & 1773(DEL)08 37 ON THE SIZE UPTO 1000 SQ.MTR. WHEREAS THE UPSIDC AL LOTTED THE PLOT OF SIZE OF 450 SQ.MTR. AT THE RATE OF ` 600/- PER SQ.MTR. IN THE M/O NOV. 2002 (COPY OF ALLOTMENT LETTER IS ENCLOSED) AND THE RATES CANNOT BE INCREASED BY 2.33 TIMES BY UPSIDC WITHIN SEVEN TO E IGHT MONTHS. FURTHER RATES OF BIGGER PLOTS ARE LESS THAN THE SM ALLER PLOTS. III. THE LD. VALUATION OFFICER HAS ERRED IN FURTHE R INCREASING 5% ON THE EXAGGERATED RATES RATHER THAN REDUCING THE RATE S OF PLOTS OF BIGGER SIZE. IV. THAT THE LD. VALUATION OFFICER HAS GIVEN THE VALUATION WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD TO THE APP ELLANT AS EVIDENT FROM THE FORWARDING LETTER OF THE VALUATION REPORT AND THE LD. AO HAS JUST RELIED UPON THE VALUATION REPORT WITHOUT CONSI DERING THE OBJECTIONS OF THE APPELLANT DEFECTS IN THE VALUATIO N REPORT. 3. THAT THE LD.AO HAS ERRED IN ENHANCING THE VALUAT ION FOR TRANSFER CHARGES WHICH WERE PAYABLE TO UPSIDC. THE TRANSFER CHARGES WERE PAYABLE TO UPSIDC IN INSTALLMENTS AS EVIDENT FROM T HE TRANSFER LETTER ISSUED BY UPSIDC . THE DETAILS OF TRANSFER CHARGES LEVIED PAID AND PAYABLE WERE AS FOLLOWS: PLOT NO. TRANSFER FEE LEVIED PAID PAYABALE 13 7 21 200 2 24 100 4 97 100 25 3 80 000 1 95 000 1 85 000 60. THE ASSESSEE HAD FURTHER INTER ALIA ALSO OBJ ECTED TO THE REFERENCE MADE U/S 142A OF THE ACT CONTENDING THAT THE CONCE RNED PROPERTY WAS NOT COVERED U/S 142A OF THE ACT AS THE SAID SECTION RE FERS TO ONLY THOSE PROPERTIES OR INVESTMENTS WHICH ATTRACT THE PROVI SIONS OF SECTION 69 OR 69B ITA NOS. 1141 1142 & 1773(DEL)08 38 OR BULLION JEWELLERY OR OTHER VALUABLE ARTICLES RE FERRED TO IN SECTION 69A OR SECTION 69B OF THE ACT 61. APROPOS THE ASSESSEES OBJECTION REGARDING THE PROPERTY NOT BEING COVERED U/S 142A OF THE ACT THE AO DISAGREED. IT WAS OBSERVED THAT THE INTERPRETATION OF THE ASSESSEE CONCERNING PROVISION S OF SECTION 142A OF THE ACT WAS NOT CORRECT; THAT THE LEGISLATURE WHILE INT RODUCING THIS PROVISION HAS SPECIFICALLY KEPT IN MIND THAT IN ORDER TO CURB WID E SPREAD PRACTICE OF THE ASSESSEES NOT TO DISCLOSE THE ACTUAL CONSIDERATION/ INVESTMENT SPECIALLY IN THE IMMOVABLE PROPERTIES IT IS NECESSARY TO TAKE THE O PINION OF A TECHNICAL PERSON; THAT IT WAS THEREFORE THAT SEC. 142A OF TH E ACT WAS INTRODUCED BY THE FINANCE ACT 2004 WITH RETROSPECTIVE EFFECT FROM 1 5.11.1972; THAT THEREFORE IF THE AO IS OF THE OPINION THAT THE CONSIDERATION/ INVESTMENT DISCLOSED BY THE ASSESSEE IN THE IMMOVABLE PROPERTY TRANSACTION IS CONSIDERABLY LOW HE HAS THE OPTION TO REFER THE MATTER TO THE VALUATION OFF ICER APPOINTED BY THE DEPARTMENT; AND THAT ACCORDINGLY THE MATTER OF VAL UATION WAS RIGHTLY REFERRED TO THE VALUATION OFFICER U/S 142A OF THE A CT. 62. HOWEVER THE OTHER OBJECTIONS RAISED BY THE ASS ESSEE AS DELINEATED IN THE EARLIER PORTION OF THE PRECEDING PARAS WERE DIS POSED OF AS NOT ACCEPTED OBSERVED AS FOLLOWS:- .THE SUBMISSION/SUBMISSIONS HAVE BEEN CONSIDEREDIS A TECHNICAL PERSON WHILE DETERMININ G THE VALUE OF ITA NOS. 1141 1142 & 1773(DEL)08 39 THE PLOTS HAVE CONSIDERED ALL THE ASPECTS RAISED BY THE ASSESSEE IN HIS SUBMISSION. THEREFORE THE OBJECTION SUBMITTED BY THE ASSESSEE IS NOT ACCEPTED. 63. IT WAS THUS THAT THE AO DETERMINED THE ALLEGED UNDISCLOSED INVESTMENT IN PURCHASE OF INDUSTRIAL PLOTS AT ` 59 52 100/-. 64. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED THE ASSESSEE I S IN APPEAL. 65. THE ARGUMENTS RAISED BEFORE US BY THE LEARNED C OUNSEL FOR THE ASSESSEE WITH REGARD TO THIS APPEAL ARE SUBSTANTIALLY THE SA ME AS THOSE RAISED IN ITA 1141(DEL)08(SUPRA). 66. ONLY THE OBJECTIONS RAISED BY THE ASSESSEE BEF ORE THE AO AGAINST THE VALUATION BY THE VALUATION OFFICER HAVE BEEN PLACE D AT PAGES 44&45 OF THE ASSESSEES PAPER BOOK FOR THIS APPEAL. IT HAS IN ADDITION BEEN ARGUED THAT THE LD. CIT(A) HAS ARBITRARILY REJECTED SOME OF THE OBJECTIONS TAKEN BY THE ASSESSEE WHEREAS HE [THE CIT(A)] IS SILENT ON OTH ER OBJECTIONS; THAT AS REGARDS THE DATE OF PAYMENT AND THE SIZE OF THE PLO TS THE LD. CIT(A) HAS ARBITRARILY REJECTED THE OBJECTION BY SAYING THAT I T DOES NOT MAKE MUCH OF A DIFFERENCE; THAT THE LD. CIT(A) HAS TOTALLY IGNORE D THE FACT THAT THE ALLOTMENT WAS MADE BY UPSIDC @ ` 600 PER MTR. IN NOVEMBER 2002 AS PER THE ALLOTMENT LETTER AND THAT TOO OF A PLOT SMALLER IN SIZE; THAT THE FACT THAT THE SELLER HAD MADE A PROFIT BY SELLING THE PLOT INSTEA D OF FACING CANCELLATION AND ITA NOS. 1141 1142 & 1773(DEL)08 40 FORFEITURE HAS BEEN ILLEGALLY IGNORED; THAT IT HAS ALSO BEEN WRONGLY IGNORED THAT THE RATES OF UPSIDC ARE HIGHER AS THE PAYMENT IS TO BE MADE IN INSTALMENTS; AND THAT THE FACT THAT IN CASE OF PURC HASE FROM THE MARKET TRANSFER CHARGES HAVE TO BE PAID HAS TOO BEEN WR ONGLY NOT CONSIDERED WHEREAS THE DVO HAS ADDED TO THE UPSIDC RATES RATH ER THAN DEDUCTING THEREFROM. 67. THE LD. DR PER CONTRA HAS TAKEN THE SAME STAN D FOR THE DEPARTMENT AS THAT TAKEN FOR ITA NO.1141(SUPRA). 68. APROPOS THE LEGAL ISSUE OF THE VALIDITY OR OTHE RWISE OF THE REFERENCE MADE BY THE AO TO THE VO IN THIS APPEAL ALSO THE POSITION REMAINS MUCH THE SAME AS IN ITA NO.1141 (SUPRA). THEREFORE OU R FINDINGS RECORDED IN THAT APPEAL QUA THIS ISSUE ARE MUTATIS MUTANDIS A PPLICABLE HERETO AND ARE REITERATED AS SUCH. 69. SO FAR AS REGARDS THE ASSESSEES OBJECTIONS ON THE MERITS OF THE VALUATION OF THE PLOTS UNDER REFERENCE IN THIS APPE AL THESE OBJECTIONS WERE DISPOSED OF SUMMARILY BY THE AO AS NOTED HEREINABO VE. 70. WE FIND THAT THE AO WAS NOT JUSTIFIED IN THROW ING OUT THE ASSESSEES OBJECTIONS NECK AND CROP OBSERVING THAT THEY HAD A LREADY BEEN CONSIDERED BY THE VALUATION OFFICER WHO IS A TECHNICAL PERSON . THESE OBJECTIONS IT MAY BE NOTED WERE SPECIFICALLY TAKEN AGAINST THE V ALUATION BY THE VALUATION ITA NOS. 1141 1142 & 1773(DEL)08 41 OFFICER AND WERE RAISED SPECIFICALLY BEFORE THE AO. IT WAS THEREFORE FOR THE AO TO DECIDE THEM RATHER THAN RELYING ON THE VALUAT ION OFFICERS OBSERVATIONS WITH REGARD THERETO AND THAT TOO WITH OUT DEALING WITH THE VIEW TAKEN THEREON BY THE VALUATION OFFICER. 71. THE OBJECTIONS TAKEN BY THE ASSESSEE BEFORE THE AO WERE REITERATED BEFORE THE LEARNED CIT(A) VIDE WRITTEN SUBMISSIONS BY THE ASSESSEE AS REPRODUCED ABOVE. A COPY THEREOF IS AT PAGES 44 & 45 OF THE APB. 72. THE LD. CIT(A) IT IS SEEN ONLY PARTLY DEALT W ITH THESE OBJECTIONS I.E. SOME OF THE OBJECTIONS WERE REJECTED WHEREAS OTHER S WERE NOT COMMENTED UPON. DURING THE YEAR THE ASSESSEE PURCHASED TWO INDUSTRIAL PLOTS FOR RS.20 LAKHS AND RS.12 50 000 RESPECTIVELY. FURTHER TRA NSFER CHARGES OF RS.2 24 100 AND RS.1 95 000 RESPECTIVELY WERE PAI D DURING AY 2005-06 AS LEVIED BY THE UPSIDC. THE BALANCE WAS PAYABLE THER EAFTER. THE AO MADE REFERENCE TO THE VALUATION OFFICERS REPORT. THE V O VALUED THE PROPERTY AT RS.52 51 200 AND RS.43 70 000 RESPECTIVELY INCLUD ING TRANSFER CHARGES. RELYING ON THE VALUATION OFFICERS REPORT THE AO M ADE ADDITIONS OF RS.30 27 100 AND RS.29 25 000 TOTAL AMOUNTING TO R S.59 52 100 AS UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE IN THE PURCHASE OF THE SAID PLOTS. THE ASSESSEE FILED OBJECTIONS (AS REPRODUCE D IN PARA 58 ABOVE) BEFORE ITA NOS. 1141 1142 & 1773(DEL)08 42 THE AO AGAINST THE VALUATION OFFICERS REPORTS. TH E AO REJECTED THESE OBJECTIONS SUMMARILY. 73. IN THIS REGARD THE CIT(A) OBSERVED AS FOLLOWS: IT IS CLEAR THAT THE VALUATION OFFICER HAS ADOPTED THE RATES OF UPSIDC. ONE MUST CONSIDER THE ROLE OF THE STATE GO VERNMENT AGENCY IN DEVELOPING THE INDUSTRIES IN GREATER NOID. ARME D WITH POWERS TO ACQUIRE AND DEVELOP THE LAND WITH NECESSARY AMENITI ES SUITABLE FOR INDUSTRIALIZATION THE UPSIDC IS SELLING THOSE INDU STRIAL PLOTS TO THE ENTREPRENEURS. THE RATES ARE FIXED KEEPING IN VIEW THE MARKET CONDITIONS AS WELL AS THE COMMITMENT OF STATE GOVER NMENT TO INDUSTRIALIZE THE AREA FOR EMPLOYMENT OPPORTUNITIES AND OVERALL ECONOMIC DEVELOPMENT OF THAT AREA. BEING A GOVERNM ENT UNDERTAKING IT CANNOT FIX ARBITRARY RATES TO MAKE EXORBITANT PR OFITS. COMPARATIVELY THE RATES FIXED BY THEM VERY REASONABLE AND CHEAPER THAN MARKET RATES. PRECISELY THE ASSESSEE HAS PURCHASED THESE PLOTS DE VELOPED BY UPSIDC FROM OTHER ALLOTTEES. SERIES OF OBJECTIONS RAISED BY THE ASSESSEE RELATING TO PLOT SIZE OF THE PROPERTY TAKE N UP BY THE VALUATION OFFICER FOR COMPARISON DATE OF PURCHASE SHOULD HAV E BEEN TAKEN AS JULY/AUGUST 03 INSTEAD OF OCTOBER 2003 