ACIT 8(1), MUMBAI V. ENPRO LTD, MUMBAI

ITA 1612/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8295 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P N DEVADASAN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K. AGARWAL (J.M.) ITA NO. 1612/MUM/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX- 8(1), R. NO. 210, 2 ND FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. VS. M/S ENPRO LIMITED, BLOCK NO. 502, 5 TH FLOOR, PLOT CTS NO. 220/23A, PATEL ESTATE ROAD, JOGESHWARI (W), MUMBAI- 400 102. PAN : AAACE 1146J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.N. DEVADASAN RESPONDENT BY : SHRI MAYUR KISNADWALA O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 21.12.2009 PASSED BY THE LD. CIT (A) FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS AS PROPERTY DEVELOPERS AND PLANNERS, TRADER IN CONSTRUCTION EQUIPMENTS AND CONSULTANCY, FILED RETU RN OF INCOME DECLARING TOTAL INCOME OF ` 56,59,292/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS INTER ALIA OBSERVED BY THE A.O. THAT THE ASSESSEE HAS PURCHASED PROPERTY VALUED AT ` 1,06,40,000/- WHICH WAS REGISTERED ON 7.7.2005 AND REFLECTED IN THE ANNUAL INFORMATION RE PORT (AIR). THE ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 2 ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE STAMP V ALUE DETERMINED BY THE SUB-REGISTRAR AT ` 1,06,40,000/- MAY NOT BE ADOPTED. IN REPLY, THE ASSESSEE VIDE LETTER DATED 19.11.2008 SUBMITTED THA T DURING THE YEAR, THE ASSESSEE HAS PURCHASED LAND AT NADHAL FOR AN AG GREGATE COST OF ` 45,60,300/-, WHICH AGREEMENT HAS BEEN REGISTERED WI TH THE SUB REGISTRATION OFFICE AT KARJAT. WE SUBMIT THAT THE PRICE SO PAID IS FAIR, CORRECT AND REPRESENTS THE FAIR MARKET VALUE OF LAN D. THE A.O. AFTER CONSIDERING THE ASSESSEES REPLY WAS OF THE VIEW TH AT PURCHASE VALUE OF THE IMMOVABLE PROPERTY EXCEEDS THE AMOUNT RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, AND THE ASSESSEE HAS NOT PROV IDED ANY COGENT EXPLANATION IN RESPECT OF DIFFERENCE OF ` 60,79,700/- ( ` 1,06,40,000 ` 54,60,300) OF INVESTMENT IN IMMOVABLE PROPERTY AT N ADHAL, HE TREATED THE SAME AS UNEXPLAINED INVESTMENT U/S 69B OF THE I .T. ACT AND ACCORDINGLY MADE AN ADDITION OF ` 60,79,700/- TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE LD. CIT(A), FOLLOWI NG SUBMISSIONS WERE MADE (PAGE 6 OF THE ORDER OF THE CIT(A):- - THOUGH THE CONVEYANCE DEED WAS EXECUTED IN JULY 2005, THE RATES WERE NEGOTIATION AND FINALISED IN THE EARLIER . - THE INFRASTRUCTURE FACILITIES LIKE ROADS, WATER S UPPLY, ELECTRICITY ETC ARE AVAILABLE AROUND THE PLOT OF LA ND PURCHASED BY THE APPELLANT. - NO SURROUNDING AREA TO THE LAND IS OCCUPIED BY TR IBAL HUTMENTS. - IT IS WELL KNOWN FACT THAT THE VALUE RATES ADOPTE D FOR STAMP DUTY PURPOSES ARE ON GENERAL BASIS AND DO NOT TAKE INTO CONSIDERATION DIVERSE FACTS AND FEATURES ATTACHED T O OR PREVALENT IN INDIVIDUAL SPECIFIC PROPERTIES. ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 3 - THE NAMES, ADDRESS ETC OF THE VENDORS IS AVAILABL E WITH THE ASSESSING OFFICER AND HENCE HE COULD HAVE MADE FURT HER VERIFICATION RELATING TO THE TRANSACTIONS. - VARIOUS COURTS AND TRIBUNALS HAVE HELD THAT STAMP DUTY GUIDELINES VALUE FIXED BY THE AUTHORITY IS NOT FINA L BUT IS ONLY A PRIMA FACIE VALUE. MOREOVER, THE APPELLANT HAS ALSO FILED VALUATION RE PORT DATED 24/10/2008 OF KOTHARI CONSTRUCTION SERVICES (REFER PAPER BOOK PG. 54-58), GOVERNMENT APPROVED VALUERS, WHEREIN TH EY HAVE VALUED THE SAID PLOT OF LAND AT ` 46,55,000/-. THE APPELLANT HAS FURTHER RELIED UPON THE FOLLOWING DECISIONS:- CIT V. K.K. ENTERPRISES 13 DTR (RAJ) 289 ITO V. SATYANARAYAN AGARWAL 112 TTJ (JD) 717 KAMAL KISHORE CHANDAK V. ITO 103 TTJ (JD) 843 JAI MARWAR CO. PVT. LTD. V. ACIT 79 TTJ (JD) 178. 3. THE LD. CIT(A) AFTER FOLLOWING THE DECISION OF T HE TRIBUNAL IN THE CASE OF ITO VS. OPTEC DISC MANUFACTURING 11 DTR 26 4 (CHD) WHEREIN IT HAS BEEN HELD THAT THE FICTION CREATED U/S 50C WHIC H IS A DEEMING PROVISION HAS TO BE RESTRICTED TO THAT SECTION ONLY AND SUCH FICTION CANNOT BE READ INTO SECTION 69B OF THE ACT, HELD THAT PROV ISIONS OF SECTION 69B ARE NOT APPLICABLE IN THE PRESENT CASE AND HENCE HE DELETED THE ADDITION MADE BY THE A.O. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF AP PEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY T HE A.O. AMOUNTING TO ` 6079700/- ON ACCOUNT OF DIFFERENCE IN THE VALUE OF SALE ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 4 CONSIDERATION AND VALUE OF THE PROPERTY AS PER THE VALUED DETERMINED AS PER STAMP DUTY ACT WITHOUT APPRECIATI NG THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ` 6079700/- MADE BY THE A.O. U/S 69B OF THE ACT WITHOUT APPRECIATING THE FACTS O F THE CASE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND TO BE SET ASIDE AND THAT OF THE ITO/ACIT/DCI T BE RESTORED. 5. AT THE TIME OF HEARING, THE LD. D.R. WHILE RELYI NG ON THE ORDER OF THE A.O. SUBMITS THAT THE LD. CIT(A) HAS ERRED IN DELET ING THE ADDITION OF ` 6079700/- MADE BY THE A.O. U/S 69-B OF THE ACT WITH OUT APPRECIATING THE FACTS OF THE CASE. HE, THEREFORE, SUBMITS THAT THE ADDITION MADE BY THE A.O. BE RESTORED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFOR E THE A.O. AND LD. CIT(A), RELIED ON THE ORDER OF THE LD. CIT(A) AND A LSO RELIED ON THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT THE FI CTION CREATED U/S 50C WHICH IS A DEEMING PROVISION HAS TO BE RESTRICTED T O THAT SECTION ONLY AND SUCH FICTION CANNOT BE READ INTO SECTION 69B OF THE ACT:- 1. KAMAL KISHORE CHANDAK VS. ITO 103TTJ (JD) 843 2. ITO VS. SATYANARAYAN AGARWAL 112 TTJ (JD) 717 3. ITO VS. OPTEC DISC MANUFACTURING 11 DTR (CHD)(T RIB) 264 4. JAI MARWAR CO PVT. LTD. VS. ACIT 79 TTJ (JD) 17 8 5. CIT VS. K.K. ENTERPRISES 13 DTR (RAJ) 289 ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 5 HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE ADDITION BE UPHELD. 7. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT IT IS NOT IN DISPUTE THAT THE A.O. HAS TAKEN THE VALUE OF THE IMMOVABLE PROPERTY AT ` 1,06,40,000/- ON THE BASIS OF THE VALUE ADOPTED BY THE SUB-REGISTRATION OFFICE, KARJAT FOR THE PURPOSE OF STAMP DUTY AS AGA INST THE PURCHASE PRICE OF THE PROPERTY AT ` 45,60,300/- SHOWN BY THE ASSESSEE AS PER REGISTERED AGREEMENT, REGISTERED WITH SUB-REGISTRAT ION OFFICE, KARJAT. ACCORDING TO THE A.O., THE DIFFERENCE BETWEEN THE V ALUE SHOWN FOR THE PURPOSE OF STAMP DUTY AND THE PURCHASE PRICE OF ` 60,79,700/- IS AN UNEXPLAINED INVESTMENT U/S 69B OF THE ACT. HOWEVER , THE LD. CIT(A) HELD THAT THE PROVISIONS OF SECTION 50-C ARE NOT APPLICA BLE AND THE SAME ARE APPLICABLE ONLY FOR COMPUTING CAPITAL GAINS IN THE HANDS OF THE SELLER, DELETED THE ADDITION MADE BY THE A.O. 8. IN THE CASE OF KAMAL KISHORE CHANDAK VS. ITO (SU PRA), IT HAS BEEN HELD THAT NO ADDITION U/S 69-B CAN BE MADE SIMPLY O N THE BASIS OF STAMP DUTY VALUATION AS THIS IS NOT A GOOD PARAMETE R TO DETERMINE THE REAL COST OF A PROPERTY. ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 6 9. IN THE CASE OF ITO VS. SATYANARAYAN AGARWAL (SUP RA) IT HAS BEEN HELD THAT NO ADDITION CAN BE MADE ON ACCOUNT OF UNE XPLAINED INVESTMENT IN PURCHASE OF PROPERTY ON THE BASIS OF STAMP DUTY CHARGED BY THE SUB- REGISTRAR. 10. IN THE CASE OF ITO VS. OPTEC DISC MANUFACTURING (SUPRA), IT HAS BEEN HELD THAT A.O. WAS NOT JUSTIFIED IN MAKING ADD ITION UNDER S. 69B OF THE DIFFERENCE BETWEEN CONSIDERATION STATED BY ASSE SSEE FOR PURCHASE OF LAND AND THE VALUE ADOPTED BY STATE REVENUE AUTHORI TY FOR STAMP DUTY PURPOSES ON THE BASIS OF CONTROVERTED AND UNCONTROV ERTED STATEMENT OF SELLER AND BY RELYING ON S. 50C WHICH IS NOT APPLIC ABLE IN THE CONTEXT OF S. 69B. 11. IN THE CASE OF JAI MARWAR CO. (P) LTD. VS. ACIT (SUPRA) IT HAS BEEN HELD THAT ADDITION COULD NOT BE MADE SIMPLY ON THE BASIS OF THE ORDER PASSED IN STAMP DUTY CASE, PARTICULARLY WHEN THERE IS NO EVIDENCE OF ANY PAYMENT OVER AND ABOVE THE AMOUNT SHOWN IN THE SALE DEED. 12. IN THE CASE OF CIT VS. K.K. ENTERPRISES (SUPRA) , IT HAS BEEN HELD THAT IN THE ABSENCE OF ANY EVIDENCE ON RECORD, IT C ANNOT BE PRESUMED THAT LAND HAS BEEN SOLD BY THE ASSESSEE AT A HIGHER PRICE THAN THE CONSIDERATION SHOWN IN THE REGISTERED SALE DEEDS, A ND THE RATES OF PROPERTY FIXED BY THE STAMP VALUATION AUTHORITY FOR REGISTRATION PURPOSES ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 7 CANNOT BE APPLIED TO ARRIVE AT THE PRICE FOR WHICH THE PROPERTY MIGHT HAVE BEEN SOLD AND NO ADDITION CAN BE MADE ON ACCOUNT OF UNDERSTATEMENT OF SALE PRICE. 13. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BR OUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE CONSISTE NT VIEW AS AFORESAID, HOLD THAT THE A.O. WAS NOT JUSTIFIED IN APPLYING TH E PROVISIONS OF SECTION 50-C IN THE CASE OF THE ASSESSEE AS A PURCHASER AS THE FICTION CREATED U/S 50C WHICH IS A DEEMING PROVISION HAS TO BE RESTRICT ED TO THAT SECTION ONLY AND SUCH FICTION CANNOT BE READ INTO SECTION 69B OF THE ACT AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING O F THE LD. CIT(A) IN DELETING THE SAME. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 14. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED ON THIS 9 TH DAY OF MARCH, 2011. SD/- (R.S. SYAL) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 9 TH MARCH, 2011. RK ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 16 MUMBAI 4. COMMISSIONER OF INCOME TAX VIII, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.1612/MUM/2010 M/ S ENPRO LIMITED 9 1 DRAFT DICTATED ON 21.2.11 ,23.2.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 23 . 2 .11 , 24.2.11 SR PS 3 DRAFT PROPOSED & P LACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS