DCIT, JAIPUR vs. ADVENT INFRAPROJECTS PVT. LTD., JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh Hkkxpan] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 333/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2015-16 cuke The DCIT, M/s Advent Infraprojects Pvt. Ltd., Vs. Central Circle-3, 424-425, Ganpati Plaza, M.I. Road, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AADCA2327C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri D.C. Agrawal (Adv.) jktLo dh vksj ls@ Revenue by : Shri Vrindera Mehta (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 17/10/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 15/11/2017 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. This appeal by the Revenue is directed against the order dated 27.03.2017 of CIT (A) for the A.Y. 2015-16.The Revenue has raised the following grounds as under:-

“1 Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 4,66,00,000/- made by A.O. on account of unaccounted investment u/s 69B of the Income Tax Act, 1961.

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

The appellant crave, leave or reserves the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.” 2. There was a search u/s 132 of the Act on 17.12.2014 in the case

of Adventage Group, Jaipur. During the search proceedings apart from

other documents two agreements were found from the business

premises of the assessee concern at 424-425, Ganpati Plaza, MI Road,

Jaipur. These agreements were seized and marked as Exhibit-24 of

Annexure –A. The AO noted that as per these agreements dated

28.03.2013, two plots situated at 201 and 202 Girnar Colony, Gandhi

Path, Jaipur were to be sold by Sh. Kailash Chand Sharma and Smt.

Urmila Sharma to Sh. Manpreet Vishnoi and Ms Sabia Vishnoi for

consideration of Rs. 3,82,50,000/- and Rs. 2,97,50,000/- respectively.

Both the agreements have been duly signed by the both parties. These

agreements were cancelled vide agreement dated 06.06.2013.

Subsequently, these two plots of land No. 201 & 202 were sold to Sh.

Arun Goyal in the month of August and October 2013 for a

consideration of Rs. 97.25 lakhs & Rs. 76.50 lakhs respectively. The AO

was of the view that the fair market price/ value of these plots were Rs.

3,82,50,000/- and Rs. 2,97,50,000/- respectively as it was mentioned in

the earlier agreements to sell. The AO further noted that the assessee

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

purchased both these properties from Sh. Arun Goyal on 07.05.2014

for consideration of Rs. 1,20,37,500/- and Rs. 93,62,500/- respectively. The AO noted the chain of event revealed from of agreement to sell,

cancellation of the original agreement to sell between Sh. Kailash Chand

Sharma and Smt. Urmila Sharma and Sh. Manpreet Vishnoi and Ms

Sabia Vishnoi and thereafter these plots were sold to Sh. Arun Goyal

within 3 months from the date of the earlier agreement cancelled and

again sold to the assessee at a substantially low sale consideration in

comparison to the original agreements. Accordingly, the AO issued a

show cause notice to the assessee as to why the differential amount of

purchase consideration between the original agreements and the sale

deed by which the assessee purchase these plots should not be

considered as undisclosed in terms of section 69B of the Act. The

assessee filed its detailed reply before the AO. The AO did not accept

the contention of the assessee and made addition of the differential

amount of Rs. 4,66,00,000/-. The Assessing Officer took full value

consideration by applying the provisions of section 50D of the Act as it

was stated in the original agreements dated 28.03.2013 and

06.06.2013. The assessee challenged the action of the AO before the ld.

CIT(A) and submitted that the earlier agreements were between

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

different parties showing a higher sale consideration cannot be adopted

as fair market value of the property in transactions between the

assessee and vender. The ld. CIT(A) has deleted the addition made u/s

69B of the Act by the AO.

evidence of payment of on money by the assessee to the seller

however, the incriminating documents found during the search in

case of Adventage Group clearly shown the chain of events from

intended buyers to the final transfer of the property in favour of the

assessee. The Assessing Officer has established the fact that the sale

consideration was agreed upon between the original owner and the

perspective buyer as per agreement dated 28.03.2013 at Rs.

