Shri Nagjibhai Mohanbhai Sakaria, Surat V. The Income tax Officer,Ward-3(4), Surat

CO 189/AHD/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1134 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Depreciation; Deemed to accrue or arise in india; Fair market value
• Section: 143(3); 50C; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S.S. GODARA , JUDICIAL MEMBER INCOME TAX OFFICER, WARD 3(4), SURAT (APPELLANT) VS SHRI NAGJIBHAI MOHANBHAI SAKARI A , VINOD NIWAS , 9/10, DAYANAND SOCIETY, B/H NAVYUG COLLEGE, RANDER ROAD, SURAT PAN: ABEPP7995G (RESPONDENT) SHRI NAGJIBHAI MOHANBHAI SAKARI A , VINOD NIWAS , 9/10, DAYANAND SOCIETY, B/H NAVYUG COLLEGE, RANDER ROAD, SURAT PAN: ABEPP7995G (CROSS OBJECT OR ) VS INCOME TAX OFFICER, WARD 3(4), SURAT (RESPONDENT) REVENUE BY: S H RI PRADIPKUMAR MAJUMDAR , SR.D.R. ASSESSEE BY: S H RI R. N. VEPARI , A.R. DATE OF HEARING : 29 - 07 - 2 015 DATE OF PRONOUNCEMENT : 07 - 08 - 2 015 / ORDER I T A NO . 1811 /AHD/2011 A SSESSMENT YEAR 200 8 - 09 CO NO. 189 / AHD/20 11 (IN ITA NO. 1811AHD/2011) ASSESSMENT YEAR 2008 - 09 I .T.A NO.1811 /AHD/20 11 & CO. NO. 189/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. SHRI NAGJIBHAI MOHANBHAI SAKARI 2 P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL AND ASSESSEE S CO FOR A.Y. 2008 - 09, ARISE FROM ORDER OF THE CIT(A) - II, SURAT DATED 06 - 05 - 2011 IN APPEAL NO. CAS/II/ 223/10 - 11/41, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT 2. WE COME TO THE REVENUE S APPEAL FIRST CHALLENGING THE LOWER APPELLATE ORDER DELETING SECTION 69B ADDITION O F UNEXPLAINED INVESTMENT AMOUNT ING TO RS. 69,06, 650/ - . THE ASSESSEE PURCHASED IMMOVABLE PROPERTY IN QUESTION LOCATED IN VILLAGE JAHAGIRPUR , RS NO. 111, BLOCK 151/A, JUNI, SURAT ADMEASURING 4013.34 SQ MTR QUOTING CONSIDERATION OF RS. 34,65,000/ - IN THE RELEVANT PREVIOUS YEAR. THE REGISTRATION AUTHORITY ADOPTED ITS VALUE OF RS. 1,0 2,71,650/ - FOR STAMP PURPOSES. THE ASSESSING OFFICER IN THE COURSE OF SCRUTINY SOUGHT TO ADD THIS DIFFERENTIAL SUM OF RS. 68,06,650/ - . THE ASSESSEE WOULD PLEAD THE PURCHASE PRICE HEREINABOVE TO BE FAIR MARKET VALUE OF THE PROP ERTY. HE STATED THAT THERE WAS NOT EVEN SINGLE PENNY P AID OVER AND ABOVE THE SAME . A ND ALSO THAT THE ENHANCED VALUE WAS ONLY FOR FISCAL PURPOSE AND DID NOT REPRESENT THE AC TUAL VALUE. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 10 - 12 - 2010 HEAVILY RELIED UPON THE STAMP VALUATION WITH RELEVANT FACTORS LEADING TO ITS FINALIZATION AND OBSERVED THAT SECTION 50C APPLICABLE W.E.F. 01 - 04 - 2003 R.W.S. 56 AMENDED W.E.F. 01 - 10 - 2009 HAD BEEN INCORPORATED IN THE ACT TO KEEP A CHECK ON SUCH R EVENUE LEAKAGES. H E HELD THAT THIS DIFFE RE NTIAL VALUE WAS THE ASSESSEE S DEEMED INCOME FROM UNDISCLOSED INCOME ; LATTER ON INVESTED IN THE PROPERTY TO BE ADDED U/S. 69B OF THE ACT. I .T.A NO.1811 /AHD/20 11 & CO. NO. 189/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. SHRI NAGJIBHAI MOHANBHAI SAKARI 3 3. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS ACCEPTED HIS CONTENTION AS UNDER: - 1. 3. 2. I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FIND THAT THE ADDITION MADE U/S 69B OF THE ACT, IS ON THE BASIS OF VALUATION OF THE STAMP DUTY AUTHORITY FOR THE PURPOSE OF LEVY OF STAMP DUTY U/S 50C OF THE ACT, FOR COMPUTING THE CAPITAL GAIN S ON THE SALE OF - THE PROPERTY. THE QUESTION THAT; ARISES, THEREFORE, IS WHETHER ANY ADDITION CAN BE MADE SIMPLY ON THE BASIS OF DIFFERENTIAL VALUE OF PROPERTY APPEARING IN THE REGISTERED DOCUMENT AND THE VALUE TAKEN FOR THE PURPOSE OF LEVY OF STAMP DUT Y, IN THE HANDS OF THE PURCHASER OF THE PROPERTY. IN THIS REGARD, I FIND THAT IN THE FINANCE (NO. 2) BILL, 2002 AMENDMENTS WERE PROPOSED IN SUB - SECTION(2) TO SECTION 56 OF THE ACT, WHEREIN SUB - CLAUSE (II) WAS PROPOSED TO BE INSERTED, WHERE A N INDIVIDUAL OR HUF RECEIVES IN ANY PREVIOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER THE 1 ST OCT. 2009 A CONSIDERATION WHICH IS LESS THAN THE STAMP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING 50,000/ - , THE STAMP VALUATION OF SUCH PROPERTY EXCEEDING SUCH CONSIDERATION WAS SUPPOSED TO BE TAXED AS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', HOWEVER, THE SAID CLAUSE WAS FINALLY NOT INCLUDED WHEN THE FINANCE(NO.2), BILL 2009 RECEIVED ASSENT FROM THE PRESIDENT OF INDIA. THEREFORE, THE LEGISLATURE ITSELF IN ITS WISDOM CAME TO THE CONCLUSION THAT WHERE ANY ASSESSEE RECEIVED ANY IMMOVABLE PROPERTY, BUT WHERE THE STAMP DUTY VALUE OF THE PROPERTY EXCEEDS RS. 50,000/ - AND IS MORE THAN THE TOTAL SALE CONSIDE RATION, THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND THE TOTAL CONSIDERATION IS NOT TO BE TREATED AS DEEMED INCOME U/S. 69B OF THE ACT. I THEREFORE HOLD THAT THE AO HAS WRONGLY INVOKED SECTION 69B OF THE ACT, TO BRING TAX, THE DIFFERENTIAL AMOUNT BET WEEN THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY AND THE TOTAL SALE CONSIDERATION. I ALSO FIND THAT ABOVE ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE AHMEDABAD BENCH OF THE ITAT IN THE CASE OF HARLEY STREET PHARMACEUTICALS LTD. [6 ITR (TRIB) 182] [A HMEDABAD], WHEREIN THE HON'BLE BENCH HAS HELD THAT SECTION 50C IS NOT APPLICABLE TO THE CA SE OF THE PURCHASER AND THIS PROV ISION WILL ONLY APPLY FOR DETERMINING THE FUL L VALUE OF CONSIDERATION, AS A RESULT OF TRANSFER OF CAPITAL ASSETS FOR THE PURPOSE OF COMPUTATION OF C APITAL GAINS U/S 48 OF THE ACT, AND THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE CONSIDERATION OVER AND ABOVE, WHAT HAS BEEN RECO RDED IN THE SALE DEED HAS BEEN MADE BY THE ASSESSEE, AND, IN THE ABS ENCE OF THE SAME, NO ADDIT ION OF UNDISCLOSED INVESTMENT CAN I .T.A NO.1811 /AHD/20 11 & CO. NO. 189/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. SHRI NAGJIBHAI MOHANBHAI SAKARI 4 BE MAD E BY INVOKING THE PROVISIONS OF SECTION 69B OF T HE ACT. I, THEREFORE, FOLLOWING THE ABOVE DECISION OF THE ITAT, AHMEDABAD, HOLD THAT IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD BY TH E ASS ESSING OFFICER THAT ANY CONSIDERATION OVER AND ABOVE THE VALUE REC ORDED IN THE SALE DEED HAS BEEN MADE BY THE APPELLANT, ADDITION OF DIFFERENTIAL AMOUNT VIDE PROVI SIONS OF SECTION 50C OF THE ACT AND AMOUNT APPEARING IN THE SALE DEED CANNOT BE MADE U/S 69B OF THE ACT, AND DELETE THE ABOVE ADDITION. THIS GROUND OF APPEAL IS ALLOWED. 4. HEARD BOT H SIDES AND PERUSED THE CASE FI LE. RELEV ANT FACTS STAND NARRATED IN THE PRECEDING PARAGRAPHS. THE REVENUE S SOLE ARGUMENT SEEKS TO RESTORE THE DIFFERENTIAL A MOUNT OF RS. 68,06,650/ - BETWEEN THE PURCHASE PRICE AND STAMP V ALUE OF THE PROPERTY IN ASSESSEE S HAND S . THE LOW ER APPELLATE AUTHORITY REJECTS APPLI CATION OF SECTION 56 FOR WANT OF ASSENT OF THE PRESIDENT OF INDIA . A ND ALSO THAT OF SECTION 50C O N THE GR OUND THAT THE SAME DOES N OT APPLY IN A PURCHASER S CASE . A CO - ORDINATE BENCH DECISION IN HARLEY STREET PHARMACEUTICAL LTD (SUPRA) IS QUOTED IN SUPPORT. THE REVENUE FAILS TO REBUT THE ABOVE STATED FACTUAL AS WELL LEGAL CONCLUSION. ITS SOLE SUBSTANTIVE GRO UND ACCORDINGLY FAILS. REVENUE S APPEAL ITA NO. 1811/AHD/2011 IS DISMISSED. 5. THIS LEAVE S US WITH ASSESSEE S CO NO. 189/ AHD/2011 CHALLENGING DISALLOWANCE OF INTEREST OF RS. 27,78,878/ - U/S. 14A AND THE ONE ON CAR AND DEPRECIATION AMOUNTING TO R S. 14,5 40/ - RESPECTIVELY @ 20%. THE LD. AR AFTER ARGUING BOTH ISSUES FOR SOME TIME STATES THAT HE DOES NOT WISH TO PRESS THE SAME WITH A CONDITION THAT THE CIT(A) S FINDING S UNDER CHALLE NGE BE NOT TREATED AS PRECEDENT . THE REVENUE DOES NOT OBJECT TO THIS PRAYER VERY SERIOUSLY. WE REJECT ASSESSEE S ARGUMENT ON MERITS AS PER THE ABOVE STATED PRAYER WITH A RIDER THAT THIS ORDER SHALL NOT BE TAKEN AS A PRECEDENT. I .T.A NO.1811 /AHD/20 11 & CO. NO. 189/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. SHRI NAGJIBHAI MOHANBHAI SAKARI 5 THE ASSESSEE S CO IS DISMISSED ACCORDINGLY . THIS R EVENUE S APPEAL NO. 1811/AHD/2011 AND A SSESSEE S CO NO. 189/AHD/2011 ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 07 - 08 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 07 /08 /20 15 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,