TMI Blog2011 (8) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. substitutes the cost of purchase, by whatever means, then that cost price has to be adjusted in the capital gains. This may result in a loss of equal amount as the books of joint venture show the book value as consideration and substituted cost price (value determined by AO in the order) as a deduction. This working would result in a loss but not a gain. This simple arithmetic calculation was missed by the A.O. and he made the addition under section 45(3) which does not permit him to substitute the full value of consideration other than the amount recorded in the books of account of the joint venture. As the Assessing Officer's action is not according to the provisions of Sec 45(3), there is no justification for upholding the contentions of Revenue. - Decided in favor of assessee. - 263 (MUM.) OF 2010 - - - Dated:- 24-8-2011 - R.V. EASWAR, B. RAMAKOTAIAH, JJ. Devi Singh for the Appellant. Vijay Mehta for the Respondent. ORDER B. Ramakotaiah, Accountant Member. This appeal by the Revenue is against the order of the CIT(A) IV, Mumbai dated 27.10.2009. 2. Revenue is aggrieved on the following grounds :- "1. On the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to explain the variations and asking for report of the DVO towards the cost of land for purchase price he determined the undisclosed amount at Rs. 60,56,27,667 as addition under section 69B. Similar amount was also added as addition under section 45(3) as the property stood transferred to the joint venture company. Thus the A.O. made two additions and raised the demand. 4. Assessee pointed out that the A.O. took the purchase price of the entire land not only by the assessee but also by the other group concerns into consideration and arrived at the amounts wrongly and furnished details of the value at which it is purchased and the maximum applicable rate and difference, if any, on the same price adopted by the A.O. The A.O. noticing the mistake modified the order and determined the undisclosed investment under section 69B at Rs. 1,61,95,917 as against Rs. 60,57,27,667. As two of the lands at Bengusari and Vellore were not transferred to the joint venture the addition under section 45(3) was restricted to Rs. 1,26,64,239 as against the amount of Rs. 60,57,27,667 originally added by the A.O. Assessee preferred appeal before the CIT(A) on the original amounts of addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt land increases and the assessee was made to purchase the land at market price then available. It was submitted that the rates vary over a period of time and whatever price it has paid to various sellers of the properties, the same was recorded and the deeds were also registered, therefore, the allegation that assessee must have paid uniform price for lands purchased over a period of time has no substance. It was also submitted that the A.O. does not have any evidence that assessee made undisclosed investments in land at various locations. He then referred to the detailed order of the CIT(A) including various case laws governing the conditions under section 69B. He drew our attention to the principles established by the ITAT in the case of Dilshad Trading Co. (P.) Ltd. v. ITO [1994] 49 ITD 348 (Bom.), CIT v. Lalit Bhasin [2007] 290 ITR 245/[2005] 147 Taxman 619 (Delhi) and CIT v. K.K. Enterprises [2009] 178 Taxman 187 (Raj.). With reference to the addition under section 45(3) it was his submission that provisions of section 45(3) are not applicable as the said provision deems the full value of consideration, the amount recorded in the books and the A.O. accepts that the amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, and (iii) Either the assessee offers no explanation about such excess amount, or the explanation offered by him is not satisfactory. The above circumstances are cumulative. If all the circumstances exist, the excess amount may be deemed to be income of the assessee for the financial year in which such investment was made. It may be noted that the legal fiction enacted in section 69B comes into effect only where all the above circumstances do exist. The onus is on the Revenue to prove the existence of all the circumstances. There is no room or scope for making any presumption about the existence of any requisite circumstances. The facts in the present case are that assessee purchased land at different places at different intervals at different prices. These purchases were registered and the value shown in the purchase agreement is in conformity with valuation of stamp duty authorities. Assessee explained that there are variations in purchases due to several factors like timings, location, demand and the fact that the project is coming up near the area the land owners increase the price automatically depending on the locational advantage. There is nothing on record to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the order u/s 154 subsequently. There seems to be casual and pedantic approach in examining the issue and making the addition by the A.O. 12. The learned counsel relied on the judicial principles established in the case of Dilshad Trading Co. (P.) Ltd. (supra), Lalit Bhasin (supra) and the decision of the Hon'ble Rajasthan High Court in the case of K.K. Enterprises (supra). All the above judgments are in support of the assessee, where it was held that for invoking the provisions of section 69B there should be justifiable evidences for making the addition. In the absence of any material on the basis of which addition under section 69B can be made that addition can only be considered as primarily on imaginative basis and conjunctures rather than on the basis of any record or evidence. There is no basis for considering that assessee has made any unexplained investment so as to invoke provisions of section 69B. A.O. cannot presume the difference between the purchase price on the basis of the entries in the books of account as unaccounted investments in this case. As rightly pointed out by the CIT(A) even a reference to valuation does not bring into existence the scope for m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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