DCIT, New Delhi v. M/s West Land Builtech Pvt. Ltd., New Delhi

ITA 1309/DEL/2011 | 2006-2007
Pronouncement Date: 14-10-2016 | Result: Dismissed

Appeal Details

RSA Number 130920114 RSA 2011
Assessee PAN AAACW5896P
Bench Delhi
Appeal Number ITA 1309/DEL/2011
Duration Of Justice 5 year(s) 7 month(s)
Appellant DCIT, New Delhi
Respondent M/s West Land Builtech Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 14-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 14-10-2016
Date Of Final Hearing 13-10-2016
Next Hearing Date 13-10-2016
Assessment Year 2006-2007
Appeal Filed On 14-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE JUDICIAL MEMBER ITA NO.1303/DEL/2011 ASSESSMENT YEAR : 2006-07 WESTLAND BUILDTECH PVT. LTD. (NOW MERGED WITH ANANT RAJ INDUSTRIES LTD.) H-65 CONNAUGHT CIRCUS NEW DELHI. PAN: AAACW5896P VS. ITO WARD-18(3) NEW DELHI. ITA NO.1309/DEL/2011 ASSESSMENT YEAR : 2006-07 DCIT CIRCLE 1(1) NEW DELHI. VS. WESTLAND BUILDTECH PVT. LTD. (NOW MERGED WITH ANANT RAJ INDUSTRIES LTD.) H-65 CONNAUGHT CIRCUS NEW DELHI. PAN: AAACW5896P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH JAIN CA DEPARTMENT BY : SHRI UMESH CHANDER DUBEY SR. DR ITA NOS.1303 & 1309/D/2011 2 DATE OF HEARING : 13.10.2016 DATE OF PRONOUNCEMENT : 14.10.2016 ORDER PER R.S. SYAL AM: THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 30.12.2010 IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL . 3. THE FIRST ISSUE RAISED IN THESE APPEALS IS AGAIN ST THE ADDITION U/S 69 OF THE ACT. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE OF LANDS/BUILDI NGS AND TO DEVELOP THE SAME FOR THE PURPOSES OF DISPOSING/MAINTAINING. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE PURCHASED FREEHOL D LAND MEASURING 17.83 ACRES FOR A SUM OF RS.3 31 90 000/-. THIS LA ND WAS PURCHASED VIDE 11 SALE DEEDS WHICH WERE EXECUTED BETWEEN 29.8.2005 AND 28.9.2005. THE LAND IS LOCATED WITHIN THE MCD CITY LIMITS. AS THE AO WAS NOT SATISFIED WITH THE PURCHASE CONSIDERATION HE REFER RED THE MATTER TO THE ITA NOS.1303 & 1309/D/2011 3 DISTRICT VALUATION OFFICER (DVO) FOR ESTIMATION OF INVESTMENT MADE IN LAND AT FAIR MARKET VALUE. THE DVO SENT HIS VALUAT ION REPORT DETERMINING FAIR MARKET VALUE OF THE PROPERTY AT RS .6 44 09 000/- AS AGAINST THE PURCHASE PRICE DECLARED BY THE ASSESSEE AT RS.3.31 CRORE AND ODD. IN DETERMINING SUCH FAIR MARKET VALUE THE DV O CONSIDERED A SALE INSTANCE OF AGRICULTURAL LAND IN THE VILLAGE SATBAR I MEHRAULI NEW DELHI AFTER APPLYING THE RELEVANT FACTORS OF ADJUSTMENT. THE DIFFERENTIAL AMOUNT OF RS.3 12 19 000/- (RS.6 44 09 000 RS.3 3 1 90 000/-) WAS ADDED U/S 69 OF THE ACT AS UNEXPLAINED INVESTMENT. THE AO FURTHER ESTIMATED STAMP DUTY AT 5% AND CORPORATION TAX AT 3 % FOR MAKING A SEPARATE ADDITION @ 8% ON THE SO CALLED UNDERSTATE D PURCHASE CONSIDERATION WHICH ADDITION WORKED OUT AT RS.24 9 7 520/-. THE LD. CIT(A) TOOK INTO CONSIDERATION A CHART FILED BY THE ASSESSEE GIVING FULL DETAILS OF LAND PURCHASED FROM 11 PERSONS AS PER WH ICH THE RATE PER SQ. YARD RANGED BETWEEN