Neelam, Agarwal, Kanpur V. Income Tax officer, Kanpur

ITA 169/LKW/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5258 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 28-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Borrowed satisfaction
• Section: 147; 148; 50C; 133(6); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.169/LKW/2023 Assessment Year 2012-13 Income Tax Officer, Ward 51(91), Kanpur, Vs. Neelam Agarwal, M-5 Indiraprastha Apartments, 12-A Ratanlal Nagar, Kanpur. PAN ADNPA 9895R (Respondent) (Appellant) Shri Rakesh Garg, Advocate Appellant by Shri Sanjeev Krishna Sharma, Addl. CIT (DR) Respondent by 24/08/2023 Date of hearing 20/11/2023 Date of pronouncement O R D E R This appeal has been preferred by the assessee against the order dated 31.03.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi for Assessment Year (AY) 2012-13. 2. The brief facts of the case are that the return of income for the captioned year was filed declaring total income of Rs.4,43,560/-. As there was information with the Income Tax Department that the assessee had sold immovable property for Rs.38,51,000/- whereas the value adopted by the Stamp 2 ITA No. 169/Lkw/2023 Valuation Authority was Rs. 43,05,000/-, the case was reopened in terms of Section 148 of the Income Tax Act, 1961 (hereinafter called the ‘Act’). The assessment was completed after making an addition of Rs.4,54,000/- being the difference in the sale price declared by the assessee and the circle value as per the Stamp Valuation Authority by invoking the provisions of Section 50C(1) of the Act. 3. Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority challenging the addition made u/s. 50C(1) of the Act. Before the ld. First Appellate Authority, it was the assessee’s submission that the flats/property were sold by the builder under a tripartite agreement and not directly by her and that she was only the owner of the land on which the property was situated and that the said land was purchased on 03.07.2010. It was further submitted that, thereafter, she had entered into a Builder Agreement with Shri Vikas Agarwal vide agreement dated 13.07.2011 and the flats were sold by the builder whereas the assessee had just got the value of the land from the builder. It was further submitted that the assessee had already disclosed the proportionate income of Rs.2,24,000/- 3 ITA No. 169/Lkw/2023 arising out of such transfer under the tripartite agreement under the head ‘income from other sources’ and since the period of possession of the land under consideration was less than three years, the income arising out of the said transaction was subject to income tax at normal rate and the assessee had not earned any long term capital gain and, therefore, the provisions of Section 50C of the Act were not applicable. However, the NFAC dismissed the assessee’s appeal by observing that the assessee had not brought any concrete evidence to substantiate her claim that provisions of Section 50C(1) of the Act were not applicable in her case. 4. Now the assessee has approached this Tribunal challenging the dismissal of assessee’s appeal by the NFAC by raising the following grounds of appeal: “1. The Commissioner of Income-tax (Appeals) erred in law in upholding the addition of Rs. 4,54,000/- made by the Assessing Officer u/s 147 read with section 1448 of the Income-tax Act 1961. 2. The Commissioner of Income-tax (Appeals) erred in fact in not accepting the appellant's claim for deletion of addition of Rs. 4,54,000/- i.e. the difference between sales consideration of Rs. 38,51 000/- and value adopted by the Stamp Valuation Authority for the 4 ITA No. 169/Lkw/2023 purpose of payment of stamp duty i.e. Rs. 43,05,000/- in this case u/s 50C of the Income-tax Act, 1961. 3. On the basis of facts and circumstances of the case it can be safely vouched that the assessee has not violate any provision of section 50(C) of the I.T. Act 1961 therefore, the addition of Rs. 4,54,000/- is bad in law and be quashed. 4. The Commissioner of Income-tax (Appeals) has failed to appreciate the written submission filed vide reply dated 30.11.2022 along with necessary evidences and has simply mentioned in the Assessment Order u/s 250 of the Act that the submissions of the appellant have been perused but found untenable regarding other grounds of appeal I do not find any merit in the appeal of the appellant. 5. Because the approval if any given us 151 of the act is purely mechanical without examining the facts and records of the case and such is a mechanical approval totally unwarranted as per the provisions of law the notice issued and the proceedings initiated thereafter are all void ab initio. The same may be quashed 6. The reasons u/s 148(2) of the I.T. Act 1961 and the order u/s 147 read with sec 144B thereafter has been passed based on borrowed satisfaction based purely on the information received from Sub Registrar office, Kanpur. 7. The Commissioner of Income-tax (Appeals) has erred on facts and in law in establishing a view that the assessee has sold an immovable property at less than the value fixed by the Stamp Valuation Authority, by an amount of Rs.4,54,000/- thereby violating the provisions of section 50C of the Income Tax Act 1961. Thereby adding the amount of Rs.4,54,000 to the total income of the appellant for the year under consideration. 5 ITA No. 169/Lkw/2023 8. Whereas, the facts of the case are as follows: The appellant was the owner of the said land purchased on 03.07.2010. Thereafter the appellant entered into a builder agreement with one Mr. Vikas Agarwal vide agreement dated 13.07.2011. The flats were sold by the builder, the appellant just got its value of land on sale of three flats from the builder. That although the appellant has not disclosed any income under the head Long/Short Term Capital Gain but Commissioner of Income-tax (Appeals) has failed to appreciate that the appellant has already disclosed the proportionate income of Rs. 2,24,000/- arising from such transfer under the Tri-partite Agreement under the head Income from Other Sources, the same cannot be taxed twice As the sale of land was within three years of purchase of land the profit arising out of that has to be taxed at regular rates of income tax instead of Long Term Capital Gain 9. Because the Commissioner of Income-tax (Appeals) has failed to consider the explanations famished evidences filed as he overlooked the calculations provided by the assessee, the addition made be deleted. 10. Because on proper consideration of facts of the case the order passed u/s 250 of the IT Act, 1961 is bad in law and me addition made be deleted, the order passed be quashed.” 5. At the outset, the ld. A.R. drew my attention to the papers filed in the form of paper book and submitted that at Page-33 the profit on real estate amounting to Rs.2,24,000/- had already been declared under the head ‘income from other sources’ being 6 ITA No. 169/Lkw/2023 proportionate share of the assessee arising out of the tripartite agreement transaction. The ld. A.R. submitted that the same transaction could not be taxed twice by invoking the provisions of Section 50C(1) of the Act. My attention was also drawn to the purchase deed placed at Pages 38 to 92 of the paper book, which was dated 03.07.2010, and it was pointed out that the purchase deed was in the name of assessee only, whereas the tripartite agreement titled ‘Builder’s Agreement’, placed at pages 93 to 98 of the paper book, was executed in the names of Smt. Neelam Agarwal and Mr. Vikas Agarwal & Smt. Sushma Narula and Shri Rohit Narula. The ld. A.R. submitted that, thus, the assessee had not sold the building but only the portion of the land on which the property was situated and, therefore, the invocation of the provisions of section 50C(1) of the Act as well as the taxation of the surplus amount twice was not valid in the eyes of law. 6. Per contra, the ld. Senior Departmental Representative vehemently supported the orders of the lower authorities. It was argued by the ld. Senior D.R. that the case was reopened only for the reason that the assessee had failed to disclose and offer tax on the difference in the value of property as per the sale deed and 7 ITA No. 169/Lkw/2023 the circle rate and, therefore, the addition had rightly been made. The ld. Senior D.R. also submitted that the assessee had not responded to notice issued u/s. 133(6) of the Act and, therefore, the Assessing Officer had no option but to proceed with the data available on record. The ld. Senior D.R. prayed that the assessee’s appeal be dismissed. 7. I have heard the rival submissions and have also perused the material on record. It is not in doubt that the assessee was the owner of land under consideration which was purchased on 03.07.2010 and, thereafter, again it is undisputed that the assessee had entered into a Builder Agreement with Shri Vikas Agarwal, vide agreement dated 13.07.2011. Again, it is seen from the tripartite agreement that the said flats were sold by the builder i.e. Mr. Vikas Agarwal in terms of the tripartite agreement and not by the assessee alone. A perusal of the tripartite agreement at pages 12 to 14 shows that the assessee Smt. Neelam Agarwal had purchased the plot of land from M/s Malay Enterprises through its partner Mr. R.K. Agarwal through sale deed registered with the Office of Sub-Registrar, Kanpur Nagar on 03.07.2010 and had become the absolute owner thereof and 8 ITA No. 169/Lkw/2023 further with an intention to develop her portion admeasuring 297.192 square meters of the said premises, she contacted Shri Vikas Agarwal to develop/construct the residential complex consisting of residential units and that further Shri Vikas Agarwal had raised a multistory complex known as Shri Balaji Apartment, Phase-II, which was subsequently sold to Smt. Sushma Narula and Shri Rohit Narula. Thus, it is apparent that the assessee had no interest in the property constructed by the builder, Shri Vikas Agarwal except for owning the piece of land and for which she was duly compensated and she has duly declared the surplus arising out of such transaction of sale of land in terms of the tripartite agreement, to the tune of Rs.2,24,000/- under ‘income from other sources’. This fact has somehow been overlooked by the lower authorities and in effect they have brought to tax the surplus twice by invoking the provisions of Section 50C(1) of the Act, which is not valid in the eyes of law. Accordingly, I deem it appropriate to allow the appeal of the assessee on merits by directing the Assessing Officer to delete the addition. 9 ITA No. 169/Lkw/2023 8. The other grounds relating to the challenge to the reopening of the case and lack of proper approval are not being addressed, as the assessee’s appeal is already being allowed on merits. 9. In the final result, the appeal of the assessee stands partly allowed. (Order pronounced in the open court on 20/11/2023) Sd/- (SUDHANSHU SRIVASTAVA) JUDICIAL MEMBER Aks – Dtd. 20/11/2023 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) Departmental Representative (5) Guard File Assistant Registrar