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आदेश/Order
PER BENCH: Appellant/assessee Smt. Jatinder Kaur has challenged the two orders dated 08.04.2021 passed by the Ld. Commissioner of Income Tax (Appeals)-5/ Ludhiana (for short the Ld. CIT(A), whereby the Ld. CIT(A) has partly allowed the appeals filed by the
2 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 assessee against the assessment orders passed by the AO u/s 153C/153A/143(3) of the Income Tax Act 1961 (for short ‘the Act’) for the assessment years 2014-15 and 2015-16. Similarly, appellant/assessee Smt. Harbajan Kaur has challenged the two orders passed by the Ld. CIT (A) partly allowing the appeals filed by her against the assessment orders passed by the AO u/s 153C/153A/143(3) of the Income Tax Act 1961 for the assessment years 2014-15 and 2015-16. Since some of the issues involved in all the four appeals are based on identical set of facts, these were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience.
ITA No. 70/CHD/2021 for the A.Y. 2014-15
Brief facts of the case are that a search and seizure operation under section132 of the Income Tax Act was conducted by the department at the residential premises of Sh. Surinder Singh Bindra on 01.11.2017. During the course of search some documents relating to the property belonging to his brother’s wife Smt. Jitender Kaur (assessee in the present case) w/o Sh. Harvinder Singh, were seized. On the basis of the said seizure, the AO issued notice u/s 153C of the Act. In response thereof, the assessee filed her return of income on 18.11.2019 declaring total income of Rs.2,18,960/-. Accordingly, AO passed the assessment order u/s 153C/153A/143(3) of the Act and determined the total income of the assessee at Rs. 5,41,710/- after making addition of Rs. 3,22,750/- as unexplained investment made in connection with renovation of her House. In the first appeal, the Ld. CIT(A)
3 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 restricted the addition to Rs. 1,73,202/-. Still aggrieved, the assessee is in appeal before this Tribunal.
2. The assessee has challenged the impugned order passed by the Ld. CIT(A) on the following grounds: -
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in giving part relief to the appellant.
2. That the Ld. CIT (A) has erred in confirming the addition on account of the undisclosed investment in the residential buildup house amounting Rs. 1,73,202/- without any basis. 3. That the Ld. CIT(A) has failed to appreciate that no incriminating evidence was found during the course of search relating to the part additions as confirmed by the Worthy CIT(A). 4. That the Ld. CIT(A) has erred in not considering and ignoring the submissions and facts as filed before the CIT(A) as well as before the Assessing Officer. 5. That the appellant craves leave to add or amend the ground of appeal before the appeal is finally heard or dispose off.
3. The Ld. Counsel submitted before us that the assessee and her mother-in-law Smt. Harbhajan Kaur, jointly purchased a built- up house in the year 2012. The share of the assessee in the said house is 25% and share of her mother-in-law is 75%. Although, during the course of search no evidence was recovered, yet the assessee submitted before the AO that in the assessment year 2014-14 an amount of Rs. 3,20,000/- and in assessment year 2015-16 an amount of Rs. 19,53,000/- was spent on renovation of the said house. The AO rejecting the contention of the assessee referred the matter to valuation cell and on the basis of the valuation report, made addition of Rs. 3,22,750/- being 25% of the investment in the assessment year under consideration. The Ld.
4 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 counsel contended that since action of AO in referring the matter to valuation cell in the absence of any incriminating material, was contrary to the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs. Abhinav Mittal 351 ITR 0020, the Ld. CIT(A) ought to have deleted the addition made on the basis of valuation report. The Ld. counsel further relied upon the judgment of the Hon,ble Delhi High Court in the case of CIT vs. Kabul Chawala 380 ITR 573 (Delhi), decision of the Delhi Bench of the ITAT in the case of USG Buildwell Pvt. Ltd. vs. ACIT 87 ITR (Trib.)151 (Delhi) and other cases to substantiate his contention. The Ld. counsel further pointed out that even the valuation report relied upon by the authorities below is in the name of Sh. Surinder Singh Bindra and Sh. Harvinder Singh, whereas the assessee and her mother-in-law are the joint owners of House in question. The Ld. counsel accordingly submitted that since the order passed by the Ld. CIT(A) is contrary to the settled principles of law, the same is liable to be set aside on this point.
On the other hand, the Ld. departmental representative (DR) supporting the order passed by the Ld. CIT(A) submitted that since the actual amount of expenditure for renovation of house in question was higher than the amount claimed by the assessee, the AO had no option but to refer the matter to the valuation cell for ascertaining the actual expenditure. Moreover, the Ld. CIT(A) has since restricted the addition to Rs. 1,73,202/- as against the addition of Rs. 3,22,750/- made by the AO, no further action is required in this matter.
5 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 5. We have carefully gone through the material available on record including the cases referred and relied upon by the Ld. counsel for the assessee in the light of the rival submissions of the parties. The undisputed facts of the present case are that the assessee and her mother-in-law, Smt. Harbhajan Kaur jointly purchased the house in question in the year 2012. The assessee share in the said house is 25% and the share of Smt. Harbhajan Kaur is 75%. Further, during the search action no incriminating evidence was recovered or seized in respect of the alleged investment by the assessee and the co-owner of the said house. Now the only issue which requires determination is whether the addition made/sustained on the basis of valuation report obtained by the AO is sustainable in the light of the ratio laid down by the Hon’ble Delhi High Court and the other cases relied upon by the Ld. counsel.
As pointed out by the Ld. counsel, the Hon’ble Delhi High Court in the case of CIT vs. Abhinav Kumar Mittal (supra), has held that when no material is found to justify the action of AO in referring the matter to the DVO for his opinion, then the valuation arrived at by the DVO would be of no consequence. In the said case the assessee has filed his return of income. Subsequently, a search u/s 132 of the Act and survey operation u/s 133A of the Act was conducted in the premises of a company, its group companies and directors of those companies. On the basis of the said operation, AO issued notice u/s 153(C) of the Act to the assessee. The assessee requested to treat the return already filed as return in response to the notice u/s 153(C) of the Act. The AO referred the 6 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 question of valuation of the properties purchased by the assessee during the relevant year. Accordingly, addition of the difference in values as declared by the assessee and as opined by the DVO, was made by the AO. In the first appeal, the Ld. CIT(A) affirmed the action of the AO. However, the Tribunal in the second appeal reversed the findings of the Ld. CIT(A) and deleted the addition holding that since no material was found during the search to justify the reference to the DVO, the action was not in accordance with law. The Tribunal further held that there must be some material to show that the investment made by the assessee was outside the books. The Tribunal also held that the DVO’s report was not reliable being based on incomparable sales and that the burden was on the revenue to show that the real investment was more than the declaration made by the assessee. In the further appeal by the department, the Hon’ble High court upheld the findings of the tribunal holding as under: - “6. We have no reason to differ from the view taken by the Tribunal, particularly, as no material was found in the search and seizure operations, which would justify the Assessing Officer’s action in referring the matter to the DVO for his opinion on valuation of the said properties. If that be the case, then the valuation arrived at by the DVO would be of no consequence. In any event, the Tribunal has also, on facts, held that the DVO’s valuation was based on incomparable sales, which is not permissible in law.”
In our considered view, the assessee’s case is fully covered by the ratio laid down by the Hon’ble High court in the said case. Further, in the present case, the authorities below have not pointed out any corroborative evidence to show that the assessee had made investment in question more than the amount declared by the her during assessment proceedings. Hence respectfully following the judgment of the Hon’ble Delhi High Court in the case of CIT vs.
7 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 Abhinav Kumar Mittal (supra), we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A).
ITA No. 71/CHD/2021 for the A.Y. 2015-16
In the assessment year 2015-16 also, the AO issued notice u/s 153C of the Act to the assessee on the basis of search and seizure operation, discussed in assessee’s appeal for the assessment year 2014-15. The assessee contended that during the relevant year an amount of Rs. 19,53,000/- was spent for renovation of the built-up house jointly purchased by the her and Smt. Harbhajan Kaur. The AO rejecting the contention of the assessee, made addition of Rs 19,69,875/- (being 25% of the total amount as per the valuation report) as undisclosed investment. The AO further made addition of Rs. 3,75,000/- on account of undisclosed capital gain. In the first appeal, the Ld. CIT(A) restricted the addition on account of expenditure incurred on renovation of house to Rs. 10,57,127/-, however, confirmed the addition made on account of undisclosed capital gain.
2. The assessee has challenged the impugned order passed by the Ld. CIT(A) on the following grounds: -
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in giving part relief to the appellant.
2. That the Ld. CIT (A) has erred in confirming the addition on account of the undisclosed investment in the residential buildup house amounting Rs. 10,57,127/- without any basis. 3. That the CIT(A) has erred in not considering the sale agreement as seized and has erred in relying only on the oral statement of the family member. 4. That the Ld. CIT(A) has failed to appreciate that no incriminating evidence was found during the course of 8 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 search relating to the part additions as confirmed by the Worthy CIT(A). 5. That the CIT (A) has erred in confirming the addition on account of the undisclosed capital gain amounting Rs. 3,75,000/- without any basis. 6. That the appellant craves leave to add or amend the ground of appeal before the appeal is finally heard or dispose off.
Ground No 1 to 4 of this appeal is identical to the ground No. 1 to 4 of the assessee’s appeal for the assessment year 2014-15 discussed and decided above. Since we have decided the identical issue in favour of the assessee in assessee’s appeal aforesaid, consistent with our findings in the said case, we allow these grounds of appeal of the assessee and set aside the findings of the Ld. CIT(A).
4. Vide ground No 5 the assessee has challenged the action of the Ld. CIT(A) in confirming the addition of Rs. 3,75,000/- made by the AO on account of undisclosed capital gain. During the course of search and seizure in the residence of Sh. Surinder Singh Bindra, certain documents relating to exchange of house situated at 99-B, South Model Gram Ludhiana, owned by four co-owners including the assessee in this case, were seized. During post-search investigation Sh. Surinder Singh Bindra stated that the said house was exchanged with a residential plot owned by Sh. Iqbaljit Singh and that the sale consideration of the said house was approximately Rs. 83 lacs whereas plot was purchased for Rs. 48 lacs. Hence, the difference amounting to Rs. 35 lacs was received in cash. Accordingly, assessee was asked to explain the nature of transaction and show cause as to why addition to the extent of her share should not be made. The assessee submitted that no amount
9 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 was received in cash as there was no difference in value between the two properties. However, rejecting the submissions made by the assessee the AO made addition of Rs 3,75,000/-, holding that the difference in the value of two properties thus comes to 20 lacs as the co-owners of the house had actually received an amount of Rs. 35 lacs.
Before us the Ld. counsel submitted that the AO has mentioned in para 4.4 of the order that as per the sale deed, the house was sold for a total consideration of Rs. 68 lacs and not for Rs. 83 lacs. Placing reliance on the judgment of the Hon'ble Supreme Court in the case of Daulat Rawat Mal vs. CIT 87 ITR 349, the Ld. counsel submitted that as per the ratio laid down in the said case, when the documentary evidence is pitted against oral evidence then the documentary evidence would prevail. The Ld. counsel further submitted that as per the settled law the statement recorded during search has no evidentiary value unless it is corroborated by the other evidence. Accordingly, the Ld. counsel submitted that the authorities below have made/sustained the addition on surmises and conjectures, therefore liable to be deleted and also contrary to the settled principles of law.
6. On the other hand, the Ld. DR supporting the order passed by the Ld. CIT(A) submitted that since the co-owner has stated before the competent authority that an amount of Rs. 35 lacs was received in cash, the Ld. CIT(A) has rightly made addition to the extent of the share of the assessee.
10 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 7. We have heard the rival submission and perused the material on record including the cases relied upon by the Ld. counsel before us. As pointed out by the Ld. Counsel the AO had made addition of Rs. 3,75,000/- as undisclosed capital gain merely on the basis of the statement of Shri S.S. Bindra, one of the co-owners of the house in question. We further noticed that AO has even not examined Shri Iqbaljit Singh to ascertain the actual sale consideration of the said house. As pointed out by the Ld. counsel even the other co-owners were not examined. As per the law laid down by the Hon'ble Supreme Court in the case of Daulat Ram Rawat Mal vs CIT (supra), in the present case the documentary evidence would prevail over the oral statement relied upon by the AO. Hence, we find merit in the contention of the Ld. counsel for the assessee that the Ld. CIT(A) has wrongly upheld the addition made by the AO. Accordingly, we allow this ground of the appeal of the assessee and set aside the findings of the Ld. CIT(A).
ITA No. 75/CHD/2021 for the A.Y. 2014-15
Assessee in this case is the co-owner of House purchased in 2012 with Smt. Jatinder Kaur as discussed in the case of co-owner Smt. Jatinder Kaur in her appeals & 71/Chd/2021. As discussed in the case of Smt. Jitender Kaur since the present assessee is having 75% of share in the said house, AO made addition of Rs. 9,68,250/- i.e., 75% of the total expenditure incurred for renovation of the said house during the assessment year 2014-15 on the basis of valuation report obtained from DVO during the assessment proceedings. The AO further made addition of Rs. 3,00,000/- on account of low household
11 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 expenses/withdrawal. The assessee challenged the assessment order before the Ld. CIT(A). The Ld. CIT(A) after hearing the assessee partly allowed the appeal filed by the assessee and restricted the addition made by the AO on account of undisclosed investment to Rs. 5,19,608/- and addition made on account of undisclosed household expenses to Rs. 1,50,000/-. Still aggrieved, the assessee is in appeal before this Tribunal.
The assessee has challenged the impugned order passed by the Ld. CIT(A) on the following grounds: -
1. That the Ld. CIT(Appeals) has erred in giving part relief to the appellant.
2. That the Ld. CIT(A) has erred in confirming the addition on account of alleged "undisclosed investment" in the residential buildup house amounting Rs. 5,19,608/- without any basis. 3. That the CIT(A) has erred in confirming the addition on account of the undisclosed household expenses amounting Rs. 1,50,000/- without any basis. 4. That the Ld. CIT(A) has failed to appreciate that no incriminating evidence was found during the course of search relating to the part additions as confirmed by the Worthy CIT(A). 5. That the Ld. CIT (A) has erred in not considering and ignoring the submissions and facts as filed before the CIT (A) as well as before the assessing officer. 6. That the appellant craves leave to add or amend the ground of appeal before the appeal is finally heard or dispose off.
3. Ground No.1, 4, 5 & 6 of this appeal are general in nature hence, do not require specific adjudication.
4. Vide Ground No. 2 the assessee has challenged the action of the Ld. CIT(A) in sustaining the addition of Rs. 5,19,608/- out of the total addition made by the AO on account of unexplained 12 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 investment/ expenses incurred in renovation in the year relevant to the assessment year under consideration. Since this issue is arising out of the common set of facts in the case of her co-owner Smt. Jatinder Kaur in ITA No. 70-71/Chd/2021 discussed above and since we have decided the identical issue in favour of the assessee in the said case, we allow this ground of the appeal of the assessee in this case for the same reasons.
5. Vide Ground No.3 the assessee has challenged the action of the Ld. CIT(A) in sustaining addition of Rs. 1,50,000/- on account of low household expenses on the ground that since no incriminating evidence were found during the course of search, the Ld. CIT(A) has wrongly sustained the said addition. The Ld. counsel further pointed out that the findings of the Ld. CIT(A) are contrary to the ratio laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawala (supra), decision of the Delhi Bench of the ITAT in the case of USG Buildwell Pvt. Ltd. vs. ACIT (supra).
6. On the other hand, the Ld. DR supported the findings of the Ld. CIT(A).
7. We have gone through the material on record in the light of the submissions made by the parties. As pointed out by the Ld. counsel, since no incriminating material was recovered during the course of search and seizure action, the Ld. CIT(A) has wrongly sustained the addition made by the AO on account of house hold expenses. Further, as pointed out by the Ld. counsel the assessee has submitted the details of year wise household expenses of the assessee, copy of which are available at page 22 & 23 of the paper book. We further notice that the Ld. CIT(A) has not given any 13 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 cogent and convincing reason for sustaining the addition of 1,50,000/- on account of the household expenses. In our considered view the addition sustained by the Ld. CIT(A) is not based on any evidence on record. We accordingly, allow this ground of appeal and set aside the findings of the Ld. CIT(A).
Ground in for the A.Y. 2015-16
The facts of this case are identical to the facts of the assessee’s case for the assessment year 2014-15 discussed above. In this year the AO made addition of Rs. 59,09,625/- on account of undisclosed investment i.e., on renovation of house and addition of Rs. 3,00,000/- on account of undisclosed household expenses. In the first appeal the Ld. CIT(A) restricted the additions to 31,71,381/- and 1,50,000/- respectively.
2. The assessee has challenged the action of the Ld. CIT(A) on the following grounds: - 1. That the Ld. CIT(Appeals) has erred in giving part relief to the appellant.
2. That the Ld. CIT (A) has erred in confirming the addition on account of the undisclosed investment in the residential buildup house amounting Rs. 31,71,381/- without any basis.
3. That the CIT (A) has erred in confirming the addition on account of the undisclosed household expenses amounting Rs. 1,50,000/- without any basis.
4. That the Ld. CIT(A) has failed to appreciate that no incriminating evidence was found during the course of search relating to the part additions as confirmed by the Worthy CIT(A).
5. That the Ld. CIT (A) has erred in not considering and ignoring the submissions and facts as filed before the CIT (A) as well as before the assessing officer.
14 Smt. Jatinder Kaur & 71/Chd/2021 Smt. Harbhajan Kaur ITA Nos. 75 & 76 / Chd/2021 6. That the appellant craves leave to add or amend the ground of appeal before the appeal is finally heard or dispose off.
3. Since we have decided both the issues in favour of the assessee in assessee’s own case for the AY 2014-15 aforesaid, consistent with our findings in the assessee’s case for the AY 2014- 15 aforesaid, we allow ground No. 2 & 3 of this appeal and set aside the findings of the Ld. CIT(A).
4. Since, we have decided the substantial issues in favour of the assessee, we do not deem it necessary to adjudicate ground No 1,4,5 and 6, which are of general nature.
In the result, all the four appeals filed by the assessee Smt. Jatinder Kaur and Smt. Harbhajan Kaur for the Ay 2014-15 & 2015-16 are allowed.
Order pronounced in the open Court on 25th Oct. 2021.