COMMISSIONER OF INCOME TAX BATHINDA vs. DARSHANA DEVI

This order shall dispose of ITA Nos.118 and 119 of 2011 as according to the learned counsel, the issue involved therein is identical. However, the facts are being extracted from ITA No.119 of 2011. 2. ITA No.119 of 2011 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 30.9.2010, Annexure A.3 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal”) in ITA No.41 (ASR)/2010.It was admitted on 13.2.2012 to consider the following substantial questions of law:- Singh Gurbax 2014.05.22 10:18 integrity of this document High Court Chandigarh i) Whether on the facts and in the circumstances of the case, the ITAT is right in deleting the addition of ` 24,56,150/- made by the Assessing Officer invoking the provisions of section 69 of the I.T.Act, 1961? ii) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in ignoring fact that there was no clear cut and specific mention of the constructed area in the Registered Deed and no segment rates were notified by the State authorities on account of construction and hence the ITAT has failed to appreciate the facts of the case in right perspective, rendering the findings of the ITAT to be perverse?

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessment was completed under section 143(3) of the Act on 30.12.2008 at an income for `29,08,150/- plus agricultural income of `4762/-. The Assessing Officer made addition of ` 24,56,150/- under Section 69 of the Act on account of unexplained investment by the assessee in the purchase of property known as Bombhiya Resorts, Gidderbaha on the basis of valuation report of the Departmental Valuation Officer (DVO). On appeal by the assessee, the Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the addition, vide order dated 30.10.2009, Annexure A.

Aggrieved by the order, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 30.9.2010, Annexure A.3, impugned herein, partly allowed the appeal deleting the addition made by the CIT(A). Hence the present appeals by the revenue.

Learned counsel for the revenue submitted that in the facts and circumstances of the case, it was necessary for the Assessing Officer to refer Singh Gurbax 2014.05.22 10:18 integrity of this document High Court Chandigarh the matter to the DVO for ascertaining the fair market value of the property. It was urged that the addition of ` 24,56,150/- made by the Assessing Officer under Section 69 of the Act on account of unexplained investment by the assessee in the purchase of property known as Bombhiya Resorts, Gidderbaha was justified and the Tribunal had erred in deleting the same.

On the other hand, learned counsel for the respondent assessee supported the order passed by the Tribunal and submitted that reference to the DVO in the present case was unjustified. Additionally, it was submitted that in the case of co-sharers Sat Pal and Om Parkash, the valuation as shown in the sale deed had been accepted.

After hearing learned counsel for the parties, we do not find any merit in the appeal.

The Tribunal while deciding the issue in favour of the assessee vide order dated 30.9.2010, Annexure A.3 had recorded as under:- “9. We have heard both the parties at length and given our thoughtful consideration to the rival submissions with reference to facts, evidence and material placed on record. We have also referred to the relevant pages of the paper book to which our attention has been drawn and gone through the orders of the authorities below. The decisions relied upon by the learned counsel for the assessee have been duly considered by us. In the present case constructed property was purchased by the assessee so was the situation in the case of Amritsar Bench, relied upon by the assessee. The learned counsel for the assessee placed reliance on the decisions of the ITAT, Amritsar Bench, in the case of M/s Jugraj Singh Ghansham Dass, Bathinda v. Income Tax Officer, Ward 1(1), Bathinda, passed in ITA No.61(Asr)/ 2010 for the A.Y.2006-07, dated 9th April 2010, wherein Singh Gurbax 2014.05.22 10:18 integrity of this document High Court Chandigarh after discussion it has been held as under: 'In the absence of the same, the addition in dispute is not possible in the present case because no other evidence has been produced by the revenue authorities against the assessee establishing that the assessee has made any payment over and above the payment mentioned in the sale deed of the property in dispute.'

We have also considered the decision of the ITAT, Chandigarh Bench, relied upon by the assessee, in the case of Income Tax Officer, Ward IV, Moga vs. M/s New P.Grand Resorts, Jagraon, passed in ITA No.526(ASR)/ 2010 for the A.Y.2006-07, dated 26th November 2009 wherein it has been held as under:- '

In the totality of facts and circumstances of the present case where the assessee had explained the sources of investment in the purchase of property during the financial year and in the absence of any evidence found to be contrary, vis a vis purchase price paid by the assessee, there is no basis for making the addition under Section 69B of the Act on the difference between the value determined by DVO and the purchase price shown by the assessee. We uphold the finding of CIT(A) in this regard that in the absence of any evidence to prove that any amount over and above the amount mentioned in the registered documents was received by the seller, no addition could be made in the hands of the assessee, especially in the circumstances, where the evidence being the statement of the sellers accepting the sale price, was against the finding of assessing officer. We uphold the deletion of addition of ` 1.87 crores by the CIT(A) and dismiss the ground of appeal raised by the revenue.'

In view of the above discussions and having regard to factual matrix of the case, we are of the considered opinion that similar issue came up for consideration before the ITAT, Amritsar Bench, in the case of M/s Jugraj Singh Ghansham Singh Gurbax 2014.05.22 10:18 integrity of this document passed in ITA No.61(Asr)/2000 for the A.Y. 2006-07 dated 9th April 2010. In the case of Income Tax Officer, Ward IV, Moga vs. M/s New P.Grand Resorts, Jagraon passed in ITA No.526(Asr)/2010 for the A.Y.2006-07, dated 26th November, 2009, the Hon'ble ITAT, Chandigrh Bench, has decided that in the absence of any evidence found to be contrary, vis a vis purchase price paid by the assessee, there is no basis for making the addition on the difference between the value determined by the DVO and the purchase price shown by the assessee and thus, the Hon'ble Bench, upheld the findings of the CIT(A), in the matter that in the absence of any evidence to prove that any amount over and above the amount mentioned in registered documents was received by the seller, no addition can be made in the hands of the assessee. Similar rule is applicable to the case of purchaser also as unless corroborative evidence proved that the purchase consideration exceeded the consideration mentioned in the documents, no addition can be made. This view has been upheld by the Hon'ble Supreme Court, in the case of K.P.Verghese v. ITO, (1981) 131 ITR 597 (SC). Thus, respectfully following the above decisions, we allow

From the above, it emerges that the Tribunal had concluded that the assessee had explained the source of investment in purchasing of the property during the financial year and there was no evidence to prove that any amount over and above the one mentioned in registered documents was received by the seller, therefore, there was no basis for making the addition on the difference between the value determined by the DVO and the purchase

In view of the above, the Tribunal was justified in deleting the addition made by the Assessing Officer and upheld by the CIT(A). Consequently, the substantial questions of law are answered against the revenue and the appeals stand dismissed.