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Income Tax Appellate Tribunal, DELHI BENCHES : “G”, NEW DELHI
Before: SHRI J.SUDHAKAR REDDY & SHRI SUDHANSHU SRIVASTAVA
PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue and is directed against the order of the Ld.CIT(A)-XV, New Delhi dated 17.8.2010 pertaining to the A.Y. 2002-03.
Facts in brief:- The assessee is an individual and derives income from salary, property and other sources. The facts of the case are brought out at para 3, page 4 of the Ld.CIT(A)’s order, which is extracted for ready reference.
Brief facts of the case that in the course of inquiry on TEP in the case of one Smt. Asha Rani W/o Sri PS Jain, it is found that the assessee has purchased 2nd floor of property situated at B 451, New Friends Colony on 21.7.2001 for Rs.14,85,000/- and that the market price of the said property at that time was Rs.70,00,000/-. In this regard, the assessee has furnished a detailed reply which has been considered and found to be not acceptable. In this respect, th Inspector’s report dated 19.10.2001 and 19.3.2009 have been perused it is clear that the assessee has paid an amount of Rs.55,15,000/- over the about the amount of Rs.14,85,000/- stated to have been paid out of his undisclosed sources. Accordingly, the amount of Rs.55,15,000/- is added to total income as income from undisclosed sources.
The A.O. recorded the following reasons for reopening and issued notice of reopening u/s 148 of the Act.
On perusal of the report of the ITI, it is seen that market rate gathered from three different property agents was much more than shown in the purchase deed. The assessee has bought second floor with open space and roof rights for Rs.14,85,000/-, whereas the market rate at that particular time relevant to the F.Y. 2001-02 was largely undervalued and purchased by the assessee at the cost much below the prevailing market value in the year under consideration. It shows that the investment made in the property has not been fully disclosed by the assessee and he has made unaccounted investment to the tune of Rs.55,15,000/- while making a purchase of the above said property. In view of the above, I have reason to believe that undisclosed income to the tune of Rs.55,15,000/- (Rs.70,00,000/- (-) Rs.14,85,000/-) has escaped assessment and this is a fit case for initiation of proceedings u/s 147 of the I.T.Act, 1961.
3.1. Based on the report of the Inspector of Income Tax the A.O. made an addition of Rs.55,15,000/-. On appeal the First Appellate Authority considered the decisions of various High Courts and Tribunals and concluded that there is no material with the A.O., to come to a conclusion that the assessee had faked excess purchase price for purchase of property. He held that the A.O. has merely assumed on the basis of the report of the ITO that the purchase price was more than what was shown by the assessee. He held that the addition was made merely on the basis of suspicion and surmises and not on the basis of any material evidence on record. He deleted the addition made.
Aggrieved the Revenue filed this appeal against the deletion of the addition. The assessee moved an application under Rule 27 of I TAT Rules, challenging the assumption of jurisdiction u/s 148 of the Act by the A.O.
We have heard Shri Sujit Kumar, Ld.Sr.D.R. on behalf of the Revenue and Shri M.P.Rastogi, the Ld.Counsel for the assessee.
On a careful consideration of the facts and circumstances of the case, on perusal of orders of lower authorities, material placed on record, we hold as follows.
The assessee purchased second floor of a property at New Friends Colony on 27.01.2001, for Rs.14,85,000/-. The Inspector of Income Tax, in a report, assumed the value of the property at Rs.70 lakhs. There is no basis for such valuation. On the other hand, the assessee filed a report of an approved valuer, wherein the property has been valued at Rs.14,47,000/-.
8.1. Be it as it may, the finding of the AO that the assessee has made payment of Rs.55,15,000/- from undisclosed sources, for purchase of the above said property, is totally baseless. In our view the Ld.CIT(A) has rightly relied on the following decisions and deleted the addition. i. CIT vs. Ms.Sushila Mittal (2001) 250 ITR 531 (Del) ii. KP Verghese vs. ITO (1981) 131 ITR 597 (SC) iii.George Handerson & Co. 66 ITR 622 (SC) iv. Gillanders Arbuthnot & Co. 87 ITR 407 (SC) v. Raman Bhattathripad 196 ITR 671 (Kerala) vi. CIT vs. Lionel Edwards Ltd. (1980) 121 ITR 416 viii. ITAT Ahemdabad in the case of Rakesh Ji Shah vs DCIT 53 TTJ 267 viii. Delhi ITAT in the case of DCIT Central-2 vs. Sh.Vinay Kochhar 2008 TIOL 113 (Del.)
8.2. In view of the above discussion, in the absence of any material evidence, to establish that the assessee made investments over and above the amount recorded in the sale deed, the addition in question was rightly deleted by the First Appellate Authority. 8.3. As we have upheld the order of the First Appellate Authority on merits, we do not go into the arguments on Rule 27 of ITAT Rules.
In the result the appeal of the Revenue stands dismissed.
Order pronounced in the Open Court on 09th October, 2015.