ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
I.T.A.No. 4969/DEL/2011
A.Y. : 2008-09
ACIT, CC-3, NEW DELHI M/S MAHAGUN TECHNOLOGIES
VS.
ROOM NO. 354, ARA CENTRE, PVT. LTD.,
E-2, JHANDEWALAN EXTN., B-66, VIVEK VIHAR,
NEW DELHI DELHI 92
(PAN: AACCB3143L)
C.O. No. 37/DEL/2012
(IN ITA NO. 4969/DEL/2011)
A.Y. : 2008-09
M/S MAHAGUN TECHNOLOGIES ACIT, CC-3, NEW DELHI
PVT. LTD., VS. ROOM NO. 354, ARA
B-66, VIVEK VIHAR, CENTRE,
DELHI 92 E-2, JHANDEWALAN EXTN.,
(PAN: AACCB3143L) NEW DELHI
(APPELLANT) (RESPONDENT)
Assesse by : Shri Rakesh Gupta, Adv.,
Sh. Somil Aggarwal, Adv. & Sh.
Prakash Gupta, Adv.
Department by : Shri Balwan Chaudhary, CIT(DR)
Date of Hearing : 27-11-2015
Date of Order : 08-12-2015
ORDER
PER H.S. SIDHU, JM
Revenue has filed the Appeal and Assessee has filed Cross
Objection against the Order passed by the Ld. Commissioner of
Income Tax (Appeals)-II, New Delhi dated 16.8.2011 pertaining to
assessment year 2008-09. Since the issues involved in the Appeal and
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
Cross Objection are common and identical, hence, we are consolidated
the same by this common order for the sake of convenience.
2. The grounds raised in Revenue's Appeal No. 4969/Del/2011 (AY
2008-09) read as under:-
1. That the Ld. CIT(A) has erred in law and in fact of the
case in deleting the addition of Rs.54,64,000/ - made
on account of suppressed sale consideration property
bearing No. A-29 Sector-63, Noida disregarding the
fact that the valuation as adopted by the Assessing
Officer was duly getting supported with the valuation
as worked out by the Departmental Valuation Officer.
2. That the Ld. CIT(A) has erred in fact and in law in
deleting the addition made by just making reference
to provisions of Section 50C whereas the addition
made by the AO was duly supported by the valuation
arrived at by the DVO?
3. That the Ld. CIT(A) has erred in fact and in law in
holding that prior to insertion of section 50C addition
for suppression sale consideration was not
permissible.
4. The Ld. CIT(A) has erred in fact and in law in not
considering the remand report submitted by the AO
where AO had made out a clear case with the help of
Valuation Report that the sale consideration had
been grossly suppressed by the assessee.
5. (a) The order of the CIT(A) is erroneous and not
tenable in law and on facts.
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
(b) The appellant craves leave to add, alter or
amend any / all of the grounds of appeal before or
during the course of the hearing of the appeal."
3. The grounds raised in Assessee's Cross Objection No.
37/Del/2012
(AY 2008-09) read as under:-
1. That having regard to the facts and circumstances of the
case Ld. CIT (A) has rightly deleted the addition of
Rs.54,64,0001- on account of alleged suppressed sale
consideration for the property bearing No. A-29, Sector 63,
Noida.
2. The Ld. CIT (A) is erred under the law while holding that
A.O. has a valid jurisdiction uls 153A of the Act.
3. That the Ld. A.O. has grossly failed to submit remand
report on time in spite of repeated reminders by the Ld. CIT
(A) which is apparent from the appellate order.
4. That it is unfair on the part of A.O. to allege Ld. CIT (A)
that he has not considered the remand report alongwith
report of DVO, contrary to the fact, that the impugned
remand report was never received by the CIT (A) before
framing the appellate order.
5. That the A.O. is erred under the law while, making
reference to the DVO after completion of the impugned
assessment order and that to without rejecting the books of
accounts so maintained by the appellant.
6. That the reference to DVO is also arbitrary, in view of the
fact that no incriminating material was found during the
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
search to suggest that the appellant has received any
consideration over and above as declared in the ITR.
7. That the cross objector craves the leave to add, amend,
modify, delete any of the grounds(s) of cross objection
before or at the time of hearing.
4. The brief facts of the case are that the original return declaring
net taxable income of Rs. 7,37,640/- was e-filed on 29.8.2008. The
return was duly processed u/s 143(1) of the Income Tax Act and AO
held that the difference of Rs. 56,64,000/- has been received by the
assessee over and above the sale consideration shown which is added
to the income of the assessee being undisclosed receipt on sale of the
property vide order dated 28.12.2010 passed u/s. 153A read with
Section 143(3) of the I.T. Act, 1961.
5. Against the aforesaid assessment order dated 28.12.2010,
assessee appealed before the Ld. CIT(A) who vide impugned order
dated 16.8.2011 partly allowed the appeal of the Assessee.
6. Aggrieved, Revenue is in appeal before the Tribunal.
7. Ld. DR relied upon the order of the AO and reiterated the
contentions raised in the grounds of appeal.
8. On the contrary, Ld. Counsel for the assessee relied upon the
order of the Ld. CIT(A) and requested that the same may be upheld.
9. We have heard both the parties and perused the records
especially the orders of the authorities below. We find that the Ld.
CIT(A) has elaborately discussed the issue in dispute in his impugned
order from pages 9 to 11 vide para nos. 8 to 10. For the sake of
convenience, we are reproducing herewith the relevant paras as
under:-
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
"8. As regards ground no 4, it relates to addition of Rs.
54,64,000/- on account of unaccounted receipts on sale of
property by the appellant company during the year. The AO. while
framing the assessment order has made the following remarks:-
"As per the computation of income, the assessee has shown
long' term capital gain of Rs.9,20,8571- on sale of property
i.e. A-19, Sector-63, Noida and as peer the annexure, cost
indexation has been made. The sale consideration of this
property is RS.1.88 Crores. As per information downloaded
from the website of Elite Realty Consultants Pvt. Ltd. the
circle rate of the plot in Sector-63 Noida is Rs. 12,000/- per
sq. mtrs. On this basis, the sale rate of the property is
worked out as under:
Land Circle Rate - Rs. 12,000/- per sq. mtr x 1000 sq.
mtrs = Rs. 1,20,00,000/-
Construction circle rate- Rs.6,000/- per sq.mtr x 2044
sq. mtrs =
Rs.1,22,64,000/-
Total Rs.2,42,64,000/-
As against this, sale consideration shown by the assessee is Rs.
1.88 Crores. As per the provisions of section 142A of the IT Act,
the matter was referred to Department's valuation Cell to
determine the fair market value of the property for the purpose of
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
computation of capital gain. The report has not been received till
date and since it is time barring matter, the assessment is framed
by adopting the circle rates as per the information downloaded
from the website of Elite Realty Consultants Pvt ltd. However, in
the meantime, the rate is adopted as per the calculations made
above.
It is held that the difference of Rs. 54,64,000/- has been received
by the assessee over and above the sale consideration shown
which is added to the income of the assessee being undisclosed
receipt on sale of property. Penalty proceedings u/s 271(1)(c) of
the IT Act are being initiated separately for furnishing inaccurate
particulars and concealing the particulars of income.
Addition on account of unaccounted receipts of property
RS.54,64,000/-
9. The AR vide his written submission dated 06.05.2011 has
submitted before me as under:-
"During the year under review, the appellant sold built up
industrial property A-19, Sector-50, Noida to M/s. Mahagun
India Pvt. Ltd. vide sale deed dated 03.06.2007 duly
registered with sub-registrar Ghaziabad for a sale
consideration of Rs. 1.88 Crores. However, while framing
the impugned assessment order the Ld. A. O. has adopted
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
circle rate from the website of Elite Realty Consultant Private
Limited, a real estate company and has alleged that the sale
consideration as disclosed by the appellant is less than the
applicable circle rate. According to the information
downloaded from the website, the Ld. A.O. has taken circle
rate of the land at Rs. 12,000/- per sq. mtr. as against Rs.
6,500/- applicable circle rate as on date of sale deed, which
is evident from the copy of sale deed itself (PB 35-99) filed
before A.0. vide letter dated 08. 10.2010 (PB32-34) without
affording any opportunity of rebut the same.
The appellant has also visited the website of "Elite
Realty Consultants Pvt. Ltd." and have downloaded the
information used by the A. O. for the purpose of impugned
assessment order (PB100-101). On perusal of such
information your honour will appreciate the circle rate
/opted by the A.O. is applicable w.e.f. 01.11.2008. Whereas,
the sale has taken /iiace on 03.06.2007. It appears that the
Ld. A. o. by oversight has not noticed the applicability of the
circle rate before alleging that the appellant has under
stated the circle rate. Therefore, the impugned addition is
factually incorrect.
