IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "G" : DELHI
BEFORE SHRI BHAVNESH SAINI, J.M. & SHRI O.P. KANT, A.M.
ITA.No.294 & 295/Del./2015
Assessment Years 2011-2012 & 2012-2013
The DCIT, M/s. Sutlej Agro Products
Central Circle-31, Ltd., 30, Community
Room No.319, E-2, Vs Centre, Saket, New Delhi.
ARA Centre, Jhandewalan PIN 110 088.
Extn. New Delhi. PAN AAACS4232K
(Appellant) (Respondent)
For Revenue : Shri S.S. Rana, CIT-D.R.
Shri Amol Sinha And
For Assessee : Shri Ashvini Kumar,
Advocates
Date of Hearing : 31.01.2019
Date of Pronouncement : 06.02.2019
ORDER
PER BHAVNESH SAINI, J.M.
Both the appeals by Revenue are directed against
the Common Order of Ld. CIT(A)-XXXIII, New Delhi, Dated
29th September 2014, for the A.Ys. 2011-12 and 2012-13 on
the following common ground of appeal.
"On the facts and in the circumstances of the case, the
Ld. CIT(A) has erred in holding that unaccounted
investment in property cannot be computed on the basis
of market valuation by Registration Authority."
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
2. Briefly the facts of the case are that original
return of income was filed for both the years on 11th
November 2013 and 30th September 2009 which was
processed under section 143 of the Income Tax Act,1961.
Subsequently, a search action under section 132 of the
Income Tax Act was carried out in the case of M/s. Aakriti
Hotels Private Ltd., and M/s. Jaguar Buildcon Pvt. Ltd., at
Community Centre, Saket, New Delhi on 22nd November
2011. During the course of search proceedings, certain
documents belonging to the assessee-company were seized.
The A.O. recorded the satisfaction under section 153C of the
Income-Tax Act, 1961 and proceeded against the assessee-
company. During the course of search proceedings, sale
deed was seized and on perusal of the same, it was noticed
that during the year under assessment i.e., 2011-12, the
assessee-company has purchased a property i.e., Plot No.3,
Sector-4, Noida from M/s B.K. Resorts vide sale deed Dated
31st March, 2011. It was further noted that as per the sale
deed, sale consideration has been mentioned at
Rs.1,68,64,103/- whereas the market value as per the
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
Registering Authority for the said plot is of
Rs.10,55,80,000/- on which stamp duty has been paid.
Similarly in the A.Y. 2012-13, sale deed was found during
the course of search, which revealed that assessee-company
has purchased a property i.e., Plot No.4, Sector-4, Greater
Noida from M/s. Sir, Biotech India Ltd., vide sale deed dated
9th May 2011. It was noticed that as per the sale deed, the
sale consideration has been mentioned at Rs.8,07,15,000/-,
whereas as per the market value as per the Registering
Authority for the said plot is of Rs.32,42,50,000/- on which
stamp duty has also been paid. The assessee-company was
requested to explain why the difference in the sale
consideration may not be added to the income considering
the same as unexplained investment in the above assets.
The assessee-company explained that it has purchased the
property on a consideration mentioned in the sale deed and
has not paid anything more than that. The assessee-
company came to know that on that valuation of the
property as per stamp duty has been made at higher
amount. The A.O. however did not accept the contention of
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
the assessee-company and made the addition of
Rs.8,87,15,897/- and Rs.24,25,35,000/- on account of
unexplained investment in the hands of the assessee-
company in both the assessment years under appeals and
computed the income accordingly under section 153C of the
Income Tax Act, 1961. The assessee-company challenged
the assumption of jurisdiction under section 153C of the Act
as well as additions on merit before the Ld. CIT(A). The
written submissions of the assessee-company is reproduced
in appellate order in which the assessee-company
reiterated the same facts as were submitted before the A.O.
It was further submitted that the conclusion drawn by the
A.O. is not supported by Law. No addition can be made to
the declared income unless the A.O. established that the
assessee had paid over and above the value declared in the
sale deed. The A.O. has not brought any material on record
to justify the additions. In the absence of any material on
record, no addition could be made against the assessee-
company. The assessee-company relied upon several
decisions in support of the contention. The Ld. CIT(A)
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
accepted the explanation of the assessee-company and
deleted the addition. His findings in appellate order in para
5.3 of the order is reproduced as under.
"5.3. Decision :
I have considered the assessment order,
written submission and the argument of Ld.AR. The sole
basis of addition is that the market value of the
properly No. 7, BZP Area, Greater Noida purchased by
the appellant as per registration authority was
Rs.8,94,22.900/- where as consideration paid by the
appellant was only Rs.1,30,00,000/-. The Ld.
assessing officer has treated the balance as under
valuation of the property. There is no provision under
I.T. Act for making addition for undervaluation of
property in the hands of the purchaser. At the most, this
addition can be taken an unaccounted investment in
property. As Unexplained investment in the property is
made as if the balance was paid out of books. Ld. AR's
main argument is that there is no evidence of
unaccounted payment in the said property. Purchaser &
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
seller have agreed to sale the property at lower rate
compared to market value as per the registration
authority. Valuation as per the registration authority is
only intended to collect stamp duty for sale purchase
transaction.
Considering the entire facts & circumstances of
the case, I agree with the arguments of Ld.AR that
unaccounted investment in property cannot be
computed on the basis of market valuation by
registration authority. For computing capital gain, such
valuation can be taken as deemed consideration by
virtue of specific deeming provision contained in section
50C of I.T. Act., in the hands of the seller. There is no
such deeming provision for computing unaccounted
investment u/s 69B or undervaluation of property. No
evidence was gathered by the assessing officer which
establishes payment outside books of account.
Therefore, I hereby delete the addition made on account
of unaccounted investment/undervaluation of
Rs.8,87,15,897/- and Rs.24,35,35,000/- made in the
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
assessment order for A.Y. 2011-12 and A.Y. 2012-13
respectively. These grounds of appeal for both
assessment years are allowed."
3. Learned DR relied upon the order of the A.O.
4. On the other hand, Learned Counsel for the
Assessee reiterated the submissions made before the
authorities below and relied upon the following decisions.
4.1. Order of ITAT, Delhi-C Bench, Delhi in the case of
ITO vs. Fitwell Logic System (P.) Ltd., reported in (2010) 1
ITR (T) 286 (Del.) in which it was held as under :
" H e l d that, there was no evidence or material
brought on record by the Assessing Officer to show
and establish that the assessee had made actual
investment to the extent of Rs. 1,34,79,780 being
valuation for the purpose of stamp duty as against
Rs.1,25,00,000 shown in the sale deed. As such
the addition was to be deleted."
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
4.2. Order of ITAT, Delhi-F Bench, Delhi, in the case
of ACIT, Circle-32(1), New Delhi vs. Rakesh Narang (2015)
64 taxmann.com 332 (Delhi-Tribu.) in which it was as
under :
"In case of purchase of property by assessee, in
absence of any positive material on record, mere
higher value of property estimated by DVO or
Registered valuer could not form basis for making
addition under section 69B
Section 56(2)(vii) is applicable on cases in which
individual or HUF receives immovable property on
or after 1-10-2009 and, therefore, where property
was purchased by assessee in financial year
2007-08, mandate of section 56(2)(vii) could not be
applied retrospectively
Substitution of 'full value of consideration received'
with 'stamp value' in terms of section 50C is
applicable only in hands of seller of property who
has to compute capital gain under section 48
pursuant to transfer of a capital asset."
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
4.3. Order of ITAT, Ahmedabad B-Bench, Ahmedabad
in the case of ITO, Ward-4(3), Ahmedabad vs. Harley Street
Pharmaceuticals Ltd., reported in (2010) 6 ITR (T) 182
(Ahmedabad) in which it was held as under :
"Section 50C, read with sections 69 and 69B of the
Income-tax Act, 1961 Capital gains - Special
provision for full value of consideration in certain
cases Whether section 50C creates a legal fiction
for taxing capital gains in hands of seller and it
cannot be extended for taxing difference between
apparent consideration and valuation done by
stamp valuation authorities as undisclosed
investments under sections 69 and 69B - Held,
yes."
4.4. Judgment of the Hon'ble jurisdictional Delhi High
Court in the case of CIT, Delhi-1, Delhi, vs. Agile Properties
(P.) Ltd., (2014) 225 Taxman 107 (Del.) (HC) in which it was
held as under :
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
"In absence of any positive evidence on record,
addition cannot be made on account of
undisclosed investment in property merely
placing reliance upon report to DVO."
4.5. Judgment of the Hon'ble jurisdictional Delhi High
Court in the case of CIT vs. Puneet Sabharwal (2011) 338
ITR 485 (Del.) (HC) in which it was held as under :
"In order to make addition under section 69B,
opinion of DVO per se is not sufficient and other
corroborated evidence is required."
4.6. Learned Counsel for the Assessee also submitted
that since the assessee-company is a purchaser of the
property and no material have been brought on record for
proving that assessee-company made any payment over and
above what is recorded in the sale deed, therefore, no
addition could be made against the assessee-company.
There is no provision under the Income Tax Act, for making
addition for undervaluation of the property in the hands of
the purchaser. He has submitted that later on Section
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ITA.No.294 & 295/Del./2015 M/s. Sutlej Agro
Products Ltd., New Delhi.
56(2)(x) have been inserted into the Income Tax Act with
effect from 01.04.2017 to deal with such situation which
would not be applicable to assessment years under appeals.
5. We have considered the rival submissions and do
not find any justification to interfere with the Orders of the
Ld. CIT(A) in deleting the additions. It is not a denying fact
that Section 50C is applicable in the case of the seller of the
property to take into consideration the valuation of the
property as per the value adopted by the Registration
Authority. However, there is no provision under the Income
Tax Act to deal with such situation in respect of the
purchase of the property. Section 56(2)(x) of the Income-Tax
Act was inserted into the Act with effect from 1st April 2017
to deal with such situation. However, it is well settled Law
that substantive provisions could not be applied
retrospectively. There is no other material brought on record
to justify the conclusion that assessee-company made
unaccounted investment in purchase of the property. In the
absence of any evidence on record to justify unaccounted
payment for purchase of the property, the Ld. CIT(A) was
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Products Ltd., New Delhi.
justified in deleting the additions. The A.O. did not gather
any evidence to establish that payments were made by the
assessee-company outside the books of account. The
decisions relied upon by the Learned Counsel for the
Assessee are squarely apply to the conclusion of the Ld.
CIT(A). We, therefore, do not find any merit in both the
appeals of the Revenue. Both the appeals of the Revenue are
dismissed.
6. In the result, appeals of the Revenue are
dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(OP KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 06th February, 2019
VBP/-
Copy to
1. The applicant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `G' Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches : Delhi.
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