AND ABSENC E OF ANY CORROBORATIVE EVIDENCES TO HOLD THAT THERE IS UNDER STATEMENT OF CONSIDERATION. AS REGARDS TO DATE IS CONCERNED IT WILL NOT MAKE ANY CONSIDERABLE VARIATION AS THE DATE CITED IN THE AGR EEMENT IS 3.09.03 AND MORE EVER IN OCTOBER ONLY THE ASSESSEE/SELLER H AS MADE AN APPLICATION TO UPSIDC FOR PERMISSION TO TRANSFER. ACCORDINGLY THE TRANSFER CHARGES WERE COMPUTED BASED ON RATES AT WH ICH THE PLOTS ARE SOLD BY THAT AGENCY. NO MATERIAL HAS BEEN BROUGHT TO SUGGEST THAT THE RATES IN AUGUST ARE LOWER THAN IN OCTOBER. ASSUMIN G THERE IS DIFFERENCE THE SAME CANNOT BE HUGE AS CONTENDED A ND IT WILL BE ONLY MARGINAL. IT IS BECAUSE BEING GOVERNMENT AGENCY S ELLING PRICE WOULD NOT CHANGE SO FREQUENTLY IN EVERY MONTH. HENCE THE OBJECTIONS OF APPELLANT ARE NOT BASED ON FACTUAL INFORMATION BUT FOR THE SAKE ARGUMENT ONY AND DESERVES TO BE REJECTED. THE NEXT OBJECTION RAISED BY THE APPELLANT HAS LITT LE CONSEQUENCE SINCE THE PLOT SIZE WILL NOT MAKE THE VALUATION BASELESS ALTOGETHER. THE ITA NOS. 1141 1142 & 1773(DEL)08 43 VALUATION OFFICER HAS BASED HIS REASONING ON UPSIDC RATES ONLY. PRESUMING THAT THERE EXISTS SOME VARIATION IT WOULD BE NEGLIGIBLE AND REQUIRED NO MENTION AT ALL. THEN COMES THE MAIN CONTENTION THAT WITHOUT ANY BAS IS OR MATERIAL THE DECLARED CONSIDERATION WAS SUBSTITUTED BY UPSIDC RA TES AND RATES DO NOT REFLECT TRUE PICTURE AS IT IS NOT A STAMP VALUA TION AUTHORITY ETC. . IN THIS CASE THE PLOTS PURCHASED BY THE ASSESSEE AR E ORIGINALLY OWNED BY UPSIDC AND THE ASSESSEE ACQUIRED THROUGH A THIRD PARTY. IN NORMAL CIRCUMSTANCES SUCH A SALE WOULD HAVE BEEN A T HIGHER PRICE THAN THE RATE AT WHICH THE PLOTS ARE SOLD BY UPSIDC IN THE CORRESPONDING PERIOD. EXCEPT THE ENTRY IN THE BOOK S NO OTHER MATERIAL HAS BEEN BROUGHT BY ASSESSEE TO SHOW THAT THE VALUE S ADOPTED ARE REAL. THE CONTENTION OF THE ASSESSEE THAT IN SUBSEQUENT P ERIOD THESE PLOTS WERE SOLD AT LOWER THAN THE UPSIDC RATES CANNOT BE A GROUND TO DETERMINE THE INVESTMENT IN THE PERIOD UNDER REFERE NCE. ACCORDINGLY THE ACTION OF THE AO IN ADOPTING THE MARKET RATE FO R INVESTMENT IN THE PROPERTIES IS SUSTAINED WITH LITTLE MODIFICATION. KEEPING IN VIEW THE PLOT SIZE AND PERIOD DIFFERENCE(EVEN THOUGH IT WOUL D NOT MAKE MUCH DIFFERENCE) IT IS CONSIDERED TO ALLOW 10% VARIATION TO THE MARKET RATE ADOPTED BY THE VALUATION OFFICE. HENCE THE AO IS DIRECTED TO ALLOW A MARGIN OF 10% I.E. RS.8 58 480 ON THE MARKET RATE A DOPTED BY HIM AND REDUCE THE SAME FROM THE ADDITION MADE IN THE TOTAL INCOME OF THE ASSESSEE. IN THE RESULT THE ASSESSEE GETS PART RE LIEF. 74. FROM THE ABOVE OBSERVATIONS OF THE CIT(A) IT I S CLEAR THAT IT HAS NOT BEEN CONSIDERED THAT THE PLOT WAS ALLOTTED BY THE U PSIDC @ RS.600 PER MTR. IN NOVEMBER 2002 AS PER THE ALLOTMENT LETTER. IT WAS ALSO