3,82,50,000/- in respect of plot No 201 and Rs. 2,97,50,000/- in respect

of plot No. 202 Girnar Colony, Gandhi Path, Jaipur. Further as per the

agreement dated 28.03.2013 an advance payment was made in cash by

the purchasers Sh. Manpreet Vishnoi and Ms Sabia Vishnoi.

Subsequently, the agreement to sell was cancelled vide another

agreement dated 06.06.2013 however, the advance received in cash

was refunded by Sh. Kailash Chand Sharma and Smt. Urmila Sharma

only after these plots were subsequently sold to Sh. Arun Goyal in the 4

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

months of August and October 2013 for a substantially less

consideration of Rs. 97.25 lakhs & Rs. 76.50 lakhs respectively. The AO

has observed that the consideration was paid in by cheque as stated in

the sale deed, however, the differential amount was paid in cash and

only after the said transaction of sale of these two plots to Sh. Arun

Goyal the owners refunded the advance to Sh. Manpreet Vishnoi and Ms

Sabia Vishnoi. By virtue of multi layer transaction of transfer, the

assessee has tried to show the purchase consideration at substantial

low in comparison to the fair market price of property in question. Due

to passage of time the value of the properties to get increased instead

of decrees as claimed by the assessee. He has relied upon the orders of

the Assessing Officer.

Assessing Officer has made the addition u/s 69B which is not attractive

in the facts of the present case when none of the parties in the

transaction has admitted any on money paid or received over and

above the sale consideration stated in the sale deed. He has further

submitted that the Assessing Officer has proceeded on the presumption

of market value of the property on the basis of the agreement which

was subsequently cancelled and therefore, the very basis of market 5

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

value of the property adopted by the AO was not inexistence. He has

further contended that the agreements between third parties cannot be

a basis of the consideration between the assessee and seller. Further

the sale/purchase consideration paid by the assessee is more than the

DLC rates of these properties, therefore, there is no question of

invoking the provisions of section 50D. He has contended that even

otherwise section 50D can be applied only in the case of computation of

capital gain and in the hands of the seller and not in the hands of the

purchaser. The Assessing Officer has made the addition without

establishing the fact that the own money over and above sale

consideration declared was actually paid. He has relied upon the

following decisions:-

(i) Aneeta Singh v. ITO 20 taxmann.com 93. (ii) CIT v. Berry plastics (P.) Ltd. 35 taxman.com 296. (iii) CIT v. Fairdeal Textile Park (P.) Ltd. 43 taxman.com 393. (vi) CIT v. Puneet Sabharwal 16 taxman.com 320. (v) CIT v. Sadhna Gupta 32 taxman.com 185. (vi) CIT v. Daulatram Rawatmull 53 ITR 574. 5. We have considered the rival submissions as well as relevant

material on record. During the course of search and seizure action on

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

17.12.2014 in case of Adventage Group to which the assessee

company belongs apart from other incriminating material two

agreements were found which were seized and exhibit as 24 of

Annexure –A. These two agreements dated 28.03.2013 show that two

plots of land situated at 201 & 202 Girnar Colony, Gandhi Path, Jaipur

were to be sold by Sh. Kailash Chand Sharma and Smt. Urmila Sharma

to Sh. Manpreet Vishnoi and Ms Sabia Vishnoi for consideration of Rs.

3,82,50,000/- and Rs. 2,97,50,000/- respectively. These agreements

were subsequently cancelled by the agreement dated 06.06.2013. The

statements of Sh. Kailash Chand Sharma and Smt. Urmila Sharma as

well as Sh. Manpreet Vishnoi and Ms Sabia Vishnoi were recorded u/s

131 of the Act. These persons confirmed sale consideration agreed

upon between the parties of Rs. 3,82,50,000/- and Rs. 2,97,50,000/-

respectively. However, the reasons for cancellation of agreements were

stated to be higher sale consideration. After the cancellation of

agreements on 06.06.213 these plots were sold to Sh. Arun Goya in

the August and October 2013 for a consideration of Rs. 97.25 lakhs as

against the sale consideration agreed upon in the original agreements

dated 28.03.2013 of Rs. 3,82,50,000/- and Rs. 76.50 lakhs as against

the sale consideration of Rs. 2,97,50,000/- as per the agreement dated

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

28.03.2013. Thus the sale was effected at a consideration which was

almost ¼ of the original sale consideration. This was the reasons for

the AO to proceed with the matter for making the addition on account

of on money paid by the assessee for purchase of these plots of land

for own on 07.05.2014 for consideration of Rs. 1,20,37,500/- and Rs.

93,62,500/- respectively. These chain of events as emerging from

agreements dated 28.03.2013 cancellation agreement dated

06.06.2013, cash received at the time of original agreement dated

28.03.2013 which was refunded subsequent to the plots were sold for a

substantially lower consideration which is almost ¼ of the original sale

consideration agreed upon between the parties led to the AO to

investigate the matter further. Though the Assessing Officer has not

conducted an enquiry for determining the fair market price of the

property in question as required u/s 69B to satisfy himself that the

actual value of the property is much higher than the sale consideration

shown by the assessee resulting the investment made by the assessee

to the extent of the difference between the fair market price and the

consideration admitted being not shown in the books of account can be

added to the income of the assessee. The assessing Officer has

proceeded on the basis of the sale consideration as stated in the

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

agreements dated 28.03.2013 as well as cancellation agreements dated

06.06.2013. There is no doubt that earlier agreements were between

different parties and assessee was not privy to the agreements.

Therefore, when the earlier agreement was cancelled then the sale

consideration stated in the earlier agreement cannot be adopted as a

fair market price/value of the property for the purpose of section 69B of

the Act. The Assessing Officer was ought to have brought some

tangible material to satisfy himself that the investment made in these

assets were more than the investment as shown by the assessee in the

books of accounts. The ld. CIT(A) issue a remand order with specific

direction that the director of the assessee company should have been

examined by the AO. It is pertinent to note that this direction of the ld.

CIT(A) even otherwise would not achieved any purpose as the director

of the assessee company would not give a statement detrimental to

the interest of the assessee company and therefore the outcome and

fate of such enquiry was predetermined. Since it is an issue of

determination of the fair market value of the plots of land in question

and it is apparent from the facts and chain of events as discovered

from the search and seizure action and emerged from the documents

disclosing the earlier agreements to sell of these plots of land that

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur

difference between the sale consideration agreed upon between the

parties in the agreement dated 28.03.2013 and the sale consider for

which the assessee purchase the property vide sale deed dated

07.05.2014 is Rs. 4.66 crores which is more than the twice of the sale

consideration paid by the assessee. The assessee has not brought on

record any facts or circumstances to show that the value of the

property has depreciated during the period from 28.03.2013 to

07.05.2014 and further the fair market price of this property is less than

the prevailing price due to certain disadvantages attached to this

property. Therefore so far as the action of the AO to invoke the

provisions of section 69B is concerned, it is proper on the part of the AO

to invoke these provisions if the AO is satisfied that the investment

made by the assessee is much more than it has shown in the books of

accounts. Accordingly, having regard to the facts and circumstances of

the case we are of the considered view that this matter requires a

proper verification and examination at the level of the AO for

determining the fair market price/value of the plot of land in question.

Since the valuation of the property is a subject matter of the experts in

the field, therefore, Assessing Officer ought to have got the valuation

from the expert/DVO. At the same time the assessee is also at liberty to

ITA No. 333/JP/2017 DCIT v M/s Advent Infraprojects Pvt. Ltd. Jaipur support its claim by filing valuation report from the registered valuer. Hence, this matter is set aside to the record of the Assessing Officer for fresh adjudication. Needless to say the assessee be given an opportunity of hearing.

In the result, the appeal filed by the Revenue is allowed for statistical purposes.

Order pronounced in the open court on 15/11/2017 Sd/- Sd/- ¼Hkkxpan ½ ¼fot; iky jko½ (Bhagchand) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 15/11/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- The DCIT), Central Circle-3, Jaipur. 2. izR;FkhZ@ The Respondent- M/s Advent Infraprojects Pvt. Ltd., 424- 425, Ganpati Plaza, M.I. Road, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 333/JP/2017} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत