ACIT, NEW DELHI vs. SH. SIRAJUDDIN QURESHI, NEW DELHI

PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER

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.

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.

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.

Order pronounced in the Open Court on 09th October, 2015.