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
Without prejudice, further the Ld. A. O. 1n the
concluding paragraph of the impugned order has alleged the
difference of Rs.54,64,000/- (difference due to circle rate)
has been received by the appellant over and above the sale
consideration and has treated the same as "unaccounted
receipts on sale of property". The AO has treated the said
impugned income as income from other sources and has
taxed @ 30% as against 20% applicable in the case of long
term capital gain. Your honourwill appreciate that there is no
provisions under the law which permits the AO to change
the nature of receipt of income unless until circumstances so
warrant. It is not case of the AO that the transaction is not
related to a long term assets. The action of the AO clearly
proves his bias about imposition of tax liability on the
appellant whether it is sustainable under the law or not?
Alternatively, without prejudice, it is settled proposition of
law that unless there is evidence that more than what was
stated was received, no higher price can be taken to be the
basis for computation of capital gains. It was further 'held in
number of cases that capital gains tax was intended to tax
the gains of an assessee, not what, an assessee might have
gained. What is not gained cannot be computed as gained.
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
Capital gains tax is not a tax on what might have been
received or could have been taxed.
Reliance can be placed on the following judicial
pronouncements:-
a) CIT v/s. Nilofar I Singh (2009) 309 ITR 0233 (DEL)
b) Dev Kumar Jain vIs. ITO (2009) 309 ITR 0240 (DEL)
c) Commissioner of Income Taxrge Henderson and Co.
Ltd. (1967) 066 ITR 0622 (SC)
d) Commissioner of Income Tax vIs. Gillianders Arbuthnot
and Co. Gillanders Arbuthnot and Co. vIs.
Commissioner of Income Tax (1973) 087 ITR 0407 (SC)
e) CIT vs. Shivakami Co. P Ltd. (1986) 159 ITR 0071 (SC)
f) ACIT vs. Nakul Kapoor (2010) TIOL 727 ITAT (Del.)
Therefore, viewed from any angle whether on factua/s
or on law, the addition made by the A.O. is liable to be
deleted."
10. I have considered the assessment order and written
submissions filed by the appellant company alongwith
annexures thereto, the facts of the case and position of law.
It appears that while finalizing the impugned assessment
order the A.O. overlooked the date of applicability of circle
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
rate which is clearly mentioned as "w.e.f. 01 Nov. 2008
which is evident from hard copy of circular furnished by the
appellant during these proceedings. Therefore, in the
absence of any other corroborative evidence or material on
records of unaccounted receipts on sale of property, I have
no hesitation in deleting the addition so made by the A.O.
which is otherwise a factual error. The appellant gets relief
on this account. The grounds taken on this account are
allowed."
10. After going through the aforesaid order passed by the Ld. CIT(A)
on the issue in dispute, we are of the considered view that the Ld.
First Appellate Authority has passed a well reasoned order by stating
that the AO has overlooked the date of applicability of circle rate which
is clearly mentioned as w.e.f. 01 Nov. 2008 whereas the sale has taken
place on 3.6.2007. Therefore, in the absence of any other corroborative
evidence or material on records of unaccounted receipts on sale of
property, we find that the Ld. CIT(A) has rightly deleted the addition
in dispute. Therefore, in view of above, we do not see any infirmity in
the order of the Ld. CIT(A) on the issue in dispute, hence, we uphold
the same. Accordingly, the Appeal filed by the Revenue stands
dismissed.
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ITA No. 4969/Del/2011 &
CO No. 37/Del/2012
ASSESSEE'S CROSS OBJECTION
11. As far as Assessee's Cross Objection is concerned, the same is
only supportive the Ld. CIT(A)'s order. Since we have dismissed the
Appeal of the Revenue as aforesaid, hence, the Cross Objection filed
by the Assessee has become infructuous and dismissed as such.
12. In the result, the Appeal filed by the Revenue stands dismissed
and Cross Objection filed by the Assessee is also dismissed.
Order pronounced in the Open Court on 08/12/2015.
Sd/- Sd/-
[PRASHANT MAHARISHI] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date: 08-12-2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5.
DR, ITAT
TRUE COPY By Order,
Assistant Registrar
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