ACIT Vs Satya Realtors Pvt Ltd (ITAT Delhi)
ITAT Delhi held that “full value of consideration” or “cost of investment” cannot be substituted by the fair market value (FMV), except in the case falling within the purview of 50C and Sec. 56(l)(vi)/(vii) of the Income Tax Act.
Facts- Present appeal is preferred by revenue mainly contesting for addition of investment in Purchase/sale of immovable property on the ground that the purchase or sale consideration recorded in the registered conveyance deed and in books or accounts are not reflecting the fair market value thereof.
Notably, AO added the difference between the fair market value (FMV) calculated by him on the basis of some assumptions and the recorded purchase or sale consideration to the total income of the assessee. CIT(A), vide the impugned order, deleted the said additions.
Conclusion- Held that “full value of consideration” or “cost of investment” cannot be substituted by the fair market value, except in the case falling within the purview of 50C and Sec. 56(l)(vi)/(vii).
Held that CIT(A) has rightly held that ld. AO cannot substitute the apparent consideration mentioned in the sale deed so as to adopt the market value without bringing any material on record to show that consideration disclosed in the sale deed is in excess of the value adopted by the assessee and in our opinion, the ld. AO cannot simply make additions on the basis of fair market value of the property. Being so, we do not find any infirmity in the orders of ld. CIT(A) and we uphold the same.
FULL TEXT OF THE ORDER OF ITAT DELHI
The above captioned appeals filed by the Assessees as well as by Revenue are against the orders of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi for Assessment Years 2011-12, 2005-06, 2006-07, 2010-11 dated 30-03- 2015 respectively. The Cross Objections are also filed by the Assessees in A.Y 2011-12 (Satya Realtors) and A.Y 2005-06 (Anju Gupta) against the Order of the CIT(A) for AY 2011-12 (Satya Realtors) and AY 2005-06 (Anju Gupta) respectively by supporting the Orders of the Ld.CIT(A).
2. The common grounds of appeal taken in captioned appeals by the Revenue as well as the grounds of cross objections (except variance of the figure) are as under:
Common Grounds of Appeal of the Revenue (except variance of the figure):
“1 The order of Ld. CIT(A) is not correct in law and facts.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of 7,87,79,900/- made by the AO on account of cash payments/investment by the assessee company in the properties.
3. The appellant craves leave to add, amend any/all grounds of appeal before or during the course of hearing of the appeal. ”
Common Grounds of Cross Objection filed by the Assessee
“1. That the disallowance of Business loss of Rs. 28,352/- claimed by the Assessee in its Return of Income is illegal unjustified and ought to be deleted.
2. That no show cause notice or any other notice with respect to any adverse interference drawn by the Assessing Officer for making any addition of any nature whatsoever for the year under consideration was ever served upon the assessee and, therefore, the consequential assessment order is illegal and void.
3. That the charging of interest u/s 234A and 234B is illegal, unjustified and ought to be deleted. ”
3.Since, the Department has filed above captioned appeals against the Orders of the CIT(A) for Assessment Years 2011-12, 2005-06, 2006-07, 2010- 11 on the similar grounds and the additions are emerging out of the very same search and seizure operation carried out u/s 132 of the Income Tax Act, 1961 (“the Act” for short) on M/s Satya Prakash & Brothers group of cases on 28/10/2010, the above captioned appeals along with the respective 2 Cross Objections have been heard together and decided in a common order.
4. Facts of the issue are that Income Tax Department carried out search and seizure proceedings u/s 132 of the Act, on M/S Satya Prakash & Brothers group of cases on 28.10.2010. Thereafter, AO issued notice u/s 153C of the Act to Satya Realtors Pvt. Ltd. for AY 2005-06 to 2010-11 and notice u/s 142(1) of the Act for the impugned AY 2011-12. Eventually, AO passed the assessment order u/s 143(3) of the Act on 03.2013 for the impugned AY 2011-12. Similarly, as regards other Assessees Mrs. Anju Gupta and Mrs. Usha Gupta whose orders are under in the present appeal, AO issued notice u/s 153A of the Act for AYs 2005-06 to 2010-11 and u/s 143(2) for AY 2011-12. The present appeals pertain to AYs 2005-06, 2006-07 and 2010-11 of Mrs. Anju Gupta and AY 2006-07 of Mrs. Usha Gupta, wherein orders dated 28.03.2013 were made by AO u/s 153A r.w.s. 143(3) of the Act. Further, the present appeal pertains to order made u/s. 143(3) of the Act for 2011-12 of Mrs. Anju Gupta too. The additions made by the A.O. in all the Assessment Proceedings have been deleted by the Ld. CIT(A) by adjudicating the issues on merit.
5. The common issue involved in all the above appeals filed by the Revenue are addition of investment in Purchase/sale of immovable property on the ground that the purchase or sale consideration recorded in the registered conveyance deed and in books or accounts are not reflecting the fair market value thereof. The Ld. A.O added the difference between the fair market value (FMV) calculated by him on the basis of some assumptions mentioned by him at Page No. 2-7 of the assessment order and the recorded purchase or sale consideration to the total income of the assessee. The assessee-wise detail of additions made by AO, being subject-matter of the present appeals are as under:
