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TMI Blog2014 (7) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy in the present appeals relate to an addition of deemed income of Rs. 55,00,000/- under Section 69B of the Act as unexplained investment and levy of penalty as a consequence thereof. 3. Briefly stated, the relevant facts of the case are as under:- 3.1. The assessee purchased a built-up property admeasuring 250 sq. meters bearing the address FD-22, Pitampura, Delhi. The conveyance deed of the property was registered and disclosed a consideration of Rs. 20 lacs for the transaction. The said amount of Rs. 20 lacs was paid by the assessee to the vendor-Ms Poonam Chaudhary by a cheque. The Income Tax Return for the Assessment Year 2005-06 was filed by the assessee on 31.07.2005 and was processed under Section 143(1) of the Act, on 23.02.2006. In the meantime, the Investigation Wing of the Income Tax Department suspected that the transaction for sale and purchase of the property in question had not been correctly reflected and, accordingly, issued summons to the assessee under Section 131 of the Act. The assessee appeared before Income Tax Authorities on 18.11.2005 and recorded his statement. Questions no. 11 and 12 posed and the answers recorded by the assessee are relevant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deemed income under Section 69B of the Act. The Assessing Officer concluded that the assessee's statement before the Income Tax Authorities was without any pressure. He also observed that the statement given by the assessee before the Income Tax Authorities did not mention that the assessee was not well at the material time. He, therefore, concluded that the grounds for retraction were an afterthought. The Assessing Officer also recorded his satisfaction that the assessee had concealed his income and accordingly directed initiation of penalty proceedings under Section 271(1)(c) of the Act. 3.4. The assessee appealed against the assessment order to the CIT (Appeals). The CIT (Appeals), by an order dated 02.01.2009 also affirmed the finding of the Assessing Officer that the statement made by the assessee before the Income Tax Authorities was without any undue influence and its retraction was an afterthought. He further held that the valuation reported by the DVO also corroborated the fact that the assessee had paid a sum much larger than the registered value of Rs. 20 lacs. The CIT (Appeals) held that the valuation made by the DVO pointed towards the truthfulness of the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question was framed:- "Whether the Income Tax Appellate Tribunal was right in deleting the addition of Rs. 55 lacs sustained by the Commissioner of Income Tax (Appeals) for the reasons and grounds stated in the order dated 11th March, 2011?" 3.7. The Assessing Officer also passed an order dated 30.03.2010 imposing a penalty of Rs. 18,52,435/- being 100% of the tax on Rs. 55 lacs which was upheld as undisclosed income by the CIT (Appeals). The assessee preferred an appeal against the said order which was allowed by the CIT (Appeals) on 08.06.2011, in view of the decision of the Tribunal whereby the addition of income on account of unexplained investment had been set aside. 3.8. The order of the CIT (Appeals) dated 08.06.2011 was carried in appeal and was affirmed by the Tribunal in its order dated 23.03.2012. The appeal (ITA No. 444/2012) has been preferred by the Revenue against the Tribunal's decision of 23.03.2012. This appeal was admitted on 03.08.2012 and the following question of law was framed by this Court: "Whether did the ITAT fall into error in setting aside the penalty imposed upon the assessee under Section 27(1)(c) of the Income Tax Act." 4. We have heard the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to note that the statement made by the assessee was not during any raid or search and seizure operations or even during a survey conducted by the Income Tax Authorities but was in response to summons that had been issued by the Income Tax Authorities. It was also open for the assessee to seek an adjournment of the proceedings before the Income Tax Authorities in the event, he was unwell to attend the same. 7. The Assessing Officer was also of the view that the consideration reflected by the assessee was understated and that the real value of the investment made by the assessee in purchasing the property in question was more than as disclosed by him. He accordingly, referred the property to be valued by a DVO. The DVO valued the property at Rs. 98,75,400/-. Although the said report was assailed by the assessee on the ground that the report was based on an auction of a property at the adjacent colony and not in the colony in which the property in question was situated, it cannot be disputed that the instance of sale referred to by the DVO relates to a locality in the immediate vicinity of the property in question. The assessee also placed instances of other transactions of sale/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Authorities were not true. This affidavit was subsequently withdrawn. Thereafter, the vendor recorded a statement on 20.11.2000 again reiterating that the purchase consideration received by him was Rs. 34.85 lacs as against Rs. 4.10 lacs as recorded in the registered sale deed. Noting the conflicting nature of statements given by the seller, the CIT (Appeals) held that his statements could not be relied upon and accordingly, deleted the addition made by the Assessing Officer on the basis of those statements. The appeal filed by the Revenue was dismissed by the Tribunal. The Division Bench of the Madras High Court also upheld the order of the CIT (Appeals) and the Tribunal and concluded that since the Assessing Officer had not conducted any independent inquiry relating to the value of the property purchase and had merely relied on the statement given by the seller, the assessment could not be sustained. The Court also observed that if an independent inquiry had been made by referring the matter to the Valuation Officer, the controversy could be avoided. The relevant extract of the decision of the Madras High Court is quoted below:- "We also found that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is entitled to act on material which may not be accepted as evidence in a court of law" 11. In a case where the allegation is that the transaction has been undervalued, the Assessing Officer can always rely on other material which establishes that the values recorded in the document are not correct. 12. In the case of Paramjeet Singh (supra) an addition had been made on the basis of a registered sale deed executed by the assessee. The vendors had recorded a statement that they had received no consideration. In the given facts, the Court held that the decision of the Tribunal in rejecting the statements and accepting the consideration as reflected in the registered sale deed did not suffer from any legal infirmity. The said decision is not an authority for the proposition that a Assessing Officer is bound to accept the consideration as recorded in the registered sale deed and has to reject any other contrary evidence. 13. In our view, in the given facts of this case, the Tribunal erred in holding that the DVO's report did not corroborate the statement made by the assessee before the Income Tax Authorities. 14. For the above reasons, this Court is of the opinion that the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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