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A.C.I.T., Central Circle-22, New Delhi.Vs. Express Earth Movers & Equipments Pvt. Ltd. 2A, Avenue Cassia, Westend Greens, Rajokari, New Delhi
October, 01st 2015
                     DELHI BENCH `B' NEW DELHI

                          SHRI L.P. SAHU, ACCOUNTANT MEMBER

                               ITA No. 507/Del./2012
                               Asstt. Years : 2008-09

A.C.I.T., Central Circle-22,   vs.   Express Earth Movers & Equipments Pvt. Ltd.
New Delhi.                           2A, Avenue Cassia, Westend Greens, Rajokari,
                                     New Delhi [PAN : AAACE 9926 C]

                               ITA No. 402/Del./2012
                                Asstt. Year : 2008-09

Express Earth Movers & Equipments Pvt. Ltd. vs.         A.C.I.T., Central Circle-22,
2A, Avenue Cassia, Westend Greens, Rajokari,            New Delhi.
Westend Greens, Rajokari, New Delhi.

(Appellant)                                        (Respondent)

      Revenue by                        :     Md. Mohsin Alam, CIT/DR
      Assessee by                       :     Sh. Salil Kapoor, Advocate

      Date of hearing                   :     09.09.2015
      Date of pronouncement             :     30.09.2015


Per L.P. Sahu, Accountant Member:

        These are cross appeals filed by the Revenue and the assessee against the
order dated 18.11.2011 of ld. CIT(A)-III, Delhi for the assessment year 2008-09 on
the following grounds :
      Ground raised by Revenue :

            "1. On the facts and in the circumstances of the case, the CIT(A) has
      erred in law and on facts in restricting the addition to Rs.11,78,000/- out of
                                          2                     ITA No.507 & 402/Del./2012

      total addition of Rs.1,13,50,000/- made by the Assessing Officer on account
      of unaccounted income from sale of property."

      Ground raised by the Assessee :

             "1. That the Learned CIT(A) erred in law and as well as on facts in
      dismissing the appeal as per Ground of Appeal No. 1 and by upholding
      addition of Rs.11,78,000/- to the income of the appellant, on account of
      `unaccounted Income' on sale of property no. C-217, Mayapuri Industrial
      Area, Phase-II, New Delhi, on the basis of sale price of property no. C-218,
      Mayapuri Industrial Area, Phase-II, New Delhi."

2.     The brief facts of the case are that the assessee is a company and a search
and seizure action 132 of the IT Act was initiated on the assessee group on
06.11.2008 and a search warrant was also issued and executed in the name of the
assessee. The original return of income u/s. 139 of the Act was filed by the
assessee on 20.12.2008 at Rs. Nil. Thereafter the case of the assessee was
centralized in Central Circle-22, New Delhi and notice u/s. 153A of the Income
Tax Act was issued on 08.07.2009 in pursuance to which the assessee filed the
return of income on 04.08.2009 at the original income. The assessee company has
been formed to carry on business of providing on hire/lease heavy earthmovers
equipments & construction of machinery, plants, equipments, accessories etc. for
the purpose of construction. The Assessing Officer completed the assessment u/s.
143A/143(3) of the Act on 24.12.2010 in the case of assessee at an income of
Rs.1,13,50,000/-. The assessee, aggrieved by the assessment order dated
24.12.2010, filed appeal before the learned first appellate authority who vide
impugned order dated 18.11.2011 partly allowed the appeal of the assessee,
thereby restricting the addition of Rs.11,78,000/- as against Rs.1,13,50,000/- made
by the Assessing Officer. Now, the Revenue has filed ITA No. 507/Del./2012
against the addition deleted by the ld. First appellate authority and the assessee has
                                         3                    ITA No.507 & 402/Del./2012

filed the appeal No. 402/Del/2012 against the addition upheld by the ld. First
appellate authority of Rs.11,78,000/- on account of unaccounted income on the
sale of property in dispute.