RS.228.89 TO RS.416.35. HE TH US NOTICED THAT THE ASSESSEE OFFERED RATE OF RS.385/- PER SQ. YARD ON T HE BASIS OF THE ABOVE AS AGAINST THE DVOS RATE OF RS.746 PER SQ. YARD. HE ESTIMATED A RATE OF RS.500 PER SQ. YARD AS REASONABLE. THIS LED TO RED UCTION IN ADDITION FROM ITA NOS.1303 & 1309/D/2011 4 RS.3.12 CRORE AND ODD TO RS.99 66 500/-. THE ASSES SEE IS AGGRIEVED AGAINST THE SUSTENANCE OF ADDITION AT RS.99 66 500/ - WHEREAS THE REVENUE IS AGGRIEVED AGAINST THE RELIEF ALLOWED BY THE LD.CIT(A) AMOUNTING TO RS.2 12 52 500/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ONLY DI SPUTE ON THIS ISSUE IS ABOUT THE INVESTMENT MADE BY THE ASSESSEE IN PURCHA SE OF 11 PLOTS IN THE COURSE OF ITS BUSINESS. WHEREAS THE ASSESSEE WENT BY THE RATES GIVEN IN SALE DEEDS AS A PROPER MEASURE OF INVESTMENT MADE THE AO ESTIMATED THE INVESTMENT MADE BY THE ASSESSEE ON THE BASIS OF THE DVOS REPORT WHICH VALUATION WAS PARTIALLY REDUCED BY THE LD. CI T(A). THE AO IN MAKING THIS ADDITION DID NOT REJECT THE BOOKS OF AC COUNT MAINTAINED BY THE ASSESSEE AND STRAIGHTWAY WENT AHEAD IN MAKING T HE ADDITION ON THE BASIS OF THE DVOS REPORT. THE HONBLE SUPREME COUR T IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 513 (SC) HAS HELD THAT WHERE THE BOOKS OF ACCOUNT ARE NOT REJECTED BY THE AO NO REFERENCE CAN BE VALIDLY MADE TO THE DVO FOR MAKING AN ADDITION. TH E RELIANCE OF THE ITA NOS.1303 & 1309/D/2011 5 LD. DR ON SOME CONTRARY JUDGMENT OF SOME NON-JURISD ICTIONAL HIGH COURT IS MISPLACED. IT IS OBVIOUS THAT WHEN AN ISSU E HAS BEEN DECIDED BY THE HONBLE SUPREME COURT NO LOWER COURT MUCH LES S THE TRIBUNAL CAN DISOBEY THE SAME. RELYING ON THE DIRECT JUDGMENT FR OM THE HONBLE SUMMIT COURT ON THIS ISSUE THE ACTION TAKEN BY THE AO IN MAKING THE ADDITION ON THE BASIS OF THE DVOS REPORT WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT CANNOT BE SUSTAINED. 5. THE LD. DR THEN CONTENDED THAT THE POSITION L AID DOWN BY THE HONBLE SUPREME COURT IS NO MORE RELEVANT AFTER THE INSERTION OF SECTION 142A OF THE ACT. WE ARE NOT CONVINCED WITH THE SUBM ISSION IN SO FAR AS THE EXTANT ASSESSMENT YEAR IS CONCERNED. IT IS RELE VANT TO NOTE THAT SUB- SECTION (2) OF SECTION 142A AS INSERTED BY THE FINA NCE (NO.2) ACT 2014 W.E.F. 1.10.2014 PROVIDES THAT : `THE ASSESSING OFF ICER MAY MAKE A REFERENCE TO THE VALUATION OFFICER UNDER SUB-SECTIO N (1) WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENE SS OF THE ACCOUNTS OF THE ASSESSEE . THERE WAS NO ANALOGOUS PROVISION PRIOR TO THIS INSERTION. THIS SHOWS THAT THE POSITION OF LAW LAID DOWN BY TH E HONBLE SUPREME ITA NOS.1303 & 1309/D/2011 6 COURT IN SARGAM CINEMA (SUPRA) FOR NOT MAKING ANY ADDITION ON THE BASIS OF THE DVOS REPORT WITHOUT FIRST REJECTING T HE BOOKS OF ACCOUNT IS VALID UP TO THE PERIOD PRIOR TO THE INSERTION OF SU B-SECTION (2). AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2006-07 BEI NG A YEAR ANTERIOR TO THE AMENDMENT THE SAME WILL BE GOVERNED BY THE JU DGMENT IN SARGAM CINEMA (SUPRA) AND NOT THE LATER AMENDMENT NULLIFYING THE PRO TANTO EFFECT OF THIS JUDGMENT. 6. HERE IT IS PERTINENT TO NOTE THAT THE ASSESSI NG OFFICER HAS MADE THE ADDITION U/S 69 OF THE ACT. THIS SECTION IN TURN PROVIDES THAT : `WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESS MENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDE D IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NO T IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE VALUE OF T HE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FIN ANCIAL YEAR. A CAREFUL PERUSAL OF THE PROVISION DIVULGES THAT IN O RDER TO INVOKE THIS ITA NOS.1303 & 1309/D/2011 7 PROVISION IT IS SINE QUA NON THAT THE ASSESSEE MUST HAVE MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. THE FACTUM OF THE ASSESSEE HAVING MADE INVESTMENT SHOULD BE FI RST PROVED BY THE AO ONLY THEN THE BURDEN SHIFTS ON THE ASSESSEE TO PROVE THE SOURCE OF INVESTMENT. SUCH INVESTMENT OUTSIDE THE BOOKS OF AC COUNT MUST BE POSITIVELY PROVED BY THE AO AND NOT ONLY INFERRED F ROM THE ATTENDING FACTS. IF SUCH AN INVESTMENT OUTSIDE THE BOOKS IS N OT PROVED THE ASSESSEE CANNOT BE CALLED UPON TO PROVE THE SOURCE OF SUCH A HYPOTHETICAL INVESTMENT. ADVERTING TO THE FACTS OF THE INSTANT CASE WE FIND THAT APART FROM RELYING ON THE DVOS REPORT THE AO HAS NOT BR OUGHT ON RECORD ANY OTHER MATERIAL TO INDICATE THAT THE ASSESSEE DID MA KE INVESTMENT IN PURCHASE OF PLOTS OVER AND ABOVE THAT DECLARED IN T HE BOOKS OF ACCOUNT. 7. AT THIS JUNCTURE IT IS SIGNIFICANT TO MENTI ON THAT THE LEGISLATURE IS ALSO NOT OBLIVIOUS OF THE PRACTICE OF UNDERSTATEMEN T OF CONSIDERATION IN THE TRANSACTIONS OF IMMOVABLE PROPERTIES IN CERTAIN CASES. THAT IS WHY APART FROM INSERTING SECTION 50C WHICH IS APPLICAB LE IN THE HANDS OF A SELLER SECTION 56(2)(VII) WAS INTRODUCED W.E.F. 1. 10.2009 FOR CHARGING TO ITA NOS.1303 & 1309/D/2011 8 TAX THE DIFFERENCE BETWEEN STAMP VALUE AND THE DECL ARED CONSIDERATION IN THE HANDS OF THE BUYER IF SUCH DIFFERENCE IS MORE THAN RS.50 000/-. AS THIS IS A SUBSTANTIVE PROVISION INSERTED W.E.F. 1.1 0.2009 THE SAME CANNOT BE APPLIED TO THE ASSESSMENT YEAR 2006-07 UNDER CON SIDERATION. EX CONSEQUENTI THE ENTIRE ADDITION MADE BY THE AO IS DELETED. T HE GROUND TAKEN BY THE ASSESSEE IS ALLOWED AND THAT BY THE RE VENUE IS DISMISSED. 8. THE ONLY OTHER ISSUE WHICH SURVIVES IN THE ASSES SEES APPEAL IS AGAINST THE CONFIRMATION OF ADDITION ON ACCOUNT OF STAMP DUTY AND REGISTRATION CHARGES. WHEREAS THE AO APPLIED 8% RA TE ON THE ALLEGED EXCESS INVESTMENT MADE BY THE ASSESSEE THE LD. CIT (A) PROPORTIONATELY REDUCED THE SAME. IN VIEW OF THE FACT THAT THE SUB STANTIVE ADDITION U/S 69 OF THE ACT ON ACCOUNT OF THE ALLEGED INVESTMENT MAD E BY THE ASSESSEE HAS BEEN DELETED IN AN EARLIER PARA THIS CONSEQUENTIAL ADDITION IS ALSO LIABLE TO BE DELETED. WE ORDER ACCORDINGLY. ITA NOS.1303 & 1309/D/2011 9 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.201 6. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 14 TH OCTOBER 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT AR ITAT NEW DELHI.