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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
Per Shri P.M. Jagtap:- This appeal filed by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-XXXII, Kolkata dated 30.07.2010 for the assessment year 2005-06.
In Ground No. 1 of this appeal, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the addition of Rs.1,49,04,888/- made by the Assessing officer under section 69B to the total income of the assesese on the basis of DVO’s report.
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The assessee in the present case is an individual, who filed her return of income for the year under consideration on 31.10.2005 declaring total income of Rs.3,96,64,300/-. In the assessment originally completed under section 143(3) vide an order dated 31.12.2007, the total income of the assessee was determined by the Assessing Officer at Rs.4,04,09,710/-. The record of the said assessment came to be subsequently examined by the ld. CIT and on such examination, he found that the claim of the assessee of having made investment in purchase of commercial property in the building known as “Ready Money Terrace’ at 167, Dr. Annie Besant Road, Worli, Mumbai for an apparent consideration of Rs.1,50,00,000/- vide Transfer Deed dated 24.12.2004, was accepted by the Assessing Officer ignoring the fact that the value of the said property for stamp duty purpose was adopted by the Registration Authority at Rs.2,40,14,500/-. He, therefore, treated the assessment made by the Assessing Officer under section 143(3) as erroneous as well as prejudicial to the interest of the Revenue vide his order passed under section 263 and directed the Assessing Officer to make the assessment afresh after making a reference to the DVO for ascertaining the exact market value of the property purchased by the assessee. As per the direction of the ld. CIT, a reference was made by the Assessing Officer to the DVO, who in his report submitted to the Assessing Officer estimated the value of property purchased by the assessee at Rs.2,99,04,888/-. Although the assessee raised before the Assessing Officer various objections in respect of the valuation so determined by the DVO, the Assessing Officer overruled the same and made an addition of Rs.1,49,04,888/- under section 69B to the total income of the assessee on the basis of the valuation of the property of the assessee as determined by the DVO in the assessment completed under section 143(3) read with section 263 vide an order dated 31.12.2009.
Against the order passed by the Assessing Officer under section 143(3) read with section 263, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging therein, inter alia, the addition
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made by the Assessing Officer under section 69B on the basis of the DVO’s report.
After considering the submissions made by the assessee and perusing the relevant material on record, the ld. CIT(Appeals) deleted the said addition made by the Assessing Officer for the following reasons given in his impugned order:- “I have carefully perused the assessment order and the submissions of the assessee in this regard. Here it would be relevant to have look at the provisions of section 69B of the Act to appreciate to issue under consideration. The section 69B of the Act also reads as follows:
"Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year."
For section 69B to become operative the Assessing Officer shall find that the amount expended on making investment exceeded the amount that is recorded in that behalf in his books of account and the assessee offers no explanation about such excess amount or the explanation offered by him is not satisfactory in the opinion of the A.O. In the instant case the decision that the amount expended on purchase of the flat at Mumbai by the assessee exceeded the amount recorded by her in her books of account was arrived by the A. O. mainly on the basis of the report of the Departmental Valuation Officer.
However, it may be mentioned here that the assessee, during the appellate proceedings produced a copy of a valuation report from a Chartered Engineer in respect of the property in consideration. Such valuation report was 'sent to the A.O. for his comments, which he did not furnish till the time of passing of this order despite seeking extension of time.
The issue whether the addition solely on the basis of the report of DVO was justified or not has been considered by the
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Hon'ble ITAT (Delhi) in K.J. Arora vs. DCIT (2009) 180 Taxman 131(Delhi) (Nag). In that case the assessee, along with two other eo-owners, was constructing a house. In the relevant assessment year, he had filed completed details of construction expenses along with the valuation report of a registered valuer. The Assessing Officer, however, referred the valuation of cost of construction to DVO, who valued the cost of property at a higher figure. Difference in cost of investment in property was added to the assessee's income as unexplained investment under section 69B. The Commissioner (Appeals) deleted addition holding that the addition was made only on the basis of report of DVO which was a mere estimate and cannot be taken as gospel truth, more so when details regarding actual expenditure were available in which no discrepancy was found. The Hon'ble Court held that the Commissioner (Appeals) was justified in deleting the addition.
The Hon'ble Allahabad High Court in CIT v. B.K. Agarwal (183 Taxman 434) has held that merely on the basis of the opinion of the departmental valuer, in the absence of any specific material, it cannot be inferred that any expenditure had been incurred towards cost of construction or renovation during the period.
In Smt. Amar Kumari Surana vs. CIT (1996) 89 Taxman 544 (Raj) the Hon'ble Court held that merely on the basis of fair market value no addition can be made under section 69B, but if on the basis of sufficient material on record some reasonable inference can be drawn that the assessee has invested more amount in purchase of plot than that shown in account books, then only the addition under section 69B can be made. The burden is on the revenue to prove that real investment exceeded the investment showing in account books of the assessee.
In the instant case the A.O. has not brought anything any record, except the report of the DVO that any consideration over and above the consideration recorded in the deed of sale in respect of the flat purchased by her at Mumbai was actually paid by her. Therefore, in the light of the above referred to judicial authorities of . Amar Kumari Surana vs. CIT (Supra), CIT v. B.K. Agarwal (Supra) and K.J. Arora vs. DCIT (Supra), in my opinion, the A.O: was not justified in making the impugned addition of Rs.1,49,04,888/- u/s.69B of the Act, solely on the basis of the DVO's report. Accordingly, the said addition is deleted”.
At the time of hearing before us, the ld. D.R. strongly relied on the order of the Assessing Officer and submitted that the fair market value of the property purchased by the assessee being on the higher side than what was disclosed by the assessee as established on the basis of DVO’s report, the difference was rightly added by the Assessing Officer to the
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total income of the assessee under section 69B being unexplained investment. He contended that the ld. CIT(Appeals), however, completely brushed aside the DVO’s report while allowing relief to the assessee on this issue, which is not justified.
The ld. Counsel for the assessee, on the other hand, strongly supported the impugned order of the ld. CIT(Appeals) and submitted that besides the judicial pronouncement relied upon by the ld. CIT(Appeals) to allow relief to the assessee on the issue under consideration, there is a decision of the Hon’ble Delhi High Court in the case of CIT –vs.- Puneet Sabharwal reported in 338 ITR 485, which further supports the decision of the ld. CIT(Appeals).
We have considered the rival submissions and also perused the relevant material available on record. It is observed that the impugned addition under section 69B on account of the alleged unexplained investment made by the assessee in the purchase of commercial property at Mumbai was made by the Assessing Officer only on the basis of DVO’s report, wherein the fair market value of the property was estimated by the DVO on higher side than the apparent consideration shown by the assessee. Besides the DVO’s report, there was nothing brought on record by the Assessing Officer to show that any sum over and above what was declared by the assessee as consideration in relevant agreement was paid by the assessee for the purchase of the property and this position has not been disputed even by the ld. D.R. at the time of hearing before us. As held in the various judicial pronouncements relied upon by the ld. CIT(Appeals) in his impugned order and also by the Hon’ble Delhi High Court in the case of CIT –vs.- Puneet Sabharwal (supra) cited by the ld. Counsel for the assessee, the addition made only on the basis of the DVO’s report without there being anything brought on record to show that any consideration over and above the consideration recorded in the relevant agreement was actually paid by the assessee, is not sustainable. Keeping in view the ratio of these judicial pronouncements and having regard to
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the facts of the case, we find no infirmity in the impugned order of the ld. CIT(Appeals) deleting the addition made by the Assessing Officer to the total income of the assessee under section 69B solely on the basis of the DVO’s report and upholding the same, we dismiss Ground No. 1 of the Revenue’s appeal.
As regards Ground No. 2 of the Revenue’s appeal, it is observed that the issue raised therein relating to the addition made to the total income of the assessee on account of deemed rental income is not directly arising from the impugned order of the ld. CIT(Appeals). As stated by the ld. CIT(Appeals) in his impugned order, this addition, in fact, was made by the Assessing Officer to the total income of the assesese in the assessment originally completed under section 143(3) vide an order dated 31.12.2007 and this issue, therefore, was involved in the appeal emanating from the order under section 143(3) and not from the order passed by the Assessing Officer under section 143(3) read with section 263. This issue thus was treated by the ld. CIT(Appeals) as infructuous in his impugned order and having regard to the facts of the case, we find no infirmity therein. Ground No. 2 of the Revenue’s appeal is accordingly dismissed. 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on November 30, 2015. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) Judicial Member Accountant Member Kolkata, the 30th day of November, 2015 Order pronounced by Sd/- Sd/- (S.S.V.R.) (W.A.) J.M. A.M. Copies to : (1) Mrs. Kabita Das (Saha), 7/2, Short Street, Flat 4A, 4th Floor, Kolkata-700 017 (2) Assistant Commissioner of Income Tax, Circle-50, Kolkata, 169, A.J.C. Bose Road, Kolkata-700 014
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(3) Commissioner of Income-tax-Kolkata-XXXII, Kolkata (4) CIT, Kolkata (5) The Departmental Representative (6) Guard File
By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.