Case Law Details
Rounak Farms Private Ltd Vs ACIT (ITAT Pune)
Introduction: In the case of Rounak Farms Private Ltd. vs. ACIT, the issue at hand concerns the confirmation of additions made under section 69B of the Income Tax Act (ITA) for the assessment year 2011-12. This appeal was filed against the order dated 18-09-2020 passed by the Commissioner of Income Tax (Appeals)-11, Pune [CIT(A)].
Detailed Analysis: Rounak Farms Private Ltd. is a private limited company engaged in the business of land dealing. A search and seizure action under section 132 of the Income Tax Act was conducted at the residential and business premises associated with Shri Ramchandra Maruti Mohite’s group in Kolhapur on 25th and 26th August 2011. The assessee company, related to this group, had acquired certain properties for a total consideration of Rs. 1,09,65,140 during the period from 31st July 2010 to 31st March 2011.
To determine the cost of these properties in the hands of the assessee, the Assessing Officer (AO) referred the matter to the Departmental Valuation Officer (DVO). The DVO’s report, dated 29th October 2013, estimated the cost of the properties at Rs. 3,21,01,000. The AO, in a letter dated 11th November 2013, asked the assessee to explain why the difference of Rs. 2,11,35,860 (Rs. 3,21,01,000 – Rs. 1,09,65,140) should not be treated as taxable.
The assessee objected to the DVO’s report, claiming that the purchase price complied with the provisions of section 50C of the Act. However, the AO did not accept these submissions and added the amount of Rs. 2,11,35,860 to the assessee’s total income under section 69B.
In the subsequent appeal to the CIT(A), the assessee reiterated the same submissions made during the assessment proceedings. The CIT(A) carefully considered the issue and confirmed the AO’s order under section 69B. The CIT(A) emphasized that the DVO conducted a physical inspection of the properties, taking into account various factors influencing their value. The DVO’s method of valuation was based on comparable sale instances, and adjustments were made for factors such as time gaps and plot size.
Since there were no submissions or evidence in support of the assessee’s claim, and the assessee failed to appear despite receiving 20 notices, the ITAT upheld the CIT(A)’s decision.
Conclusion: The ITAT upheld the decision to confirm the additions under section 69B in the case of Rounak Farms Private Ltd. vs. ACIT. Despite 20 notices, the appellant did not appear, and there were no submissions or evidence to support their claim. Therefore, the CIT(A)’s decision was deemed valid and upheld. This case underscores the importance of participating in proceedings and providing necessary evidence to support one’s claims in income tax matters.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee against the order dated 18-09-2020 passed by the Commissioner of Income Tax (Appeals)-11, Pune [‘CIT(A)’] for assessment year 2011-12.
2. The sole issue raised by the assessee challenging the action of CIT(A) in confirming the addition made by the AO u/s. 69B of the Act.
3. We note that this appeal was filed on 21-10-2020 and the Registry intimated the date of hearing on 13-06-2022 vide notice dated 23-05-2022. On perusal of the order sheet, we note that, non-appeared on the behalf of the assessee and accordingly, the appeal adjourned to 01-08-2022. Likewise, the appeal adjourned from 01-08-2022 to 16-08-2023, wherein, on all the 20 proceedings non-appeared on behalf of the assessee. Therefore, it clearly shows that the assessee has no interest to prosecute this appeal. On 16-08-2023, the assessee called absent and set ex-parte. Therefore, we proceed to dispose off the appeal by hearing the ld. DR and perusing the material available on record.
4. Heard ld. DR and perusing the material available on record. We note the assessee is a private limited company engaged in land dealing business. A search and seizure action u/s. 132 of the Act was conducted at the residential and business premises in the group of Shri Ramchandra Maruti Mohite, Kolhapur on 25th and 26th-08-2011, the assessee related to this group. According to the AO, the assessee acquired the properties detailed therein para 11 of the assessment order and said properties were purchased for a consideration of Rs.1,09,65,140/- during the period of 31-07-2010 to 31-03-2011. A reference was made by the AO to Departmental Valuation Officer (DVO) to determine the cost of the properties in the hands of the assessee as on the date of acquisition. The DVO estimated the cost of properties at Rs.3,21,01,000/- vide its report dated 29-10-2013. The AO issued a letter dated 11-11.2013 requesting the assessee to explain why the difference of Rs.2,11,35,860/-(Rs.3,21,01,000/- – Rs.1,09,65,140/-) should not be taxed. The assessee objected to the DVO report being based on erroneous consideration and contended that the purchase price paid by the assessee was in accordance with the provisions of section 50C of the Act. The AO did not accept the submissions of the assessee and added the said amount to the total income of the assessee u/s. 69B of the Act. We note that the assessee reiterated the same submission made in the assessment proceedings before the CIT(A). The CIT(A) discussed the issue in detail and confirmed the order of AO u/s. 69B of the Act. According to the CIT(A), that the DVO conducted reference proceedings by physical inspection of the properties along with the representatives of the assessee on 24-09-2013. Further, the method adopted by the DVO by comparing the same instances after giving due consideration for various factors influencing the value of the said properties. Further, he held the objections raised by the assessee regarding the DVO’s report was not justified and upheld the order of AO taking into consideration the DVO’s report as well as the submissions of the assessee in the First Appellate proceedings. The relevant part at para 6.8 of the impugned order is reproduced hereunder for ready reference :
“6.8 From the valuation report it is seen that the valuation was done after physical inspection of the properties, by the valuation officer along with representatives of the assessee firm on 24/09/2013. It is noted that the appellant company purchased various plots under reference through various agreements from different people and these were not contiguous and located on the northern parts of the Here Village. It was noted that some of the properties were with cultivation of crops like Ground Nut, Jowar, Soyabean, Cattle Grass etc and that some plots were having access through Kaccha Road. It is noted by the valuation officer that these properties are situated within 7 to 8 Kms from municipal boundary of Kolhapur, North of the main Kolhapur-Sangli Road (State Highway). These are accessed from these roads and are situated 4 to 5 kms inside Wadgoan side. The total plot area has also been identified and there is no dispute to this. It is also noted that the properties are under valuation approximately 8 Kms from Municipal boundaries of Kolhapur and public and civic amenities are available at reasonable distance at Hatkamangle and Kolhapur. It is also mentioned that the properties are free hold. The method adopted is the physical method of valuation based on the comparable sale instances after giving due consideration for various factors influencing the value of the particular properties. Sale instances have been enclosed as Annexure. After considering the pros and cons of the property with related and relevant factors affecting the value such as physical, social, legal, economical and environmental, the land rate of the plot of land as on the date of purchase/sale has been considered and accordingly, valuation has been arrived at. From the annexures to the valuation, it is seen that adjustments have been made vis-a-vis the comparable land instances on account of time gap, size of the plot etc. For example in several instances due to the largeness of the plot, the rate has been reduced by 15% and then the net rate per sq. mt. of land has been arrived. In view of these facts and the method adopted by the DVO, I am of the considered view that the objections raised by the appellant against the valuation of the ova is not justified.
Accordingly, it is held that the valuation done by the ova by his report is valid and the claim of the appellant that the DVO erred in his valuation is rejected. In view of the above and considering the facts and circumstances and the position of law, the addition made by the AO, on account of the difference of 292.75% between the investment done by the assessee at Rs. 1,09,65,140/- and the valuation made by the DVO of Rs. 3,21,01,000/-; being the difference of Rs. 2,11,35,860/- as unaccounted investment in immovable properties u/s. 69B of the Act is upheld. The ground of appeal is therefore rejected.”
5. On an examination of the same, we find no submissions or evidences in support of the claim of assessee were filed before this Tribunal and as discussed above inspite of having received notices for 20 proceedings, there was no appearance on behalf of the assessee. Therefore, having no alternative except to confirm the order of CIT(A), we find no infirmity in the order of CIT(A) and it is upheld. Thus, the sole ground raised by the assessee is dismissed.
6. In the result, the appeal of assessee is dismissed.
Order pronounced in the open court on 08th September, 2023.
