M/s, Joy Bajaj, Jaipur V. Assistant Commissioner of Income Tax, Ward -4(2), Jaipur

ITA 118/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3776 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 04-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Recovery proceedings
• Section: 56(2)(vii)(b); 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 118/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2015-16. M/S. JOY BAJAJ, 1/567, VIDHYADHAR NAGAR, JAIPUR. CUKE VS. THE ACIT, WARD 4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AHIPB 7102 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ASHOK KHANNA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18.03.2019 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22 /03/2019 VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 14 TH DECEMBER, 2018 OF LD. CIT (A) FOR THE ASSESSMENT YE AR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE L D. AO, IN MAKING ADDITION OF RS. 53,50,000/- U/S 56(2)(VII) O F THE INCOME TAX ACT, 1961. THE ACTION OF THE LD. CIT (A) IS ILL EGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIE F MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 53,50, 000/-. 2. THE ASSESSEE CRAVES HIS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2 ITA NO. 118/JP/2019 M/S. JOY BAJAJ, JAIPUR. 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSE SSEE IS REGARDING ADDITION MADE BY THE AO UNDER SECTION 56(2)(VII) ON ACCOUNT OF LE SSER PURCHASE CONSIDERATION PAID BY THE ASSESSEE FOR ACQUIRING THE IMMOVABLE PROPERT Y. THE AO NOTED THAT THE ASSESSEE PURCHASED TWO OFFICES BEARING NO. 716 & 71 7 AT 7 TH FLOOR, SUN N MOON TOWER, S-4, FATEH SINGH KI DHARAMSHALA, JAIPUR. THE SE OFFICES WERE PURCHASED FROM M/S. RADHA SWAMI BUILDCON PVT. LTD. THROUGH REGISTE RED SALE DEED DATED 16.10.2014 WHICH WERE EXECUTED BY SHRI SHYAM SUNDER BAJAJ, THE FATHER OF THE ASSESSEE IN THE CAPACITY OF DIRECTOR OF M/S. RADHA SWAMI BUILDCON P VT. LTD. AS PER THE SALE DEED, THE TOTAL CONSIDERATION OF 2 OFFICES WAS SHOWN AT R S. 54,50,000/-. HOWEVER, THE ASSESSEE PAID ONLY RS. 1 LAC AT THE TIME OF SALE DE ED AND THE BALANCE AMOUNT WAS NOT PAID BY THE ASSESSEE THOUGH THE CHEQUE NUMBERS WERE MENTIONED IN THE SALE DEED. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE H AS MADE THE PAYMENT OF RS. 50,000/- FOR EACH OFFICE AND THE BALANCE AMOUNT WAS NOT PAID BY THE ASSESSEE. HENCE THE AO HAS MADE THE ADDITION OF BALANCE AMOUN T OF RS. 53,50,000/- UNDER SECTION 56(2)(VII)(B) OF THE IT ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT AS PER THE SALE DEED DATED 16.10.2014 THE PURCHASE CONSIDERATION THROUGH CHEQUE HAS BEEN MENTIONED. HOWEVER, THE SELLER HAS NOT PRESENTED THESE CHEQUES FOR ENCASHMENT AND SUBSEQUENTLY THE ASSESSEE HAS ISSUED ANOTHER CHEQUE FOR PAYMENT OF THE PURCHASE CONSIDERATION THROUGH CORRECTION DEED EXECUTED BETW EEN THE PARTIES ON 15 TH MAY, 2017. THE AO HAS ALSO REFERRED TO THE PROFIT & LOS S ACCOUNT AND BALANCE SHEET OF M/S. RADHA SWAMI BUILDCON PVT. LTD AND SUBMITTED TH AT THE SAID COMPANY HAS SHOWN THE SALES OF THESE TWO OFFICES FOR THE YEAR U NDER CONSIDERATION AND ALSO 3 ITA NO. 118/JP/2019 M/S. JOY BAJAJ, JAIPUR. SHOWN THE ASSESSEE AS DEBTOR IN RESPECT OF THE BALA NCE AMOUNT OF RS. 53,50,000/-. ONCE THE SAID COMPANY HAS SHOWN THE ASSESSEE AS DEB TOR AND THE AMOUNT IS STILL PAYABLE BY THE ASSESSEE, THEN IT CANNOT BE A CASE O F LESSER PURCHASE CONSIDERATION FOR INVOKING PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT. EVEN OTHERWISE, SUBSEQUENTLY THE ASSESSEE HAS PAID THE ENTIRE AMOUN T BY ISSUING THE FRESH CHEQUE AS PER THE CORRECTED DEED DATED 29 TH APRIL, 2017. HENCE THE LD. A/R HAS SUBMITTED THAT THE ADDITION MADE BY THE AO IN VIEW OF THE SUB SEQUENT PAYMENT MADE BY THE ASSESSEE IS NOT SUSTAINABLE. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THERE IS NO DISPUTE THAT AT THE TIME OF PURCHASE OF THESE OFFICE PREMISES NO. 7 16 AND 717 AT 7 TH FLOOR, SUN N MOON TOWER, S-4, FATEH SINGH KI DHARAMSHALA, JAIPUR THE ASSESSEE HAS MADE PAYMENT OF RS. 50,000/- FOR EACH OFFICE TOTAL AMOUN TING TO RS. 1 LAC AS AGAINST THE TOTAL CONSIDERATION OF RS. 54,50,000/-. ONLY WHEN THE AO PROPOSED TO MAKE THE ADDITION UNDER SECTION 56(2)(VII)(B), THE ASSESSEE AFTER THE GAP OF MORE THAN 2 YEARS COME UP WITH THE PLEA THAT NOW THE ASSESSEE H AS MADE THE BALANCE PAYMENT. THEREFORE, THE SUBSEQUENT PAYMENT AS CLAIMED BY THE ASSESSEE IS NOT A VOLUNTARY PAYMENT BUT JUST TO AVOID THE ADDITION MADE BY THE AO. THE LD. CIT (A) HAS CONSIDERED ALL THESE CONTENTIONS AND FACT AND THEN SUSTAINED THE ADDITION BY NOTING THE FACT THAT THE SUBSEQUENT PAYMENT CANNOT BE CONS IDERED AS PAYMENT MADE FOR ACQUISITION OF THE PROPERTIES IN QUESTION WHICH WER E ALREADY ACQUIRED BY THE ASSESSEE AND POSSESSION WAS HANDED OVER TO THE ASSE SSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. IT IS NOT DISPUTED THAT AS PER THE SALE DE ED DATED 16 TH OCTOBER, 2014 THE 4 ITA NO. 118/JP/2019 M/S. JOY BAJAJ, JAIPUR. ASSESSEE PURCHASED TWO OFFICES BEARING NO. 716 & 71 7 AT 7 TH FLOOR, SUN N MOON TOWER, S-4, FATEH SINGH KI DHARAMSHALA, JAIPUR FROM M/S. RADHA SWAMI BUILDCON PVT. LTD. THE SAID COMPANY APPEARS TO BE THE ASSES SEES FAMILY OWNED COMPANY AS THE FATHER OF THE ASSESSEE WAS DIRECTOR AT THAT POI NT OF TIME. WE FURTHER NOTE THAT THE SALE DEEDS WERE EXECUTED BY THE FATHER OF THE A SSESSEE ON BEHALF OF M/S. RADHA SWAMI BUILDCON PVT. LTD. THOUGH IN THE SALE DEED PA RTIES HAVE GIVEN THE DETAILS OF PAYMENT THROUGH CHEQUE NUMBERS, HOWEVER, EXCEPT RS. 50,000/- FOR EACH OFFICE, THE OTHER PAYMENTS WERE NOT ACTUALLY MADE. THE DET AILS OF THE CHEQUES AS GIVEN IN THE SALE DEED ARE AS UNDER :- S.NO. CH./DD NO. BANK NAME AMOUNT (RS.) 1. 187498 SBBJ, M.I. ROAD, JAIUR 50,000/- 2. 358858 SBBJ, C-SCHEME, JAIPUR 10,00,000/- 3. 358859 SBBJ, C-SCHEME, JAIPUR 10,00,000/- 4. 358866 SBBJ, C-SCHEME, JAIPUR 7,50,000/- TOTAL : 28,00,000/- S.NO. CH./DD NO. BANK NAME AMOUNT (RS.) 1. 187498 SBBJ, M.I. ROAD, JAIUR 50,000/- 2. 358863 SBBJ, C-SCHEME, JAIPUR 10,00,000/- 3. 358864 SBBJ, C-SCHEME, JAIPUR 10,00,000/- 4. 358867 SBBJ, C-SCHEME, JAIPUR 6,00,000/- TOTAL : 26,50,000/- THERE IS NO DISPUTE THAT EXCEPT THE FIRST CHEQUE, T HE OTHER CHEQUES WERE NEVER PRESENTED FOR ENCASHMENT. IT IS ALSO NOT CLEAR WHET HER THE OTHER CHEQUES WERE ACTUALLY HANDED OVER BY THE ASSESSEE TO THE SAID CO MPANY. SUBSEQUENTLY, WHEN THERE WAS A CHANGE IN THE MANAGEMENT OF THE SAID CO MPANY THEY INITIATED THE 5 ITA NO. 118/JP/2019 M/S. JOY BAJAJ, JAIPUR. RECOVERY PROCEEDINGS AGAINST THE ASSESSEE. THE AO PROPOSED TO MAKE THE ADDITION OF THE BALANCE AMOUNT OF RS. 53,50,000/- AS THE ASS ESSEE NEVER PAID THE SAID AMOUNT TILL THE ASSESSMENT PROCEEDINGS WERE INITIAT ED BY THE ASSESSING OFFICER. THE ASSESSEE HAS NOT DISPUTED THE FACT THAT THE BALANCE AMOUNT WAS FINALLY PAID THROUGH THE CHEQUES DATED 11 TH APRIL, 2017. THUS THE SAID PAYMENT WAS MADE AFTER THE EXPIRY OF ABOUT 2 YEARS FROM THE DATE OF PURCHAS E OF THESE TWO OFFICES. IT IS APPARENT THAT THOUGH FOR THE PURPOSE OF REGISTRATIO N OF SALE DEED THE PAYMENT WAS SHOWN THROUGH CHEQUES, HOWEVER, IT WAS NEITHER THE INTENTION OF THE ASSESSEE TO PAY THE AMOUNT NOR IT WAS INTENTION OF THE SELLER T HROUGH THE FATHER OF THE ASSESSEE TO RECOVER THE SAID SALE CONSIDERATION FROM THE ASS ESSEE. ONLY WHEN THERE WAS A CHANGE IN THE MANAGEMENT, THE SAID SELLER COMPANY I NITIATED THE RECOVERY AND FINALLY THE ASSESSEE PAID THE BALANCE AMOUNT BY ISSUING THE CHEQUES ON 11 TH APRIL, 2017. FROM THESE UNDISPUTED FACTS IT IS CLEAR THAT THE AS SESSEE HAS FINALLY PAID THE PURCHASE CONSIDERATION TO THE EXTENT OF RS. 53,50,0 00/- AFTER A GAP OF MORE THAN 2 YEARS AND, THEREFORE, THE ASSESSEE HAS ENJOYED TH E MONEY FOR SUCH A LONG TIME AS WELL AS THE PROPERTIES IN QUESTION. THE VALUE OF T HE PURCHASE CONSIDERATION PAID SUBSEQUENTLY HAS TO BE DETERMINED BY APPLYING THE I NTEREST FACTOR FOR THE SAID PERIOD OF DELAY IN MAKING THE PAYMENT. SINCE THE PAYMENT WAS FINALLY MADE BY THE ASSESSEE AND THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO, THEREFORE, THE ADDITION OF THE ENTIRE AMOUNT IS NOT SUSTAINABLE BUT ONLY TO TH E EXTENT OF THE DIFFERENTIAL VALUE OF THE PURCHASE CONSIDERATION AS ON THE DATE OF PURCHA SE NEEDS TO BE DETERMINED FACTORING THE ELEMENT OF INTEREST FOR SUCH DELAYED PAYMENT AND HENCE THE ADDITION UNDER SECTION 56(2)(VII)(B) WOULD BE MADE ONLY TO T HE EXTENT OF THAT DIFFERENTIAL VALUE THE ASSESSEE HAS PAID LESSER THAN THE ACTUAL AMOUNT OF CONSIDERATION DUE TO 6 ITA NO. 118/JP/2019 M/S. JOY BAJAJ, JAIPUR. THE DELAY OF PAYMENT WITHOUT ANY INTEREST. THE AO IS DIRECTED TO COMPUTE THE AMOUNT WHICH WAS TO BE DETERMINED THE REAL VALUE OF THE PURCHASE CONSIDERATION BY CONSIDERING THE ACTUAL PAYMENT DATE AND THE DATE OF PURCHASE. THE BALANCE ADDITION MADE BY THE AO SHALL STAND DELETED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/03/201 9. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/03/2019. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. JOY BAJAJ, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT WARD 4(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO.118/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR