Lata Jain, New Delhi v. DCIT CC-21, New Delhi

ITA 2895/DEL/2008 | 2001-2002
Pronouncement Date: 22-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 289520114 RSA 2008
Bench Delhi
Appeal Number ITA 2895/DEL/2008
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant Lata Jain, New Delhi
Respondent DCIT CC-21, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 22-01-2010
Date Of Final Hearing 21-01-2010
Next Hearing Date 21-01-2010
Assessment Year 2001-2002
Appeal Filed On 11-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI D.R.SINGH JM AND SHRI R.C.SHARMA AM ITA NOS.2895/DEL/2008 3259/DEL/2008 3520/DEL/2008 & 3521/DEL/2008 ASSESSMENT YEARS : 2001-02 2002-03 2003-04 & 2004 -05 SMT.LATA JAIN 201 SURYAKIRAN BUILDING 19 KASTURBA GANDHI MARG NEW DELHI. PAN NO.AANPJ5648L. VS. DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-21 NEW DELHI. (APPELLANT) (RESPONDENT) ITA NOS.3028/DEL/2008 3576/DEL/2008 35/DEL/2009 & 36/DEL/2009 ASSESSMENT YEARS : 2001-02 2002-03 2003-04 & 2004 -05 DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-21 NEW DELHI. VS. SMT.LATA JAIN 201 SURYAKIRAN BUILDING 19 KASTURBA GANDHI MARG NEW DELHI. PAN NO.AANPJ5648L. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH JAIN CA. RESPONDENT BY : SMT.KAVITA BHATNAGAR CIT-DR. ORDER PER BENCH : THESE ARE THE CROSS-APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF CIT(A) FOR THE AY 2001-02 2002-03 20 03-04 & 2004-05. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. COMMON ISSUE RAISED IN ALL THE YEARS PERTAINS TO ADDITION MADE O N ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT U/S 69B OF THE IT ACT. 3. AT THE TIME OF HEARING BEFORE US THE LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2 000-01 WHEREIN VIDE ORDER ITA-2895/D/2008 & OTHERS 2 DATED 30.9.2009 SIMILAR ADDITION MADE IN AY 2000-0 1 WAS DELETED BY THE TRIBUNAL. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL I N ASSESSEES OWN CASE. FACTS IN BRIEF ARE THAT SEARCH AND SEIZURE OPERATIO NS U/S 132 OF THE INCOME TAX ACT WERE CONDUCTED ON 9.12.2003 IN THE RESIDENTIAL/BUSI NESS PREMISES OF THE RELATED PERSONS/CONCERNS OF BEGUM GUTKHA GROUP OF CASES. O N THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND THE STATEMENT RECORDED VARIOUS ADDITIONS WERE MADE BY THE AO WHICH MAINLY RELATE TO GIFTS RE CEIVED BY THE ASSESSEE DURING THE YEARS UNDER CONSIDERATION INVESTMENT ON ACCOUN T OF PURCHASE OF VARIOUS PROPERTIES AND THE CASH FOUND DURING THE COURSE OF SEARCH ETC. WHILE FRAMING ASSESSMENT U/S 153A THE AO OBSERVED THAT AS PER TH E DOCUMENTS FOUND THE ASSESSEE AND HIS MINOR CHILDREN WERE IN RECEIPT OF GIFTS FROM VARIOUS FRIENDS VIZ. SHRI NARESH JAIN AND SHRI ANIL JAIN. THESE PERSONS APPEARED BEFORE THE AO AND THEIR STATEMENTS WERE RECORDED U/S 131. THE ADDITI ON WAS ALSO MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF VARIO US PROPERTIES LIKE PROPERTY NO.49 RAMA ROAD NEW DELHI WHICH WAS PURCHASED FOR RS.24 45 000/- WHEREIN ASSESSEE WAS IN RECEIPT OF INCOME OF RS.3 LAKHS P.A . THE AO OBSERVED THAT ASSESSEE HAS MADE HEAVY INVESTMENT IN INCOME YIELDI NG ASSETS AND THAT RENTAL INCOME GENERATED BY THOSE ASSETS WAS DISPROPORTIONA TELY HIGH WHEN COMPARED WITH THE INVESTMENT SHOWN TO HAVE BEEN MADE IN THEM . AS PER AO THIS DISPROPORTIONATE YIELDING OF INCOME PRIMA FACIE/SUF FICIENTLY INDICATES THAT THE DOCUMENTED INVESTMENT HAS BEEN SUPPRESSED SUBSTANTI ALLY. IN THIS CONNECTION THE ASSESSEE WAS ASKED TO EXPLAIN WHAT THE COST OF ACQU ISITION IGNORING THE DOCUMENTED INVESTMENT SHOULD NOT BE TAKEN AT THE F AIR MARKET VALUE AND WHILE DOING SO WHY THE PROVISIONS OF RULE 3 OF PART B OF THE 3 RD SCHEDULE 3 TO THE WEALTH TAX ACT NOT BE TAKEN HELP OF BOTH FOR THE PURPOSES OF INCOME TAX AND FOR THE PURPOSE OF WEALTH TAX ASSESSMENT. THE AO STATED TH AT IN THE ENTIRE BLOCK PERIOD COMPRISING AY 1998-99 TO 2004-05 MANY PROPERTIES HA VE BEEN ACQUIRED BY THE ASSESSEE WHICH ARE DULY DECLARED IN THE INCOME TAX RETURNS. FURTHER DURING THE ITA-2895/D/2008 & OTHERS 3 PROCEEDINGS U/S 153A/143(3) OF THE ACT THE DETAILE D CHARTS OF VARIOUS PROPERTIES ACQUIRED BY DIFFERENT ASSESSEES OF THE GROUP SUBST ANTIATING THE SOURCE OF INVESTMENT HAVE BEEN FURNISHED AND ARE AVAILABLE O N RECORDS. THE AO ALSO MADE A REFERENCE TO THE VALUATION CELL IN RESPECT OF THE PROPERTY SO PURCHASED BY THE ASSESSEE FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY ON THE VERY SAME DATE WHEN THE ASSESSMENT ORDER WAS PASSED. THE AO RESORTED TO PROVISIONS OF WEALTH TAX ACT FOR ARRIVING AT THE FAIR MARKET PRIC E OF THESE PROPERTIES AND MADE ADDITION ON THE BASIS OF DIFFERENCE BETWEEN FAIR MA RKET VALUE SO ARRIVED AT AS PER THE PROVISIONS OF SCHEDULE 3 OF WEALTH TAX RULES. IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE PROPERTIES SO PURCHASED WERE DULY SUPPORTED BY PROPER CONVEYANCE DEED/SALE DEED AND VALUE OF WHICH HAS DU LY BEEN ACCEPTED BY THE SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY VALUATION. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NOT PAID ANY AMOUNT OVER AND ABOVE THE CONSIDERATION STATED IN THE SAID SALE DEED. IT WAS ALSO STATED THAT THIS FACT CAN FURTHER BE VERIFIED BY SELLER OF RESPECTIVE PROPERTIES WHOSE ADDRESS IS GIVEN IN THE RESPECTIVE SALE DEEDS. IT WAS ALSO BROUGHT TO THE NOTICE OF THE AO THAT IT WAS A CASE OF SEARCH AND NO INCRIMINATING MATERIAL WHATSOEVER HAS BEEN SEIZED O R CAME TO THE NOTICE OF THE DEPARTMENT WHICH OTHERWISE PROVES THAT INVESTMENT I N PROPERTIES HAS BEEN UNDERSTATED. BY REFERRING TO THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF K.P.VERGHESE 131 ITR 597 IT WAS CONTENDED BY LEA RNED AR THAT ONUS LIES ON THE DEPARTMENT TO PROVE THAT SOME CONSIDERATION OVER AN D ABOVE THE CONSIDERATION STATED IN THE SALE DEED HAVE BEEN INVESTED AND THAT NO ADDITION CAN BE MADE ON PRESUMPTION AND SUSPICIONS. THE ADDITION WAS ALSO MADE IN RESPECT OF CASH FOUND AT THE RESIDENCE OF THE ASSESSEE AS WELL AS IN THE BANK LOCKER. 5. BY THE IMPUGNED ORDER THE CIT(A) OBSERVED THAT THE AO HAS PROCEEDED ON THE PLEA THAT ANNUAL RENT YIELD ON THIS PROPERTY WA S VERY HIGH AS COMPARED TO THE NORMAL RETURN OF INVESTMENT ACCORDINGLY APPLYING T HE RENT CAPITALIZATION METHOD THE AO HAS ARRIVED AT THE FAIR MARKET VALUE. AS PE R CIT(A) SUCH VALUATION DEPENDS UPON VARIOUS FACTORS THAT ARE RULING IN THE MARKET AT THE TIME OF GIVING ITA-2895/D/2008 & OTHERS 4 RENT OR PURCHASING PROPERTY. HE FURTHER OBSERVED T HAT IT IS NOT POSSIBLE TO ADDUCE EVIDENCE IN RESPECT OF EXCHANGE OF MONEY AND MERELY ON THE BASIS OF STAMP DUTY VALUATION AUTHORITY ONE CANNOT CONCLUDE THAT THE R ATES ADOPTED BY THEM ARE REFLECTING THE TRUE VALUE IN THE OPEN MARKET. WITH OUT REFERRING TO THE SPECIFIC REASON OR JUSTIFICATION THE CIT(A) HELD THAT IN HI S OPINION THE VALUATION OF THE PROPERTY CAN REASONABLY BE TAKEN AT A RATE WHICH WA S HIGHER THAN THE VALUE DISCLOSED BY THE ASSESSEE. ACCORDINGLY PART RELIE F WAS GIVEN BY THE CIT(A). BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL AGAINST THE ORDER OF CIT(A). 6. THE ISSUE WITH REGARD TO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY HAS ALREADY BEEN DEALT BY THE TR IBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS VIDE ORDER DATED 30.9.2009 WHEREI N FOLLOWING WERE THE OBSERVATIONS OF THE TRIBUNAL :- FROM THE RECORD WE FOUND THAT ON THE BASIS OF SAL E DEED FOUND DURING THE COURSE OF SEARCH IN RESPECT OF PURCHASE OF VARIOUS PROPERTIES THE AO FOUND THAT ASSESSEE WAS IN RECEI PT OF RENTAL INCOME IN RESPECT OF THESE PROPERTIES. AS PER AO THE DISPROPORTIONATE YIELD OF INCOME FROM THESE PROPERT IES INDICATE THAT THE AMOUNT INVESTED HAS BEEN SUPPRESSED. ACCORDING LY HE APPLIED PROVISIONS OF RULE 3 OF PART (B) OF THE 3 RD SCHEDULE TO THE WEALTH TAX RULES FOR THE PURPOSE OF DETERMINING THE FAIR M ARKET VALUE OF THESE PROPERTIES. THE AO ALSO MADE A REFERENCE TO THE DVO AS THE REFERENCE WAS MADE ONE DAY PRIOR TO THE FRAMING OF ASSESSMENT HE WAS NOT IN RECEIPT OF ANY DVOS REPORT. IT IS UNDI SPUTED FACT THAT DEPARTMENT HAS NOT REFERRED ANY INCRIMINATING MATER IAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH AND INVESTIGATION MADE THEREAFTER WHICH INDICATE THAT ASSESSEE HAD PAID ANYTHING MORE THAN WHAT HAS BEEN STATED IN THE SALE DEEDS. IT WAS ALSO NOT THE ALLEGATION OF THE DEPARTMENT THAT THERE WAS ANY DIFFERENCE IN THE VAL UE OF THE PROPERTY AS ACCEPTED BY THE SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY VALUATION. IN VIEW OF THE FACT THAT NO MATERIAL WA S FOUND INDICATING ANYTHING PAID OVER AND ABOVE THE REGISTERED SALE PR ICE OF THE PROPERTY SO ACQUIRED KEEPING IN VIEW OF THE DECISI ON OF HON'BLE SUPREME COURT IN THE CELEBRATED JUDGMENT OF K.P.VER GHESE (SUPRA) WHEREIN IT WAS HELD THAT ONUS LIES ON THE DEPARTMEN T TO PROVE THAT SOME CONSIDERATION OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED HAVE BEEN INVESTED NO ADDITION CAN BE MA DE ON ITA-2895/D/2008 & OTHERS 5 PRESUMPTIONS AND SUSPICIONS. IN THE LATEST CASE OF CIT VS. SHAKUNTALA DEVI (ITA NO.345/2007) HON'BLE DELHI HI GH COURT HELD IT MAY BE RELEVANT TO NOTE THAT A DIVISION BENCH O F THE COURT COMPRISING DR.ARIJIT PRASAYATH AND JUSTICE D.K.JAIN AS THEIR LORDSHIPS THEN WERE RETREATED THAT THERE MUST BE A FINDING OF THE REVENUE THAT THE ASSESSEE HAD RECEIVED AMOUNTS OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE DEED FOLLOWING TH E RATIO OF K.P.VERGHESE (SUPRA). K.P.VERGHESE (SUPRA) HAS ALS O BEEN FOLLOWED AND APPLIED BY THE SUPREME COURT IN CIT VS. GODAVAR I CORPORATION LIMITED 200 ITR 567. THE DIVISION BENCH OF HON'BLE DELHI HIGH COURT IN CIT VS. ASHOK KHETRAPAL 294 ITR 143 OBSERV ED THAT BY REFERRING TO THE REPORT OF VALUATION OFFICER IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF A SE ARCH NO ADDITION COULD BE MADE BY TREATING INVESTMENT AS UNDISCLOSED ON THE BASIS OF ANY DVOS REPORT. THE DECISION IN CIT VS. MANOJ JA IN 287 ITR 285 IS ALSO TO THE SAME EFFECT. IN CIT VS. SHIVAKAMI C OMPANY (P) LTD. 151 ITR 79(SC) THEIR LORDSHIPS HAVE ONCE AGAIN RET REATED THAT ONUS WHETHER THE ASSESSEE HAD RECEIVED MORE CONSIDERATIO N THAN WHAT WAS STATED IN THE DOCUMENTS OF TRANSFER RESTED ON THE REVENUE AND IN THE ABSENCE OF THAT BURDEN HAVING BEEN BEING DISCHARGED IT WOULD BE LEGALLY IMPERMISSIBLE TO MAKE ANY INFERENCES AGAINS T THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE AO UNDER THE HEAD UNEXPLAI NED INVESTMENT ON ACCOUNT OF VARIOUS PROPERTIES PURCHASED BY THE A SSESSEE DURING THE BLOCK PERIOD ON THE BASIS OF FAIR MARKET VALUE AS ESTIMATED BY THE AO. ALL THESE ADDITIONS ARE DIRECTED TO BE DELETED . 7. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE IN PARI-MATERIA RESPECTFULLY FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE WE DO NOT FIND ANY MERIT IN THE ADDITION MADE BY THE AO. 8. IN THE AY 2002-03 A GROUND WAS TAKEN BY THE ASS ESSEE WITH REGARD TO DENIAL OF CLAIM OF EXEMPTION U/S 54F AGAINST LONG T ERM CAPITAL GAINS OF RS.1 76 236/-. FACTS IN BRIEF ARE THAT ASSESSEE EA RNED LONG TERM CAPITAL GAIN ON SALE OF FACTORY BUILDING WHICH WAS SPENT BY HER ON CONST RUCTION OF A NEW RESIDENTIAL HOUSE. ASSESSEES CLAIM FOR EXEMPTION U/S 54F WAS DECLINED BY THE AO ON THE PLEA THAT ASSESSEE WAS HAVING MORE THAN ONE HOUSE P ROPERTY WHOSE INCOME WAS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY THE EXEMPTION IS NOT ITA-2895/D/2008 & OTHERS 6 ALLOWABLE. BY THE IMPUGNED ORDER THE CIT(A) CONFI RMED THE ACTION OF THE AO BY OBSERVING THAT THE SALE PROCEEDS WERE UTILIZED IN T HE CONSTRUCTION WORK OF EXISTING OLD HOUSE AND THAT ASSESSEE COULD NOT FURNISH RELEV ANT PERIOD UNDER WHICH THE SAID CONSTRUCTION WORK COMMENCED. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND T HAT THE CAPITAL GAINS ARISING OUT OF SALE PROCEEDS WAS INVESTED BY THE ASSESSEE IN MA KING ADDITION TO THE EXISTING HOUSE. CONTENTION OF LEARNED AR WAS THAT ADDITIONA L FLOOR WAS CONSTRUCTED ON THE EXISTING HOUSE AND IN VIEW OF THE AMENDMENT BROUGHT IN SECTION 54F BY FINANCE ACT 2000 W.E.F. 1.4.2001 EVEN IF THE ASSESSEE OWN S ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF ORIG INAL ASSET THE EXEMPTION CLAIMED U/S 54F CANNOT BE DECLINED. SINCE THE ASSESSMENT Y EAR UNDER CONSIDERATION WAS 2002-03 AS PER LEARNED AR ONLY AMENDED PROVISIONS ARE TO BE MADE APPLICABLE. HE ALSO PLACED ON RECORD THE ORDER OF THE HONBLE K ERALA HIGH COURT IN THE CASE OF MRS.MEERA JACOB 313 ITR 411 WHEREIN IT WAS OBSERV ED THAT EVEN ADDITION TO THE EXISTING HOUSE WOULD HAVE QUALIFIED FOR EXEMPTION. SINCE IN THE INSTANT CASE AS PER LEARNED AR THE ADDITION WAS ON THE FIRST FLOOR OF EXISTING HOUSE THE DEDUCTION U/S 54 IS TO BE ALLOWED. KEEPING IN VIEW THE JUDGM ENT OF HONBLE KERALA HIGH COURT AS WELL AS THE AMENDED PROVISIONS BROUGHT IN THE STATUTE BOOK W.E.F. AY 2001-02 THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING AFRESH KEEPING IN VIEW OUR ABOVE OBSERVATIONS. 10. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART WHEREAS THE APPEALS OF THE REVENUE ARE DISMISSED IN TERMS INDI CATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22.01.2010. VK. ITA-2895/D/2008 & OTHERS 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR