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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: Shri Mahavir Singh, Hon’ble & Shri Krinwant Sahay, Hon’ble
Per Mahavir Singh, Vice President:
The Revenue has filed the instant appeal and Assessee has filed the Cross Objection and both are arising out of the order of the Ld. CIT(A)-37, New Delhi dated 21.02.2020 passed in Appeal No. CIT(A), Delhi-37/10046/2018-19, pertaining to assessment year 2005-06.
Heard both the parties at length. Case files perused.
The brief facts of the case are that the assessee is an individual who had filed her original return of income under section 139 of the at an income of Rs. 32,110/-. A search and seizure action was initiated on the assessee group on 06.11.2008 u/s. 132 of the Income Tax Act, 1961 and consequently a search warrant also executed in the name of assessee. Originally this case was centralized with ACIT, Central Circle 22, New Delhi, and a notice u/s. 153A of the Act was issued on 6.11.2009. In compliance of the notice under section 153A, the assessee had filed her return on 27.11.2009 at original income of Rs. 32,110/- as per return filed under section 139 of the Act. The ACIT, Central Circle-22, New Delhi, passed the assessment order u/s. 153A/143(3) of the Act on 29.12.2010 and made to additions of Rs. 10,53,50,000/- with regard to unaccounted investment in property to the returned income and assessed the income at Rs. 10,84,97,500/-. The assessee filed an appeal against the assessment order dated 29.12.2010 before the Ld. CIT(A)-III, New Delhi who vide his impugned order dated 10.10.2011 deleted the addition of Rs. 31,15,400/- and restricted the addition of Rs. 10,53,50,000/- to Rs. 15,75,850/-. Aggrieved, the assessee filed the appeal before the ITAT vide Appeal No. 5020/Del/2011 and AO has filed the appeal against the order of the Ld. CIT(A) of dated 10.10.2011 before the Tribunal and Tribunal vide its order dated 12.08.2016 has set aside the matter to the file of the AO to verify the facts regarding availability of any incriminating material during the course of search and status of the return of income originally field as on the date of search and decide the validity of additions in question following the ratio laid down in the above case of Kabul Chawla (Supra) after hearing the assessee. Thereafter, ITO, Ward 18(3), New Delhi passed the assessment order dated 28.12.2017 assessed the income of the assessee at Rs. 10,84,97,500/- by making an additions to the returned income i.e. addition of Rs. 31,15,400/- towards short term capital gain and an addition of Rs. 10,53,50,000/- with regard to unaccounted investment in property. Aggrieved, appeal before the Ld. CIT(A), who vide his impugned order 21.02.2020 has again partly allowed the appeal of the assessee by deleting the addition of Rs. 31,15,400/- and restricted the addition of Rs. 10,53,50,000/- to Rs. 15,75,850/-. Against the aforesaid action of the Ld. CIT(A), Revenue is in appeal before the Tribunal and Assessee has filed the Cross Objection.
We have heard the rival contentions and gone through the facts and circumstances of the case. The first issue in this appeal of Revenue and Assessee’s Cross Objection is as regards the order of the CIT(A) restricting the addition of Rs. 15,75,850/- as against the addition made by the AO of Rs. 10,53,50,000/-. We noted that the assessee has purchased property i.e. 3, Avenue Jacranda, Rajokari, New Delhi for a sum of Rs. 50,00,000/-and assessee’s share worked out to the extent of Rs. 25,00,000/-. While pledging the said property the assessee for the purpose of obtaining OD/CC facility from Indian Overseas Bank (IOB), the assessee got the valuation prepared of this property at Rs. 10,53,00,000/-. The AO on the basis of valuation report treated this as unexplained investment amounting to Rs. 10,53,50,000/-. The Assessee before the CIT(A) and now before us, contended that this valuation report was sent by the IOB to AO in response to notice u/s. 133(6) of the Act and there is no incriminating material available and the said valuation report cannot be as incriminating material and hence, the CIT(A) has rightly restricted the addition to the extent of Rs. 15,75,850/- by observing as under:- “In the case of Sanjeev Mahajan, close relative of the appellant for AY. 2003-04, it was found that he had purchased property i.e. Farm House No. 2, Avenue Cassia, Rajokri, New Delhi on 09.12.2002 for Rs.62.50 lacs which consists of land area of 1.25 acre with construction thereon. This fact has been examined and discussed in the appellate proceedings for AY. 2003-04 (Appeal No. 296/10-11). The Cost of construction was worked out to Rs.23,35,500/-. Thus, the Cost of land was shown at Rs.29,71,600/- per Acre (Rs.37,14,500/- for 1.25 Acre. To be fair and reasonable, the appellant group itself had purchased adjoining property i.e. Farm House No. 2, Avenue Cassia, Rajokri, New Delhi for Rs.29,71,600/- per acre on 09.12.2002. This property is in close proximity to the property under consideration i.e. Farm House No. 3, Avenue Jacranda, Rajori, New Delhi purchased by the appellant on 05.06.2004. Both these properties are located in Rajokri and there is a time gap of 18 months only in these two transactions. It is a fact that there was considerable appreciation in property prices in 2002-2004. Thus, some appreciation in property prices has to be loaded in while working out purchase price in hands of appellant. It is fair and responsible to estimate escalation of property prices @ 15% during this period. Thus, the purchase price of Avenue Jacranda property is estimated at Rs.34,17,340/- per acre (115% of Rs.29,71,600/-). Total cost of 2.3854 acre land works out to Rs.81,51,700/- as against Rs.50,00,000/- shown by the appellant and her co buyer. The cost of property in hands of appellant works out to Rs.40,75,850/- (50% of Rs.81,51,700/-) as against Rs.25,00,000/- shown by the appellant. This difference of Rs.15,75,850/- (Rs.40,75,850/- - Rs.25,00,000/- is liable to be added to the Income of the appellant u/s 69 as Unexplained Investment. Thus, the addition made by the AO is confirmed to the extent of Rs.15,75,850/- as against addition of Rs.10,53,50,000/- made by the AO. Consequent relief is allowed to the appellant. Grounds of appeal
no. 6, 7 and 8 are partly allowed.” 4.1 We find no infirmity in the order of the CIT(A), in view of the above discussion, and accordingly, we sustain the order of the CIT(A). Resultantly, the issue of Revenue as well as Assessee are dismissed.
5. The next issue raised in Revenue’s appeal is as regards the order of the CIT(A) in deleting the addition on account of Short Term Capital Gain (STCG) of Rs. 31,15,400/-. 5.1 We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that assessee has STCG of Rs. 10 lacs on sale of Farm House No. 2 Avenue Jacranda, Rajokri, New Delhi which was purchased on 12.1.2004 for a sum of Rs. 50,00,000/-. This was sold for a sum of Rs. 60,00,000/- on 02.04.2004 and therefore, the assessee has declared STCG at Rs. 10 lacs. The AO was not agreeable to the valuation and hence, referred the same to the DVO who valued the property at Rs. 96,09,000/-. AO estimated the sale value @ 120% of Rs. 96,09,000/- i.e. Rs. 11,530,800/- after considering 20% escalation in property price. Therefore, the AO computed the STCG at Rs. 31,15,400/- and added to the returned income of the assessee. Aggrieved, assessee preferred appeal before the Ld. CIT(A), who deleted the addition by stating that simplicitor estimate without any basis and even there is no incriminating material relating to this, which can be the basis for search assessment. Ld. CIT(A) observed as under:-
“(c) As evident from CIT(A)'s order in the present case dated 10.10.2011, the applicable rate for purpose of Stamp Duty Valuation for this property is Rs.17,58,400/- per acre vide notification dated 30.05.2005 (Para 3.3, Page 10 of the appellate order). Section 50C of the Act is a Special Provision for calculating the full value of consideration in Certain cases. As per Section 50C, where consideration received as a result of transfer by an assessee of a Capital asset is less than the value adopted by Stamp Valuation Authority, then, the value so adopted for purpose of payment of Stamp Duty shall be deemed to be full value of consideration received as a result of such transfer. In the present case the Value adopted by Stamp Valuation Authority for the impugned property is Rs.17,58,400/- per acre. The consideration recorded in the registered Sale deed as on 02.04.2004 works out to Rs.23,13,030/- per acre (Rs.60,00,000/- for 2.594 acre). Prior to 30.05.2005 the applicable rates for impugned land adopted by Stamp Valuation Authority was Rs.15,70,000/- per acre vide notification dated
02.08.2001. These facts clearly show that Sale consideration received by the appellant for transfer of Capital Asset/was much higher than the Circle rate fixed for purpose of Stamp Duty by the State Govt. Hence, the provisions of Section 50C are not attracted on the facts of the present case. Thus, it is clear that the AO did not apply the provisions of Section 50C in the present case. d) The AO has estimated the Sale value by taking an estimated appreciation @20% over and above the DVO's valuation. STCG cannot be calculated on basis of any estimate of consideration received on sale of an asset. Sale consideration has been estimated by applying estimated appreciation @20% over and above the DVO's valuation. However, the Cost acquisition is not replaced by DVO's valuation, but rather it is taken as Cost of acquisition declared by the appellant in her return. This has resulted in an anomalous situation resulting in STCG of Rs.31,15,400/- i.e. Increase of more than 100% in value of property in a span of less than 3 months which is an abnormal fact in property market.”
5.2 Going by the findings of the Ld. CIT(A), we are of the considered view that there is no incriminating material first of all and secondly, which is on the basis of the estimation by the DVO the value cannot be considered @120%. Hence, we are of the view that Ld. CIT(A) has rightly deleted the addition and hence, we dismiss this issue of the Revenue.
5.3 All other pleadings on merits herein stand rendered academic.
To sum up, the Revenue’s appeal as well as Assessee’s Cross Objection stand dismissed in the very above terms. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 16/12/2025.