TMI Blog2010 (10) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... present case the addition has been made only u/s 69B of the Act read with sec. 142A of the Act - The burden will be on the assessee to prove that it had actually paid the amount which is stated in the title deed and no extra consideration has been passed – Decided against the assessee - ITA No. 1063/Del/2010 - - - Dated:- 8-10-2010 - BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER J. AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER J. Appellant by : Manish Gupta, Sr. DR Respondent by : None (Written Submission) ORDER PER I.P. BANSAL, J.M. This is an appeal filed by the revenue. It is directed against the order of CIT(A) dated 28.01.2010 for A.Y. 2006-07. Grounds of appeal read as under: - 1. On the facts and circumstances of the case and in law the order of the CIT(A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. 2. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 15,22,500/- made by the AO to the income of the assessee on account of its undisclosed investment in property u/s 69B of I.T. Act. 3. On the facts and circumstances of the case, the CIT(A) has erred in concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per bigha at the time of registration. The AO referred to the decision of Hon ble Rajasthan High Court in the case of Smt. Amar Kumari Vs. CIT 226 ITR 344, wherein it was held that though merely on the basis of the fair market value no addition can be made u/s 69B of the I.T. Act, but on the basis of sufficient material on record, some reasonable inference can be drawn that the assessee has invested more than the amount shown in the account books and an addition can be made u/s 69B where the assessee does not have any reason to have sold the property at less than the prevalent market rate. 3. The AO also referred to the sec. 50C of the Act according to which circle rate could be taken as a fair estimate of going rate in the area ;in absence of any special mitigating circumstances or some reason for the assessee to sell/purchase below the market rate and he observed that assessee has not mentioned any reason for the transaction being made below the circle rate. Therefore, relying upon the valuation report the AO has made addition of Rs. 15,22,500/- 4. The appeal was filed before CIT(A). It was submitted that sec. 50C has no application in the case of buyer as the same is appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chand.) 6) Navneet Kumar Thakur 110 ITD 525 (Jodhpur) 7) Shyam Kumar Ahuja (citation not given) (Del.) ITAT 8) ITO Vs. Manju Rani Jain 24 SOT 24 (Del.) Relying upon aforementioned decisions ld. CIT(A) has held that the assessee had furnished all the necessary and relevant documents in support of purchase and thus, had discharged the preliminary onus on it to prove the transaction. Sec. 50C could not be applied on purchaser. Sec. 69B clearly established that the onus is on the AO to prove that assessee has expanded in excess of that shown in books of account and thus, relying upon the decision of Hon ble Delhi High Court in the case of Lalit Bhasin (supra), ld. CIT(A) has deleted the addition. The revenue is aggrieved, hence in appeal. 6. This appeal was fixed for hearing on 6th September, 2010. Written submissions have been received from the assessee which are placed on record. Ld. DR wanted time to go through those written submissions hence, the case was adjourned to 7th September, 2010. 7. In the written submission it has been mentioned that agreement to sell the said land was executed on 8.6.05. The AO has made addition of Rs. 15,22,500/- being undisclosed investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng three ingredients are to be proved for making such addition: - i. The assessee must have made investment. ii. It is founded by AO that the amount expended by assessee exceeds the amount recorded in books iii. Either the assessee offers no explanation or not satisfactory explanation. 9. It was further submitted that similar view has been taken in the case of CIT Vs. Lalit Bhasin 290 ITR 245 (Del.). Reliance is also placed on the following decisions: - CIT Vs. Meerut Cement Co. Ltd. (2006) 202 CTR 506 Kamal Kishore Saharia Vs. CIT (1996) 216 ITR 217 CIT Vs. Padakhan (2003) 182 CTR 469 10. It is submitted that the AO s reliance on the case of Amar Kumari Saurana Vs. CIT 226 ITR 344 is misplaced wherein it has been held by the Hon ble High Court that merely on the basis of fair market value no addition could be made u/s 69B of the Act. It is submitted that onus in the present case was on the AO to prove that additional amount was expanded over and above the amount shown in the books of account by the assessee for acquiring the asset and such onus has never been discharged by the AO. 11. Reference is also made to the decision of Hon ble Punjab Haryana High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,22,500/- in place of a meager sum shown by the assessee at Rs. 7 lakh. Therefore, according to the facts available on record the amount recorded by the assessee in its books of account for the purchase of said land was much less than the amount invested by the assessee. It is, therefore, the AO applied sec. 69B of the Act. 14. It may be observed here that sec. 69B is a deeming provision by which, in a case, where assessee has made investment and/or is found that the investment made by him or amount expanded by him in acquiring such asset exceeds the amount recorded in this behalf in the books of account and the explanation offered by the assessee in this regard, in the opinion of AO, is not satisfactory or no explanation is furnished by the assessee then the difference can be assessed as deemed income of the assessee for that financial year. For the sake of convenience sec. 69B is reproduced below: - 69B 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 AO finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting provisions of sec. 131 provide that the AO shall have the same powers as are vested in Court under the Code of Civil Procedure, 1908, when trying a suit. One such power which has been provided in clause (d) of sub-section (1) of section 131, is the power to issue commissions. Section75 of CPC and order XXVI of the Schedule thereto lays down the power of issuing commission , which interalia, empowers the Court to make a local investigation and also to hold a scientific, technical and expert investigation . Using this power, the AO has been making a reference to the Valuation Officer for estimating the cost of construction of properties. The scope of power vested in an AO u/s 131 to make a reference to the Valuation Officer for estimating the cost of construction of properties has been a subject-matter of litigation. A new sec. 142A has been inserted by the Finance (No. 2) Act, 2004 to specifically provide that an AO has the power to make a reference to the Valuation Officer for estimating the value of investment, expenditure, etc. This section has been inserted with retrospective effect from 15.11.1972 to save the cases where such references have been made in the past a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, has not submitted any explanation or reason to explain that as to why the rate shown by him was the correct rate prevailing in the market for the property purchased by it. 19. On the other hand, the department has ample evidence on record which is in the shape of circle rate of valuation report that the market rate of that property was three fold of the amount stated by the assessee in the sale deed. In absence of any explanation coming from the side of the assessee the rate stated to have been paid by the assessee cannot be accepted. No doubt sec. 50C will not have any application in the case of purchaser of the property but in the present case the addition has been made only u/s 69B of the Act read with sec. 142A of the Act. 20. Section 142A clearly refers to sec. 69B. The huge difference in the amount stated as consideration in the title deed and prevailing circle rates are clear indicative of the fact that assessee had made an investment which exceeded the amount recorded in this behalf in the account books. The assessee has not brought any material on record (except the title deed) to show that the amount stated as consideration in the title deed was the actual consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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