INCOME TAX OFFICER 5(3)(4), MUMBAI V. M/S. SAJJID PROPERTIES & TRADING PVT.LTD., MUMBAI

ITA 1109/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3702 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-10-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S ARNEJA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Income from undisclosed sources; Assessment record; Capital Gains
• Section: 143(3); 50C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI E BENCH, MUMBAI E BENCH, MUMBAI E BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R. K. PANDA , A.M. BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R. K. PANDA , A.M. BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R. K. PANDA , A.M. BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R. K. PANDA , A.M. I.T.A. NO.1108/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER 5(3)(4) ROOM NO.565, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI VS. SAIF PROP ERTIES & MULTI TRADING PVT. LTD. 18/20 B, SEEVRAJ BUILDING, SLEATER ROAD, GRANT ROAD, MUMBAI PAN NO: AAICS6584N PAN NO: AAICS6584N PAN NO: AAICS6584N PAN NO: AAICS6584N (APPELLANT) (RESPONDENT) & I.T.A. NO.1109/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER 5(3)(4) ROOM NO.565, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI VS. SAJJID PROPERTIES & TRADING PVT. LTD. 18/20 B, SEEVRAJ BUILDING, SLEATER ROAD, GRANT ROAD, MUMBAI PAN NO: AAICS6586Q PAN NO: AAICS6586Q PAN NO: AAICS6586Q PAN NO: AAICS6586Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S. ARNEJA APPELLANT BY : SHRI R.S. ARNEJA APPELLANT BY : SHRI R.S. ARNEJA APPELLANT BY : SHRI R.S. ARNEJA RES RES RES RESPONDENT BY : SHRI PONDENT BY : SHRI PONDENT BY : SHRI PONDENT BY : SHRI K. K. K. K. GOPAL GOPAL GOPAL GOPAL ORDER ORDER ORDER ORDER PER R. K. PANDA PER R. K. PANDA PER R. K. PANDA PER R. K. PANDA ,AM ,AM,AM ,AM : :: : THE ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 22.12.2008 OF THE C OMMISSIONER OF INCOME TAX (APPEALS)- V, MUMBAI, RELATING TO ASSESSMENT YEAR 2005-06 IN THE CASES OF THE ABOVE NAMED ASSESSEES. SINCE, COMMON GROUNDS ARE 2 INVOLVED IN BOTH THE APPEALS; THEREFORE, THESE WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. IT ITIT ITA. NO.1108/MUM/2009 A. NO.1108/MUM/2009 A. NO.1108/MUM/2009 A. NO.1108/MUM/2009 (ASSESSMENT (ASSESSMENT (ASSESSMENT (ASSESSMENT YEAR: YEAR: YEAR: YEAR: 2005 2005 2005 2005- -- -06 0606 06) )) ) (SAIF PROPERTIES & MULT (SAIF PROPERTIES & MULT (SAIF PROPERTIES & MULT (SAIF PROPERTIES & MULTI TRADING PVT. LTD) I TRADING PVT. LTD) I TRADING PVT. LTD) I TRADING PVT. LTD) 2 GROUND OF APPEAL NO.1 RAISED BY THE REVENUE READS A S UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE BY THE ASSESSING OFFICER U/S.68 OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACT THAT THE SAME WAS ROUTE D BY THE DIRECTOR OF THE COMPANY THROUGH HIS FAMILY SOURC ES. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY AND HAS NOT CARRIED OUT ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE COMPANY PURCHASED OFFICE PRE MISES AT SHREEJI PLAZA AT BANDRA, MUMBAI FOR A CONSIDERATION OF RS.1,37,94,490/-. THIS PROPERTY WAS PURCHASED BY THE ASSESSEE BY TAKING LOAN S FROM ITS DIRECTOR MR. SAJJID KHAN. THE PAYMENTS FOR THE PURCH ASE OF PROPERTY WERE MADE BY MR. SAJJID KHAN AS UNDER: DATE OF PAYMENT DATE OF PAYMENT DATE OF PAYMENT DATE OF PAYMENT NATURE OF PAYMENT NATURE OF PAYMENT NATURE OF PAYMENT NATURE OF PAYMENT AMOUNT AMOUNT AMOUNT AMOUNT 11.09.2004 PURCHASE CONSIDERATION 1,28,00,000 09.09.2004 STAMP DUTY CHARGES 8,50,075 28.10.2004 BROKERAGE 1,25,000 OTHER EXPENSES 425 TOTAL TOTAL TOTAL TOTAL 1,37,75,500 1,37,75,500 1,37,75,500 1,37,75,500 3 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSE E EXPLAINED THE SOURCES OF PAYMENT OF RS.1,28,00,000/- F OR PURCHASE OF PROPERTY AS UNDER : (A) ON 20.03.2004 MR. SAJJID KHA GAVE GIFTS OF RS.5.5 CRORES TO HIS FAMILY MEMBERS AS FOLLOWS : MRS. FIRDAUS KHAN WIFE RS.2,00,00,000/- MS. SHEHLA S. KHAN DAUGHTER RS.2,00,00,000/- MR. SAIF S KHAN SON RS.1,50,00,000/- (B) THESE GIFTS WERE GIVEN BY MR. SAJJID KHAN BY ACCOUNT PAYEE CHEQUES DRAWN ON HDFC BANK DRAWN ON ITS A K MA RG BRANCH, MUMBAI. THESE AMOUNTS WERE CREDITED TO THE BA NK ACCOUNTS OF DONEES ON 9 TH AND 10 TH MARCH, 2004. (C) MRS. FIRDAUS S. KHAN FLOATED PROPRIETARY CONCERN M/ S. SFS HOLDING ON 1.3.2004. IN THIS FIRM SHE INTRODUCED AMOUNT OF RS.2 CRORES AS HER CAPITAL ON 15.3.2004. THIS IS THE SAME AMOUNT WHICH SHE RECEIVED AS GIFT FROM HER HUSBAND MR . SAJJID KHAN AS EXPLAINED ABOVE. M/S. SFS HOLDING ALSO TOOK LOANS OF RS.2 CRORES FORM MS. SHEHLA S. KHAN AND LOANS O F RS.1.5 CRORES FROM MR. SAIF S KHAN. THESE ARE THE AMOU NTS THESE PERSONS RECEIVED AS GIFTS FROM THEIR FATHER. ALL T HESE TRANSACTIONS WERE CARRIED THROUGH THE BANK AND CHEQU ES WERE CLEARED ON 16.3.2004. (D) ON 16.4.2004 M/S. SFS HOLDING GAVE LOANS OF RS.5.5 CRORES TO MR. SAJJID KHAN AND WITH THIS AMOUNT MR. SA JJID KHAN PURCHASED FIXED DEPOSITS AGGREGATING TO RS.5.5 CRO RES. THESE FIXED DEPOSITS WERE LATER ON ENCASHED BY MR. SAJJ ID KHAN AS UNDER :- 17.6.2004 RS.1,50,00,000/- 2.7.2004 RS.2,00,00,000/- 10.9.2004 RS.2,00,00,000/- (E) OUT OF THE PROCEEDS OF THE ENCASHED DEPOSIT OF RS.2 CRORES ON 11.09.2004, MR. SAJJID KHAN GAVE LOANS OF RS.1,28,00,000/- TO THE ASSESSEE COMPANY ON 11.09.2004. WITH THE HELP OF THIS MONEY, THE ASSESSEE COMPANY PURCHASED PROPERTY FROM SHRIJI DEVELOPERS AT BANDRA. ALL THESE TRANSACTIONS ARE THROUGH THE BANKS AND THERE ARE NO DISPUTES ABOUT THESE FACTS. 4 2.3 FURTHER, MR. SAJJID KHAN GAVE FURTHER AMOUNT O F RS.9,75,500/- TO THE ASSESSEE COMPANY AS LOANS FROM HIS PRO PRIETARY CONCERN M/S. SAKS INDIA ON DIFFERENT DATES AS EXPLAINED ABOVE. THESE PAYMENTS ARE ALSO MADE FROM THE BANK ACCOUNT NO. CA-1 803 WITH BANK OF BARODA AND FROM HIS ACCOUNT WITH HDFC BANK, BHULA BHAI DESAI ROAD BRANCH. 2.4 HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. HE TREATED THE LOAN OF RS.1,37,94 ,490/- (THE CORRECT AMOUNT IS RS.1,37,75,500/-) TAKEN BY THE ASSESSE E COMPANY FROM ITS DIRECTOR AS UNEXPLAINED IN THE HANDS OF THE ASSESSEE COMPANY AND TREATED THE SAME AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. THE ASSESSING OFFICER AFTER MENTIONING THE ABOVE STATED FACTS HELD THAT, SINCE THE DIRECTOR O F THE ASSESSEE COMPANY HAS RECEIVED THE LOANS FROM HIS FAMILY MEMBERS WHO HAVE NO SOURCE OF INCOME, THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO PROVE THE CREDIT WORTHINESS OF THE LOAN CREDITORS. THE ASSESSING OFF ICER HELD THAT RECEIPT OF MONEY IN THE HANDS OF THE ASSESSEE IS THE RESUL T OF MONEY LAUNDERING DEVICE AND IS ROTATION OF UNACCOUNTED FUN DS. THE ASSESSING OFFICER HELD THAT THE ASSESSEE COMPANY HAS INTRODUCED IT S OWN UNDISCLOSED MONEY IN THE GUISE OF LOANS. THE ASSESSING OFFI CER ACCORDINGLY, TREATED THE SAME AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. 5 2.5 BEFORE CIT (APPEALS) IT WAS SUBMITTED THAT THE UL TIMATE SOURCE OF PAYMENT OF LOANS OF RS.1,28,00,000/- TAKEN B Y THE ASSESSEE COMPANY IS THE GIFTS GIVEN BY THE DIRECTOR OF THE ASSESSE E COMPANY MR. SAJJID KHAN TO HIS FAMILY MEMBERS IN THE ASSESSMENT YEAR 2004-05. THE MONEY GIVEN BY MR. SAJJID KHAN HAS COME BACK TO HIM BY WAY OF LOANS AND DIRECTOR HAS INTRODUCED THIS MONEY IN THE ASSESSEE CO MPANY AS LOANS. IT WAS FURTHER SUBMITTED THAT FURTHER PAYMENT FOR RS.9,75,500/- HAS BEEN MADE FROM THE BANK ACCOUNT OF PROPRIETARY C ONCERNS OF DIRECTOR M/S. SAKS INDIA AND FROM THE INDIVIDUAL BANK ACCOUNT OF THE DIRECTORS. THE SOURCES OF THE PAYMENT MADE IS FULLY EXP LAINED AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER OF DIRECTOR DATED 18.12.2007. THE ASSESSEE CLAIMED THAT T HE ADDITION MADE BY THE ASSESSING OFFICER IS REQUIRED TO BE DELETED AS (A) IT HAS PROVED THE IDENTITY OF THE PERSON GIVING THE LOAN I.E. MR. SAJJID KHAN, WHO IS DIRECTOR OF THE APPELLANT CO MPANY. (B) IT HAS ALSO PROVED THE CAPACITY OF MR. SAJJID KHAN. (C) GENUINENESS OF THE TRANSACTION IS ALSO PROVED AS ALL THE TRANSACTIONS ARE CARRIED THROUGH BANKS. 3 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE C IT (APPEALS) DELETED THE ADDITION BY HOLDING AS UNDER:- 3.5.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. IN THE APPELLATE PROCEEDING THE AUTHORIS ED REPRESENTATIVE OF THE APPELLANT FILED PAPER BOOK CON TAINING 113 PAGES. THIS PAPER BOOK WAS REFERRED TO THE ASSESSING OFFICER FOR HIS REPORT VIDE LETTER DATED 23.01.2008 BY THE CIT(A) XV HAVING JURISDICTION OVER THE APPEAL AT THA T TIME. 6 THE ASSESSING OFFICER FILED THE REPORT ON 15.12.2008. T HE ASSESSING OFFICER REPORTED AS UNDER: AFTER CONSIDERING THE PAPER BOOK AND SUBMISSIONS MADE BY THE ASSESSEE AND AFTER GONE THROUGH THE ASSESSMENT RECORD, IT APPEARS THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE RESPECTIVE ADDITIONS IN T HE CASE, AFTER DISCUSSING THE ISSUES INVOLVED IN A DETAILED MANNER AS CAN BE SEEN FROM THE ASSESSMENT ORDER DTD.26.11.2007 PASSED U/S.143(3), WHICH IS A SELF- CONTENT. THE ASSESSEE HAD MADE CIRCULAR TRANSACTIONS OF FUNDS WITHIN A SPAN OF SHORT PERIOD OF ONE MONTH AMONG MR. SAJJID A.KHAN, MRS. FIRDUAS SAJJID KHAN, MS. SHEHLAR S.KHAN AND MR.SAIF S. KHAN. THE TRANSACTIONS CARRIED OUT APPEARS TO BE MAKE BELIEVE AND NOT GENUINE. IN VIEW OF THE ABOVE, IT IS OPINED THAT THE SUBMISSIONS MADE BY THE ASSESSEE IN THE APPELLATE PROCEEDINGS U/S.250 (4) MAY NOT BE CONSIDERED. HOWEVER, THE CASE MAY KINDLY BE DECIDED ON MERITS. 3.5.2 FACTS AS REPRODUCED IN PARA 3.1 OF THIS ORDER SHOWS THAT THE ULTIMATE SOURCE OF LOANS TAKEN BY THE APPELLANT FROM ITS DIRECTOR IS THE DIRECTOR MR. SAJJ ID KHAN. THE TRANSACTIONS HAVE BEEN DISCLOSED BY MR. SAJJID KHAN IN HIS RETURN OF INCOME TAX AND THE CAPACITY OF MR. SAJJID KHAN IS ALSO PROVED. MR. SAJJID KHAN HAS ACCEPTED THE FACT TH AT HE HAS GIVEN LOANS TO FOUR COMPANIES INCLUDING THE APPELL ANT COMPANY AND EXPLAINED THESE FACTS TO HIS ASSESSING OFFICER S VIDE LETTER DATED NIL FILED BEFORE THE ASSESSING OFFICE R IN HIS ASSESSMENT PROCEEDING (PAGE 61 OF THE PAPER BOOK). THE ASSESSING OFFICER OF MR. SAJJID KHAN ACCEPTED THE EXPLANATION OF MR. SAJJID KHAN AND DID NOT MAKE ANY ADDITION ON THIS ISSUE IN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT DATED 18.12.2007. THE APPELLANT HAS NOT CARRIED OUT ANY BUSINESS DURING THE Y EAR UNDER CONSIDERATION. THE APPELLANT COMPANY HAS BEEN A BLE TO PROVE THE GENUINENESS OF THE TRANSACTION AND IDENTI TY AND CAPACITY OF THE PERSON WHO HAS GIVEN THE LOANS. THOUG H THE REASONS FOR ROTATING THE MONEY BY MR. SAJJID KHAN THR OUGH HIS FAMILY MEMBER IS NOT KNOWN, BUT ON THIS FACT IT CA NNOT BE HELD THAT THE SOURCE OF LOANS TAKEN BY THE APPELLANT COMPANY IS NOT EXPLAINED. THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORDINGLY DELETED. THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 7 4 AGGRIEVED WITH SUCH ORDER OF THE CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 THE LEARNED DR RELIED ON THE ORDER OF THE AO. 6 THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND WHILE RELYING ON THE ORDER OF THE CIT(APPEAL) REFER RED TO THE VARIOUS PAGES OF THE PAPER BOOK. REFERRING TO THE COPY OF T HE BALANCE SHEETS, CAPITAL ACCOUNT, BANK ACCOUNT AND ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06 OF MR. SAJJID KHAN, HE SUBMITTED THAT M R. SAJJID KHANS IDENTITY AND CREDIT WORTHINESS IS PROVED. REFERRING T O THE GIFT DEEDS, GIVING GIFTS BY MR. SAJJID KHAN TO HIS WIFE, DAUGHTER AND SON, THE LEARNED AR SUBMITTED THAT THE GENUINENESS OF THE SAME HAS NOT BE EN DOUBTED BY THE AO ASSESSING MR. SAJJID KHAN. THEREFORE, IN ABS ENCE OF ANY ADVERSE MATERIAL, THE AO SIMPLY CANNOT MAKE THE ADDIT IONS. 7 WE HAVE CONSIDERED THE RIVAL SUBMISSION MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO & THE CIT(APPEALS) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO MA DE THE ADDITION OF RS.1,37,94,470/- BEING THE LOAN TAKEN FROM THE DI RECTOR MR. SAJJID KHAN ON THE GROUND THAT THE SAME IS FALSE AND THAT THE ASSESSEE COMPANYS OWN MONEY HAS BEEN INTRODUCED IN THE BOOKS IN THE GUISE OF LOAN WHICH IS FORM UNDISCLOSED SOURCE. WE FIND FROM THE CAPITAL ACCOUNT OF MR. SAJJID KHAN FOR THE YEAR ENDING 31.03.2004 A ND A COPY OF WHICH IS 8 PLACED AT PAPER BOOK PAGE 58 THAT HE HAD SHOWN DRAW L OF RS.5,50,10,000/- AS GIFTS AND ARTICLES ACCOUNT. FURTHE R, THE OPENING CAPITAL AS ON 01.04.2003 WAS RS.11,09,48.610.66 AND TH E CLOSING CAPITAL AFTER THE DRAWLS ON ACCOUNT OF GIFTS AND ARTICLES AS O N 31.03.2004 WAS RS.5,04,06,229.71. WE FIND THE AO HAS ALSO COMPLETED THE ASSESSMENT U/S.143(3) FOR THE ASSESSMENT YEAR IN THE CASE OF SHRI SA JJID KHAN 2005- 06 IN THE CASE OF MR SAJJID KHAN AND THE BALANCE SHE ET AND CAPITAL ACCOUNT FOR THE YEAR HAS NOT BEEN DISTURBED. WE FIND THE GIFTS DURING THE YEAR 2003-04 ARE PAID BY ACCOUNT PAYEE CHEQUE TO HI S WIFE, DAUGHTER AND SON AND ARE EVIDENCED BY DULY EXECUTED GIFT DEED S. THE ASSESSEES EXPLANATION BEFORE THE ASSESSING OFFICER THAT M/S SFS HOLDING FLOATED BY MRS FIRDAUS KHAN WHEREIN SHE HAS INVESTED ` 2.00 CROR ES AND FURTHER TOOK LOAN OF ` 2 CROES FROM SHEHLA S KHAN AND ` 1.50 CRORES FROM SAIF S KHAN HAS NOT BEEN COTROVERRTED. FURTHER, THE LOAN OF `. 5.5 CRORES GIVEN TO MR SAJJID KHAN OUT OF WHICH HE PURCHASED THE FDS AND SUBSEQUENTLY EN-CASHED THESE DEPOSIT OUT OF WHICH HE GAVE LOAN OF ` 1,28,00,000 TO THE ASSESSEE COMPANY REMAINS UNCONTROVERTED. AS STATED BY THE AO IT IS ALSO A FACT THAT THE ASSESSEE COMPANY HAD NOT DONE ANY B USINESS DURING THE YEAR. SINCE, THE COMPANY WAS INCORPORATED ONLY ON 15.09.2004, THEREFORE, THERE WAS NO BUSINESS IN THE PAST. THEREFORE , THE PRESUMPTION OF THE AO THAT ASSESSEES OWN MONEY INTRODUCED IN THE B OOKS OF ACCOUNTS, IN THE GUISE OF LOANS WHICH IS FROM UNDISCL OSED SOURCES, IN OUR OPINION IS BASELESS. 9 7.1 IT IS THE SETTLED PROPOSITION OF LAW THAT FOR EXP LAINING ANY CASH CREDIT, 3 INGREDIENTS I.E. IDENTITY OF THE PERSON , CREDIT WORTHINESS OF THE PERSON AND GENUINENESS OF THE TRANSACTION ARE TO BE PROVED. IN THE INSTANT CASE, THE IDENTITY AND CREDIT WORTHINESS OF THE DIRECTOR MR. SAJJID KHAN CANNOT BE DOUBTED. THE GENUINENESS OF THE TRANSAC TION ALSO CANNOT BE DOUBTED. THE AO IN THE ASSESSMENT OF MR. SAJ JID KHAN HAS NOT MADE ANY ADDITION, THE DETAILS OF LOAN GIVEN BY MR. SAJED KHAN TO THE ASSESSEE COMPANY AMOUNTING TO RS.1,37,94,490/- WAS DULY D ISCLOSED TO THE AO WHILE FRAMING THE ASSESSMENT OF SHRI SAJJID KHA N AND A COPY OF WHICH IS AVAILABLE IN THE PAPER BOOK. WE THEREFORE, DO NOT FIND ANY SOUND REASON ON THE PART OF THE AO TO MAKE THE ADDITI ON. FURTHER, IT IS ALSO THE SETTLED PROPOSITION OF LAW THAT PRESUMPTIONS HO WEVER STRONG MAY BE CANNOT BE BASIS FOR ADDITION WITHOUT ANY CORRO BORATIVE MATERIAL. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAIL ED ORDER PASSED BY THE CIT(APPEALS) WHICH HAS BEEN REPRODUCED AT PARA 3 OF THIS ORDER AND IN ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NOTICE BY THE LD DR, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E CIT(APPEALS). WE, ACCORDINGLY UPHOLD THE SAME, THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 8 GROUND OF APPEAL NO.2 RAISED BY THE REVENUE READS AS UNDER:- 10 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.34,92,999/- MADE BY THE ASSESSING OFFICER U/S.69 OF TH E INCOME TAX ACT WITHOUT APPRECIATING THE FACT THAT T HERE IS DIFFERENCE IN DOCUMENT PRICE AND MARKET PRICE A S WORKED OUT BY STAMP DUTY VALUATION. 8.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE P URCHASED AN OFFICE PREMISES AT SHREEJI PLAZA AT BANDRA, MUMBAI FOR A CONSIDERATION OF RS.1,28,000,000/-. THE MARKET VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE WAS RS.1,63,92,999/-. THE ASSESSING OF FICER ASKED THE ASSESSEE TO EXPLAIN THE DIFFERENCE AND ALSO TO EXPLA IN WHETHER IT HAS OBJECTED TO THE AUTHORITIES REGARDING THE VALUATION OF PROPERTY AT THE TIME OF REGISTRATION. IN THE REPLY DATED 10.9.2007, THE ASSESSEE EXPLAINED THAT IT HAS NOT PAID ANY EXCESS PRICE TO THE SELLER. 8.1 ACCORDING TO THE ASSESSING OFFICER IN REAL ESTATE D EALS THE ACTUAL PRICE PAID FOR PURCHASE OF PROPERTY INCLUDES C HEQUE COMPONENTS AND CASH COMPONENTS. WHEN THERE IS DIFFERENCE BETWEEN THE DOCUMENT PRICE AND MARKET PRICE FOR STAMP DUTY PURPOSE, IT IS C LEAR INDICATION OF SUPPRESSION OF PURCHASE PRICE. ACCORDING TO THE ASSESSING OFFICER, AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, F OR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, VALUES ADOPTED BY THE A SSESSING AUTHORITIES FOR STAMP DUTY PURPOSE IS TO BE TAKEN AS SALE VALUE FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS OF AN ASSESSEE. ACCORDING TO THE ASSESSING OFFICER PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT CAN 11 ALSO BE APPLIED IN THE CASE OF PURCHASER. SINCE WHAT IS APPLICABLE TO THE SELLER IN TERM OF SECTION 50C OF THE INCOME TAX ACT I S EQUALLY APPLICABLE TO THE CASE OF THE PURCHASER ALSO. REJECTING THE VARIO US EXPLANATIONS GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITIO N OF `34,92,999/- AS INCOME FROM UNDISCLOSED SOURCES U/S 69 O F THE I T A T, 1961. 8.2 BEFORE CIT(APPEALS) IT WAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE PROPERTY AND NOT SOLD THE SAME. IT WAS SUB MITTED THAT PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT ARE AP PLICABLE WHILE COMPUTING THE CAPITAL GAINS AT THE TIME OF SALE OF PROPERTY. THESE PROVISIONS CAN NOT BE APPLIED WHEN THE PROPERTY IS P URCHASED. IT WAS FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 69 AR E ALSO NOT APPLICABLE TO THE CASE OF ASSESSEE. IT WAS SUBMITTED THA T THE PROVISIONS OF SECTION 69 ARE APPLICABLE WHERE BOOKS OF ACCOUNT O F AN ASSESSEE RECORDS TRANSACTION OF PURCHASE OF PROPERTY AND THE ASSE SSEE IS NOT OFFERING ANY EXPLANATION ABOUT THE NATURE AND SOURCE OF INVESTMENT TO THE SATISFACTION OF THE ASSESSING OFFICER. IT WAS SUBMITTE D THAT THE DIFFERENCE BETWEEN THE STAMP DUTY VALUATION AND CONSI DERATION PAID BY THE ASSESSEE IS NOT THE INVESTMENT MADE BY THE ASSESSEE AND H ENCE CANNOT BE TREATED AS INCOME OF THE ASSESSEE UNDER THE PR OVISIONS OF SECTION 69 OF THE INCOME TAX ACT. 12 9 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE CIT(APPEALS) DELETED THE ADDITION BY HOLDING AS UNDE R :- 4.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER HAS WRONGLY APPLIED TH E PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT IN TH E CASE OF APPELLANT. THESE PROVISIONS ARE TO BE APPLIED WHEN COMPUTING THE CAPITAL GAINS AT THE TIME OF SALE OF IMMOVEABLE PROPERTY. THESE ARE DEEMING PROVISIONS AND THEREFORE, THESE PROVISIONS ARE TO BE STRICTLY INTERPRE TED AND TO BE APPLIED ACCORDINGLY. RELIANCE IS PLACED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF A.V. FERNANDEZ V S. STATE OF KERALA AIR 1957 SC 657, WHEREIN THE HONBLE SUPR EME COURT HAD HELD THAT: 29. IT IS NO DOUBT TRUE THAT IN CONSTRUING FISCAL STATUTES AND IN DETERMINING THE LIABILITY OF A SUBJECT TO TAX ONE MUST HAVE REGARD TO THE STRICT LETTER OF THE LAW AND NOT MERELY TO THE SPIRIT OF THE STATUTE OR THE SUBSTANCE OF THE LAW. IF THE REVENUE SATISFIES THE COURT THAT THE CASE FALLS STRICTLY WITHIN THE PROVISION S OF THE LAW, THE SUBJECT CAN BE TAXED. IF, ON THE OTH ER HAND, THE CASE IS NOT COVERED WITHIN THE FOUR CORNERS OF THE PROVISIONS OF THE TAXING STATUTE, NO TAX CAN BE IMPOSED BY INFERENCE OR BY ANALOGY OR BY TRYING TO PROBE INTO THE INTENTIONS OF THE LEGISLATURE AND BY CONSIDERING, WHAT WAS THE SUBSTANCE OF THE MATTER. WE MUST OF NECESSITY, THEREFORE, HAVE REGARD TO THE ACTUAL PROVISIONS OF THE ACT AND THE RULES MADE THERE UNDER BEFORE WE CAN COME TO THE CONCLUSION THAT THE APPELLANT WAS LIABLE TO ASSESSMENT AS CONTENDED BY THE SALES TAX AUTHORITIES. 4.6 RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SALES TAX COMMISSIONER VS. MODS SUGAR MILLS AIR 1961SC 1047, WHEREIN IT IS HELD, THAT ; IN INTERPRETING A TAXING STATUTE, EQUITABLE CONSIDERATIONS ARE ENTIRELY OUT OF PLACE. N OR CAN TAXING STATUES BE INTERPRETED ON ANY PRESUMPTIONS OR ASSUMPTIONS. THE COURT MUST LOOK SQUARELY AT THE WORDS O F THE STATUTE AND INTERPRET THEM. IT MUST INTERPRET A T AXING STATUTE IN THE LIGHT OF WHAT IS CLEARLY EXPRESSED. IT C ANNOT IMPLY ANYTHING WHICH IS NOT EXPRESSED; IT CANNOT IMPOR T 13 PROVISIONS IN THE STATUTES SO AS TO SUPPLY ANY ASSUMED DEFICIENCY. 4.7 THUS THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT CAN BE APPLIED ONLY TO CASES OF PURCHASE OF PROPERTY. THESE PROVISOS ARE APPLICABLE ONLY WHEN COMPUTATION OF CAPITAL GAINS IS UNDER QUESTION. THOUG H WHEN THE DIFFERENCE BETWEEN THE VALUE FOR THE PURPOSE OF STAMP DUTY AND THE VALUE ACTUALLY PAID TO THE SELLER, IT D OES LEAD TO THE SUSPICION THAT THE APPELLANT MAY HAVE GIVEN EXTRA CONSIDERATION FOR THE PURCHASE OF PROPERTY, BUT NO AD DITION CAN BE MADE ON THE BASIS OF SUSPICION ALONE. THE ASSESSING OFFICER HAS BROUGHT NO OTHER EVIDENCE ON RECORD THAT THE APPELLANT PAID MORE MONEY TO THE SELLER THAN THE VA LUE DISCLOSED BY THE APPELLANT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. THIS GROUND OF APPEA L OF THE APPELLANT IS ALLOWED. 10 AGGRIEVED WITH SUCH ORDER OF THE CIT(APPEALS), TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 11 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE F ACT THAT THE ASSESSEE HAS PURCHASED THE OFFICE PREMISES AT SHREEJI PLA ZA, BANDRA FROM M/S SHREE DEVELOPERS VIDE AGREEMENT DATED 9.9.2 004 FOR A DECLARED CONSIDERATION OF ` 1,28,0,000/- THERE IS A LSO NO DISPUTE TO THE FACT THAT THE STAMP DUTY AUTHORITIES HAVE DETERMINED SUCH VALUE AT ` 1,63,92,999/-. WE FIND THE ASSESSING OFFICER APPLYI NG THE PROVISIONS OF SEC. 50C OF THE I T ACT MADE THE ADDITION OF ` 34,9 2,999/- U/S 69 OF THE I T ACT ON THE GROUND THAT THE ASSESSEE HAS PAID THE BALA NCE AMOUNT OUT 14 OF HIS UNDISCLOSED SOURCES. WE FIND THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT PROVISIONS OF SEC. 50C OF THE I T ACT CAN BE APPLIED ONLY IN CASE OF SALE OF PROPERTY AND THESE PROVISIONS ARE APP LICABLE ONLY WHEN COMPUTATION OF CAPITAL GAIN IS UNDER QUESTION. FURTHE R, WHEN THERE IS A DIFFERENCE BETWEEN THE VALUATION ADOPTED BY THE STA MP DUTY AUTHORITIES AND THE VALUATION AS PER THE SALE AGREEMENT IT MAY LE AD TO SOME SUSPICION THAT THE ASSESSEE MUST HAVE GIVEN SOME EXTRA CON SIDERATION FOR THE PURCHASE OF PROPERTY; BUT TO BRING THE SAME TO TAX, THE ASSESSING OFFICER HAS TO BRING SOME EVIDENCE ON RECORD TH AT THE ASSESSEE HAS PAID MORE MONEY TO THE SELLER THAN THE VALUE DISCLOSED BY THE ASSESSEE. WE FIND THE ABOVE ISSUE STANDS DECIDED IN FA VOUR OF THE ASSESSEE BY THE DELHI D BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS SMT KUSUM GILANI VIDE ITA NO.1576/DEL/2008 ORDER DA TED 11.12.2009 FOR THE ASSESSMENT YEAR 2004-05. 11.2 WE FIND THE TRIBUNAL IN THE SAID DECISION AFTER CONSIDERING DECISIONS OF COORDINATE BENCH OF THE TRIBUNAL AT PARA 2.1 OF ITS ORDER HAS HELD AS UNDER: 2.1 WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVA L SUBMISSIONS. WE FIND THAT SECTION 50C WAS INTRODUCED IN T HE INCOME TAX ACT, 1961 BY FINANCE ACT, 2002, WITH EFF ECT FROM 1.4.2003, WHICH PERMITTED THE ASSESSING OFFICER TO ADOP T THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCORDING TO BE T HE VALUE ADOPTED BY THE AUTHORITIES OF THE STATE GOVERNMENT F OR PAYMENT OF STAMP DUTY FOR THE PURPOSE OF