SH. DEVINDER SINGH VOHRA,PATIALA vs. ITO, W-4, PATIALA

आदेश/Order

The present appeal has been preferred by the assessee against the order dated 22.10.2018 of the Commissioner of Income Tax (Appeals), Patiala [hereinafter referred to as ‘CIT(A)’].

ITA No. 1603-Chd-2018- Shri Devinder Singh Vohra, Patiala 2

appeal is against the addition made by the lower authorities of Rs. 9.34

lacs on account of difference between the registered sale deed price and

the value of the property as per report of the Departmental Valuation

Officer.

the Assessing Officer on the ground that a survey action was carried out

at the premises of the assessee and during the survey action it was found

that the assessee had sold certain properties for a total consideration of

Rs. 35 lacs. However, in the return of income, the assessee had shown

sale consideration at Rs. 9,36,265/- only. The Assessing Officer,

therefore, noted that the sale consideration has been shown less by the

assessee at Rs. 25,63,735/-. He, therefore, observed that the assessee

had understated the value of the Long Term Capital Gains. The

Assessing Officer further noted that as per the information available on

record, the assessee had purchased a property bearing No. 146, Punjabi

Bagh, Patiala for a sum of Rs. 45 lacs and further a sum of Rs.

3,37,500/- was incurred as registration expenses, thus, the total

investment in the purchase of the said property was made at Rs.

48,37,500/-, whereas, the assessee had shown the consideration at Rs.

ITA No. 1603-Chd-2018- Shri Devinder Singh Vohra, Patiala 3

35 lacs. He, therefore, observed that the assessee had made unexplained

investment of Rs. 13,37,500/-. He, therefore, reopened the assessment.

In the reopened assessment proceedings, the assessee explained

that the assessee had not sold the property at Rs. 35 lacs, as alleged by

the Assessing Officer, whereas, the total sale consideration received by

the assessee was at Rs. 9,36,265/- whereupon a deduction u/s 54 of the

Act was claimed as per law. That thereafter the assessee along with his

wife had purchased House No. 146, Punjabi Bagh, Patiala, wherein, the

assessee had only 50% share. That the total purchase consideration of

the said house was at Rs. 45 lacs, out of which the assessee’s share of investment in the said house was at Rs. 22.50 lacs The Assessing

Officer, however, was of the view that the assessee had shown the

purchased price at a lower side. He, accordingly referred the matter to

the valuation officer who estimated the value of the property at Rs.

63,68,000/- calculating assessee’s 50% share in the said investment,

the Assessing Officer observed that the assessee had shown a less

purchase consideration of Rs. 9.34 lacs, which the Assessing Officer

considered as out of unexplained income of the assessee. He,

accordingly made the impugned addition.

through the record. A perusal of the reasons recorded by the Assessing

ITA No. 1603-Chd-2018- Shri Devinder Singh Vohra, Patiala 4 Officer reveal that the Assessing Officer noted that during the survey

action it was found that the assessee had sold his two properties at Rs.

35 lacs, whereas, the assessee had shown the sale consideration in the

sale deed at a total amount of Rs. 9,36,265/-. However, a perusal of

the assessment order reveals that the Assessing Officer has not touched

this point. What was the information available to the Assessing Officer

that the property of the assessee was sold at Rs. 35 lacs has not been

brought before us. Even the Assessing Officer has not discussed this

issue at all in the assessment order and no evidence has been pointed

out either in the assessment order or in the appellate order of the

CIT(A) in this respect. Even no additions have been made on this issue.

It seems that the lower authorities just assumed that the property was

sold at Rs. 35 lacs as no evidences have been brought to our knowledge

which were available to the Assessing Officer to form this belief. Even

there is no whisper of source of any information in this respect on the

basis of which the Assessing Officer formed an opinion that the value

of the property / house purchased by the assessee along with his wife

was higher than that was shown in the sale deed. The assessment was

reopened on this issue only on assumption basis as there was no reason

for the Assessing Officer to form this belief in the absence of any

evidence on the file. The sole reason for making the addition on this

issue is the report of the Valuation Officer which was obtained by the

Assessing Officer after reopening of the assessment. However, before

the reopening of the assessment, there was no information available to

ITA No. 1603-Chd-2018- Shri Devinder Singh Vohra, Patiala 5 the Assessing Officer to form the belief that the assessee has purchased

the house at higher price involving his unexplained investments. Even a

perusal of the valuation report also reveals that the same is cryptic. The

Valuation Officer has not mentioned the instances or the reasons on the

basis of which he formed the belief that the valuation of the property

was higher than that was mentioned in the sale deed. Though, it has

been mentioned in the valuation report that the Valuation Officer has

taken note of the sale deed / data provided by the Sub-Registrar, but

there is no mention in the report as to what were the instances of other

similar situated properties that were sold at higher rate. The report of

the Valuation officer also seems to be based on conjecture and surmises.

In view of the above discussion, the assessee succeeded on both the

counts i.e. on the legal ground of validity of the reopening of the

assessment as well as on merits. The impugned addition made by the

lower authorities is, therefore, set aside and the appeal of the assessee

stands allowed.

Order dictated and pronounced in the Open Court immediately on

completion of hearing.

Sd/- (संजय गग� / SANJAY GARG) �या�यक सद�य/ Judicial Member Dated : 22. 07.2019 “आर.के.”

ITA No. 1603-Chd-2018- Shri Devinder Singh Vohra, Patiala 6 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar