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2016 (1) TMI 29 - ITAT AHMEDABAD

2016 (1) TMI 29 - ITAT AHMEDABAD - TMI - Unexplained investment under section 69B - Held that:- We have considered the issue in the case of Shri Vishnuprasad S. Agarwal, who was co-owner to the extent of 75% of the plot wherein it has been unanimously 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 piece of evidence demonstrating the unexplained investment made by the assessee .....

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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.

In view of the above discussion, we are of the view that the learned Revenue authorities have failed to appreciate the facts and circumstances. The assessees have not made any unexplained investment in purchase of plots, an .....

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out of which ground no.3 and 4 are general grounds of appeal. In ground no.1, the assessee has challenged reopening of the assessment. In ground no.2 the assessee has contended that the ld.CIT(A) has erred in confirming the addition of ₹ 13,91,699/-, which was added by the AO on account of unexplained investment under section 69B of the Act. 3. In response to the notice of hearing, the assessee has filed written submissions, wherein, he has withdrawn ground no.1, meaning thereby, the asse .....

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s followed the order of his predecessor passed in the case of Shri Vishnuprasad S. Agarwal, who is also co-owner of the property, in whom, it was alleged that the assessee has made unexplained investment. 5. With the assistance of the ld.DR, we have gone through the record carefully. The assessee has filed its his return of income on 6.9.2012 declaring total income of ₹ 3,43,680/- and agriculture income of ₹ 2,77,536/-. A notice under section 143(2) was issued and served upon the ass .....

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e confronted the assessee as to why the amount of ₹ 13,19,699/- should not be added in the hands of the assessee as unexplained investment. After hearing the assessee, the ld.AO has made addition. 6. On appeal, the CIT(A) has confirmed the addition. 7. We have considered the issue in the case of Shri Vishnuprasad S. Agarwal, who was co-owner to the extent of 75% of the plot. Our finding in ITA No.2567/Ahd/2011 and 2571/Ahd/2011 for the Asstt.Year 2008-09 read as under: 7. Before we embark .....

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rticle, and the A.O. finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any 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 yea .....

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ation of the assessee about source of income for making such investment, and if explanation offered by the assessee is not, in the opinion of the AO satisfactory, then, the excess amount would be treated as income of the assessee for such financial 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 ha .....

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over and above, the amount so disclosed in the sale deed. His belief is based on the basis of stamp duty valuation which authorizes the valuation authorities to charge stamp duty on registering the transfer of plots. This type of evidence possessed 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 .....

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s considered this issue elaborately and the following findings of the Tribunal is noteworthy, which reads as under: 11. The factual position in the present case is that during the year the assessee had purchased agricultural land. The purchase cost 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 shoul .....

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. The A.O. has failed to bring on record any material to support his estimated price. 12. Section 50C is a deeming provision where under the stamp duty rate is treated as full value of consideration for the purpose of computing capital gain under section 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 .....

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r: "10. It is true that merely on the basis of fair market value no addition can be made u/s. 69B of the Act, 1961, but on the basis of sufficient material on record some reasonable inference can be drawn that petitioner has invested more amount 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 Pha .....

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luation done by Stamp Valuation Authorities as undisclosed investment u/s. 69. 16. The Co-ordinate Bench in the case of Dy. CIT v. Virjibhai Kalyan Bhai Kukadia [2012] 26 taxmann.com 13 (Ahd.) had on identical facts dismissed the appeal of the Revenue. 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 .....

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nsel for the Revenue vehemently contended that there was considerable gap between the valuation disclosed in the sale deed, which was also adopted for the purpose of assessee's books and what was estimated by the Stamp Duty Authority for the purpose 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 .....

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69B of the Act. In absence of any other material on record, addition was correctly deleted. Tax Appeal is, therefore, dismissed. 9. Coming to the question of addition towards purchase of land, the Commissioner of Income-tax (Appeals) as well as the 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 .....

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