NOT CONSIDERED THAT EVEN SUCH ALLOTMENT WAS OF A SMALLER PLOT. TH E DATE OF VALUATION AND THE SIZE OF THE PLOT WERE WRONGLY NOT TAKEN INTO CONSID ERATION AND IT WAS MERELY OBSERVED SUCH DATE OF VALUATION AND SIZE DID NOT MA KE ANY DIFFERENCE. THIS ITA NOS. 1141 1142 & 1773(DEL)08 44 DESPITE THE FACT THAT THE CIT(A) HIMSELF ALLOWED 10 % VARIATION TO THE MARKET RATE ADOPTED BY THE VO KEEPING IN VIEW THE PLOT S IZE AND PERIOD DIFFERENCE. FURTHER IT HAS WRONGLY NOT BEEN CONS IDERED THAT THE SELLER HAD MADE A PROFIT BY SELLING THE PLOT AND THAT IN SELLI NG THE PLOT THE SELLER DID NOT HAVE TO FACE CANCELLATION OF THE ALLOTMENT AND FORF EITURE OF THE PLOT. MOREOVER IT HAS ALSO BEEN IGNORED BY THE CIT(A) TH AT IT REMAINS A FACT THAT THE RATES OF UPSIDC ARE HIGHER SINCE THE PAYMENT I S TO BE MADE IN INSTALLMENTS. IT HAS NOT BEEN SHOWN OTHERWISE. ST ILL FURTHER THE CIT(A) OVERLOOKED THE FACT THAT ON PURCHASE FROM THE MARKE T PAYMENT OF TRANSFER CHARGES IS A NECESSARY CONCOMITANT. REMARKABLY THE DVO HAD ADDED TO THE UPSIDC RATE. THIS HAS ALSO NOT BEEN TAKEN INTO CON SIDERATION BY THE CIT(A). 75. IN VIEW OF THE ABOVE THE GRIEVANCE OF THE ASS ESSEE BY WAY OF GROUND NOS.3 & 4 IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. 76. KEEPING IN VIEW OUR DECISION ON GROUND NOS. 3 & 4 AS ABOVE GROUND NO.5 BECOMES INFRUCTUOUS AND IS REJECTED AS SUCH. 77. HENCE ITA NO.1142/DEL./08 FILED BY THE ASSESS EE FOR AY 2004-05 IS PARTLY ALLOWED. ITA NO.1773/DEL./08 ITA NOS. 1141 1142 & 1773(DEL)08 45 78. THIS IS DEPARTMENTS APPEAL FOR AY 2004-05. IT IS A CROSS APPEAL TO THE ASSESSEES ITA NO.1142/DEL./08. THE DEPARTMENT CONTENDS THAT HE CIT(A) HAS ERRED IN GIVING RELIEF OF RS.558580 TO T HE ASSESSEE OUT OF AN ADDITON OF RS.59 52 100 ON ACCOUNT OF UNEXPLAINED I NVESTMENT. 80. THE AO MADE ADDITION OF RS.69 52 100. THE CIT( A) GAVE RELIEF OF RS.858550 TO THE ASSESSEE. THE ADDITION WAS SUSTAI NED TO THE EXTENT OF RS.50 93 620. THIS ACTION OF THE CIT(A) HAS NOT BE EN AGREED TO BY US WHILE DEALING WITH ITA NO.1142/DEL./08 AND THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED IN THIS REGARD. AS SUCH FOR THE DETAILED D ISCUSSION MADE WHILE DEALING WITH ITA NO.1142/DEL./08 THERE REMAINS NO MERIT IN THE DEPARTMENTS APPEAL AND IT IS HEREBY DISMISSED. 81. CONSEQUENTLY ITA NOS.1141 & 1142/DEL./08 FILE D BY THE ASSESSEE FOR AYS 2001-02 & 04-05 RESPECTIVELY ARE PARTLY A LLOWED WHEREAS THE DEPARTMENTS APPEAL FOR AY 2004-05 IN ITA NO.1773/ DEL./08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.01.2011. SD/- SD/- (R.C. SHARMA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.01.2011 *RM COPY FORWARDED TO: 1. APPELLANT ITA NOS. 1141 1142 & 1773(DEL)08 46 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR [FIT FOR PUBLICATION- SD/- JM.SD /-AM]