3.    At the time of hearing, the ld. Counsel for the assessee stated that the issue
involved in these appeals is decided in favour of the assessee by the ITAT Delhi
Bench `B' in ITA Nos. 505 & 506/Del./2012 for the assessment years 2004-05 and
2005-06 in the case of assessee, i.e., ACIT, CC-22 New Delhi vs. Express Earth
Movers & Equipment Pvt. Ltd. on 29th June, 2015. He requested that in view of the
order dated 29.06.2015 passed in assessee's own case, the appeal filed by the
Revenue may be dismissed and the assessee's appeal may be allowed. The learned
DR on the other hand relied upon the order of the Assessing Officer.

4.    We have heard both parties, perused the material available on record along
with the orders of the revenue authorities and the order passed by ITAT `B' Bench,
New Delhi in the assessee's own case (supra) and we are of the considered view
that the ITAT has already adjudicated the issue in dispute and decided the same in
favour of the assessee on 29.05.2015 in assessee's own case for A.Y. 2005-
06(supra). For the sake of convenience, relevant portion of the order of ITAT is
reproduced as under :
      "9. ITA 506/Del/2012 (AY: 2005-06):-
      For the A.Y. 2005-06 an addition u/s 68 amounts to Rs.2,87,00,000/- has
      been made based on property valuation done by a Bank empanelled valuer,
      of property which was purchased by the assessee, in Plot no.217, Block C,
      Rewari Line Industrial Area, Phase II, New Delhi 110 064. The sale deed of
      the transaction discloses that the property was purchased for Rs.45 lakhs on
      31.8.2004. The property was valued by an approved Panel Valuer of Punjab
      National Bank on 1.9.2006 i.e. two years after the transaction of purchase,
      for Rs.4,86,00,000/- and the net realisable value was fixed at
      Rs.4,15,00,000/-. The A.O. reduced 20% from the said value of
                                   4                    ITA No.507 & 402/Del./2012

Rs.4,15,00,000/- @ 10% per year and arrived at net realisable value as on
31.8.2004 at Rs.3,32,00,000/- and considered this figure as the purchase
consideration paid.

9.1. As the assessee had purchased the said property for the total
consideration of Rs.45 lakhs, the difference between Rs.3,32,00,000 and
Rs.45,00,000/- is taxed as unaccounted income u/s 68 of the Act during the
year. The amount so taxed is Rs.2,87,00,000/-. ITA Nos. 505 &
506/Del/2012 AY: 2004-05 and 2005-06 Express Earth Movers &
Equipment Pvt.Ltd.

9.2. The First Appellate Authority deleted the addition on the ground that:
(a) no incriminating documents or material was found to prove that the
assessee has made unaccounted investment in the purchase of the property
at Plot no.217, Block C, Rewari Line Industrial Area, Phase II, New Delhi
110 064. (b) On reference to the D.V.O. u/s 142A of the Act by the Assessing
Officer, the value of such property was determined at Rs.46,96,000 and
whereas the assessee has paid purchase consideration of only Rs.45 lakhs.
(c ) There is nothing irregular or illegal on the part of the AO for making
reference to the DVO for valuation of the property. (d) The valuation report
given by the valuer of Punjab National Bank, at a much later point of time,
cannot be taken as the cost of investment by the assessee. (e) The A.O. is not
correct in completely ignoring the DVO's valuation report. The burden is on
the Revenue to prove that the income sought to be taxed is within the taxing
provisions. (f) The addition made u/s 68 of the Act, based on an estimate, in
the proceedings u/s 153A, otherwise than through the mechanism provided
u/s 142A, is bad in law. He deleted the addition.

9.3. Aggrieved the Revenue is before us.

10. After hearing rival contentions we are of the considered opinion that the
order of the First Appellate Authority has to be upheld for the reason that
S.68 cannot be invoked under the facts and circumstances of the case. A
hypothetical and imaginary addition has been made by the A.O.

The departmental Valuation Officer has on reference made u/s 142A of the
Act valued the property at Rs.46.96 lakhs, which is marginally higher than
the purchase consideration of Rs.45 lakhs disclosed by the assessee. The
difference is negligible. Taking evaluation report value, arrived at 2 years
after the date of transaction and then arbitrarily modified the value and
thereafter treating this amount as sale.
                                  5                    ITA No.507 & 402/Del./2012

Under the circumstances no addition can be sustained on the ground that
banker's valuer, after two years after the date of transaction, valued the
property at a particular amount when no material is found in support of the
AO's conclusion that the assessee had made unaccounted investments in
purchase price. The AO can not ignore the DVO's report. The addition has
been made on conjectures and surmises and without any basis. Hence the
First Appellate Authority has rightly deleted the said addition.

In coming to this conclusion we draw strength from the following
judgements of the Jurisdictional High Court.

      (1) CIT vs. Aerens Infrastructure & Technology Ltd. (2011) reported
      in 16 400 (Delhi) where it is held as follows. "Section
      142A of the Income Tax Act, 1961 ­ Assessment ­ Estimate by
      Valuation Officer. Assessee purchased a property for certain
      consideration. Since valuation was found to be on lower side, A.O.
      made reference to DVO u/s 142A and made addition of amount of
      difference between valuation made by DVO and value declared by
      assessee. On appeal, CIT(A) gave partial relief to assessee. On
      second appeal, Tribunal deleted addition made by AO holding that
      reference made by AO invoking provisions of S.142A was without
      jurisdiction inasmuch as AO had not first recorded that there was an
      excess expenditure incurred by assessee in acquiring articles.
      Whether, on the facts, finding recorded by Tribunal was correct. Held,

 (2) CIT vs. Anil Arora (ITA 340/2015) judgement dt. 22.5.2015 (Del)
wherein it is held as follows.

      "Having heard the Ld.Counsel for the Revenue, we find the
      contentions argued in the appeal to be wholly misplaced. It is fairly
      conceded (at bar) by the Counsel for the Revenue that the reference to
      DVO for estimation of the market value of the property in Punjabi
      Bagh was not based on any material discovered or seized during the
      search operations. The Counsel, however, referred to the case of
      another property in District Baddi (Himachal Pradesh), in respect of
      which documentary evidence indicated unaccounted consideration
      paid by the assessee, referred to by the A.O. in para 4.3 of his order.
      At the same time, Ld. Counsel also conceded that no addition to the
      tax liability of the assessee on account of the said other property has
                                             6                    ITA No.507 & 402/Del./2012

             been made. There is no nexus between the property in Baddi
             (Himachal Pradesh) and the property in Punjabi Bagh (West). There
             is undoubtedly no material available to even remotely reflect that
             consideration over and above what was shown to be paid in the
             registered sale deed of the West Punjabi Bagh property was made
             over to the seller. In these circumstances, it was not fair in the first
             place to refer the said property for estimation of its market value by

       11. In the result Revenue's appeal for the A.Y. 2005-06 is dismissed."

5.    After going through the aforesaid order passed by ITAT `B' Bench, in which
Judicial Member is the party, we are of the considered view that the issue in
dispute has already been decided in favour of the assessee. Respectfully following
the same, the appeal filed by the Revenue is liable to be dismissed and that of the
assessee deserves to be allowed.

6.    In the result, the appeal of the Revenue is dismissed and the appeal filed by
the assessee is allowed.
      Order pronounced in the open court on 30.09.2015.

            Sd/-                                                 Sd/-
      (H.S. SIDHU)                                           (L.P. SAHU)
      Judicial Member                                       Accountant Member

Dated :30.09.2015
Copy of order forwarded to:
(1)   The appellant                    (2)       The respondent
(3)   Commissioner                     (4)       CIT(A)
(5)   Departmental Representative      (6)       Guard File
                                                                                  By order

                                                                    Assistant. Registrar
                                                         Income Tax Appellate Tribunal
                                                             Delhi Benches, New Delhi
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