Commissioner of Income Tax vs Ajay Gupta

A search and seizure operation was carried out at the premises of the assessee on 7-10-1998. Thereafter notice under section. 158BC of the IT Act was issued to the assessee to file their returns. During the course of block assessment proceedings, the AO noticed that property No. 41 A, Rajpur Road, Civil Lines, Delhi was purchased by the three assessees who were family members vide three separate sale deeds for a sum of Rs. 54,00,000 which was paid as under :

SI. No.

Name of person

Amount paid

Date of registration

1.

Shri Ajay Gupta

20 lacs

16-4-1999

2.

Smt. Urmila Gupta

17 lacs

16-4-1999

3.

Shri Abhishek Gupta

17 lacs

16-4-1999

A reference was made by the AO to the Valuation Officer who gave his report dt. 20-10-2000 determining the fair market value of the property as on 31-12-1997 at Rs. 2,76,31,300. On the basis of this valuation report, the AO while completing the assessment for the assessment. year. 1998-99 in the case of Shri Ajay Gupta adopted the aforesaid value and apportioned his share and his sons share of investment in the purchase of property at Rs. 1,89,32,557 as against the disclosed income of Rs. 37 lacs. The difference of Rs. 1,52,32,557 was accordingly added to the income of the assessee being unexplained investment in this property. The assessee preferred appeal there against. The Tribunal ultimately allowed this appeal and set aside the assessment order inter alia holding that the unexplained investment, if any, related to the assessment year 1999-2000. The Tribunal also questioned the land and building method adopted by the DVO on the basis of which the valuation of the property was arrived at holding that since the property was tenanted, the appropriate method was rent capitalization method. Insofar as taking the assessment year 1999-2000 for the purpose of making the purported addition is concerned, the reason given by the Tribunal was that the agreements for sale of the properties were executed on 20-8-1998 relevant to assessment year 1999-2000 and on the execution of these agreements not only the entire sale consideration was paid by the assessees to the sellers, even the constructive possession of the property was handed over to the assessees/purchasers since actual possession was with the tenants. It seems that the aforesaid orders of the Tribunal were accepted by the Revenue as nowhere it is indicated that there was challenge laid to the said order.

We may also record that Dr. Rakesh Gupta, learned counsel appearing for the assessee, has made a statement at the Bar that insofar as assessees are concerned, they never received any notice of any appeal filed by the Revenue.

In spite of the aforesaid categorical order of the Tribunal, holding that relevant assessment year was 1999-2000, the AO issued notice under section. 148 of the Act reopening the assessment in respect of assessment year 2000-01 and made the additions under section. 69B of the Act in the case of all the three assessees. Curiously, the assessments were reopened on the basis of same report of the DVO which had adopted the land and building method. The Tribunal has set aside the reassessment pertaining to these years. Referring to the earlier order of the Tribunal, the order of the CIT(A) has been affirmed by the Tribunal in the following manner :

Thus, it can be seen that according to the agreement, the physical possession of the property was given to the respective parties on the spot i.e. on the execution of agreement. This fact has not been controverter by the Revenue by bringing any material on record when the substantial payment has been made (in the present case full payment) and the possession of the property has been handed over, then, the assessee can be said to have become owner of the property in the year when such consideration was passed from buyer to seller and the possession of property has also been delivered. Mere execution of sale deed on the next year cannot be said to be the year of purchase simply on the ground that title deed was executed in that year. This conclusion is also supported by abovementioned observations of the Tribunal in assessees own case. Thus, we have no reason to differ with the findings of the CIT(A) that addition, if any, could not be made in the year under consideration as the same in any case will relate to assessment year 1999-2000 and not for the year under consideration. It has also not been shown by the Department by producing any evidence that any extra consideration was passed between the seller and the buyer in the year under consideration. In the circumstances, there being no infirmity in the order of the learned CIT(A), we decline to interfere. The Departmental appeals in the cases of assessees are dismissed.

We fail to understand what prompted the AO to issue notice under section. 148 of the Act seeking to reopen the assessment in respect of assessment year 2000-01 notwithstanding the aforesaid categorical findings of the Tribunal in the case of Shri Ajay Gupta while dealing with the appeal in respect of assessment year 1998-99 and categorically holding that the addition if at all could be made in the assessment year 1999-2000. Even otherwise, we find that the aforesaid view of the Tribunal is correct in law having regard to the provisions of section. 147 of the Act.

We find no question of law arises in these appeals which are accordingly dismissed.