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ACIT, C.C. 22 New Delhi Versus Express Earth Movers & Equipment Pvt. Ltd.

2015 (7) TMI 165 - ITAT DELHI

Unexplained investment in property - CIT(A) deleted the addition - Held that:- The entire addition is based on the presumption that the assessee must have received an amount of ₹ 18,79,500/- being the difference between the value of the property estimated by the D.V.O. and the amount declared as consideration in the sale deed of the property, which as per the AO is unaccounted receipt of cash for sale of property. There is not even an iota of evidence with the AO to come to a conclusion th .....

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- Held that:- S.68 cannot be invoked under the facts and circumstances of the case. A hypothetical and imaginary addition has been made by the A.O.The departmental Valuation Officer has on reference made u/s 142A of the Act valued the property at ₹ 46.96 lakhs, which is marginally higher than the purchase consideration of ₹ 45 lakhs disclosed by the assessee. The difference is negligible. Taking evaluation report value, arrived at 2 years after the date of transaction and then arbit .....

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nce the First Appellate Authority has rightly deleted the said addition.- Decided against revenue. - I.T.A.No. 505 and 506/DEL/2012 - Dated:- 29-6-2015 - Shri H.S. Sidhu and Shri J.Sudhakar Reddy, JJ. For the Petitioner : Sh. Salil Kapoor, Adv. For the Respondent : Sh. Sanjay Prasad, CIT, DR ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER These are appeals filed by the Revenue directed against two separate orders of the Ld.CIT(A)-III, Delhi dated 04.11.2011 pertaining to the Assessment Year (AY) .....

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he original return of income u/s 139 of the Act was filed by the assessee on 27.10.2004. Thereafter, the case was centralised in CC 22, New Delhi and notice u/s 153A of the Act was issued on 8.7.2009 and the assessee filed the return of income u/s 153A of the Act on 4.8.2009 at the original income. During the year under appeal, the assessee company is engaged in the business of providing heavy earth movers equipments and construction machinery, plants, equipments, accessories etc. On hire/lease. .....

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n the circumstances of the case the Ld.CIT(A) erred in deleting the addition of ₹ 1,87,99,500/- made by the AO on account of unexplained investment in property. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in brushing aside the evidentiary value of the Valuation Report of the DVO, which was based on scientific method approved by the government without rebutting the facts mentioned therein. 3. The order of the Ld.CIT(A) is erroneous and is n .....

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add, alter, amend or vary the above grounds of appeal at or before the time of hearing. 2.3. The assessee invoked Rule 27 of ITAT Rules but during the course of hearing, he did not press the same. Thus this is dismissed as not pressed . 3. Heard Shri Salil Kapoor, the Ld.Counsel for the assessee and Shri Sanjay Prasad, Ld.CIT, D.R. on behalf of the Revenue. 4. ITA 505/Del/2012 (AY: 2004-05):- The only addition that is disputed before us for the A.Y. 2004-05, is addition made u/s 68 of the Incom .....

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n transacted. The transaction has been between two unrelated parties acting at arm's length. The transaction is a normal commercial transaction not influenced by any non commercial factor such as love or affection etc. The assessee could not demonstrate any reason as to why the property would not be transacted at the market value. The only inference which can be drawn out of these facts it that the property has been transacted at market value but much lower consideration was shown in the reg .....

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on'ble Supreme Court's decision in the case of Sumati Dayal Vs. CIT 214 ITR 801 and Durga Prasad More 1971 82 ITR 540 (SC). (Addition of ₹ 1,87,99,500/-) 5. The First Appellate Authority at page 20 considered the submissions of the assessee and held as follows. On a consideration and analysis of the submissions of the appellant it is noted that the valuation report in this case have been obtained u/s 142A of the Act, which bears the marginal note "Estimate by Valuation Officer .....

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is only for the purpose of estimating the cost of investment u/s 69/69A & 69B of the Act and therefore, the scope of this section cannot be extended for determining the sale consideration of an asset. In the facts of the case it is not the value of the investment which is to be estimated in this case. That during the present assessment year the property has been sold by the assessee and therefore it is capital gain or unaccounted income earned out of such sale which is to be computed. Theref .....

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this sale deed as to higher stamp duty having been charged as compared to the stamp duty as mentioned on the declared sale consideration by the appellant. From this it can necessarily be inferred that the case of the appellant does not attract Section 50-C which is a special provision for full value of consideration in certain cases and which being a deeming provision" has to be strictly construed. Additionally, the appellant has contended that no circle rates for stamp valuation purpose we .....

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e it is not a comparable one for the reason that the sale instance property was at a better location and was subjected to auction, which may fetch a better price than fair market value on account of competitive bidding. Secondly the unit rate sale consideration of the appellant is better than the other sale instances of adjacent property relied upon by the appellant during the appellate proceedings. The appellant's arguments regarding the comparable sale instance taken in valuation is accept .....

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e case, on perusal of material on record, orders of the authorities below, case laws cited, we hold as follows. 7. The entire addition is based on the presumption that the assessee must have received an amount of ₹ 18,79,500/- being the difference between the value of the property estimated by the D.V.O. and the amount declared as consideration in the sale deed of the property, which as per the AO is unaccounted receipt of cash for sale of property. There is not even an iota of evidence wi .....

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the findings of the First Appellate Authority and dismiss the appeal of the Revenue for the A.Y. 2004-05. 9. ITA 506/Del/2012 (AY: 2005-06):- For the A.Y. 2005-06 an addition u/s 68 amounts to ₹ 2,87,00,000/- has been made based on property valuation done by a Bank empanelled valuer, of property which was purchased by the assessee, in Plot no.217, Block C, Rewari Line Industrial Area, Phase II, New Delhi 110 064. The sale deed of the transaction discloses that the property was purchased fo .....

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see had purchased the said property for the total consideration of ₹ 45 lakhs, the difference between ₹ 3,32,00,000 and ₹ 45,00,000/- is taxed as unaccounted income u/s 68 of the Act during the year. The amount so taxed is ₹ 2,87,00,000/-. 9.2. The First Appellate Authority deleted the addition on the ground that: (a) no incriminating documents or material was found to prove that the assessee has made unaccounted investment in the purchase of the property at Plot no.217, .....

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ter point of time, cannot be taken as the cost of investment by the assessee. (e) The A.O. is not correct in completely ignoring the DVO s valuation report. The burden is on the Revenue to prove that the income sought to be taxed is within the taxing provisions. (f) The addition made u/s 68 of the Act, based on an estimate, in the proceedings u/s 153A, otherwise than through the mechanism provided u/s 142A, is bad in law. He deleted the addition. 9.3. Aggrieved the Revenue is before us. 10. Afte .....

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essee. The difference is negligible. Taking evaluation report value, arrived at 2 years after the date of transaction and then arbitrarily modified the value and thereafter treating this amount as sale. Under the circumstances no addition can be sustained on the ground that banker s valuer, after two years after the date of transaction, valued the property at a particular amount when no material is found in support of the AO s conclusion that the assessee had made unaccounted investments in purc .....

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- Estimate by Valuation Officer. Assessee purchased a property for certain consideration. Since valuation was found to be on lower side, A.O. made reference to DVO u/s 142A and made addition of amount of difference between valuation made by DVO and value declared by assessee. On appeal, CIT(A) gave partial relief to assessee. On second appeal, Tribunal deleted addition made by AO holding that reference made by AO invoking provisions of S.142A was without jurisdiction inasmuch as AO had not first .....

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