Usha Rani Talla, New Delhi vs Assessee

Department by : Sh. Nagesh Bhel, CA Assessee by : Sh. J.P. Chandrekar, Sr. DR

Date of Hearing : 16-6-2015 Date of Order : 30-6-2015 ORDER

PER H.S. SIDHU : JM These are the cross appeals filed by the Revenue and Assessee

emanate out of the Order passed by the Ld. CIT(A)-XXIV, New Delhi

pertaining to assessment year 2009-10. Since the issues are

1 ITA NOS.5698 & 5974/Del/2014

common and identical, hence, these are being decided by this

common Order for the sake of convenience.

2. The grounds raised in the Revenue's Appeal No. 5698/Del/2014

read as under:-

"On the facts and circumstances of the case and in

law CIT(A) has erred in:-

1. Deleting the addition of Rs. 3,53,30,000/- made by the

AO on account of explained income.

2. Admitting the additional evidence without giving the

opportunity to AO under Rule 46A.

3. Directing the AO to consider claim of the assessee u/s.

54 of the I.T. Act, 1961.

4. The assesseecraves the right to add, alter or demand

any ground of appeal."

3. The grounds raised in the Assessee's Appeal No.

5974/Del/2014 read as under:-

"1. That CIT(A) erred in passing order without

disposing off ground no. 4 of the grounds of appeal

filed before CIT(A) whereas in the appeal order

CIT(A) has reproduced ground no. 4 also.

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ITA NOS.5698 & 5974/Del/2014

2. The AO erred in taking sales consideration u/s.

48 on the basis of market value as per old

valuation report instead of actual sales

consideration of Rs. 95,00,000/- as per registered

sales deed and as such additions be deleted.

3. That exemption u/s. 54 be allowed to the

assessee in respect of "residential property"

purchased by the assessee.

4. That CIT(A) erred in holding that case of the

assessee is squarely covered u/s. 292BB.

5. The assesseecraves leave to add to or amend

the aforesaid grounds before disposal of the appeal.

4. First we take up the Revenue's s appeal. The brief facts of the

case are that a survey uls 133 of the Income Tax Act was carried

out by ADIT(lnv. )Unit -Ill, New Delhi on 06.10.2010 at the premises

of Mls Vishal Gold and Precious Stone Pvt. Ltd., B- 5, Near Durga

Mandir, Moti Nagar, Delhi. During the course of survey, several

documents were impounded from the premises and after

examination of these documents, a report was prepared by the ADIT

(Inv) Unit-Ill, Delhi and the same was forwarded to the Assessing

Officer of the appellant. As per information and documents seized, it

3 ITA NOS.5698 & 5974/Del/2014

was found that the assessee had made investment in the following

property:-

S.No. Address of property Date of Purchase Value (In Rs.)

1. J-1/161, Rajouri 19.05.2008 88,58,420/-

Garden, New Delhi It was also noted that during the year, the assessee has also sold

property no. 20C/72, West Punjabi Bagh, New Delhi on 17-09-2008

for RS.95,00,000/-. A valuation report in respect of the said property

was impounded during survey according to which the value of

property is RS.3.87 crores as on Sep. 2007 whereas the same has

been sold for Rs. 95,00,000/-. The Assessing Officer also, vide its

letter dated 01.06.2011 asked assessee to show cause as to why the

difference between the valuation and sale price be not added to the

income for AY.2009-2010 as unaccounted receipts.

4.1 In response to the letter dated 1.6.2011, the assessee

submitted the copies of purchase deeds of the aforesaid properties

on 02.09.2011. However, the assessee did not make any submission

regarding the source of investment in the J-1/161, Rajouri Garden,

New Delhi. In the absence of any explanation from the assessee

about the source of investment in the aforesaid property, the

Assessing Officer formed an opinion that the investments made by

the assessee are unexplained and after recording reason to believe,

he issued a notice u/s 148 of the I T Act to the assessee on

4 ITA NOS.5698 & 5974/Del/2014

18.01.2012 to assess the escaped income. In response to the notice

u/s 148, the assessee submitted before the Assessing Officer that

the original return of income filed on 31.03.2010 for the relevant

assessment year 2009-10 may be treated as return. In response to

the aforesaid notice. Subsequently notices u/s 143(2) and 142(1) of

the I.T. Act were issued to the assessee and she was requested to

explain the sources of investment in the abovementioned property.

In compliance the assessee submitted before the Assessing Officer

that the purchases were made through banking channels and in

support of her contention, she submitted the copy of the bank

statement at BOI Kirti Nagar Branch and Axis Bank, New Delhi.

However, the Assessing Officer was not satisfied with the

explanation of the assessee and vide letter dated 21.11.2012, he

referred the matter to the valuation officer for estimation of value

officer for estimation made by the assessee in the property J-1/161,

Rajouri Garden, New Delhi u/s. 142A of the IT Act. The valuation

officer vide his letter No. VO-II/ND.IT-05/142-A/2012-13/23 dated

20.3.2013 submitted his valuation report to the Assessing Officer in

respect of property J-1/161 Rajouri Garden, New Delhi wherein he

assessed the value of such property at Rs. 3,53,30,000/- against its

declared value of Rs. 88,60,000/-. Thereafter, the Assessing Officer

issued a letter dated 21.03.2013 to the assessee and requested her

to explain as to why not the aforesaid property should be valued at

5 ITA NOS.5698 & 5974/Del/2014

Rs. 3,53,30,000/- as per the Report of the Valuation Officer by

22.03.2013. The assessee could not explain the difference in the

valuation of the aforesaid property. Therefore, the Assessing Officer.

concluded that the assessee failed to explain the investments in the

property by establishing the genuineness and her creditworthiness

and he added the aggregate values of the property at Rs.

3,53,30,000/- (i.e. at J-1/161, Rajouri Garden, New Delhi at Rs.

3,53,30,000/- as the unexplained income of the assessee which was

invested in aforesaid properties during the relevant assessment

year.

4.2 Further, with regard to sale of property no. 20C/72, West

Punjabi Bagh, New Delhi, accordingly to the sale deed of the said

property the sale consideration was amounting to RS.95 lacs.

However, as per information received from ADIT (Inv.) Unit-Ill market

value of such property at the time of sale. was valued at RS.3.87

crores in valuation report. No explanation/documentary evidence in

this regard has been furnished by the assessee. Hence, long term

capital gain on this property for the Assessment year 2009-2010 is

computed as under and added back to the total income of the

assessee:-

Sales Consideration (as per Valuation report) 3,87,00,000

Less: Index cost of acquisition

6 ITA NOS.5698 & 5974/Del/2014

891000*582/259 20,02,170

Long Term Capital Gain 3,66,97,830

4.3 Thereafter, the AO completed the assessment u/s 147/143(3)

of the I T Act vide order dated 25.03.2013 at the taxable income of

Rs. 7,48,68,123/-.

5. Aggrieved by the aforesaid additions, the assessee Appealed

before the Ld. CIT(A) who vide impugned order 26.8.2014 has

partly allowed the appeal of the Assessee.

6. Against the above order of the Ld. First Appellate Authority,

the Revenue is in appeal before the Tribunal.

7. Ld. DR relied upon the order passed by the AO and reiterated

the contentions raised in the grounds of appeal. He further stated

that Ld. CIT(A) has wrongly deleted the addition in dispute on

account of unexplained income which has rightly been made by the

AO. He further stated that Ld. CIT(A) has admitted the additional

evidence produced by the assessee without giving proper

opportunity to the AO which is contrary to Rule 46A of the Income

Tax Rules, 1962. Therefore, he requested that the issue in dispute

may be set aside to the file of the Ld. CIT(A) to decide the same

afresh, after giving adequate opportunity on the admission of

additional evidence to the AO before the Ld. CIT(A). He further

7 ITA NOS.5698 & 5974/Del/2014

submitted that Ld. CIT(A) has wrongly given the directions to the AO

to consider the claim of the assessee u/s. 54 of the I.T. Act, 1961

and finally he requested that the impugned order passed by the ld.

CIT(A) on the dispute issue involved in the Revenue's Appeal may be

cancelled and the order of the AO may be upheld.

8. On the contrary, Ld. Counsel of the assessee relied upon the

order passed by the Ld. CIT(A) on the issue involved in the

Revenue's Appeal and stated that the Ld. CIT(A) has rightly deleted

the addition of Rs. 3,53,30,000/- on account of unexplained income

for which the assessee has produced sufficient opportunity before

the Revenue Authority. He further stated that the assessee has not

filed any additional evidence before the Ld. CIT(A), therefore, there

is no question to giving the opportunity to the AO under Rule 46 of

the I.T. Rules, 1962. He further stated that the sale consideration

received by the assessee is Rs. 95 lacs. There is no evidence on

record and sale consideration received by the Assessee is more than

Rs. 95 lacs. Therefore, the actual sale consideration as per Section

48 should be Rs. 95 lacs. Ld. Counsel of the assessee further stated

that even if it is presumed that sale consideration is as per Valuation

Report, then exemption u/s. 54 is allowable on entire capital gain, as

assessee has invested entire sale consideration received in new

property. In support of his contention, he cited the following

decisions of the Hon'ble Delhi High Court:-

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ITA NOS.5698 & 5974/Del/2014

- CIT vs. Smt. Nilofer I. Singh [2009] 176 TAXMANN 252 (Delhi)

- CIT vs. Aerens Inrastructure & Technology Ltd. vs. DCIT

[2011] 16 taxmann.com 400 (Delhi).

- CIT vs. Anil Arora ITA No. 340/2015 & CM No. 9241/2015

vide order dated 22.5.2015.

In view of above discussions and precedents, Ld. Counsel of

the Assessee requested that the Appeal filed by the Revenue may

be dismissed.

9. We have heard both the parties and perused the records,

especially the orders of the revenue authorities and the submissions

and precedents submitted by both the parties. We find considerable

cogency in the submissions of the Ld. Counsel of the assessee and

the judgment rendered by Hon'ble Delhi High Court by which issue

involved in ground no. 1 in the Revenue's appeal is squarely covered

in favor of the Assessee and against the Revenue.

10. We find that in the case CIT vs. Smt. Nilofer I. Singh [2009]

176 TAXMANN 252 (Delhi), the Hon'ble High Court has held

"expression 'full value of consideration' used in section 48 does not

have any reference to market value but only to consideration

referred to in sale deeds as sale price of assets which have been

transferred.

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ITA NOS.5698 & 5974/Del/2014

10.1 We further find that in the case of - CIT vs. Aerens

Inrastructure & Technology Ltd. vs. DCIT [2011] 16 taxmann.com

400 (Delhi), the Hon'ble High Court has confirmed the order of the

ITAT wherein the Tribunal deleted the addition of Rs. 48,68,774/-

made by the AO on account of difference between the value

determined by the DVO and the purchase consideration shown by

the assessee holding that the reference made by the AO invoking

the provisions of Section 142A was without jurisdiction and

therefore, no addition could have been made by the AO on the bass

of valuation made by the DVO.

10.2 We further find from the latest decision of the Hon'ble High

Court of Delhi passed in the ITA No. 340/2015 & CM No. 9241 / 2015

in the case of Commissioner of Income Tax vs. Anil Arora decided on

22.5.2014 wherein vide para no. 8 & 9 of the said order the Court

has observed as under:-

"8. Having heard the learned counsel for the Revenue, we find

the contentions urged in the appeal to be wholly misplaced. It

is fairly concede (at bar) by the counsel for the Revenue that

the reference to DVO for estimation of the market value of the

property in Punjabi Bagh was not based on any material

discovered' or seized during the search operations. The

counsel, however, referred to the case of another property in

10 ITA NOS.5698 & 5974/Del/2014

District Baddi (Himachal Pradesh), in respect of which

documentary evidence indicated unaccounted consideration

paid by the assessee, referred to by the AO in para 4.3 of his

order. At the same time, learned counsel also conceded that

no addition to the tax liability of the assessee on account of

the said other property has been made. There is no nexus

between the property in Baddi (Himachal Pradesh) and the

property in Punjabi Bagh (West). There is undoubtedly no

material available to even remotely reflect that consideration

over and above what was shown to be paid in the registered

sale deed of the West Punjabi Bagh property was made over to

the seller. In these circumstances, it was not fair in the first

place to refer the said property for estimation of its market

value by DVO.

9. The assessment of the value by DVO cannot hold

primacy over the consideration for which the property was

actually acquired. If there is any difference in the shares in

consideration borne by the four brothers, it is matter of their

inter se understanding. Doubts as to the real value cannot

arise from such fact alone."

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ITA NOS.5698 & 5974/Del/2014

10.3 We further find that the assessee has contested that the

addition of Rs. 3,53,30,000/- on account of unexplained income on

the basis of DVO's report is not as per law and is liable to be

deleted. It was further observed that during the course of

assessment proceedings vide her submission dated 22.11.2012, and

on being asked to explain further source of deposits in the bank

account, the assessee explained the source of investment in the

aforesaid property as follows:-

S.No Date Ch. Amount Name Particular Bank . No. of the s party 1 5.5.2008 01790 44,30,000 Gaga J-1/161 Axis 3 n Rajouri Bank Preet Garden Ltd. Singh New Delhi West Punjab i Bagh. 2 5.5.2008 01790 44,30,000 Rishi J-1/161 Axis 4 Preet Rajouri Bank Singh Garden Ltd. New Delhi West Punjab i Bagh. 3 19.5.200 Paid Rs.3,54,400 Stamp J-1/161 BOI, 8 by duty Rajouri Kiriti cash paid Garden Nagar, New Delhi Total 92,14,400

She further explained the source of the deposits made in the

aforesaid bank account as follows:-

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ITA NOS.5698 & 5974/Del/2014

Source of Payment (Receipts in Bank)

S.No. Date Ch. No. Amount Name Nature Bank Property

1 5.5.2008 301651 85,00,000 Sale Sale of Axis J-1/161, Consideration property Bank Rajouri 20- C/72, Ltd., Garden, West West New Delhi Punjabi Punjabi Bagh Bagh, 2 6.5.2008 Cash 3,10,000 Cash Cash Axis J-1/161, deposited in withdraw Bank Rajouri Axis from BOI Ltd., Garden, A/c West New Delhi Punjabi Bagh, 3 22.4.2008 000016 26,786 Rent Rent Axis J-1/161, Recd. Bank Rajouri From Ltd., Garden, Care Zone West New Delhi from DE- Punjabi 85, Bagh, Tagore Garden, New Delhi 4 26.4.2008 000005 26,739 Rent Rent Axis J-1/161, Recd. Bank Rajouri From Ltd., Garden, Bharti West New Delhi Celuler Punjabi Ltd., from Bagh, DE-85, Tagore Garden, New Delhi

5. 19.5.2008 3,50,000 Stamp Duty Cash BOI J-1/161, withdrawn Kirit Rajouri from BOI Nagar Garden, A/c New Delhi

The assessee also submitted the copies of bank statements of

the BOI, Kirti Nagar and Axis Bank, New Delhi

10.4 From the above chart, it is clear that the assessee had made

the investment in the aforesaid properties through her bank

accounts at Axis Bank, West Kirti Nagar Branch, Delhi & Bank of

India, Kirti Nagar Branch, Delhi. It was explained that during the

13 ITA NOS.5698 & 5974/Del/2014

relevant assessment year, the assessee sold a property at 20C/72,

West Punjabi Baqh, New Delhi and utilized the sale proceeds for the

purchase of property at J-1/161, Rajouri Garden, New Delhi.

However, it seems that the Assessing Officer has ignored all the

explanations given by the assessee during the course of

assessment. From the assessment order, it is also evident that the

Assessing Officer has not controverted the explanation given by the

assessee regarding the investments made in the aforementioned

property. Further, no material has been brought on record by the

Assessing Officer to show that the assessee has made any excess

investments in the aforesaid property over and above the value

recorded in the sale deed. Therefore, we are of the view that the

Assessing Officer has grossly erred in making addition of

RS.3,53,30,OOO/- on account of investment in the properties at J-

1/161, Rajouri Garden, New Delhi and Ld. CIT(A) has rightly

appreciated all the evidences filed by the Assessee before AO. The

AO without bringing any evidence on record of excess investment in

the properties at J-1/161, Rajouri Garden, New Delhi over and above

the value of investment shown in the sale deed at Rs. 88,59,420/-

has referred the matter to the District Valuation officer for

estimation of the value of the property. Even no opportunity of being

heard or a show cause notice was given to the assessee before

referring the matter to the DVO for the estimation of the value of

14 ITA NOS.5698 & 5974/Del/2014

investment in the aforesaid properties at J- 1/161, Rajouri Garden,

New Delhi. In our considered opinion, without bringing any adverse

material on record or any evidence of excess investment the

Assessing Officer had no power to refer the matter to the DVO and

Ld. CIT(A) has rightly deleted the addition in dispute.