COMPUTING THE CAPITA L GAINS 15 UNDER THE ACT. THIS SECTION DOES NOT HAVE ANY APPLICA BILITY IN THE CASE OF THE PURCHASER OF THE PROPERTY. IN THE CASE OF THE PURCHASER, IT WAS HELD IN THE AFORESAID ORDER THAT THE ASSESSING OFFICER OUGHT TO HAVE COLLECTED EVIDENCE INDICATING THAT THE ASSESSEE PAID MONEY OR AND ABOVE THE AMOUNT DISCLOSED IN THE PURCHASE DEED. THERE IS NO SUCH EVIDENCE O RECORD. IT WAS FURTHER HELD THAT THE TRIBUNAL CANNOT ISSUE DIRECTIONS TO THE REVENUE IN SECOND APPEAL TO MAKE A REFERENCE TO THE VALUATION O FFICER. RELYING ON THIS ORDER, IT IS HELD THAT THERE WAS NO ER ROR IN THE ORDER OF THE LD CIT(A) WHICH REQUIRES ANY CORRECTION FROM US. 13 ADMITTEDLY IN THE INSTANT CASE NOTHING HAS BEEN BRO UGHT TO OUR NOTICE TO SUGGEST THAT THE ASSESSEE HAS PAID MORE MONEY T HEN WHAT WAS DECLARED IN THE SALE AGREEMENT. THEREFORE, MERELY BE CAUSE THE STAMP DUTY AUTHORITY HAD ADOPTED HIGHER PRICE THAN THE AC TUAL AGREED SALE PRICE, THE SAME IN OUR OPINION CANNOT BE THE BASIS FOR MAKING THE ADDITION U/S 69 OF THE I T ACT. FURTHER, PROVISIONS OF SEC. 50C ARE APPLICABLE FOR COMPUTATION OF CAPITAL GAIN IN CASE O F SALE OF THE CAPITAL ASSET; THEREFORE, WE FIND SUFFICIENT FORCE IN THE SUBM ISSIONS OF THE LD COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SEC; 50C AR E NOT APPLICABLE FOR PURCHASE OF THE PROPERTY. IN THIS VIE W OF THE MATTER AND IN VIEW OF THE DETAILED ORDER PASSED BY THE CIT(A) AND I N ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NOTICE BY THE LD DR, WE UPHOLD THE ORDER OF THE CIT(A). THE GROUND RAISED BY THE R EVENUE IS ACCORDINGLY DISMISSED. IT ITIT ITA. NO.1109/MUM/2009 (ASSESSMENT YEAR A. NO.1109/MUM/2009 (ASSESSMENT YEAR A. NO.1109/MUM/2009 (ASSESSMENT YEAR A. NO.1109/MUM/2009 (ASSESSMENT YEAR : 2005 : 2005 : 2005 : 2005- -- -06) 06) 06) 06) (SAJJID PROPERTIES & TRADING PVT. LTD) (SAJJID PROPERTIES & TRADING PVT. LTD) (SAJJID PROPERTIES & TRADING PVT. LTD) (SAJJID PROPERTIES & TRADING PVT. LTD) 14 THE GROUND RAISED BY THE REVENUE READS AS UNDER:- 16 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE BY THE ASSESSING OFFICER OF RS.1,45,67,715/- WITHOUT APPRECIATING THE FACT THAT THE SAME WAS ROTATED BY TH E DIRECTOR OF THE COMPANY THROUGH HIS FAMILY SOURCES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30,92,999/- MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WITHOUT APPRECIATING THE FACT THAT THE RE IS DIFFERENCE IN DOCUMENT PRICE AND MARKET PRICE A S WORKED OUT BY STAMP DUTY VALUATION WHICH HAS RESULTED IN INCOME FROM UNDISCLOSED SOURCES U/S.69 OF THE INCOME TAX ACT. 15 AFTER HEARING BOTH THE PARTIES, WE FIND THESE GRO UNDS RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS RAISED BY THE REVENUE IN I.T.A. NO.1108/MUM/2009. WE HAVE ALREADY DECIDED TH E ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. FOLLO WING THE SAME RATIO, THESE GROUNDS RAISED BY THE REVENUE ARE DISM ISSED. 17 IN THE RESULT, BOTH THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 8 TH DEC, 2010. SD/ SD/- ( D. K. A D. K. A D. K. A D. K. AGARWAL GARWAL GARWAL GARWAL ) ( R. K. P R. K. P R. K. P R. K. PANDA ANDA ANDA ANDA ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI, DATE: 8 TH DEC 2010 17 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, E - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI/RAJ