Delhi High Court
Commissioner Of Income Tax vs Dinesh Kumar Agarwal on 29 August, 2013
Author: Sanjiv Khanna
$~11&12.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ INCOME TAX APPEAL NO. 411/2010
Date of decision: 29th August, 2013
COMMISSIONER OF INCOME TAX
..... Appellant
Through Mr. Sanjeev Rajpal, Sr. Standing
Counsel.
versus
DINESH KUMAR AGARWAL
..... Respondent
Through Mr. Ankit Gupta, Advocate.
INCOME TAX APPEAL NO. 1026/2010
COMMIISSIONER OF INCOME TAX NEW DELHI
..... Appellant
Through Mr. Sanjeev Rajpal, Sr. Standing
Counsel.
versus
M/S ASHOKA ICE AND COLD STORAGE NEW DELHI
..... Respondent
Through Mr. Manu K. Giri & Mr. Anoop
Sharma, Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ITA Nos. 411/2010 & 1026/2010 Page 1 of 7
SANJIV KHANNA, J. (ORAL):
These two appeals can be disposed of by a common order as
they are somewhat connected. The issue pertains to the sale
consideration disclosed by the seller-M/s Ashoka Ice and Cold Storage
and the purchaser Dinesh Kumar Agarwal of property No. C-15,
Lawrence Road Industrial Area vide documents executed on 3 rd
January, 2005. The total sale consideration disclosed by the two
assessees was Rs.64,32,800/-. For the sake of completeness, we record
that the Assessment Year in question in the two appeals is 2005-06.
2. By order dated 16th March, 2012, the following substantial
questions of law were framed in the case of M/s Ashoka Ice and Cold
Storage:-
"(i) Whether the Income Tax Appellate
Tribunal was right in upholding the order of the
CIT (Appeals) and deleting the addition made
by the Assessing Officer on account of
understatement of sale consideration?
(ii) Whether the order passed by the Income
Tax Appellate Tribunal is perverse?"
3. Similarly, in the case of Dinesh Kumar Agarwal, vide order
dated 15th November, 2011, the following two questions of law were
framed:-
"(i) Whether the Income Tax Appellate
Tribunal was justified in deleting of
Rs.1,06,12,000/- addition made by the
ITA Nos. 411/2010 & 1026/2010 Page 2 of 7
Assessing Officer on account of unexplained
investment in property under Section 69B of
the Income Tax Act, 1961?
(ii) Whether the order passed by the Income
Tax Appellate Tribunal is perverse?"
4. Liberty was granted to the Revenue to file additional documents
on record within two days. We record and notice that no additional
documents have been filed on record except the remand report dated 8th
August, 2007 and valuation report of the District Valuation Officer
(DVO), Income Tax Department.
5. The Assessing Officer in the two assessment orders has relied
upon the report of the DVO, who had determined the value of the
property on the date of transfer at Rs.3,30,24,000/-. The Assessing
Officer, however, felt that the report of the DVO requires moderation
after noticing the fact that the property was leasehold and 36 years out
of 99 years of lease were over. He also referred to the fact that the
lease deed postulated payment of 50% unearned increase and
determined the value of the property as Rs.1,65,12,000/- and observed
that the difference between the value determined by him and the value
mentioned in the documents dated 3rd January, 2005, i.e.,
Rs.1,06,12,000/- should be treated as unexplained payment and receipt.
He has mentioned that Rs.15,17,000/- in cash were found and
seized from Seema Kuthiala wife of Sumant Kuthiala, partners
of M/s Ashoka Ice and Cold Storage. Seema Kuthiala had
ITA Nos. 411/2010 & 1026/2010 Page 3 of 7
18.75% share in this concern.
6. The aforesaid addition under Section 69B was deleted by the
first appellate authority, which view has been affirmed by the tribunal.
They have referred to the DVO report and pointed out several flaws in
the same. DVO, for the purpose of valuation, had taken the market
price of land in Okhla Industrial Area, New Delhi in 1994 and had
referred to 1994 DDA rate of land fixed for Lawrence Road Industrial
Area. He came to the conclusion that the difference in land rate in
Okhla and Lawrence Road Industrial Area in 1994 was 38.75%, i.e.,
land at Okhla was more expensive by 38.75%. Thereafter, the DVO
referred to one sale deed in Okhla Industrial Area in the year 2001 for
a plot measuring 1648 square metres. This property was sold for
Rs.3,70,00,000/-. After making some reductions for cost of building
etc., he computed the value of the property at Lawrence Road
Industrial Area by giving benefit of 38.75% in the year 2001. For the
balance period of 41 months from July, 2001 to 3rd January, 2005, he
applied rate of 1% per month, i.e., he increased the value of the
property as determined in 2001 by 41%.
7. It is apparent that the DVO report is flawed and defective on
several accounts, which have been noticed in the order passed by the
CIT (Appeals) and the tribunal. Firstly, the only one case was taken
into consideration and the method of computation adopted by the DVO
ITA Nos. 411/2010 & 1026/2010 Page 4 of 7
is rather far-fetched and based upon surmises and conjectures.
Multiplication of 41 months at the rate of 1% per month itself is highly
debatable. Difference of 38.75% is also debatable.
8. What had perturbed and created doubt was reference made by
the CIT(Appeals) in his order in the case of M/s Ashoka Ice and Cold
Storage to a valuation report of K.R. Sharma dated 22nd June, 1999.
The said report was seized during the course of search in the case of
M/s Ashoka Ice and Cold Storage on 14th February, 2005. The CIT
(Appeals) in his order has mentioned that as per the seized document,
value of the land as on 22nd June, 1999 was Rs.1,26,30,730/- and the
cost of construction was Rs.6,28,237/-. In the remand report dated 8th
August, 2007 reference is made to this document, i.e., valuation report
of K.R. Sharma dated 22nd June, 1999.
9. We are rather surprised that the tribunal did not take notice of
this document and the CIT (Appeals) has mentioned this document and
the contention of the Revenue, but did not deal with the same and
examine the same while accepting the appeal. We are also surprised
that the Assessing Officer in the two assessment years did not mention
and refer to this document.
10. This document, i.e., valuation report dated 22nd June, 1999 is
also referred to in the order passed by the CIT (Appeals) in the case of
Dinesh Kumar Agarwal and thereafter there are certain other
observations about the said report dated 22nd September, 1999 to the
ITA Nos. 411/2010 & 1026/2010 Page 5 of 7
effect that registered value had determined the value at
Rs.38,72,031.57.
11. Learned counsel appearing for the Revenue has submitted that
the report of K.R. Sharma dated 22nd September, 1999 is not available
and cannot be traced out. The said report has not been filed on record.
Learned counsel for the Revenue submits that this report is not relevant
as it relates to the year 1999 whereas the transaction in question is of
2005.
12. In the absence of the said report, which has not been placed on
record, it is difficult to hold that the order passed by the tribunal is
perverse. On the question of DVO report relied upon by the Revenue,
we have already noticed that there are contradictions and the report is
not reliable. The primary reason why substantial questions of law were
framed in the case of M/s Ashoka Ice and Cold Storage on 16 th March,
2012 and in the case of Dinesh Kumar Agarwal on 15th November,
2011 (orders to which one of us, Sanjiv Khanna, J. was a member) was
the valuation report of K.R. Sharma dated 22nd September, 1999. As
the said report has not been placed on record, we do not think the order
passed by the tribunal rejecting the valuation report of the DVO can be
questioned and challenged as perverse. Second question is accordingly
decided against the Revenue. In view of the aforesaid position, we
need not examine the first question as the report of the DVO itself has
ITA Nos. 411/2010 & 1026/2010 Page 6 of 7
been rejected and this effects the foundation and the basis of the order
passed by the Assessing Officer. We may note that Mr. Anoop Sharma
has raised and questioned the re-opening, but we need not examine the
said question in view of our order passed today. Appeals are
accordingly dismissed.
SANJIV KHANNA, J.
SANJEEV SACHDEVA, J.
AUGUST 29, 2013
VKR