10.5 We further observed that the assessee had submitted her

books of accounts explaining the sources of investment in the

aforesaid property and the Assessing Officer has given no comment

or even rejected the books of accounts before making a reference to

the DVO for ascertaining the actual investment in the aforesaid

property. The Assessing Officer has not even recorded any reason

for referring the matter to the DVO for the estimation of the value of

property. The Ld. First Appellate Authority has rightly appreciated

the provisions of law. The relevant provision sub-section-t of

Sec.142A reads as under:-

"142A (1) For the purposes of making an assessment or

reassessment under this Act, where an estimate of the

value of any investment referred to in section 69 or

section 69B or the value of any bullion, jewellery or other

valuable article referred to in section 69A or Section 698

is required to be made, the Assessing Officer may require

15 ITA NOS.5698 & 5974/Del/2014

the Valuation Officer to make an estimate of such value

and report the same to him."

10.6 We further find that the words mentioned in the above

mentioned section "where an estimate of the value of any

investment referred to in Sec. 69 ...... is required to be made . ... "

means that a reference to the DVO be made only when a

requirement is felt by the Assessing Officer for making such

reference. Requirement would arise or could be felt only when there

is some material with the AO to show that whatever amount the

assessee has shown is not correct or not reliable. The use of the

word "require" is not superfluous but signifies a definite meaning

whereby some preliminary formation of mind by the AO is necessary

which requires him to make a reference to DVO uls 142A. In other

words, it is only during the course of pendency of the assessment

that the AO can frame his mind to refer the property to DVO. Such

mind can be framed if there is a basis to think that the assessee

may have understated the cost of construction or whatever is

declared by him in this regard is not believable. Ld. CIT(A) has

rightly appreciated the all evidences as well as provisions of law and

decided the issue in favor of the assessee.

10.7 On perusal of the assessment order, we find that there was no

reference whatsoever made by the AO to any

16 ITA NOS.5698 & 5974/Del/2014

material/evidence/information on the basis of which it could be said

that the said that the investment shown by the appellant was

understated and that anything above what was disclosed by the

appellant. Thus, the condition precedent for making reference to the

DVO by invoking the provisions of Sec. 142A was not satisfied in the

present case. Moreover, on perusal of the assessment order, it is

noted that nowhere the AO has mentioned that what are the

mistakes and unreliability has been found out by the AO in the books

of accounts of the appellant. Thus, the AO has not pointed out any

defects in the books as far as related to the investment made by the

appellant. In my humble opinion, the provisions of Sec. 142A cannot

be read in isolation to Sec.145. In other words, if books of account

are found to be correct and complete in all respect and :10 defect is

pointed out therein and the investment is recorded therein, then the

addition on account of difference in investment could not be made

even if a report is obtained within the meaning of Sec.142A from the

DVO. It is because the use of the report of the DVO obtained u/s.

142A is not mandatory but is discretionary as the word used is 'may'

therein. Accordingly, in the present case when AO has not rejected

the books of account by pointing out any defects reference to the

DVO will not be valid and, therefore, DVO's report could not be

utilized for framing assessment even if such a report is considered

to be obtained u/s 142A. Since reference to DVO being held as

17 ITA NOS.5698 & 5974/Del/2014

invalid, the assessment/reassessment framed thereafter would also

be invalid. Reliance in this regard was placed on the decision of ITAT

Delhi, in the case of Aerens Infrastructure & Technology Ltd. v.

Deputy Commissioner of Income-tax [2010] 3 ITR (TRIB.) 344

(DELHI) which has been approved by Hon'ble Delhi HC In the case of

Commissioner of Income-tax Delhi-I, New Delhi v. Aerens

Infrastructure & Technology Ltd. [2011] 16 taxmann.com 400

(Delhi). It has been held that :-

"Where Assessing Officer made reference to Valuation Officer

in respect of a property purchased by assessee and though

there was no finding by Assessing Officer that assessee had

incurred any expenditure in excess of what had been declared

but he had referred issue of valuation to DVO only on basis of

speculation alleging information in form of newspaper report

about enhanced property prices in area, reference to Assessing

Officer and addition based on his report were not justified."

10.8 On going through the records, we note that the assessee-

company had during the relevant assessment year purchased a

property in Delhi for a consideration of Rs. 11,84,926. The Assessing

Officer invoked the provisions of section 142A and sent the issue to

the DVO for valuation of the property at the fair market value. On

the basis of report of the Valuation Officer valuing the property at

18 ITA NOS.5698 & 5974/Del/2014

Rs. 60,53,700 the Assessing Officer had treated the difference

between the purchase consideration shown by the assessee and the

fair market value as on the date of purchase determined by the ova

as unexplained money paid by the assessee for the purchase or the

property.

10.9 We further note that there was no finding by the Assessing

Officer that the assessee had incurred any expenditure in excess of

what had been declared but he had referred the issue of valuation to

the ova only on the basis of speculation alleging information in the

form of newspaper report about enhanced property prices in the

area. In these circumstances, the reference made by the Assessing

Officer by invoking the provisions of section 142A was without

justification and, consequently, no addition could be made on the

basis of valuation made by the DVO.

10.10 To support our finding, we place reliance on the decision

of the Hon'ble Supreme Court of India in the case of Sargam

Cinema vs. CIT [2011] 197 Taxman 203 (SC) wherein it was held as

under:-

"4. In the present case, we find that the Tribunal decided the

matter rightly in favour of the assessee inasmuch as the

Tribunal came to the conclusion that the assessing, authority

could not have referred the matter to the Departmental

19 ITA NOS.5698 & 5974/Del/2014

Valuation Officer (DVO) without the books of account being

rejected. In the present case, a categorical finding is recorded

by the Tribunal that the books were never rejected. This aspect

has not been considered by the High Court. In the

circumstances, reliance placed on the report of the DVO was

misconceived.

5. For the above reasons, the impugned judgment of the High

Court is set aside and the order passed by the Tribunal stands

restored to the file. Accordingly, the assessee succeeds."

10.11 We further place reliance in another case of ITO vs.

Rajeshwar Nath Gupta dated 4.5.2008 in ITA no.

4295/D.eI.l2005,The ITAT, Delhi in the context of provisions of sec.

142A of the Act, held as follows:

"15. A perusal of the aforesaid provisions shows that section

142A is attracted, inter alia, where the assessee is found to

have made investment outside the books of account or where

any such investment made by him is not fully disclosed in the

books of account. The condition precedent for making the

reference by invoking the provisions of section 142A thus is

that there should be something on record to show that the

assessee in the first place has made such investment outside

the books or the investment so made by him is not fully

20 ITA NOS.5698 & 5974/Del/2014

disclosed in the books of account and once this condition is

satisfied, the quantum of such investment made can be

ascertained by the Assessing Officer by making a reference

under section 142A in order to make the addition under section

69 or 69B, whichever is applicable. In the present case, the

relevant property was purchased by the assessee during the

year under consideration for Rs. 15 lakhs and the amount of

the said consideration was paid out of its disclosed sources as

accepted even by the Assessing Officer in the assessment. A

perusal of the assessment order, however, shows that there

was no reference whatsoever made by the AO to any material

/ evidence / information on the basis of which it could be said

that the said consideration shown by the assessee had actually

been paid as consideration. The condition precedent for

making a reference to the DVO by invoking the provisions of

section 142A thus was not satisfied in the present case and

neither the said reference nor the addition made on the basis

of report obtained from the DVO in response to the said

reference, in our opinion, was sustainable in Jaw as rightly held

by the learned Commissioner of Income-tax tax (Appeals)."

10.12 We further find that similar views were taken in the cases of

Commissioner of Income-tax v. Ambience Developers and

Infrastructure(P.) Ltd, [2012] 25 taxmann.com 210 (Delhi), CIT vs

21 ITA NOS.5698 & 5974/Del/2014

Gulshan Kumar [2002] 257 ITR 703 (Delhi), CIT v. P .V.

Kalyanasundaram [2007] 294 ITR 49 (SC) Subhash Chand Chopra v.

Asst. CIT [2005] 92 TTJ (Delhi) 1087) and K.P Varghese. v. ITO [1981]

131 ITR 597 (SC).

10.13 Under these circumstances, We are of the opinion that the

Assessing Officer has erred in referring the matter to the DVO and

consequently the DVO's report on the value of investment in the

property cannot replace the actual purchase value shown in the

purchase deed of the aforesaid property at J-1/161, Rajouri Garden,

New Delhi. Hence, the Assessing Officer has erred in adopting the

value of the property at J-1/161, Rajouri Garden, New Delhi

estimated by the DVO by replacing the value shown in the purchase

deed. Ld. First Appellate Authority has rightly appreciated the all

evidences as well as the relevant provisions of law and deleted the

addition in dispute. It is further observed that even after the receipt

of the valuation report from the DVO, the Assessing Officer had

given only one day time to the appellant to explain the difference in

the value of the property as estimated by the DVO and the value

shown by her in the purchase deed. This is against the principle of

natural justice. In this regard it is seen that the AO had issued a

show cause notice dated 21-03-2013 for submitting reply on 22-03-

2013 i.e. immediately next date, Therefore, assessing officer has not

given sufficient opportunity of being heard to the assessee. It cannot

22 ITA NOS.5698 & 5974/Del/2014

be said that by giving opportunity of being heard for hearing

immediately one day assessing officer has discharged his obligation

of giving opportunity of being heard. In the case of Sahara India

(Firm) v. Commissioner of Income-tax, Central-I [2008] 169 Taxman

328 (SC) Supreme Court of India has held as under:-

"It is trite that unless a statutory provision either specifically or

by necessary implication excludes the application of principles

of natural justice, because in that event the Court would not

ignore the legislative mandate, the requirement of giving a

reasonable opportunity of being heard before an order is

made, is generally read into the provisions of a statute,

particularly when the order can have adverse civil

consequences for the party likely to be affected."

9.14 In an another case title as Assistant Director of Income-tax,

Circle 1 (2), International Taxation, New Delhi v. Ranjay Gulati,

[2011] 14 taxmann.com 161 (Delhi) ITAT Delhi has held as under:-

"Section 50C, read with sections 45 and 48, of the

Income-tax Act, 1961 - Capital gains - Special provision

for full value of consideration in certain cases -

Assessment year 2007-08 - Assessee sold an industrial

plot for a sum of Rs. 2.90 crores - Assessing Officer made

a reference to District Valuation Officer (DVO) to

23 ITA NOS.5698 & 5974/Del/2014

ascertain fair market value of plot on date of sale who

arrived at a valuation of Rs. 5.36 crores - Assessing

Officer without giving an opportunity of being heard to

assessee, adopted valuation made by ova and,

accordingly, enhanced amount of capital gain liable to

tax - On appeal, Commissioner (Appeals) deleted addition

made by Assessing Officer - It was noted from records

that value of assessee's property as per circle rates was

Rs. 2 crores as against sale consideration of Rs. 2.90

crores admitted by assessee - Further, there was nothing

on record to suggest that assessee had received more

than what was stated in sale deed - Whether in aforesaid

circumstances, Assessing Officer had to adopt amount

received by assessee as full value of sale consideration

for calculating capital gain liable to tax - Held, yes -

Whether even otherwise, adoption of report of ova

without providing an opportunity of being heard to

assessee was against principles of natural justice - Held,

yes - Whether, consequently, impugned addition made by

Assessing Officer was rightly deleted - Held, yes"

10.15 In the background of the aforesaid discussions and

respectfully following the precedents as aforesaid, we are of the

considered view that the Ld. CIT(A) was right in observing that the

24 ITA NOS.5698 & 5974/Del/2014

AO has erred in making the addition Rs. 3,53,30,000/- on account of

unexplained income of the assessee and accordingly rightly directed

the AO to delete the addition in dispute, which in our opinion, does

not need any interference on our part, hence, we uphold the same.

Accordingly, the Ground no. 1 raised by the Revenue stands

dismissed.

11. With regard to ground no. 2 regarding admitting the additional

evidence without giving the opportunity to AO under Rule 46A is

concerned, we find that no additional evidence have been filed by

the Assessee before the Ld. CIT(A), which required to be sent to the

AO under Rule 46A and also in the Ld. CIT(A)'s order there was no

mention about the admission of additional evidence, hence, the

ground no. 2 in dispute in the Revenue's Appeal is dismissed as

such.

12. Apropos ground no. 3 regarding directing the AO consider

the claim of assessee u/s. 54 of the I.T. Act, 1961 is concerned, we

find that during the relevant assessment year, the assessee has sold

a property at 20C/72, West Punjabi Nagar, New Delhi for the

consideration of Rs. 95,00,000/- as per the registered value of the

property (whereas during the course of survey, the same property

was found to be valued at Rs. 3,87,00,000/- by a registered valuer).

The assessee has claimed that the sale proceed of the aforesaid

25 ITA NOS.5698 & 5974/Del/2014

property at 20C/72, West Punjabi Bagh, New Delhi was invested in

the purchase of property in the same assessment year at J-1/161,

Rajouri Garden, New Delhi. We observed that the assessee was

entitled for deduction u/s. 54 of the I.T. Act in respect of capital gain

on the sale of property at 20C/72, West Punjabi Bagh, New Delhi.

We further note that the assessee has also relied upon the decision

of the Hon'ble Supreme Court of India in the case of National

Thermal Power Co. Ltd. vs. CIT 229 ITR 383. The AO has not

considered the claim of exemption of the assessee u/s. 54 in

respect of the capital gain arose in respect of the sale of property at

20C/72, West Punjabi Bagh, New Delhi. In view of the above, in our

considered opinion, the Ld. CIT(A) rightly directed the AO to

consider the aforesaid claim of the assessee of exemption u/s 54 of

the I.T. Act, while computing the income of the assessee. We also

find considerable cogency in the assessee's counsel that Ld. DR

itself was saying that the assessee has sold one property and

purchased another, then there is no question why exemption u/s. 54

should not be given. In view above, we find that the CIT(A) has

given a well reasoned finding on the issue in dispute, which does

not need any interference on our part, hence, we uphold the same

and decide the issue no. 3 against the Revenue.

In the result, the Revenue's appeal is dismissed.

26

ITA NOS.5698 & 5974/Del/2014

ASSESSEE'S APPEAL NO. 5974/DEL/2014

13. The brief facts are similar and identical, as explained in

Revenue's Appeal No. 5698/Del/2014 as aforesaid, therefore, there

we are not repeating the same again for the sake of brevity.

14. At the time of hearing, Ld. Counsel of the Assessee Sh. Nagesh

Behl, stated that assessee has raised 5 grounds of appeal. As

regards ground no. 1 is concerned, he stated that the Assessee has

raised this ground before the Ld. CIT(A) which has not been decided

by the Ld. CIT(A), but he decided the other issues by partly allowing

the Appeal filed by the Assessee. Assessee has filed the Appeal on

the issue involved in ground no. 5 mentioned in the Assessee's

Cross Appeal and Revenue has filed the Appeal i.e. ITA No.

5698/Del/2014 and challenged the addition deleted by the Ld.

CIT(A). He stated that the issue in ground no. 2 to 4 are inter

connected with the Revenue's Appeal and if the Revenue's Appeal is

dismissed, then he is not pressing the grounds raised in Assessee's

Appeal vide ground no. 2 to 4. Since we have already dismissed

the Revenue's Appeal, hence, as per the statement of the Ld.

Counsel of the assessee that he is not pressing the issue involved in

ground no. 2 to 4, if the Revenue's appeal is dismissed, the ground

no. 2 to 4 raised in the Assessee's Appeal stands dismissed, as not

pressed.

27

ITA NOS.5698 & 5974/Del/2014

15. As regards issue involved in ground no. 1 is concerned, we find

that Ld. Counsel of the assessee has prayed to set aside the same

to the file of Ld. CIT(A) to decide the same afresh and Ld. DR has no

objection to the same, hence, we are remitting back the issue

involved in ground no. 1 in the Assessee's Appeal to the file of the

Ld. CIT(A) to decide the same afresh, under the law, after giving

adequate opportunity of being heard.

16. In the result, the Appeal filed by the Revenue stands dismissed

and Assessee's Appeal is partly allowed for statistical purposes.

Order pronounced in the Open Court on 30-6-2015.

Sd/- Sd/-

[J.S. REDDY] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER Date 30/6/2015 "SRBHATNAGAR" Copy forwarded to: - 1. Assessee- 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches 28 ITA NOS.5698 & 5974/Del/2014

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