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2015 (7) TMI 250

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..... has erred in referring the matter to the DVO and consequently the DVO's report on the value of investment in the property cannot replace the actual purchase value shown in the purchase deed of the aforesaid property at J-1/161, Rajouri Garden, New Delhi. Hence, the Assessing Officer has erred in adopting the value of the property at J-1/161, Rajouri Garden, New Delhi estimated by the DVO by replacing the value shown in the purchase deed. Ld. First Appellate Authority has rightly appreciated the all evidences as well as the relevant provisions of law and deleted the addition in dispute. It is further observed that even after the receipt of the valuation report from the DVO, the Assessing Officer had given only one day time to the appellant to explain the difference in the value of the property as estimated by the DVO and the value shown by her in the purchase deed. This is against the principle of natural justice. In this regard it is seen that the AO had issued a show cause notice dated 21-03-2013 for submitting reply on 22-03- 2013 i.e. immediately next date, Therefore, assessing officer has not given sufficient opportunity of being heard to the assessee. It cannot be said that b .....

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..... given.- Decided against revenue. - I.T.A. No. 5698/Del/2014,I.T.A. NO. 5974/DEL/2014 - - - Dated:- 30-6-2015 - Shri H.S. Sidhu and Shri J.S. Reddy, JJ. For the Petitioner : Sh. Nagesh Bhel, CA For the Respondent : Sh. J.P. Chandrekar, Sr. DR ORDER PER H.S. SIDHU : JM These are the cross appeals filed by the Revenue and Assessee emanate out of the Order passed by the Ld. CIT(A)-XXIV, New Delhi pertaining to assessment year 2009-10. Since the issues are common and identical, hence, these are being decided by this common Order for the sake of convenience. 2. The grounds raised in the Revenue s Appeal No. 5698/Del/2014 read as under:- On the facts and circumstances of the case and in law CIT(A) has erred in:- 1. Deleting the addition of ₹ 3,53,30,000/- made by the AO on account of explained income. 2. Admitting the additional evidence without giving the opportunity to AO under Rule 46A. 3. Directing the AO to consider claim of the assessee u/s. 54 of the I.T. Act, 1961. 4. The assessee craves the right to add, alter or demand any ground of appeal. 3. The grounds raised in the Assessee s Appeal No. 5974/Del/2014 rea .....

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..... e aforesaid properties on 02.09.2011. However, the assessee did not make any submission regarding the source of investment in the J-1/161, Rajouri Garden, New Delhi. In the absence of any explanation from the assessee about the source of investment in the aforesaid property, the Assessing Officer formed an opinion that the investments made by the assessee are unexplained and after recording reason to believe, he issued a notice u/s 148 of the I T Act to the assessee on 18.01.2012 to assess the escaped income. In response to the notice u/s 148, the assessee submitted before the Assessing Officer that the original return of income filed on 31.03.2010 for the relevant assessment year 2009-10 may be treated as return. In response to the aforesaid notice. Subsequently notices u/s 143(2) and 142(1) of the I.T. Act were issued to the assessee and she was requested to explain the sources of investment in the above mentioned property. In compliance the assessee submitted before the Assessing Officer that the purchases were made through banking channels and in support of her contention, she submitted the copy of the bank statement at BOI Kirti Nagar Branch and Axis Bank, New Delhi. However, .....

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..... axable income of ₹ 7,48,68,123/-. 5. Aggrieved by the aforesaid additions, the assessee Appealed before the Ld. CIT(A) who vide impugned order 26.8.2014 has partly allowed the appeal of the Assessee. 6. Against the above order of the Ld. First Appellate Authority, the Revenue is in appeal before the Tribunal. 7. Ld. DR relied upon the order passed by the AO and reiterated the contentions raised in the grounds of appeal. He further stated that Ld. CIT(A) has wrongly deleted the addition in dispute on account of unexplained income which has rightly been made by the AO. He further stated that Ld. CIT(A) has admitted the additional evidence produced by the assessee without giving proper opportunity to the AO which is contrary to Rule 46A of the Income Tax Rules, 1962. Therefore, he requested that the issue in dispute may be set aside to the file of the Ld. CIT(A) to decide the same afresh, after giving adequate opportunity on the admission of additional evidence to the AO before the Ld. CIT(A). He further submitted that Ld. CIT(A) has wrongly given the directions to the AO to consider the claim of the assessee u/s. 54 of the I.T. Act, 1961 and finally he requested that t .....

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..... eference to market value but only to consideration referred to in sale deeds as sale price of assets which have been transferred. 10.1 We further find that in the case of - CIT vs. Aerens Inrastructure Technology Ltd. vs. DCIT [2011] 16 taxmann.com 400 (Delhi), the Hon ble High Court has confirmed the order of the ITAT wherein the Tribunal deleted the addition of ₹ 48,68,774/- made by the AO on account of difference between the value determined by the DVO and the purchase consideration shown by the assessee holding that the reference made by the AO invoking the provisions of Section 142A was without jurisdiction and therefore, no addition could have been made by the AO on the bass of valuation made by the DVO. 10.2 We further find from the latest decision of the Hon ble High Court of Delhi passed in the ITA No. 340/2015 CM No. 9241 / 2015 in the case of Commissioner of Income Tax vs. Anil Arora decided on 22.5.2014 wherein vide para no. 8 9 of the said order the Court has observed as under:- 8. Having heard the learned counsel for the Revenue, we find the contentions urged in the appeal to be wholly misplaced. It is fairly concede (at bar) by the counsel for .....

