TMI Blog2017 (8) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have purchased the property “Corenthem” from M/s Shivraj Properties Pvt.Ltd. in the Financial Year 2009- 10 at ₹ 8.15 crores. The DVO vide his report has also ascertained the value of the property at ₹ 8,31,07,000/- as on 30th October,2009. Under these circumstances and in absence of any incriminating material found during the course of search to establish that the assessee has received anything other than what has been disclosed, we do not find any merit in the order of the Ld. CIT(A) in enhancing the income of the assessee by ₹ 6,66,93,021/-. Accordingly, the same is directed to be deleted. Applicability of Section 50C - capital gain - value determination of property sold - reference to DVO - property as a capital asset - computation of total income - Held that:- Value determined by the AO is concerned it is an admitted fact that as against the sale consideration of ₹ 8.15 crores the DVO had determined the value of the property at ₹ 8,31,07,000/-. Although the assessee had agreed to sell the property to M/s Mackson Creations Pvt.Ltd. at ₹ 8.5 crores, however, the property was finally sold at ₹ 8.15 crores. No reason whatsoever has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3rd September, 2012, the assessee filed its return of income on 16th October, 2012 declaring total income of nil . 2.1. The Assessing Officer (A.O.) observed that during the course of search and seizure action carried out at various premises of the group, pages 1-4 of Annexure A-2 seized from Corporate Office at Mohan Co-operative shows that M/s Shivraj Properties Pvt. Ltd. had executed an agreement to sell with M/s Radico Khaitan Ltd. dt. 3.2.2009 as per which a property owned by the former measuring 20723.31 sq. ft. situated at A-41, 6th floor, Sector 62, Noida was to be sold to the latter for ₹ 13.45 crores. However, as per pages 55-58 of same annexure, it was seen that the same property is sold by M/s Shivraj Properties Pvt.Ltd. to a party, M/s Mackson Creations P.Ltd. on 1.7.2009 by a MOU, for a consideration of ₹ 8.5 crores only. He, therefore, asked the assessee to furnish complete details and also to reconcile the difference with corresponding entries in the books of accounts. In the mean time the A.O. also made some verification u/s 131(1) and 133(6) of the Act in the case of M/s Mackson Creations Pvt.Ltd. and others and observed that M/s Mackson Proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various decisions, it was submitted that there cannot be addition on estimate basis in case of search assessment. 4 . So far as the addition made by the A.O. on the basis of the report of the DVO is concerned, it was argued that the Hon ble Karnataka High Court in the case of CIT vs. Vasudev Constructions, reported in 363 ITR 247 has held that where during the search no incriminating material was found and the difference between the cost of construction estimated by the DVO and the cost shown in accounts is less than 15%, addition on the basis of report of the DVO is not justified. It was argued that since in the present case the difference between the value as per the DVO s report at ₹ 8,31,07,000/- and the sale value shown as per the registered sale deed at ₹ 8,15,00,000/- is less than 2% of the amount shown in the accounts, therefore, no addition is called for. 5. Without prejudice to the above the assessee further argued that the property does not form part of the capital asset and the same is business asset as the assessee is engaged in buying and selling of real estate properties. The A.O. has merely treated the difference in the value as per sale deed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) the assessee is an appeal before us on the following grounds. 1. That the Commissioner of Income-tax (A) [CIT(A)] erred on facts and in law in not holding that the assessment order dated 28.03.2013 passed under section l53C was beyond jurisdiction, bad in law and void ab-initio since no satisfaction as required in law was recorded by the assessing officer in the case of M/s Radico Khaitan Ltd., being the person searched under section 153A, nor was any satisfaction recorded by the Assessing Officer in the case of the appellant company before initiation of proceedings under section 153C of the Income-tax Act, 1961 ('the Act'). 1.1. That the CIT(A) erred on facts and in law in not allowing the appellant to raise additional ground of appeal as regards the issue of lack of jurisdiction, which goes to the root of the matter and disposing off the appeal in undue haste and in violation of the principles of natural justice. 3. That the C1T(A) erred on facts and in law in confirming the action of the assessing officer in substituting the actual/apparent sale consideration of the property held as stock in trade, with the alleged fair market value of such proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radico Creations Pvt.Ltd. for consideration of ₹ 13.45 crores as per sale agreement dated 3rd February,2009. However the said agreement was not finally acted upon as the employees of Radico Khaitan resisted for shifting of its registered office to Noida because of inconvenience in transport. Therefore the sale agreement was not finally acted upon and the property was not purchased by Radico Khaitain. On account of the cancellation of agreement the amount given as advance by M/s Radico Khaitan was refunded to them. Since Radico Khaitan Limited and assessee being group companies the value of the agreement was fixed internally without any reference to the market value of the set property. Subsequently when the property was sold to M/s Mackson Creations Pvt.Ltd. the same was based on the prevailing market price and accordingly it was sold for a consideration of ₹ 8.15 crores which was duly recorded in the books of accounts of the company. Referring to the decision of Hon ble Supreme Court in the case of CIT vs. Calcutta Discount Co.Ltd. reported in 91 ITR 8, he submitted that the Hon ble Supreme Court in the said decision has held that where the trader transfers goods to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be deleted. 11. Ld.D.R. on the other hand strongly relied on the order of the Ld. CIT(A). He submitted that when the assessee has agreed to sell the property to Radico Khaitan at ₹ 13.45 crores and has incurred huge expenses of ₹ 1.53 crores towards renovation and repairs of the said property, it is not understood as to why the said property was sold to another party for consideration of ₹ 8,15,00,000/- only. He submitted that there is strong documentary evidence found in shape of agreement to sell the property to M./s Radico Khaitan that the value of the property was ₹ 13.45 crores. Ld. CIT(A) had given justifiable reasons as to why the property value should be considered at ₹ 14.98 crores which includes the original agreed price for sale plus the renovation expenses, therefore, the order of the Ld. CIT(A) should be upheld and the ground raised by the assessee should be dismissed. 12. We have considered the rival arguments made by both the sides, perused the orders of the lower authorities and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find that the assessee has exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the agreement with Radico Khaitan was not acted upon on the ground that the employees of Radico Khaitan Limited resisted to go to the new place because of inconvenience in transport. Further the A.O. had verified u/s 131 (1) and 133(6) of the Act in case of M/s Mackson Creations P.Ltd. and others according to which they have purchased the property Corenthem from M/s Shivraj Properties Pvt.Ltd. in the Financial Year 2009- 10 at ₹ 8.15 crores. The DVO vide his report has also ascertained the value of the property at ₹ 8,31,07,000/- as on 30th October,2009. Under these circumstances and in absence of any incriminating material found during the course of search to establish that the assessee has received anything other than what has been disclosed, we do not find any merit in the order of the Ld. CIT(A) in enhancing the income of the assessee by ₹ 6,66,93,021/-. Accordingly, the same is directed to be deleted. 13 . So far as the value determined by the AO is concerned it is an admitted fact that as against the sale consideration of ₹ 8.15 crores the DVO had determined the value of the property at ₹ 8,31,07,000/-. Although the assessee had agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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