ITO, Ward 28 (2), New Delhi. Vs. Shri Upender Kumar Gupta, 4273, Gali Bhairon Nai Sarak, Delhi 110 006.
June, 04th 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `H' : NEW DELHI)
BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER
SHRI GEORGE GEORGE K, JUDICIAL MEMBER
(ASSESSMENT YEAR : 2010-11)
ITO, Ward 28 (2), vs. Shri Upender Kumar Gupta,
New Delhi. 4273, Gali Bhairon Nai Sarak,
Delhi 110 006.
(PAN : AAEPG6222A)
ASSESSEE BY : Shri P.K. Jain, Advocate
REVENUE BY : Shri P. Dam Kanunjna, Senior DR
Date of Hearing : 01.06.2015
Date of Pronouncement : 03.06.2015
PER GEORGE GEORGE K., JM :
This appeal, at the instance of the department, is directed against the
order of the Commissioner of Income-tax (Appeals)-XXV, New Delhi
dated 28.05.2013. The relevant assessment year is 2010-11.
2. The revenue has raised six grounds. Grounds No.1 & 2 relate to the
issue whether the CIT (A) is justified in allowing the appeal and directing
the Assessing Officer to refer the case for valuation of property to the
DVO and thereafter make an assessment as provided under section 50C(2)
and 50C(3) of the Income-tax Act, 1961. Grounds No.3, 4 & 5 relate to
2 ITA No.4531/Del./2013
the issue whether the CIT (A) is justified in deleting the addition of
Rs.14,00,000/- made by the Assessing Officer on account of unexplained
cash credits. Ground No.6 relates to the deletion of addition of
Rs.2,57,500/- made by the Assessing Officer on account of disbelieving
the cost of improvement incurred on properties which was sold.
3. We shall take up the issues ground-wise as under.
GROUNDS NO.1 & 2
4. The assessee had sold a property. The consideration shown in the
sale deed was Rs.15,00,000/-. While computing the capital gains, the
assessee has taken the sale consideration at Rs.15,00,000/-. The Assessing
Officer computed the capital gains after taking the circle rate/stamp duty
valuation which was at Rs.28,40,000/- as provided u/s 50C of the Act.
Therefore, the Assessing Officer has made an addition of Rs.13,40,000/-
(Rs.28,40,000/- minus Rs.15,00,000/-).
5. Aggrieved the assessee preferred an appeal before the CIT (A). It
was submitted before the CIT (A) that the fair market value of the property
as per valuation report is only Rs.15,00,000/-. It was further submitted that
the assessee had objected to the adoption of the circle rate/stamp duty
valuation before the Assessing Officer vide his letter dated 01.01.2013.
Therefore, it was submitted that the valuation of the property was to be
referred to the DVO and assessment is to be completed subsequent to the
receipt of the valuation report of the DVO. The CIT (A) directed the
3 ITA No.4531/Del./2013
Assessing Officer to refer the impugned property for valuation to the DVO
and on receipt of the valuation report, complete the assessment. The
relevant finding of the CIT (A) reads as under :-
"4.4. It is apparent from the order of the AO that the AO
has followed the deeming provisions of section 50C (1)
without following the other provision u/s 50C(2) and has
not referred the valuation of the property to the DVO when
the assessee had objected and the assessee had in fact
pleaded before the AO in the letter dated 01/01/2013 that
the valuation of the property may be referred to the DVO
and the valuation of the DVO should be adopted as
provided u/s 50C(1), 50C(2) & 50C(3). After considering all
the facts and circumstances of the case, I am of the view
that the AO has not followed the complete provisions of
section 50C(2) and accordingly, the AO is directed to refer
the valuation to the DVO and make the assessment as
provided u/s 50C(1), 50C(2) & 50C(3) and as such the
alternate appeal of the assessee is allowed."
6. The revenue, being aggrieved, is in appeal before us.
7. Ld. DR relied on the assessment order. On the other hand, the AR
reiterated the submissions made before the Income-tax Authorities and
placed reliance on the findings of the CIT (A).
8. We have heard the rival submissions and perused the material on
record. On perusal of material placed on record, it is clear that assessee
had filed objections against adoption of the circle rate/stamp duty valuation
before the Assessing Officer (the objections filed by the assessee dated
01.01.2013 placed at pages 43 44 of the paper book filed by the
assessee.). When assessee has filed objections before the Assessing
4 ITA No.4531/Del./2013
Officer that circle rates are above the fair market value, the Assessing
Officer was duty bound to refer the impugned property for valuation to the
DVO before proceeding to make an assessment of long term capital gains.
The CIT (A) has only directed the Assessing Officer to refer the matter for
valuation to the DVO and thereafter conclude the assessment. The
directions of the CIT (A) has legal sanctity by various judicial
pronouncements, including the judgment of the Hon'ble Madras High
Court in the case of N Meenakshi vs. ACIT reported in 326 ITR 229.
Therefore, we see no reason to interfere with the order of CIT (A) on this
score and we uphold the directions of the CIT (A) as correct and in
accordance with law. It is ordered accordingly. Grounds no.1 & 2 are
GROUNDS No.3, 4 & 5
9. The Assessing Officer had made an addition of Rs.14,00,000/- by
observing as under :-
"7. During the course of assessment proceeding it was
noticed that the assessee has deposited a sum of
Rs.6,00,000/- on 11.02.10, Rs 3,00,000/- on 12.02.10 and a
sum of Rs 5,00,000/- on 13.02.10 in his saving a/c no
0221053000019589 with South Indian Bank Ltd Chandni
chowk New Delhi. The assessee was asked to explain the
source of deposit in his saving bank account. The assessee
vide his letter dated 30th October 2012 submitted that the
Cash deposited in account represent the advance received
for and on behalf of Mrs. Anjana Gupta for prospective sale
of property. The assessee was further asked to produce
5 ITA No.4531/Del./2013
confirmation of the same from prospective buyer vide order
sheet entry dated 17.12.2012. However the assessee has
failed to produce any confirmation. Hence in the absence of
any confirmation the sum of Rs.14,00,000/- is added to the
income of the assessee as unexplained cash credits u/s 68 of
Income Tax Act 1961."
10. On further appeal, the addition made by the Assessing Officer was
deleted by the CIT (A). The relevant findings of the CIT (A) read as
"6.3. I have considered the order of the AO and the
submissions of the assessee and I find considerable merit
in the submission of the assessee that the AO is not justified
to make the addition of the cash deposits without
considering the simultaneous or corresponding cash
withdrawals which are for the purpose of business. It is not
uncommon for the business people to make frequent cash
deposits and withdrawals in the bank accounts as per the
requirement of business convenience. After considering all
the case facts and circumstances of the case, I am of the
view that there is no proper justification for making the
addition of Rs 14,00,000/- of the cash deposits and
accordingly, the addition made by the AO is deleted."
11. The revenue, being aggrieved, is in appeal before us.
12. The ld. DR strongly supported the assessment order. On the other
hand, the AR relied on the findings of the CIT (A).
13. We have heard the rival submissions and perused the material on
record. The cash deposited of Rs.14,00,000/- in assessee's accounts were
duly and fully explained in the cash flow statement with supporting
evidence consisting of assessee's bank statements and the sale deed
executed by the assessee as General Power of Attorney for his wife,
6 ITA No.4531/Del./2013
Anjana Gupta. The copies of the cash flow statement, bank statement and
various sale deeds are placed on record. The receipt of sale consideration
in cash is duly supported by the sale deeds. Therefore, the addition of
Rs.14,00,000/- as unexplained cash credit u/s 68 of the Act is unwarranted
and CIT (A) was justified in deleting the same. It is ordered accordingly.
Grounds No.3, 4 & 5 are rejected.
14. The assessee has sold several properties and also claimed cost of
improvement on these properties. The cost of improvement claimed was
Rs.5,15,000/-. The Assessing Officer disallowed 50% of the cost of
improvement while computing the long term capital gains and hence, made
an addition of Rs.2,57,500/-. The relevant finding of the Assessing
Officer in making the addition reads as follows :-
"6. During the course of assessment proceedings, it is
noticed that the assessee has claimed to have got renovation
done in property No.4279, Gali Bhairav, Nai Sarak, Delhi
amounting to Rs.2,65,000/- and property No. 1374,
Maliwara, Vaidwara, Nai Sarak, Delhi-110006 amounting
to Rs.2,50,000/-, totaling to Rs.5,15,000/-. The AR of the
assessee was asked to furnish the documentary evidence /
bills & vouchers of these expenses. In response to this, the
AR of the assessee has furnished receipts on plain paper
from Shri Daulat Ram Saini s/o Shri Sukhlal Saini R/o
Village Kesri Pura, Tehsil Baswa, Distt. Dosa, Rajasthan
and claimed that the payment were made to Shri Daulat
Ram Saini for carrying renovation work including the cost
of material. The statement of Shri Daulat Ram Saini was
recorded on oath on 05.03.2013 which is placed on record
however, the statement of Shri Daultat Ram Saini was not
satisfactory. The evidence produced by the AR is
7 ITA No.4531/Del./2013
insufficient and not reliable, hence in order to cover the
possible leakage of revenue 50% of the amount claimed
which comes to Rs.2,57,500/- is disallowed on account of
non production of complete bills and vouchers."
15. The CIT (A) deleted the addition by observing as under :-
"7.3. I have considered the order of the AO and the
submission of the assessee and I find considerable merit in
the submission of the assessee that the AO is not justified to
disallow the claim cost of improvement without any valid
reasons and accordingly, the addition made by the AO is
16. We have heard the rival submissions and perused the material on
record. The confirmation of expenses on improvement of property before
its sale has been placed on record and statement of Shri Daulat Ram Saini
was recorded on oath. Confirmation and statement has been rejected by
the Assessing Officer on the ground "not satisfactory, insufficient and not
reliable" which are vague and based on surmises and conjectures.
Therefore, the CIT (A) is justified in deleting the same. Hence, ground
no.6 raised by the revenue is rejected.
17. In the result, the appeal filed by the revenue is dismissed.
Order pronounced in open court on this 3rd day of June, 2015.
(N.K. SAINI) (GEORGE GEORGE K)
ACCOUNTANT MEMBER JUDICIAL MEMBER
8 ITA No.4531/Del./2013
Dated the 3rd day of June, 2015
Copy forwarded to:
4.CIT(A)-XXV, New Delhi.
5.CIT(ITAT), New Delhi.