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..... J-1/161 Rajouri Garden New Delhi Axis Bank Ltd. West Punjab i Bagh. 3 19.5.2008 Paid By cash Rs.3,54,400 Stamp Duty paid J-1/161 Rajouri Garden New Delhi BOI, Kiriti Nagar, Total 92,14,400 She further explained the source of the deposits made in the aforesaid bank account as follows:- Source of Payment (Receipts in Bank) S.No. Date Ch. No. Amount Name Nature Bank Property 1 5.5.2008 301651 85,00,000 Sale Consideration Sale of property 20- C/72, West Punjabi Bagh Axis Bank Ltd., West Punjabi Bagh, J-1/161, Rajouri Garden, New Delhi 2 6.5.2008 Cash 3,10,000 Cas .....

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..... ee before AO. The AO without bringing any evidence on record of excess investment in the properties at J-1/161, Rajouri Garden, New Delhi over and above the value of investment shown in the sale deed at ₹ 88,59,420/- has referred the matter to the District Valuation officer for estimation of the value of the property. Even no opportunity of being heard or a show cause notice was given to the assessee before referring the matter to the DVO for the estimation of the value of investment in the aforesaid properties at J- 1/161, Rajouri Garden, New Delhi. In our considered opinion, without bringing any adverse material on record or any evidence of excess investment the Assessing Officer had no power to refer the matter to the DVO and Ld. CIT(A) has rightly deleted the addition in dispute. 10.5 We further observed that the assessee had submitted her books of accounts explaining the sources of investment in the aforesaid property and the Assessing Officer has given no comment or even rejected the books of accounts before making a reference to the DVO for ascertaining the actual investment in the aforesaid property. The Assessing Officer has not even recorded any reason for referr .....

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..... e AO in the books of accounts of the appellant. Thus, the AO has not pointed out any defects in the books as far as related to the investment made by the appellant. In my humble opinion, the provisions of Sec. 142A cannot be read in isolation to Sec.145. In other words, if books of account are found to be correct and complete in all respect and :10 defect is pointed out therein and the investment is recorded therein, then the addition on account of difference in investment could not be made even if a report is obtained within the meaning of Sec.142A from the DVO. It is because the use of the report of the DVO obtained u/s. 142A is not mandatory but is discretionary as the word used is 'may' therein. Accordingly, in the present case when AO has not rejected the books of account by pointing out any defects reference to the DVO will not be valid and, therefore, DVO's report could not be utilized for framing assessment even if such a report is considered to be obtained u/s 142A. Since reference to DVO being held as invalid, the assessment/reassessment framed thereafter would also be invalid. Reliance in this regard was placed on the decision of ITAT Delhi, in the case of Ae .....

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..... the conclusion that the assessing, authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been considered by the High Court. In the circumstances, reliance placed on the report of the DVO was misconceived. 5. For the above reasons, the impugned judgment of the High Court is set aside and the order passed by the Tribunal stands restored to the file. Accordingly, the assessee succeeds. 10.11 We further place reliance in another case of ITO vs. Rajeshwar Nath Gupta dated 4.5.2008 in ITA no. 4295/D.eI.l2005,The ITAT, Delhi in the context of provisions of sec. 142A of the Act, held as follows: 15. A perusal of the aforesaid provisions shows that section 142A is attracted, inter alia, where the assessee is found to have made investment outside the books of account or where any such investment made by him is not fully disclosed in the books of account. The condition precedent for making the reference by invoking the provisions of section 142A thus is that there should .....

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..... s of law and deleted the addition in dispute. It is further observed that even after the receipt of the valuation report from the DVO, the Assessing Officer had given only one day time to the appellant to explain the difference in the value of the property as estimated by the DVO and the value shown by her in the purchase deed. This is against the principle of natural justice. In this regard it is seen that the AO had issued a show cause notice dated 21-03-2013 for submitting reply on 22-03- 2013 i.e. immediately next date, Therefore, assessing officer has not given sufficient opportunity of being heard to the assessee. It cannot be said that by giving opportunity of being heard for hearing immediately one day assessing officer has discharged his obligation of giving opportunity of being heard. In the case of Sahara India (Firm) v. Commissioner of Income-tax, Central-I [2008] 169 Taxman 328 (SC) Supreme Court of India has held as under:- It is trite that unless a statutory provision either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the Court would not ignore the legislative mandate, the requirement .....

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..... ismissed. 11. With regard to ground no. 2 regarding admitting the additional evidence without giving the opportunity to AO under Rule 46A is concerned, we find that no additional evidence have been filed by the Assessee before the Ld. CIT(A), which required to be sent to the AO under Rule 46A and also in the Ld. CIT(A) s order there was no mention about the admission of additional evidence, hence, the ground no. 2 in dispute in the Revenue s Appeal is dismissed as such. 12. Apropos ground no. 3 regarding directing the AO consider the claim of assessee u/s. 54 of the I.T. Act, 1961 is concerned, we find that during the relevant assessment year, the assessee has sold a property at 20C/72, West Punjabi Nagar, New Delhi for the consideration of ₹ 95,00,000/- as per the registered value of the property (whereas during the course of survey, the same property was found to be valued at ₹ 3,87,00,000/- by a registered valuer). The assessee has claimed that the sale proceed of the aforesaid property at 20C/72, West Punjabi Bagh, New Delhi was invested in the purchase of property in the same assessment year at J-1/161, Rajouri Garden, New Delhi. We observed that the assessee .....

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