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Vishuprasad S. Agrawal, Dist. Navsari and others Versus ITO, Ward-4 Navsari

2015 (7) TMI 734 - ITAT AHMEDABAD

Addition u/s 69B unexplained investments - AO disputing and harbouring a belief that the assessees have made investments, over and above, the amount so disclosed in the sale deed is based on the basis of stamp duty valuation which authorizes the valuation authorities to charge stamp duty on registering the transfer of plots - Held that:- Valuation made for the purpose of stamp duty is an estimated opinion. It can be a corroborative evidence for the help of the AO, but, it cannot be conclusive pi .....

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ll value of consideration disclosed by the assessee for the purpose of computing the capital gain. In that situation, the AO would replace the sale consideration disclosed by the assessee by an amount on which stamp duty was paid by the assessee. Therefore, this section is of no help while determining the unexplained investment of the assessee.

Thus Revenue authorities have failed to appreciate the facts and circumstances. The assessees have not made any unexplained investment in purc .....

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d. 2. Since a solitary question is being disputed by both the assessees, therefore, we heard both the appeals together and deem it proper to dispose of these appeals, by this common order, though, the assessees have taken five grounds of appeals, but, the learned counsel for the assessee did not press other grounds, except wherein, the assessee, Shri Vishnuprasad S. Agrawal challenged the addition of ₹ 27,39,079/- and Shri Sureshchandra S. Agrawal, ₹ 32,20,512/- which have been added .....

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which was duly served upon the assessee on 6.9.2009. On scrutiny of the accounts, it revealed to the AO that Shri Vishnuprasad S. Agrawal) has been drawing income from share of profit from the firm viz. M/s.Jalaram & Co., interest income and rental income He has also shown long term capital gains from sale of plot of land. The learned AO further found that the assessee has sold six plots during the year. Since there is no dispute between parties with regard to computation of capital gain, t .....

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chase deed was ₹ 29,12,350/-, whereas, the stamp duty was paid by the assessee on the circle rate notified by the stamp duty authority is on ₹ 56,51,429/-. The AO has harboured a belief that the assessee must have made investment of ₹ 56,51,429/-, and therefore, the amount of ₹ 29,12,350/- (Rs.56,51,429/- minus ₹ 29,12,350/-) is to be added as unexplained investment in the total income of the assessee under section 69B of the I.T. Act. The learned AO had issued a sh .....

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₹ 1,37,450/- and agriculture income of ₹ 3,72,562/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 1.9.2009, which was duly served upon the assessee on 3.9.2009. On scrutiny of the accounts, it revealed that the assessee has purchased six plots of land during the year. The learned AO has noted the details of transactions, exhibiting name of purchaser, name of seller, city survey no., area of plot, registration no. and the .....

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s a difference between both these amounts of ₹ 32,20,512/-. This amount has been added by the AO on account of unexplained investment under section 69B of the Act. Appeal to the CIT(A) did not bring any relief to the assessee. 7. Before we embark upon inquiry about the quality of evidence possessed by the AO for concluding that the assessees have made unexplained investment which deserves to be added in the total income under section 69B of the Act, we deem it pertinent to take note of sec .....

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source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the A.O.. satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year." 8. A perusal of the section would reveal that section 69B of the Income Tax Act, authorizes the AO to deem unexplained investment, if he find that the assessee had made investments or owner of any bullion, jewellery, or other valuable art .....

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l year. Thus, the basic condition for applying under section 69B is that it should be found that the assessee has made investment or the assessee found to be owner of the money, bullion and jewellery. In the present case, both assessees were found to have made investment for purchase of plots. The next question is whether the assessees have made investment exceeding the amount recorded in the books. This is a crucial question, which demonstrates factual position. It is to be proved with the help .....

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ed by the AO is of not such a nature, which empowers him to invoke section 69B of the Act. Stamps duty paid by the assessee on purchase of land is a small portion of the total consideration, say, 8% or 10% of the total value. The assessee might have not disputed levy of that stamp duty on account of smallness of the amounts involved when compared to the litigation cost. But that does not mean that the assessee has accepted the valuation of the property made by the stamp duty valuation authority. .....

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t of a sq. mtrs. of land was shown to be ₹ 74/- per sq. mtr. The A.O. was of the view that the purchase price shown by the assessee was quite low as compared to the prevailing market rate of the land. According to the A.O. the purchase price should have been ₹ 510/- per sq. mtr. He taking into consideration the prevailing jantry price and the auction price of SUDA, estimated the undisclosed investment at ₹ 97,41,000/-.After adjusting for the value disclosed in the books of acco .....

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ection 48. It is applicable in the case of a seller of property and therefore cannot be invoked in case of purchaser of property for the purpose of section 69B. CIT (A) has given a finding that the A.O. has not made any independent enquiry or collected corroborative evidence to justify the addition. 13. In the case of CIT v. Naresh Khattar (HUF) [2003] 261 ITR 664/ 130 Taxman 15 (Delhi) the Hon'ble Delhi High Court has held that to invoke the provisions of Sec.69B, the burden is on the Reven .....

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nt than the shown in account books, then only the addition u/s. 69B can be made. The burden is on the Revenue to prove that real investment exceeds the investment shown in account books of the assessee." 15. In the case of ITO v. Harley Street Pharmaceuticals Ltd. [2010] 38 SOT 486 (Ahd) it has been held that provisions of Sec.50C are applicable only for computation of capital gains in real estate transaction in respect of seller only and not for the purchaser. Legal fiction cannot be exten .....

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nue. 17. In view of the aforesaid facts in view of the fact that the A.O. has failed to bring on record any material to support the rates estimated by him and relying on the decisions of the Hon'ble High Courts and of the co-ordinate Bench, we are of the view that for the reasons stated hereinabove, no addition can be made in the present case and therefore no interference is called for to the order of CIT(A). We thus, uphold the order of CIT(A). In the result the appeal of the Revenue is dis .....

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rpose of collecting stamp duty. He submitted that the Assessing Officer, on the basis of DVO's report, found that the investment was much greater than what was reflected in the books made by the assessee in purchase of such property. Counsel placed heavy reliance under Section 142A of the Act in support of his contention. 9. We are of the opinion that CIT(Appeals) as well as the Tribunal committed no error in deleting the additions made by the Assessing Officer. It is undisputed that the sol .....

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e Tribunal both have examined the issue on the basis of the material available on record. It is noted that the assessee had made no disclosure towards the purchase of land in his statement during the search proceedings. The addition was made merely on the basis of the DVO's report without there being any other material. Moreover, the DVO had also substantially relied on jantri rates and had made other references for arriving at the valuation. 10. In the above three decisions, it has been una .....

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