TMI Blog2019 (5) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, liable for addition. - Decided against revenue. Disallowance of interest u/s 36(1)(iii) - CIT(A) recorded that the entire set of circumstances showed that the assessee had avoided to give data from the books of account to show the business use of interest bearing funds - HELD THAT:- CIT(A) has observed that as available from the calculation chart given by the assessee, even the amount of capital of Shri Kulwinder Singh brought into the business was taken to be a part of the calculation, treating this amount to be funds available free of interest and that the capital is meant to earn profits and separate interest thereon to decide the issue of disallowance could not have been done. It was on this basis that the learned CIT(A) held that no interest was payable to the assessee on this amount . We do not find any error in the order of the learned CIT(A) - Decided against revenue. - ITA No.101 of 2017 (O&M) - - - Dated:- 28-3-2019 - MR AJAY KUMAR MITTAL AND MRS MANJARI NEHRU KAUL, JJ. For The Appellant-Revenue : Mr. Rajesh Katoch, Sr. Standing Counsel For The Respondent (s) : Ms.Radhika Suri, Sr. Advocate with Mr. Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 26.9.2017 passed by the ITAT is sustainable in the eyes of law or maintainable in the facts and circumstances of the case? 3. A few facts relevant for the decision of the controversy involved as available on the record of ITA No.101 of 2017 may be noticed. The respondent assessee is engaged in the business of sale/purchase of property. During the course of assessment proceedings under Section 153A read with Section 143(3) of the Act, it was noticed by the Assessing Officer that the respondent-assessee during the financial year 2008-09 relevant to the assessment year 2009-10 had purchased land measuring 2 kanals 10 marlas from Punjab Iron and Steel Co. Limited (PISCO), GT Road, Jalandhar and the same was shown to have been purchased for ₹ 1 crore as per the registered conveyance deed. During the course of search at the residential premises of Shri Vinay Kumar, Accountant of M/s PISCO, a photo copy of duly stamped, witnessed and fully honoured agreement dated 10.5.2007 was found and seized. The said agreement was between Ravneet Takhar son of Ravinder Singh, MD of M/s PISCO and Mohinder Singh Bajwa and Joginder Singh for sale of land meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer 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 Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. 6. A plain reading of Section 69B of the Act shows that if in any financial year, the Assessing Officer finds that the amount invested by the assessee exceeds the amount recorded in his books of account and no satisfactory explanation is given, then the excess amount may be deemed to be the income of the assessee for such financial year. In other words, Section 69B of the Act requires that the Assessing Officer has to first find that the assessee has expended an amount which he has not fully recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement to sell with regard to a deed between two other persons in respect of different piece of land and on a different date. Thus, the Assessing Officer could definitely make a presumption on sale price being higher than what was stated in the registration deed by the assessee. The said presumption had to be supported by some evidence of transfer of such consideration from the buyer to the seller. The registration between the assessee and the seller had been at a price which was at least as per circle rate approved by the revenue authorities and hence could not be said to be below fair market price. After examining the entire case law on the point, it was recorded that as per Section 69B of the Act, it is the burden of the Assessing Officer to first prove that there was understatement of the consideration(investment) in the books of account. Since the present case was proceeded on the assumption that there was understatement of the investment without a finding that the assessee invested more than what was recorded in the books of account, the decision of the Assessing Officer could not be approved. Section 69B of the Act was thus wrongly invoked. The relevant findings recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on record. xxxxxxxxxxxxxxxxxxx 8. On appeal by the revenue, it was categorically recorded by the Tribunal that the agreement seized was only a photo copy of the original which was not seized from the assessee. The seller, buyer and the witnesses refused to identify the same. The assessee was neither a party nor witness to the agreement. The assessee was not related to either party. The assessee purchased the land directly from PISCO at the prevalent circle rate. In the purchase deed of the assessee, the rate was ₹ 4 crore per acre = ₹ 2.50 lacs per marla as against that of ₹ 11.05 crore per acre as mentioned in the agreement seized. The land purchased by the assessee was different from that mentioned in the agreement seized. The burden was on the department to prove understatement of sale consideration which was not discharged. Thus, the presumption of the Assessing Officer could not lead to a conclusion of under investment by the assessee, liable for addition. The relevant findings recorded by the Tribunal read thus:- 8. From the rival contentions and the material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxi) It is the burden of the department to prove understatement of sale consideration. xxii) This burden has not been discharged. xxiii) There is no positive evidence against the assessee. xxiv) Thus, the AO s presumption did not materialize into conclusive evidence against the assessee. xxv) Such a presumption cannot be accorded the status of fool proof evidence against the assessee. xxvi) Such a presumption cannot lead to a conclusion of underinvestment by the assessee, liable for addition. 9) The learned CIT(A) has duly considered all the above said facts as well as the relevant case laws. There has been no effective rebuttal to the well reasoned elaborate findings recorded by the learned CIT(A). 10) In view of the above discussion, we are of the considered view that the learned CIT(A) has passed a detailed, well reasoned and well versed order which does not require any interference and accordingly, the same is upheld. Ground No.1 is thus, rejected. 9. Learned counsel for the respondent assessee relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct Valuation Officer (DVO). Opinion of the DVO per se is not an information for the purposes of reopening assessment under Section 147 of the Income Tax Act, 1961. The AO has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the Civil Appeal. The Department was not entitled to reopen the assessment. Civil appeal is, accordingly, dismissed. No order as to costs. Similar was the position in K.P.Varghese vs. Income Tax Officer, Ernakulam and another, (1981) 131 ITR 597. 10. In view of the above facts proved on record, the Tribunal rightly upheld the findings recorded by the CIT(A) on question No.(i). Learned counsel for the appellant-revenue has not been able to point out any error or illegality therein. 11. Adverting to question (ii), it would be apposite to reproduce Section 36(1)(iii) of the Act, which reads thus:- 36. ( 1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer that the interest bearing funds had been diverted to advance interest free loans, could not be said to be arbitrary. Consequently, the CIT(A) restricted the disallowance to ₹ 10,95,795/-. The Tribunal rightly upheld the findings recorded by the CIT(A) on this point. The relevant findings recorded by the Tribunal in this regard read thus:- 11. As regards Ground No.2, the Department has contended that the learned CIT(A) has erred in deleting the addition of ₹ 14,00,000/- on account of disallowance of interest under section 36(1)(iii) of the IT Act. 12. The learned DR relied on the order of the Assessing Officer. 13. The learned counsel for the assessee, on the other hand, strongly relied on the order of the learned CIT(A) and reiterated the submission made before him. 14. We have heard the rival contentions and have carefully gone through the material available on record, including the order of the learned CIT(A). The relevant findings given by the learned CIT(A) qua this issue in his order in paras 25 to 29 of the order are as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Singh ₹ 50,400/-, Harman Builders Pvt. Limited, ₹ 8,96,835/-, Inderpal Singh ₹ 24000/-, Jagjit Singh ₹ 36000/-, Narotam Singh ₹ 6000/-, Raminder Kaur ₹ 3,11,520/-, Ravinder Singh ₹ 12000/-, Satish Kumar ₹ 96000/- and Venus Builders Pvt. Limited ₹ 24000/-. It is in this manner that the disallowance has been restricted to ₹ 10,95,795/- taking out the sum of interest payable amounting to ₹ 24,97,899/- representing the capital brought in by Sh.Kulwinder Singh. 16. The learned CIT(A) has observed that as available from the calculation chart given by the assessee, even the amount of capital of Shri Kulwinder Singh brought into the business was taken to be a part of the calculation, treating this amount to be funds available free of interest and that the capital is meant to earn profits and separate interest thereon to decide the issue of disallowance could not have been done. It was on this basis that the learned CIT(A) held that no interest was payable to the assessee on this amount of ₹ 24,97,899/-. 17. We do not find any error in the order of the learned CITA). The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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