ACIT, NEW DELHI vs. SMT USHA GUPTA, NEW DELHI

per circle rate as on 01.01.2012 as base and reducing 15% from the same

every year.

8.2 Regarding validity of the assumptions, the ld. A.R. submitted that the

ld. CIT(A) held in para No.4.3.1 to 4.3.11 at page No.43-53 and para No.5.2.2

– 5.2.8 at page Nos.66 – 70 of his order that:

a) AO has not considered that the properties purchased or sold by one

member of the M/s. Satya Prakash & Brother's Group could be completely

different in its location, size, shape, quality of title, nature of ownership

(lease hold or freehold), neighborhood, proximity to various amenities, etc.

One can go on listing the various factors that could affect the value of any

immovable property. Therefore, there cannot be same value of all properties

located in one colony or area. Therefore, standard treatment given by AO to

all properties in the instance of 2 properties, admittedly not belonging to

the impugned assessee, does not carry any evidentiary value.

b) Without any other evidence in respect of the property under reference, it

cannot be straight away presumed that in every property unaccounted cash

has been paid or received. That would amount to suspicion or surmise. It is

thus not possible to hold that in every transaction of purchase or sale of

property, the Satya Prakash & Brother's group could have definitely

indulged in on-money payments or receipts. Page 9 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

c) AO has not given any basis to state that the market value of property in

Delhi was much higher than market rate as prescribed as circle rate.

d) It is in common knowledge that there could be cash element in many

property transactions, but at the same time, it is also in the common

knowledge that the public do complain that the circle rates prescribed in

the many areas of Delhi are higher than the prevailing market rates.

e) The market value of a property depends upon the market forces as well

as the general economic condition prevailing in the relevant point of time. It

also depends upon the financial status and the urgency of the seller and

buyer of the property. It may sometimes also depend upon the dire need of

the buyer to purchase a particular property at any cost due to several

considerations. Thus, assumption of the AO is fraught with the danger of

arriving at wrong conclusion if such assumption are made and held

applicable to all cases.

f) CIT(A) concluded that on the very face Of it, the assumption of

guaranteed return in property investment does not appear to be correct. If

this were to be true there could be no loss at all in property market.

g) AO is not permitted under the law to make assumption based upon the

so-called market information.

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

h) The AO is not permitted to take note of the prevalent practice of on-

money payments in property transactions and apply it to all the instances

of property transactions without any specific evidence to that effect.

i) There was no positive evidence before the A.O. in respect of the property

under reference that the assessee expended or received any excess amount

over and above what is stated in the conveyance deed.

j) Relying upon the order of Hon'ble High Court of Delhi in the case of CIT

vs. Dinesh Jain HUF (2013) 352 ITR 629, CIT(A) held that the AO cannot

take judicial notice of certain information available in the property websites

or in the so called reports without there being any specific and positive

evidence of cash transaction in the property under reference. Thus, various

assumptions made by the AO do not find support of the law.

8.3. With regard to Calculation of FMV without Rejection of books of

accounts, the ld. A.R. submitted that the ld. CIT(A) has held that :-

a) The A.O. has not rejected the books of account before resorting to estimate

the fair market value.

b) AO cannot resort to the valuation of fair market value of an immovable

property unless he rejects the books of accounts. The CIT (A) has placed

reliance upon various judgments i.e., Asst. CIT vs. Dhariya Construction co.

(2010) 236 CTR (SC) 226, ITO vs. Arasen Subiah (2009) 20 DTR (Mad) 113,

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

CIT vs. Partap Singh Amro Rajinder Singh (1993) 200 ITR 788 (Raj.), CIT vs.

and Bajrang Ram Bansal (2011) 335 ITR 572.

c) The Hon'ble Court in the said case of CIT vs. Bajrang Ran Bansal (Supra)

has also quoted the decision of Hon'ble Supreme Court in the case of Asst.

CIT vs. Dhariya Construction Co. (2010) 236 CTR (SC) 226, wherein it has

been held that the report of the valuation officer is not information per se.

Further, the Hon'ble Court in the same case (CIT vs Bajrang) has reiterated

that it was settled law that the primary burden of proof to prove the

understatement or concealment of income is on the revenue and it is only

when such burden is discharged that it would be permissible to rely upon the

valuation given by the Distt. Valuation Officer.

d) The AO has no powers under the Act to resort to estimation of Fair Market

Value without rejecting the books of accounts, as held in the case of Sargam

Cinema V. CIT (2010) 328 ITR 513(SC).

8.4. With regard to addition made by AO citing wrong section 69 the ld. A.R.

submitted that it is not in dispute that the assessee has duly accounted for

the cheque portion of the purchase consideration of the property in the books

of accounts in so far as the addition made in respect of purchase transactions

is concerned. In such circumstances, it is section 69B of the Act, which

would be applicable. Therefore, action of the AO in invoking section 69 of the

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

Act is incorrect. Further, insofar as the addition made in respect of sale

transactions of properties is concerned, it is section 45 of the Act, which

would be applicable. Therefore, action of the AO of invoking section 69 of the

Act for sale transactions is incorrect.

8.5. The Ld. A.R. submitted that no incriminating document/material

belonging or pertaining or relating to the assessee showing receipt/payment

of on-money in any property transaction was found during the course of

search.

a) Search on the Assessees did not yield any incriminating material on the

basis of which it can be said that the assessee was indulging in

understatement of consideration for purchase or sale of properties.

b) AO did not have any documentary evidence, statement or any

incriminating material showing understatement of purchase or sale

consideration in respect of the property in question.

c) The documents on which the Assessing Officer has placed reliance, were

seized from a different person and not from the impugned Assessees and do

not relate to the year under consideration in which the impugned Assessees

bought or sold the properties and that no nexus between that person and

the assessee has been established beyond doubt. In such circumstances,

the seized material cannot be used against the assessee.

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

d) CIT(A) has referred to the decision of Hon'ble Delhi High Court in the case

of CIT v. Lachman Das Bhatia (ITA No. 1731, 1733, 1734/2010), wherein

the Hon'ble jurisdictional High Court of Delhi laid down that the search on

the assessee did not yield any incriminating material on the basis of which

it can be said that the assessee was indulging in under-invoicing or

suppression of sales. The documents on which the Assessing Officer has

placed reliance, were seized from a different person and not from the

assessee and that no nexus between that person and the assessee has been

established beyond doubt. Further, the documents upon which the

Assessing Officer placed reliance relate to a subsequent period and not to

the year under consideration. In such circumstances, it has been held that

the seized material cannot be used against the assessee.

8.6. The ld. A.R. submitted that no power bestowed by legislature upon AO

to calculate FMV without finding any direct positive evidence of

understatement of consideration by assessee, and Sec. 69B of the Act and

Sec. 45 of the Act talk of actual consideration and not FMV and do not allow

substitution of actual consideration by FMV.

a) Relying upon the order of the Hon'ble High Court of Delhi in the case of CIT

v. Dinesh Jain (HUF) (2013) 352 ITR 629 (Del) and CIT v. Agile Properties Pvt.

Ltd. (ITA No. 176/2014), CIT(A) held that in order to invoke S. 69B, AO has to

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

first "find" that the assessee has actually "expended" an amount which has

not been fully recorded in his books of accounts. The burden is on the AO to

prove that there is some amount that has been expended over and above

what is recorded in the conveyance deed. The "finding" obviously should rest

on evidence. Section 69B does not permit an inference to be drawn from the

circumstances surrounding the transaction that the purchaser of property

must have paid more than what was actually recorded in his books of

accounts. Such action is not permitted for the simple reasons that such an

inference could be very subjective and could involve the dangerous

consequences of a notional income being brought to tax contrary to the strict

provisions of Article 265 of' the Constitution of India and the Seventh

Schedule thereto which deals with "taxes on income other than the

agriculture income.

b) The CIT(A) held that the jurisdictional Hon'ble Court of Delhi has come

down heavily against resorting to estimation of Fair Market Value to the

application of section 69B of the Income Tax Act. The AO is required to find

out the real and actual consideration paid by the assessee and to see whether

such consideration has been recorded in the books.

c) It is clear that AO can disturb the value recorded in the conveyance deed

only and only if he has positive evidences of extra consideration having

changed hands in the transaction. Page 15 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

d) In the present case, the very fact that AO has resorted to estimation of

excess consideration, itself, would show that AO did not have any positive

evidence that any cash was exchanged in the purchase or sale of the property

in question. AO is only assuming that there must have been exchange of

unaccounted cash, because the group had done so in respect of two other

properties and the group was allegedly involved in booking bogus expenditure

and illegal payments in CWG (common wealth games project).

e) The wordings of Section 69 are such that they, in fact, do not permit any

assumption of understatement of amount; rather it requires AO to exactly

point out the precise amount paid or received. AO is not only required to

prove understatement of purchase price, but also to show precise extent of

the understatement. There is no authority given by the section to adopt some

reasonable yardstick to measure the extent of understatement.

f) In the absence of any direct evidence to the effect that the price settled

between the parties is anything other than the agreed consideration as

appearing on the sale documents or any other instrument, "full value of

consideration" or "cost of investment" cannot be substituted by the fair

market value, except in the case falling within the purview of Sec. 50C and

Sec. 56(l)(vi)/(vii), which lays down the statutory fiction that the circle rate of

property shall be substituted for the recorded transaction if the former is

found to be more than the latter; however, in this case, the consideration as Page 16 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

per registered conveyance deeds is invariably higher than valuation as per

circle rate. AO has not brought on record any evidence which would allow him

to substitute the recorded consideration by any other figure as permitted

under the law, to arrive at "full value of consideration".

g) Obviously, AO did not have any documentary evidence, statement or any

incriminating material showing understatement of purchase or sale

consideration in respect of the property in question; therefore, he could not

have jumped to the step of ascertaining the fair market value. There is no

allegation of the value recorded in the conveyance deed being less than the

circle rates. In fact, the consideration is higher than the value as per circle

rates.

h) During course of hearing before Hon'ble Tribunal, besides relying upon the

order of CIT (A), the Assessee has further relied upon the case of PCIT v.

Quark Media House India Pvt. Ltd [2017] 391 ITR 145 (P&H), wherein Hon'ble

Punjab and Haryana High Court has held that the full value of the

consideration is neither the market value nor necessarily the price stated in

the document for sale but the price actually arrived at between the parties to

the transaction. The court pointed out that though understatement of

consideration is taxable, but not undervaluation; a distinction has to be

understood between understatement and undervaluation. Also in CIT v.

Shivakami Co. Pvt. Ltd (1986) 159 ITR 71 (SC), Hon'ble Supreme Court has Page 17 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

held that unless there is evidence that more than what was stated was

received, no higher price can be taken to be the basis for computation of

capital gains.

8.7. The Ld. A.R. submitted that value as per registered sale deed is higher

than circle rate:

a) Just like section 50C authorizing substitution of declared sales

consideration by circle rate value in case of sale of property, analogues

provision for purchase of property lies in section 56(2)(vi)/(vii). The section

lays down that even if fair market value of a property exceeds circle rate, the

purchase consideration in the case of purchase of property or full value of

consideration in case of sale of property cannot exceed circle rate value. Thus,

there is no provision in the Act in the nature of deeming fiction authorizing

the AO to substitute any value higher than circle rate value in place of actual

consideration. There is no room for FMV exceeding circle rate value.

b) Hence, Assessing Officer has no authority or power under the Act to

substitute fair market value to the value declared by the assessee in

duly registered conveyance deed which in itself is higher than the circle

rate notified by the Government.

8.8. The ld. A.R. submitted that complete assessment cannot be disturbed

without any nexus with seized material:

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

a) The CIT(A) relied upon the decision of the Hon'ble Delhi High Court in the

case of CIT vs. Kabul Chawla (2015] 61 Taxmann 412 (Delhi) dated

28.08.2015, in which Hon'ble Court held that completed assessment can be

interfered with by the Assessing officer while making the assessment under

section 153A only on the basis of incriminating material pertaining to the

person searched upon unearthed during the course of search or undisclosed

income or property discovered in the course of search which were not

produced or not already disclosed or made known in the course of original

assessment.

b) CIT(A) held that there is no incriminating documents relating to the

impugned Assessees which has been unearthed by the department

during the search and seizure action.

c) Pertinently, the above order in the case of Kabul Chawla (supra) has

been affirmed by Hon'ble Supreme Court in PCIT v. Abhisar Buildwell

Pvt. Ltd. (Civil Appeal No. 6580 of 2021).

8.9. Finally, the ld. A.R. submitted that the ld. CIT(A) held that it is clear

that the AO has travelled beyond his powers to make addition u/s 69 in

respect of purchase or sale of property.

on record. In this case, search action took place in these groups u/s 132 of the Page 19 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

Act on 28.10.2010. The ld. AO compared the value mentioned in the sale deed

of these properties with the fair market value of these properties calculated by

him making strange assumptions and brought the difference between these

two as undisclosed incomes of the assessee. However, these additions are not

based on any corroborative materials to suggest that there was payment or

receipt of money over and above the sale deed. In other words, these Assessees

have registered properties with the registration authorities as applicable

valuations for the purpose of registration. In order to make addition as

undisclosed income in these cases, the burden is on the revenue to prove that

the Assessees herein have invested in any property or sold the property over

and above what is in the sale deeds. It is noted that there is nothing on record

to show that the Assessees herein had made any investment or recived

consideration in addition to what has been disclosed in the sale deeds. In our

opinion, no addition could be made in the hands of present Assessees on the

basis of presumption when the valuation mentioned in the sale deed has been

accepted by the registration authorities.

valuation higher than the value mentioned in the sale deed. Further, the

details of buyers or sellers of these immovable properties, as the case may be,

were already on record before the ld. AO and the ld. AO had all the powers to Page 20 of 22

ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

make enquiry under the Act from such sellers and buyers, the AO for the

reasons best known to him did not make any such enquiry. Thus, the onus on

the department to prove that investment was made by Assessees or sale

consideration received by the Assessee, as the case may be was in fact more

than that depicted in the sale deed did not get discharged at all. In our

opinion, the Ld. CIT (A) has rightly held that ld. AO cannot substitute the

apparent consideration mentioned in the sale deed so as to adopt the market

value without bringing any material on record to show that consideration

disclosed in the sale deed is in excess of the value adopted by the assessee and

in our opinion, the ld. AO cannot simply make additions on the basis of fair

market value of the property. Being so, we do not find any infirmity in the

orders of ld. CIT(A) and we uphold the same. The grounds raised by revenue in

the captioned appeals are dismissed.

raised by the Assessees in Cross Objections have became in-fructuous, which

do not require any adjudication. Accordingly, we dismiss the entire cross

objections filed by the Assessees.

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ITA No. 3826/Del/2015 & ors Asst. CIT Vs. M/s Satya Realtors Pvt. Ltd.

3858/Del/2015, 3859/Del/2015, 3860/Del/2015 and 3862/Del/2015 of the

revenue as well as the cross objections in C.O No. 109/Del/2016,

111/Del/2016 filed by the Assessees are dismissed.

Order pronounced in open Court on 15th December, 2023 Sd/- Sd/- (SHAMIM YAHYA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15/12/2023 Pk/R.N, SR Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT, NEW DELHI

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