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ITO, Ward 25 (3) , New Delhi Versus Murti Aggarwal

2016 (5) TMI 528 - ITAT DELHI

Unexplained investment u/s 69 - Held that:- The assessing officer is under an obligation to give reasons for not accepting the explanation so offered by the assessee in the present case the assessing officer has not come out with any corroborative evidence or cogent material to demonstrate that the assessee has actually expanded the amount towards the purchase of the land, more than what has been documented. Hence in our considered opinion the said transaction does not fall within the ambit of s .....

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g the addition of ₹ 55,30,000/- made by the Assessing Officer on account of unexplained investment u/s 69 of the I.T. Act. 2. The appellant craves the right to add, alter or amend any ground of appeal. 2. Brief facts of the case are as under: The appellant filed return of income for the relevant A.Y. 2009-10, on 31.03.2010, declaring income of ₹ 6,36,980/-. The case was selected for scrutiny under CASS and notice u/s 143(2) was issued on 18.08.2010 which was duly served upon the appe .....

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g the relevant assessment year on 27.10.2008 and at the time of registration of the aforesaid property, stamp duty of ₹ 2,21,200/- was paid on the basis of value of property as per prevailing circle rate. However, no payment of ₹ 55,30,000/- was made to any person and the value of the property was taken at ₹ 55,30,000/- for the purposes of stamp duty only. The Assessing Officer was not satisfied with the explanation of the assessee, and added the amount of ₹ 55,30,000/-, .....

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p; e) Sale deed dated 29.10.2008 2.2. Besides these, the assessee submitted copies of sale deeds of properties with the same specifications, under the same Khesra in the same area which were registered by the subregistrar for ₹ 3,15,000/- in the F.Y. 2005-06 i.e. much after the year in which the assessee executed the transaction. Before the Ld.CIT(A), it was submitted that the stamp duty was paid by the assessee on the circle rates and the sale consideration was paid as per the agreement t .....

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06. 2.5 the Ld.CIT(A) observed as under: I have carefully considered the submission made by the AR of the assessee and have gone through the assessment order. It is observed that the assessee had purchased a property i.e. property No. 19, Road No. 1A, Jaidev Park, Punjabi Bagh, Delhi from Sh. Ashok Kr. Aggarwal, S/o Sh. Sitaram Aggarwal, the GPA holder. An agreement to sell in this regard was entered into between the vendor and the vendee on 23.10.2001 for ₹ 2,80,000/-. However, the proper .....

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perty at ₹ 55,30,0001- instead of the declared value of the property at ₹ 2,80,000/-. It is the contention of the assessee that she did not pay anything more than that stated in the purchase/sale deed. It is observed that indeed there is no evidence to the effect that the assessee has paid more than what was stated in the deed of conveyance. The Assessing Officer has not brought any material on record to show that the assessee had paid more than what is recorded in the books of accou .....

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investment. Section 69 is the weapon in the armoury of the Assessing Officer to detect the tax evasion In respect of clandestine Investments made by the assessee & naturally which are not recorded in the books of accounts, if any, maintained by him. Section 69 also gives power to AO to treat the value of investments as the income of the assessee, if the assessee does not offer any explanation or the explanation offered by him is not satisfactory. Section 69 does not provide any guideline ab .....

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, Section 69 has been reproduced below:- "Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, AND the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory , the value of the investments may be deemed to be the income of th .....

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deemed to be his income. The provision which is deeming is always rebuttable. The use of the words 'if any' in the section indicates that it is not compulsory that the assessee must have maintained the books of accounts. He can prove the genuineness of the investments by some other evidence which proves investment out of disclosed source. The word 'explanation' indicates that the opportunity of being heard must be given to the assessee to prove the nature and source of investmen .....

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n possession of the Assessing Officer to demonstrate that the assessee has actually expended the amount towards purchase of land more than what was documented. Hence, in my opinion, the impugned addition cannot be sustained. Reliance in this regard is placed on the decision of Hon'ble IT AT, Ahmedabad in the case of Amar Arvindkumar Rawal, Surat vs Assessee [ITA NO.1947/AHD/2008 dated 23 July, 2010]. The Hon'ble Madras High Court in CGT v. R. Damodaran [2001] 247 ITR 698 held that the st .....

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assessee by the Assessing Officer. It is held that there is no rule of law to the effect that the value determined for the purposes of stamp duty is the actual consideration passed between the parties to the sale. It is worthwhile to mention here that section 69 is a legal fiction whereby investment in an asset is treated as income if it is not disclosed in the regular books .of account. No further legal fiction from elsewhere in the statute can be borrowed to extend the field of section 69. Thi .....

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ction is limited to the purpose for which it is created and could not be extended beyond that legitimate frame. The Hon'ble Allahabad High Court in the case of Controller of Estate Duty v. Krishna Kumari Devi [1988] 173 ITR 561 held that in interpreting the legal fiction the court should ascertain the purpose for which it was created and after doing so assume all facts which are logical to give effect to the fiction. The Hon'ble Supreme Court in CIT v. Mother India Refrigeration Industri .....

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f section 50C of the Income Tax Act, the same cannot be sustained as section 50C is inapplicable in the case of purchaser of a property. Apart from the stamp duty valuation, there is nothing on record which suggests that the AO has proved that the assessee has paid over and above, what has been recorded as purchase consideration of the land in the instrument, i.e., the sale deed. Accordingly, I hold that the addition made by the Assessing Officer is purely on notional basis, not supported by eit .....

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