YOGESHKUMAR VRAJLAL BARBHAYA , RAJKOT V. THE PCIT, RAJKOT-1, RAJKOT, RAJKOT

ITA 135/RJT/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9787 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 28-04-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Difference of opinion; Change of opinion
• Section: 56; 263; 56(2)(vii)(b); 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Yogesh kumar Vrajlal Barb haya, C/o M/s. Dhaval Jeweller s 10/11 , Shalibh adra Palace, Soni Bazar, Rajko t-360001 PAN: A CJ PB96 18C Vs The Pr. Commi ssioner o f Inco me Tax, Rajkot-1, Aayak ar Bhawan, Race Course Rin g Ro ad, Rajkot-360 001 (Appellant) (Respond ent) Asses see by : Shri M ehul Ranp ura, A.R. Revenue by : Shri S anjeev Jain, CIT-D. R. Date of hearing : 01-07 -2022 Date of pronouncement : 28-09 -2022 आदेश/ORDER PER BENCH:- This appeal has been filed by the Assessee against the order passed by the Ld. Pr. CIT-1, Rajkot in Order No. ITBA/REV/F/REV5/2021- 22/1040308586(1) vide order dated 03.03.2022 passed for Assessment Year 2017-18. 2. The assessee has taken the following grounds of appeals:- ITA No. 135/Rjt/2022 Assessment Year: 2017-18 ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 2 “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The order passed by Pr. Commissioner of Income-tax, Rajkot-1 [hereinafter referred as to the “PCIT”] is bad in law, invalid and requires to be quashed, the same may kindly be quashed. 3. The Ld. PCIT erred in law and on facts in arriving at a conclusion to the effect that the assessment order passed by the AO was erroneous as well as prejudicial to the interest of the revenue on the ground that such order was passed without making proper enquiries/verification of applicability of section 50C of the Act in respect of properties received as gift from brother and given as gift to brother. Therefore, the order passed by PCIT is required to be quashed and may kindly be quashed. 4. The learned Pr. CIT erred on facts as also in law in setting aside the assessment order dated 16.09.2019 passed u/s. 143(3) of the Income Tax Act, 1961 directing the AO pass a fresh assessment order. The order passed u/s 263 of the Act by the learned Pr. CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed. 5. Your Honour’s appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 3 3. The brief facts of the case are that the assessee filed Return of Income for Assessment Year 2017-18 declaring total income of Rs. 45,01,700/-. The assessment was completed under Section 143 (3) of the Act on 16-09- 2019 accepting the returned income. Subsequently, Principal CIT initiated proceedings under Section 263 of the Act on ground that Shri Dalsukbhai (the assessee’s brother ) had received 3 properties in the gift from his brother Shri Yogeshbhai (the assessee) for “Nil” consideration. However, Stamp Duty was paid at time of such sale and therefore the assessed value of the property as per Stamp Duty valuation comes to Rs. 18,01,020/- and therefore, in view of the provisions of Section 50C of the Act, the assessee, being the seller, is liable to pay tax on such sale of property. Besides above, it is noticed that the assessee has received two properties as gift from his brother Shri Dalsukbhai who has debited his capital account by Rs. 11,87, 416/- and Rs. 6,87,874/-. The sale deed of the property is not available with the case records, and as the capital account is debited by Rs. 11,87, 416/- and Rs. 6,87,874/- by him, the provisions of Section 56(2)(vii)(b) of the Act are applicable in the case of the assessee. However, the AO has not verified the above issues properly while finalising the assessment under Section 143(3) of the Act. After taking the submissions of the assessee on record, Principal CIT set-aside the assessment order as being erroneous and prejudicial to the interests of the revenue, with the following observations: “6. I have gone through the records the submission made by the assessee during the proceedings. The assessee has submitted that the issue under consideration has been duly examined in the assessment proceedings by the AO therefore there was no omission on the part of the AO and it is the change of opinion in revisionary proceedings. The ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 4 assessee has submitted that during the year he has received two immovable properties in gifts from his real brother through gift deeds. Therefore the provisions of section 56(2)(vii)(b) are not applicable in the case as the gifts have been received from the real brother. The submission to this extent from non-applicability of provision of section 56(2)(vii)(b) needs to be examined by the AO. The AO has not examined the acquisitions of all the 02 properties along with sources thereof to know whether the payments of the original purchase by the brother of assessee has been made out of his own funds and not elsewhere. Through this enquiry firstly the AO ought to have ascertained the ownership as the same will be material for deciding the applicability of provisions of section 56(2)(vii)(b) of IT act. He ought to have examined the purchase deeds and the gift deeds thoroughly to ascertain the facts and take the necessary action on the issue. Similarly, the assessee has not given any details or evidences with regard to the transfer three properties to his brother and the AO has not examined this issue as the sale deeds were not required or produced in the assessment proceedings. Thus there remains to be examined the applicability of the provisions of section 50C of IT act. Further the assessee has submitted that he has purchased the property in F.Y. 2009-10 & 2010-11. Further in support of it, it has provided the copies of the purchase deed of some properties only and not about all the properties. ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 5 Here it is worth to mention that it is peculiar fact that the assessee is transferring three properties to his brother Shri Yogeshbhai V Barbhaya and he is getting two properties from Shri Yogeshbhai V Barbhaya. Therefore the nature of transfer in view of the relevant provisions of IT act ought to have been examined by the AO. 7. The above facts will indicate that AO has not conducted by inquiries/verification in respect of issues mentioned above. It may be mentioned that two essentials condition for invoking the provisions of section 263 of I.T. Act are that the order passed by the AO is erroneous and prejudicial to the interest of revenue.” 4. The assessee is in appeal before us against the aforesaid order by Principal CIT setting aside the assessment proceedings. The primary contention of the assessee is that the Principal CIT has incorrectly observed that this is a case of sale / purchase of property. In this case, the transaction occurred between the assessee and his real brother by way of ‘gift’ of property and this was not a transaction of sale and purchase of property. He also produced copies of the gift deed and submitted that from the documents on record, it is evident that this is not a case of sale/purchase of property, but it is a case of “gift” of property between two real brothers. Accordingly, since the transacting parties were real brothers and the issue involved gift of property, and not sale/purchase of property, there is no question of invoking Section 56 of the Act in the instant set of facts, in view of the exclusion provided under Section 56(2)(vii)(b). Further, the Counsel for the assessee submitted that provisions of Section 50C would come into play only when ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 6 the “consideration received or accruing” as a result of the transfer by an assessee of a capital asset is less than the value adopted or assessed by any authority of the State Government for the purpose of payment of Stamp Duty in respect of such transfer. In the present case, the assessee did not receive any consideration nor any consideration accrued on account of such transfer of capital asset (this being a “Gift” of property between two real brothers), the provisions of Section 50C are not attracted. In response, the Ld. DR relied upon the observations made by the Principal CIT in the 263 order. 5. We have heard the rival contentions and perused the material on record. In the assessment order, AO observed that in the reply dated 13-09- 2019, the assessee has submitted clarification for each of the entries made in his capital account. Accordingly, the AO being satisfied with the reply/clarification filed by the assessee, accepted the returned income of the assessee and no additions or made in the assessment order. However, considering the facts involved in the present case, where there was transfer of property between the assessee and his brother, the AO should have done more investigation into the facts at the time of assessment on this issue/aspect, which, in our view is missing in the instant set of facts. The AO, in a view, should have examined the facts in detail and after due application of mind on the facts should have decided the issue on merits of the applicability of provisions of Section 56(2)(vii)(b) and 50C of the Act. However, from the records, no such investigation was carried out by the AO during the course of assessment proceedings, which, in our view, should have been done in the instant set of facts. The AO did not call for the records regarding the transactions/transfer property between the assessee and ITA No. 135/Rjt/2022 (Shri Yogeshkumar V. Barbhaya vs. PCIT) A.Y. 2017-18 7 his brother, and did not investigate into the nature of transaction, which should have been during the course of assessment. We observe that no documents regarding the transfer property were called for or submitted during the course of assessment proceedings. The AO did not apply his mind on the applicability of provisions of Section 50C or 56(2)(vii)(b) of the Act in the instant set of facts. Accordingly, we are of the view that says the AO did not carry out the necessary enquiries/verification during the course of original assessment proceedings, we find no infirmity in the observations of the Principal CIT that the assessment order is erroneous and prejudicial to the interests of the Revenue. Accordingly, we hold that Principal CIT has not erred in facts and in law in holding that the assessment order is erroneous and prejudicial to the interests of the Revenue. 6. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 28-09-2022 Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 28/09/2022 Tanmay, Sr. PS TRUE COPY आदेशक त ल पअ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot