ITO 15(3)(1), MUMBAI V. ATUL PRAVINCHANDRA PAREKH, MUMBAI

ITA 1344/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2267 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Fair market value; Onus to prove
• Section: 50C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.1344/MUM/2012 ASSESSMENT YEAR: 2008-09 ITO-15(3)(1), ROOM NO.106, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 / VS. SHRI ATUL PRAVINCHANDRA PAREKH 303, SHOBHA APARTMENT, 3 RD FLOOR, S.NO. ROAD, TAMBE NAGAR, MULUND (WEST), MUMBAI-400080 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AMBPP5491R % & ' $ ( / DATE OF HEARING : 09/12/2015 ' $ ( / DATE OF ORDER: 10/12/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 22/12/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO DELET ING THE ADDITION OF RS.83,58,292/- MADE ON ACCOUNT OF UNEXP LAINED INVESTMENT IN PURCHASING A FLAT. THE CRUX OF ARGUME NT ! / REVENUE BY SHRI ASGHAR ZAIN !'# $ ! / ASSESSEE BY SHRI BHUPENDRA SHAH SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 2 ADVANCED ON BEHALF OF THE REVENUE, THE LD. DR,SHRI ASGHAR ZAIN, IS IDENTICAL TO THE GROUND RAISED BY THE DEFE NDING THE ADDITION MADE IN THE ASSESSMENT ORDER BY FURTHER SU BMITTING THAT THERE WAS A DIFFERENCE BETWEEN THE PURCHASE PR ICE AND THE STAMP VALUATION AUTHORITIES AND THERE IS A SMEL L OF UNDER HAND TRANSACTION. 2. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE, SHRI BHUPENDRA SHAH, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT THE FLAT WAS PURC HASED BY THE ASSESSEE FROM M/S NIRMAL DEVELOPERS AND THE FLA T WHICH WAS ORIGINALLY BOOKED BY MILIN DEORA WAS FINALLY SO LD BY THE DEVELOPER TO THE ASSESSEE. THE ADDITION WAS EXPLAIN ED TO BE MADE MERELY ON PRESUMPTION. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRI EF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.1,72,110/- WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER THE ACT). THE ONLY ISSUE PERTAINS TO THE VALUE OF F LAT AND THE DIFFERENCE BETWEEN THE PURCHASE PRICE AND THE VALUA TION MADE BY THE STAMP DUTY AUTHORITIES. THE ASSESSEE PURCHAS ED THE FLAT DIRECTING FROM THE NIRMAL DEVELOPERS. THE FLAT WAS ORIGINALLY ALLOTTED TO ONE MR. MILIN DEORA. VIDE AL LOTMENT LETTER DATED 15/05/1995, ISSUED BY THE BUILDER, THE ALLOTM ENT VALUE OF THE FLAT WAS RS.13,12,500/-. MR. MILIN DEORA MAD E TOTAL PAYMENT OF RS.4,59,375/- I.E. 35% OF THE VALUE OF T HE FLAT) TILL 18/06/1996. THE WORK OF THE PROJECT WAS STAND STILL TILL 2006 SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 3 AND THE CONSTRUCTION STARTED IN 2007. THE BUILDER V IDE LETTER DATED 11/09/2007 ASKED MR. MILIN DEORA TO MAKE THE PAYMENT, DUE, TOTALING TO 95% OF THE FLAT VALUE. MR . DEORA LOST FAITH IN THE BUILDER AND SURRENDERED THE FLAT. THER E WAS NOT IMMEDIATE BUYER TO THE FLAT AND REFUNDED THE AMOUNT TO MR. DEORA AND MR. DEORA VIDE LETTER DATED 21/12/2007, SURRENDERED HIS ALL RIGHTS OF THE FLAT TO THE BUILD ER. THE BUILDERS VIDE LETTER DATED 02/01/2008 GRANTED NOC T O THE ASSESSEE FOR PURCHASING THE FLAT. THE ASSESSEE AND HIS WIFE REFUNDED RS.4,59,375/- TO MR. MILIN DEORA AND THE R EMAINING AMOUNT OF RS.8,53,125/- PAID TO THE BUILDER AND THU S THE SALE DEED WAS EXECUTED ON 22/02/2008 AND THUS, THE ASSES SEE ALONG WITH HIS WIFE JOINTLY OWNED THE FLAT. THE ASS ESSING OFFICER ADOPTED THE VALUE OF THE FLAT AT RS.91,87,5 00/- BY DOUBTING THE GENUINENESS OF THE TRANSITION AND ISSU ED SUMMONS TO MR. DEORA. BY THE TIME, MR. DEORA CHANGE D HIS RESIDENCE AND THUS THE NOTICE/SUMMONS RETURNED UNSE RVED. THE LD. ASSESSING OFFICER MADE ADDITION OF RS.83,58 ,292/- AS AN UNEXPLAINED INVESTMENT U/S 69B OF THE ACT. 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), THE IMPUGNED ADDITION WAS DELETED, N OW THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS T RIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 4 JUXTAPOSITION AND ANALYZED, UNDER THE FACTS STATED HEREINABOVE, WE FIND THAT THE ASSESSEE FILED WRITTE N SUBMISSIONS BEFORE THE LD. COMMISSIONER OF INCOME T AX (APPEALS) AND FURNISHED THE NEW ADDRESS OF MILIN DE ORA. MR. DEORA WAS EXAMINED BY THE ASSESSING OFFICER AND SUB MITTED A REMAND REPORT BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON 18/10/2011. STATEMENT WAS RECORDED, WH EREIN, MR. DEORA STATED THAT AFTER BOOKING OF FLAT THE PRO JECT WAS HOLD FOR AROUND TWELVE YEARS AND MEAN TIME HE SHIFTED HI S RESIDENCE FROM MULUND TO VILEPARLE AND FURTHER HE L OST INTEREST IN THE FLAT. THE DEVELOPER REFUSED TO REFU ND THE MONEY. SO FAR AS, THE ADDITION MADE U/S 69B OF THE ACT IS CONCERNED, THE ASSESSING OFFICER MADE THE ADDITION ON THE BASI S OF FAIR MARKET VALUE OF THE FLAT. IN SUCH A SITUATION, WE N OTE THAT NO EVIDENCE WAS BROUGHT ON RECORD EITHER TO PROVE THE REAL CONSIDERATION OR THE AMOUNT PAID WAS MORE THAN THE AMOUNT SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN SUCH A SITUATION, THE DECISION IN CIT VS LALIT BHASIN 290 ITR 245 (DELHI) SUPPORTS OUR VIEW. THE FLAT WAS DIRECTLY PU RCHASED BY THE ASSESSEE FROM THE DEVELOPERS. NO PROOF WAS EVER BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE ASSESSE E ACTUALLY PAID EXTRA MONEY OR REFLECTED IN THE ACCOUNTS OF TH E ASSESSEE AND THE BUILDER. THE VALUATION ADOPTED BY THE ASSE SSING OFFICER EVEN IS MORE THAN/DOUBLE OF THE STAMP DUTY VALUATION AUTHORITY. THE BONE OF CONTENTION BETWEEN MR. DEORA AND THE DEVELOPER WAS THE LETTER IN WHICH MR. DEORA WAS ASK ED TO PAY 95% OF THE BOOKING AMOUNT AND THE PROJECT WAS STALL ED FOR SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 5 TWELVE YEARS. EVEN OTHERWISE, THERE IS NO JUSTIFICA TION IN ENHANCING THE SALE PRICE IN THE HANDS OF THE PURCHA SER BY APPLYING PROVISIONS OF SECTION 50C AND THE PROVISIO N CAN ONLY BE APPLIED IN THE HANDS OF THE SELLER WHILE COMPUTI NG CAPITAL GAIN. THERE IS NO APPLICATION OF SECTION 50C OF THE ACT IN THE CASE OF A BUYER. SECTION 50C WAS INTRODUCED BY THE FINANCE ACT, 2002 AND CAME INTO OPERATION FROM 01/04/2003. THE SCOPE AND THE EFFECT OF INSERTION HAVE BEEN ELABORA TED IN DEPARTMENT CIRCULAR NO. 8 OF THE 2002 DATED 27/08/2 002 WITH AN UNDERLINE IDEA FOR COMPUTING CAPITAL GAIN IN REA L ESTATE TRANSACTION. IT PROVIDES THAT WHERE THE CONSIDERATI ON DECLARED TO BE RECEIVED OR ACQUIRED AS A RESULT OF TRANSFER OF LAND OR BUILDING ARE BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE AUTHORITIES OF THE STATE GOVERNMENT FOR STAM P DUTY PURPOSES, IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF TH E CONSIDERATION AND CAPITAL GAINS SHALL BE COMPUTED A CCORDINGLY U/S 48 OF THE ACT. FURTHER, EXPLANATION -2 WAS INSE RTED IN SUB- SECTION (2) OF SECTION 50C SO AS TO CLARIFY THE MEA NING OF THE TERM ASSESSABLE, THUS, THE AMENDMENTS WERE MADE APPLICABLE W.E.F. 01 ST OCTOBER, 2009. VIDE CIRCULAR NO. 5 OF 2010 DATED 03/06/2010, IT WAS MADE CLEAR THAT THE AMENDMENT MADE BY THE FINANCE (2) ACT, 2009 IS PROS PECTIVE IN NATURE, (CIT VS R. SUGANTHA RAVINDARAN (2013) 35 2 ITR 488 (MAD.)). THE OBJECT AND THE PURPOSE OF SECTION 50C IS TO EXPLORE THE UNDISCLOSED INCOME OF CAPITAL GAINS, RE CEIVED BY THE ASSESSEE IS TAXED. IT IS ALSO NOTED THAT READI NG SECTION 40A SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 6 (AS INTRODUCED BY THE U.P. ACT 11 OF 1969) OF THE I NDIAN STAMP ACT, 1899 WITH RULE 340A OF THE U.P. STAMP RULES 19 42, IT WAS MADE CLEAR THAT CIRCLE RATE FIXED BY THE COLLEC TOR IS NOT FINAL BUT IS ONLY A PRIMA FACIE DETERMINATION OF RA TE OF THE ARE CONCERNED ONLY TO GIVE GUIDANCE TO THE REGISTERING AUTHORITIES TO TEST PRIMA FACIE WHETHER THE INSTRUMENT HAS PROP ERLY DESCRIBED THE VALUE OF THE PROPERTY. THE CIRCLE RAT E UNDER THAT RULE IS NEITHER FINAL FOR THE AUTHORITY NOR TO ONE SUBJECTED TO PAY THE STAMP DUTY. THE CIRCLE RATE DOES NOT TAKE A WAY THE RIGHT OF SUCH PERSON TO SHOW THAT THE PROPERTY IN Q UESTION IS CORRECTLY VALUED AS HE GETS AN OPPORTUNITY IN CASE OF UNDER VALUATION TO PROVE IT BEFORE THE COLLECTOR AFTER RE FERENCE IS MADE (RAMESHCHANDRA BANSAL VS DISTRICT MAGISTRATE/ COLLECTOR (1999) 5 SCC 62, 67-68). THE RATIO LAID D OWN IN STATE OF PUNJAB VS MAHAVIR SINGH (AIR) 1996 SC 2994, 2995 -96) FURTHER THROW LIGHTS ON THE ISSUE. IN JAWAJEE NAGAT HAM VS REVENUE DIVISIONAL OFFICER (1994) 4 SCC 595, 600-01 , IT WAS HELD THAT BASIC VALUATION REGISTER MAINTAINED FOR S TAMP DUTY HAS NO STATUTORY BASE OR FORCE. SECTION 48 OF THE ACT SPEAKS ABOUT MODE OF COMPUTA TION AND THE INCOME CHARGEABLE FOR CAPITAL GAINS. IT MAY BE NOTED THAT BY CLAUSE 25 OF THE FINANCE (NO.2) BILL 1998, A PROVISO WAS PROPOSED TO BE INSERTED AFTER THE 3 RD PROVISO IN SECTION 48 BY OPINING THAT VALUE ADOPTED FOR STAMP DUTY PURPOS ES IS NOT RELEVANT. FROM LANGUAGE OF SECTION 48(1)(A), IT FOL LOWS THAT ALL EXPENDITURE INCIDENTAL TO THE TRANSFER MUST BE DEDU CTED IN SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 7 COMPUTING THE AMOUNT OF CAPITAL GAINS (CIT VS ROHTA K TEXTILES MILLS LTD. )(1982) 138 ITR 195 (DEL.), CIT VS SOUND RA RAJAN (150 ITR 80). SO FAR AS, APPLICATION OF SECTION 50C AND CONSEQUE NT ADDITION MADE U/S 69B OF THE ACT IS CONCERNED, IN T HE PRESENT APPEAL, THE ASSESSEE IS A BUYER OF THE FLAT, THEREF ORE, SECTION 50C OF THE ACT, UNDER THE FACTS NARRATED HEREINABOV E, IS NOT APPLICABLE AND EVEN OTHERWISE, SECTION 69B HAS BEEN ADDED MERELY ON SURMISES WITHOUT BRINGING ANY ADVERSE MAT ERIAL ON RECORD AS THE ASSESSEE IS A DIRECT PURCHASER OF THE FLAT FROM THE BUILDER I.E. M/S NIRMAL DEVELOPERS. THERE IS NO MATERIAL ON RECORD THAT THERE WAS UNACCOUNTED INVESTMENT MADE B Y THE ASSESSEE OVER AND ABOVE WHICH HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND FOUND RECORDE D IN THE BOOKS OF THE DEVELOPER. SECTION 69B OF THE ACT IS A PPLICABLE ONLY IN A SITUATION, WHERE THE AMOUNT INVESTED BY T HE ASSESSEE IS NOT FULLY DISCLOSED IN HIS BOOKS OF ACCOUNTS, MA INTAINED BY THE ASSESSEE AND FURTHER THE ASSESSEE OFFERS NO EXP LANATION ABOUT SUCH EXCESS AMOUNTS OR THE EXPLANATION IS NOT FOUND SATISFACTORY IN THAT CASE, THE EXCESS AMOUNT MAY BE DEEMED TO BE INCOME OF THE ASSESSEE. THE RATIO LAID DOWN IN S MT. AMAR KUMARI SURANA VS CIT (1997) 226 ITR 344 (RAJ.), HIN DUSTAN MILLS AND ELECTRIC STORES 232 ITR 421 (MP), CIT VS DINESH JAIN; LATA JAIN (2013) 352 ITR 629, CIT VS WESTER E STATES 209 ITR 343 (CAL.), CIT VS BAJRANGLAL BANSAL 335 ITR 57 2 (DEL.), DHANUSH GENERAL STORE VS CIT 339 ITR 651 (CHHATISGA RH), CIT SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 8 VS SADHNA GUPTA (2013) 352 ITR 595 (DEL.), CIT VS F AIR DEAL TEXTILE PARK LTD. (2014) 362 ITR 497 (GUJ.) AND CIT VS VEERDIP ROLLERS PVT. LTD. (2010) 323 ITR 341 (GUJ.), SUPPO RTS OUR VIEW. SO FAR AS, PRIMARY BURDEN OF PROOF TO PROVE UNDER S TATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT IS O NLY WHEN SUCH BURDEN IS DISCHARGED, THEN ADDITION CAN BE MAD E AS WAS HELD IN CIT VS PUNIT SAWARBAL (2011) 338 ITR 485 ( DEL.). NO BURDEN HAS BEEN DISCHARGED BY THE REVENUE, THEREFOR E, SUCH ADDITION U/S 69B, MADE BY THE ASSESSING OFFICER, TH EREFORE, CANNOT STANDS ON ITS LEG. THE RATIO LAID DOWN IN KI SHINCHAND M. THAKUR VS CIT (1992) 106 CTR (BOM.) 273, 274. I N VIEW OF THE CLEAR FACTS, AND THE JUDICIAL PRONOUNCEMENTS, D ISCUSSED HEREINABOVE, WE AFFIRM THE STAND OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS), RESULTING INTO, DISMISSAL OF APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN T HE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 09/12/2015 SD/- SD/- ( SANJAY ARORA ) (JOGINDER SIN GH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % & MUMBAI; * DATED : 10/12/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-. / THE APPELLANT SHRI ATUL PRAVINCHANDRA PRAKASH ITA NO.1344/MUM/2012 9 2. /0-. / THE RESPONDENT. 3. 1 1 % 2$ ( , ) / THE CIT, MUMBAI. 4. 1 1 % 2$ / CIT(A)- , MUMBAI 5. 45 /$ ! , 1 ,( ! 6 , % & / DR, ITAT, MUMBAI 6. ' 8& / GUARD FILE. ! / BY ORDER, 04,$ /$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI