The DCIT, Central Circle-2, Baroda V. Shri Samir M.Shah, Baroda

ITA 1287/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6965 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Salary income
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI , A.M. & SHRI KUL BHARAT, J.M. ) I. T. A. NO. 1287 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2007 - 08) THE D.C.I.T, CENTAL CIRCLE - 2, BARODA V/S SHRI SAMIR M. SHAH, 25 SAMPATRAO COLONY, R.C. DUTT ROAD, BARODA (APPELLANT) (RESPONDENT) PAN: ADPPA0478J APPELLANT BY : SHRI V. K. SINGH, SR. D.R. RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 28 - 11 - 2014 DATE OF PRONOUNCEMENT : 12 - 12 - 2014 P ER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - III, BARODA DATED 04.11.2011 FOR A.Y. 2007 - 08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAINS. ASSESSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 07 - 08 ON 14.02.2008 DECLARING TOTAL INCOME OF RS.6, 47,460/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION ITA NO 1287/AHD/2011 . A.Y. 2007 - 08 2 143(3) VIDE ORDER DATED 22.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 28,66,960/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 04.11.2011 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIE VED BY THE AFORESAID ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS; - 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.22,19,500/ - MADE BY THE ASSESSING OFFICER BY INVOKING TH E PROVISIONS OF SECTION 69B OF THE ACT AND SECTION 50C OF THE ACT, BY HOLDING THAT THE PROVISIONS OF SECTION 50C CANNOT BE APPLIED IN THE CASE OF PURCHASER OF THE PROPERTY. 2. THE LEARNED C.I.T(A),FURTHER ERRED IN LAW AND. ON FACTS OF THE CASE IN HOLDING THAT THERE WAS NO EVIDENCE BROUGHT ON RECORD BY THE A.O. TO MAKE THE ADDITION OF RS.22,19,500/ - AS UNEXPLAINED INVESTMENT BY INVOKING THE PROVISIONS OF SECTION 69B OF THE ACT AND IGNORING THAT THE SALE DEED DULY REGISTERED WITH STAMP DUTY VALUATION AUTHORITY A FTER ADOPTING THE JANTRI RATES WAS AN IMPORTANT EVIDENCE TO MAKE THE ADDITION US.69B OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER ON THE ABOVE ISSUE BY CONFIRMING THE ADDITION OF RS,22,19,500/ - FOR THE REASONS DISCUSSED IN THE ASSESSMENT ORDER. 4. BEFORE US, BOTH THE PARTIES SUBMITTED THAT T HOUGH VARIOUS GROUNDS HAVE BEEN RAISED THE ISSUE IS ONLY WITH RESPECT TO ADDITION OF RS. 22,19,500/ - MADE U/S. 69B OF THE ACT . 5. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAD PURCHASED A HOUSE PROPERTY IN BOMBAY FOR A SUM OF RS. 75 LACS BUT AS PER THE STAMP VALUATION , THE PROPERTY WAS REGISTERED AT RS. 97,19,500/ - AND THUS THERE WAS A DIFFERENCE OF RS. 22,1 9,500/ - BETWEEN THE PURCHASE VALUE OF THE HOUSE PROPERTY AND VALUE AS PER THE STAMP VALUATION. A.O WAS THEREFORE OF THE VIEW THAT ASSESSEE HAS PAID D IFFERENTIAL AMOUNT WITHOUT RECOR DING THE SAME IN HIS BOOKS OF ACCOUNTS. HE ACCORDINGLY CONSIDERED THE SAME AS UNACCOUNTED INVESTMENTS AND MADE ADDITION OF RS. 22,19,500/ - U/S 69B OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND VARIOUS DECISIONS , DELETED THE ADDITION BY HOLDING AS UNDER: - 5.4 HAVING CONSIDERED THE ABOVE, SECTION 50C, AS THE HEAD NOTE ITSELF SAYS IS A SPECIAL PROVISION AND CREATE A LEGAL FICTION TO DEEM THE RATE ADOPTED BY THE STAMP VALUATION AUTHORITY AS FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPU TATION OF CAPITAL GAIN UNDER SECTION 48 UNDER CHAPTER IV - E - UNDER THE HEAD 'CAPITAL GAINS'. ITA NO 1287/AHD/2011 . A.Y. 2007 - 08 3 ON READING THE PROVISIONS OF SECTION 50C, IT IS CLEAR THAT IT IS APPLICABLE ONLY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS IN THE HANDS OF VENDOR BY DEEMIN G VALUATION AS PER STAMP AUTHORITY AS CONSIDERATION ACCRUING TO THE VENDOR. IT IS NOT APPLICABLE FOR ASCERTAINING THE CONSIDERATION PAID OR ACTUAL COST TO THE ASSESSEE. THEREFORE THE FICTION CREATED BY SECTION 50C HAS LIMITED APPLICATION FOR COMPUTATION OF CAPITAL GAIN IN THE HANDS OF THE SELLER. SO FAR AS BUYER IS CONCERNED UNLESS AND OTHERWISE, THE AO FIND SOME EVIDENCE BEYOND DOUBT OF HAVING ACTUALLY MADE THE PAYMENT IN EXCESS OF THE CONSIDERATION MENTIONED IN THE DEED, NO ADDITION CAN BE MADE WITHIN THE MEANING OF SEC.69B OF THE ACT AS THE SAID SECTION SPEAKS ABOUT THE AMOUNT OF INVESTMENT ETC. NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT - WHERE THE ASSESSEE MADE INVESTMENT ETC. AND THE AO FIND THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENT ETC. EXCE EDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION OR THE EXPLANATION OFFERED IN THE OPINION OF THE AO IS NOT SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED THE INCOME OF THE ASSE SSEE FOR SUCH FINANCIAL YEAR. THE SECTION 69B IS PART OF CHAPTER VI OF THE I.T. ACT, 1961 BEING PART OF AGGREGATION OF INCOME AND SET OFF OF CARRY FORWARD OF LOSS. 5.5 AS STATED EARLIER, SECTION 50C IS A LEGAL FICTION CREATED BY THE LEGISLATURE TO DEEM THE FUL L VALUE OF CONSIDERATION TAKEN BY STAMP VALUE AUTHORITY WHEREAS A LEGAL FICTION IS A LEGAL ASSUMPTION OF THING THAT A THING IS TRUE WHICH IS EITHER NOT TRUE OR WHAT IS PROBABLY FALSE OR UNTRUE. 5.6 IN VIEW OF THE AFORESAID, THE LEGAL ASSUMPTIONS THEREOF CANNOT BE IMPORTED TO SEC. 69B. IT IS FOR THE AO TO BRING OUT AND ESTABLISH BEYOND THE REASONABLE DOUBT THAT THE ASSESSEE HAS ACTUALLY PAID FOR THE INVESTMENT UNDER REFERENCE AND THAT SUM SO PAID IS NOT RECORDED IN THE BOOKS AND THE EXPLANATION IS EITHER NOT OFF ERED OR IS NOT SATISFACTORY. THE SECOND LIMBS OF THE SECTION I.E. EXPLANATION NOT OFFERED OR EXPLANATION NOT BEING SATISFACTORY IS WITH REFERENCE TO AMOUNT PAID FOR THE INVESTMENT UNDER REFERENCE WHICH IS NOT RECORDED IN THE BOOKS. AS CAN BE OBSERVED FROM THE ASSESSMENT ORDER THAT THERE IS NO EVIDENCE THAT ANY EXTRA AMOUNT WHETHER BY CASH OR CHEQUE OR BY ANY OTHER MODE HAS BEEN PAID FOR THE INVESTMENT WHICH IS NOT RECORDED IN THE BOOKS AND WITHOUT GIVING THAT FINDING, THE SAID INVOKING OF PROVISIONS OF SECT ION 69B IS BEYOND JURISDICTION SINCE LEGAL FICTION CREATED IN SEC. 50C CANNOT BE EXTENDED BEYOND FOR THE PURPOSE FOR WHICH IT IS CREATED. THUS, THE APPELLANT HAS RIGHTLY SO AGITATED WHILE STATING THAT 'IT IS NOT UNDERSTOOD ON THE BASIS OF WHICH CONCLUSIVE EVIDENCE THE AO SAYS THAT THE ASSESSEE HAS PAID THE SUM OF 22,19,500/ - TO THE SELLER WITHOUT RECORDING IT IN THE BOOKS OF ACCOUNT '. IT IS A FACT THAT THERE IS NOTHING ON RECORD WHICH SAYS OR ESTABLISHES THAT THE APPELLANT HAS PAID MORE THAN WHA T HAS BEEN RECORDED IN THE DEED OF SALE NEITHER ANY SUCH EVIDENCE HAS BEEN BROUGHT OUT IN THE ORDER BY THE AO THAT ANY SUCH PAYMENT HAS TAKEN PLACE. HENCE, IT HAS TO BE INFERRED THAT THE AO HAS INVOKED THE PROVISION WITHOUT ANY EVIDENCE AND JURISDICTION. 6. BEFORE US, LD. D.R. RELIED ON THE ORDER OF A.O. ON THE OTHER HAND THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE CIT(A) AND SUPPORTED HIS ORDER. HE FURTHER PLACED RELIANCE ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARJAN REA LITIES LTD. (2013) 40 TAXMAN.COM 398 (GUJ). HE THUS SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . IN THE PRESENT CASE, WE FIND THAT A.O HAS TREATED THE DIFFERENCE BETWEEN THE AMOUNT AS NOTED BY THE STAMP VALUATION AUTHORITIES FOR VALUATION PURPOSE AND THE AMOUNT SHOWN BY THE ASSESSEE IN THE SALE DEED AS INCOME U/S 69B OF THE ACT. WE FIND THAT CIT(A) HAS GIVEN A FINDING THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE ITA NO 1287/AHD/2011 . A.Y. 2007 - 08 4 FOR ASCERTAINING THE CONSIDERAT ION PAID OR ACTUAL COST TO THE ASSESSEE WHO IS BUYER OF THE PROPERTY . HE HAS FURTHER GIVEN A FINDING THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE A.O OF PROOF OF PAYMENT OF ANY EXTRA AMOUNT BY WAY OF CASH CHEQUE OR ANY OTHER MODE WHICH HAS BEEN PAID FOR INVESTMENTS AND HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS. WE FURTHER FIND THAT THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARJAN REALITIES LTD (SUPRA) HAS HELD THAT DEEMING FICTION CREATED BY SECTION 50C WHICH SUBSTITUTES CONSIDERATIO N RECEIVED ON SALE OF A CAPITAL ASSET BY STAMP DUTY VALUATION, IS APPLICABLE ONLY CASE OF A SELLER AND NOT BUYER OF PROPERTY. BEFORE US, REVENUE HAS BEEN BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A) NOR HAS BROUGHT ANY CONTRARY BINDI NG DECISION IN ITS SUPPORT. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 1 2 - 12 - 201 4 . SD/ - SD/ - (KUL BHAR AT ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. T HE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD