ITO, New Delhi V. Shri Rajeev Goel, New Delhi

ITA 156/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6994 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASMITA JHA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Business income; Cost of acquisition
• Section: 143(3); 50C; 142(1); 69

Judgement Text

1 ITA NO. 15 6/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT ME MBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO.-156/DEL /2013 (ASSESSMENT YEAR-2009- 10) ITO, WARD 33(1), 16 TH FLOOR, TOWER E-2, DR. S.P. MUKHERJEE CIVIC CENTER, NEW DELHI. VS RAJEEV GOEL, 11152/9, EAST PARK ROAD, KAROL BAGH, NEW DELHI. AANPG9767H APPELLANT BY SMT. RASMITA JHA, SR. DR RESPONDENT BY SHRI VED JAIN, CA ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A)S-XXVI, NEW DELHI VIDE HIS ORDER DATED 31/10/2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUND S: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 23,05,000/- MADE BY THE ASSESSING OFFICER U/S 69 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING DATE OF HEARING 09.12.2015 DATE OF PRONOUNCEMENT 11.02.2016 2 ITA NO. 15 6/DEL/2013 OFFICER U/S 69 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH PAYMENT. 3. THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING T HE PLEA OF THE ASSESSEE THAT PAYMENT OF RS. 5,00,000/- WAS MADE ON 30.08.2008 WITHOUT APPRECIATING THE FACT THAT BOTH THE PARTIES HAD ADMITTED BEFORE THE REGISTRAR THAT PAYMENT OF RS. 5,00,000/- IN CASH HA D BEEN MADE BY THE ASSESSEE BEFORE THE DATE OF REGIST RY AND THIS VERY FACT WAS ALSO MENTIONED IN THE SALE DEED DATED 26.08.2008. 4. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT: THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30/07/2009 AND DECLARED AN INCOME OF RS. 1,98,070/-. THE CASE WAS PROCESSED U/S 143( 1) AND LATER ON WAS SELECTED FOR SCRUTINY UNDER CASS. STATUTORY NO TICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE APPELLAN T. IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE, ATTENDED THE A SSESSMENT PROCEEDINGS AND FILED THE NECESSARY DETAILS THAT WE RE CALLED FOR AND AFTER EXAMINING THE SAME, THE ASSESSING OFFICER PAS SED AN ORDER U/S 143(3) ON 1/12/201,1 ASSESSING THE TAXABLE INCO ME AT RS. 30,03,065/-. THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION DECLARED BUSINESS INCOME FROM JOB WORK OF PLASTIC M OLDINGS AND SHOWED A PROFIT OF RS. 2,69,017/- ON TOTAL RECEIPTS OF RS. 6,83,400/- WHICH WAS ABOUT 39.36% OF THE TOTAL RECEIPTS. NECE SSARY DETAILS 3 ITA NO. 15 6/DEL/2013 PERTAINING TO THE EXPENSES INCURRED FOR JOB WORK WE RE CALLED BY THE ASSESSING OFFICER, WHICH THE APPELLANT FILED. 2.1. DURING THE YEAR, THE ASSESSEE HAD PURCHASED A FLAT BUILT ON SECOND FLOOR OF PLOT NO. 4/288, SECTOR-6, VAISHALI, GHAZIABAD FOR A CONSIDERATION OF RS. 25,00,000/-, THROUGH THE SALE DEED DATED 26/08/2008. THE ASSESSEE FURNISHED THE COPY OF THE SALE DEED AND ALSO THE TOTAL INVESTMENT MADE IN PURCHASE OF THIS FLAT AMOUNTING TO RS. 28,36,500/- (RS. 25,00,000/- PLUS STAMP DUTY OF RS. 3,36,500/-) ON BEING ASKED ABOUT THE SOURCES OF SUC H AN INVESTMENT BY THE ASSESSING OFFICER, THE ASSESSEE E XPLAINED THE SOURCES AS UNDER: A. CASH RS. 5,00,000/- B. PO DT. 23.8.08 DRAWN ON ANDHRA BANK RS. 13,00,000/ - C. HOUSING LOAN RAISED FROM ANDHRA BANK HOUSING FINANCE RS. 7,00,000/- D. OUT OF CASH IN HAND OF RS. 3,40,000/- FROM PROP. BUSINESS RS. 3,36,500/- 2.2 REGARDING THE SOURCE OF RS. 5,00,000/-, VIDE LE TTER DT. 24/11/2011, THE ASSESSEE SUBMITTED AS UNDER: IN REGARD TO CASH PAYMENT OF RS. 5,00,000/- FOR PU RCHASE OF RESIDENTIAL FLAT BY THE ASSESSEE, IT IS SUBMITTE D THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 5,00,000/- TO THE SELLER OF THE FLAT ON 30.08.2008. ACTUALLY THE ASS ESSEE HAS GOT THE DEED REGISTERED ON 26.08.2008, THE LAST DAT E AS PER THE AGREEMENT, BUT HE COULD NOT MAKE THE ARRANGEMEN T OF CASH ON 26.08.2008 AS THE CHEQUES HE DEPOSITED IN B ANK CLEARED ON 27.08.2008. SO, ON THE SPECIFIC REQUEST OF THE ASSESSEE AND AGAINST TWO PERSONAL GUARANTEES, THE S ELLER AGREED TO DEED REGISTERED ON 26.08.2008 AND ALSO AG REE TO ACCEPT CASH WITHIN 2-3 DAYS. ON 30.8.2008, THE ASS ESSEE 4 ITA NO. 15 6/DEL/2013 HAS WITHDRAW THE CASH FROM HIS BANK ACCOUNT AND HAN DED OVER TO THE SELLER OF THE FLAT. 3. THE LD. ASSESSING OFFICER MADE AN ADDITION OF TH E DIFFERENCE OF THE AMOUNT OF VALUE ADOPTED BY STAMP DUTY AUTHORITI ES AND THE ACTUAL COST OF ACQUISITION IN THE HANDS OF THE BUYE R. 3.1. THE LD. ASSESSING OFFICER INVOKED THE PROVISIO N OF SECTION 50C ON THE GROUND THAT THE ASSESSEE WOULD HAVE PAID THE DIFFERENCE AMOUNT IN CASH IN AN UNACCOUNTED MODE AS THE PROPER TY PURCHASED WAS FOR BELOW THE CIRCLE RATE BUT THE STAMP DUTY PA ID WAS ON THE CIRCLE RATE. THE LD. ASSESSING OFFICER THUS, MADE AN ADDITION OF RS. 23,05,000/- (RS. 48,05,000 RS. 25,000). 4. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFI CER THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). 4.1. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, DELETED THE ADDITION AND HELD THAT THE LD . AO WAS NOT JUSTIFIED IN DRAWING UP AN INFERENCE THAT THE PROPE RTY WAS PURCHASED FOR A CONSIDERATION WHICH IS MUCH LOWER T HAN THE MARKET VALUE, WHEN THE PURCHASE TRANSACTION ARE RECORDED O N THE SALE DEED WHICH WAS EXECUTED BEFORE THE SUB-REGISTRAR AND THE IDENTITY OF THE VENDOR IS DISCLOSED. THE LD.CIT(A) ALSO HELD THAT THE LD. AO WAS NOT JUSTIFIED IN CONCLUDING THE INVESTMENT AS UNEXPLAIN ED U/S 69 OF THE INCOME TAX ACT. 5. WE HAVE GONE THROUGH THE SUBMISSIONS AND THE PAP ER BOOK FILED BY THE ASSESSEE. WE HAVE ALSO HEARD THE RIVA L ARGUMENTS BY BOTH THE PARTIES. 5 ITA NO. 15 6/DEL/2013 5.1. WE FURTHER OBSERVE THAT AT PAGE 55 OF THE PAP ER BOOK, A CERTIFICATE HAS BEEN ISSUED BY THE SELLER IN RESPEC T OF THE CASH PAYMENT RECEIVED AMOUNTING TO RS. 5 LAKHS FROM THE ASSESSEE, BEING THE BALANCE MONEY PAYABLE IN RESPECT OF THE P URCHASE OF THE FLAT. PAGE 7 OF THE PB IS THE REPLY DT. 24.11.2011 TENDERED BY THE ASSESSEE TO THE LD. AO IN LIEU OF THE NOTICE DATED 28.10.2011 ISSUED BY THE LD. AO. THE ASSESSEE HEREIN HAS NARRATED TH E CIRCUMSTANCES UNDER WHICH THE CASH PAYMENT HAS BEEN MADE TO THE S ELLER TOWARDS THE PURCHASE OF THE FLAT. 5.2. THE LD.AR SUBMITTED THAT THE AGREEMENT WAS REGISTER ED ON THE LAST DATE BEING 26.8.08 AS PER THE AGREEMENT AND TH AT HE COULD NOT MAKE ARRANGEMENT OF CASH ON 26.8.08 AS THE CHEQUES HE DEPOSITED IN THE BANK WAS CLEARED ON 27.8.08. THE LD.AR FURT HER SUBMITTED THAT IT WAS ON THE SPECIFIC REQUEST OF THE ASSESSEE , AND AGAINST TWO PERSONAL GUARANTEES, THE SELLER HAD AGREED TO REGIS TER THE AGREEMENT ON 26.8.08, AND FURTHER AGREED TO ACCEPT THE CASH OF RS. 5 LAKH WITHIN 2 TO 3 DAYS OF TIME. IT WAS FURTHER SUBMITTED THAT, IN THE LETTER BY THE ASSESSEE IT HAS BEEN ACCEPTED THA T THE ASSESSEE HAS WITHDRAWN CASH FROM HIS BANK AMOUNTING TO RS. 5 LAKH AND HAS HANDED OVER TO THE SELLER OF THE FLAT. IT IS O BSERVED THAT THE LD. AO HAS NOT APPRECIATED THE CIRCUMSTANCES UNDER WHIC H THE CASH HAS BEEN GIVEN TO THE SELLER BY THE ASSESSEE. 5.3. THE LD.AR HAS PLACED HIS RELIANCE ON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KHOOBSURAT RESORTS PVT.LTD. REPORTED IN 82 DTR 290, WHEREIN THE ADDITION MADE O N THE BASIS OF DIFFERENCE IN THE ACTUAL PURCHASE CONSIDERATION AND THE VALUE 6 ITA NO. 15 6/DEL/2013 ADOPTED FOR THE PURPOSE OF THE STAMP DUTY WHICH WAS DELEATED BY THE TRIBUNAL HAS BEEN UPHEALD. 5.4. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT TH E LD. AO RELIED ON THE DEEMING PROVISION OF SECTION 50C FOR DRAWING AN INFERENCE THAT THE PROPERTY IN QUESTION WAS TRANSAC TED AT THE MARKET VALUE AND THE CONSIDERATION RECEIVED BY THE SELLER WAS BASED ON SUCH MARKET VALUE WHICH WAS NOT SHOWN IN T HE SALE DEED FOR TRANSFER OF THIS PROPERTY. 5.6. SECTION 50C IS A DEEMING PROVISION FOR A LIMITED PU RPOSE FOR COMPUTATION OF INCOME FROM CAPITAL GAINS IN THE HAN DS OF THE TRANSFEROR. PROVISIONS OF SECTION 50C IS APPLICABL E ONLY FOR COMPUTATION OF CAPITAL GAINS IN REAL ESTATE TRANSAC TIONS IN RESPECT TO SELLER ONLY AND NOT FOR THE PURCHASER. SECTION 50C CREATES A LEGAL FICTION FOR TAXING CAPITAL GAINS IN THE HANDS OF TH E SELLER AND IT CANNOT BE EXTENDED FOR TAXING THE DIFFERENCE BETWEE N APPARENT CONSIDERATION AND VALUATION DONE BY STAMP AUTHORITY IS UNDISCLOSED INCOME IN THE HANDS OF THE PURCHASER. IT CANNOT BE INVOKED FOR CHARGING TO TAX AN UNDISCLOSED INVESTME NT IN THE HANDS OF THE TRANSFEREE. IT IS ALSO A POINT TO MENTION, THAT SECTION 50C DOES NOT AUTHORIZE ADDITION WITH REFERENCE TO THE S TAMP VALUE AS AN AMOUNT PAID BY THE PURCHASER, SO AS TO REQUIRE HIM TO EXPLAIN THE SOURCE THEREOF. SECTION 50C HAS A LIMITED OPERATIO N FOR ASSESSMENT OF THE VENDOR AND NOT BUYER. THEREFORE, THE RELIAN CE OF THE ASSESSING OFFICER ON THE DEEMING PROVISIONS OF SECT ION 50C FOR HIS INFERENCE THAT THE PROPERTY WAS PURCHASED FOR A CON SIDERATION WHICH IS MUCH LOWER THAN THE MARKET VALUE IS NOT JU STIFIED WHEN 7 ITA NO. 15 6/DEL/2013 THE PURCHASE TRANSACTIONS ARE RECORDED ON THE SALE DEED WHICH WAS EXECUTED BEFORE THE SUB-REGISTRAR AND THE IDENTITY OF THE VENDOR U/S 69 OF THE I.T. ACT, 1961. THE HONBLE HIGH COU RT OF GUJARAT IN THE CASE OF CIT VS. USHA KANT W PATEL (2006) 282 IT R 553 HAVE HELD THAT THE REVENUE MUST ESTABLISH THAT THERE WAS AN U NRECORDED INVESTMENT IN THE RELEVANT FINANCIAL YEAR AND A PRE SUMPTION RAISED IN THE ASSESSMENT PROCEEDINGS ON THE BASIS OF PROVI SIONS OF SECTION 50C IS NOT SUFFICIENT. THE BURDEN IS ON THE ASSESS ING OFFICER TO ESTABLISH AN UNDERSTATEMENT OF CONSIDERATION WHICH IN THIS CASE HAS NOT BEEN DISCHARGED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT MAKE ANY INDEPENDENT ENQUIRY TO BRI NG ON RECORD ANY COGENT EVIDENCE TO ESTABLISH THAT THE PURCHASE CONSIDERATION SHOWN IN THE REGISTERED SALE DEED IS MUCH LESSER TH AN THE MARKET VALUE OF THE PROPERTY. 6. IN LIEU OF THE ABOVE FACTS AND CIRCUMSTANCES AND THE DISCUSSION, WE ARE INCLINED TO DISMISS THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE T HUS, STANDS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.02.2016 SD/- SD/- (N.K. SAINI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.2.2016 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 8 ITA NO. 15 6/DEL/2013 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 09.12.15 2. DRAFT PLACED BEFORE AUTHOR 14.12.15 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 11.2.16 6. KEPT FOR PRONOUNCEMENT ON 11.2.16 7. FILE SENT TO THE BENCH CLERK 11.2.16 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.