MR. S. KRISHNAMOORTHY, SALEM V. ACIT CIRCLE 2 (1), SALEM

ITA 1770/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7281 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: LAKSHMI VENKATARAMAN
• Keywords: Sale consideration of property below Jantri Value; Valuation report; Assessment record; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1770/CHNY/2018 ( / ASSESSMENT YEAR: 2014-15) SHRI S. KRISHNAMOORTHY (LATE) C/O. T.S. LAKSHMI VENKATARAMAN, CHARTERED ACCOUNTANT, NO.55/135, RAJAJI ROAD, SALEM 636007. VS THE ACIT, CIRCLE 2(1), SALEM PAN: AERPK9570Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI LAKSHMI VENKATARAMAN, CA /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 28.02.2019 /DATE OF PRONOUNCEMENT : 25.04.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, SALEM, DATED 01.03.2018 IN C.NO.9544(01)/2017-18/PCIT/SLM FOR THE ASSESSMENT YEAR 2014-15 PASSED U/S.263 OF THE ACT. 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN HIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.PCIT HAS ERRED IN INVOKING HIS 2 ITA NO.1770/CHNY /2018 POWERS U/S.263 OF THE ACT AND DIRECTED THE LD.AO TO REDO THE ASSESSMENT AFRESH CONSIDERING THE ASPECTS DISCUSSED IN HIS ORDER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONTRACTORS, ESTATE AGENTS, TEXTILES, HANDLOOMS & POWER LOOMS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2015-16 ON 26.09.2015 ADMITTING TOTAL INCOME OF RS.22,57,830/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 19.09.2016. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 23.12.2016 ACCEPTING THE RETURN FILED BY THE ASSESSEE. SUBSEQUENTLY THE LD.PCIT INVOKED HIS POWERS U/S.263 OF THE ACT AND SET ASIDE THE ORDER OF THE LD.AO WITH DIRECTIONS TO REDO THE ASSESSMENT AFRESH CONSIDERING THE DISCUSSIONS MADE IN HIS ORDER. THE LD.PCIT WAS OF THE VIEW THAT THE LD.AO HAD NOT DISCUSSED IN HIS ORDER ABOUT THE GUIDE LINE VALUE FIXED BY THE LAND REGISTRATION AUTHORITY AND THE PURCHASE CONSIDERATION PAID BY THE ASSESSEE FOR PURCHASING THE PROPERTY VIDE SALE DEED DATED 27.12.2013 AND ALSO FAILED TO REFER THE MATTER TO THE VALUATION OFFICER U/S.55A OF THE ACT IN ORDER TO EXAMINE WHETHER THE PROVISIONS OF SECTION 56(2)(VII)(B)(II) WOULD BE APPLICABLE IN THE CASE OF THE ASSESSEE. 3 ITA NO.1770/CHNY /2018 4. THE LD.PCIT ON PERUSING THE CASE OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD PURCHASED LAND AND CERTAIN IMMOVABLE PROPERTIES FOR A SALE CONSIDERATION OF RS.5,05,00,000/- (LAND RS.4,51,00,000/-, IMMOVABLE PROPERTY RS.54,00,000/-). ON FURTHER EXAMINING THE MATTER, THE LD.PCIT ARRIVED AT THE CONCLUSION THAT THE AGGREGATE VALUATION OF BOTH THE PROPERTIES PURCHASED BY THE ASSESSEE IS RS.6,78,17,250/-. THEREFORE THE LD.PCIT WAS OF THE VIEW THAT PROVISIONS OF SECTION 56(2)(VII)(B)(II) OF THE ACT WOULD BE APPLICABLE IN THE CASE OF THE ASSESSEE AND THE DIFFERENCE AMOUNT OF RS.1,78,17,250/- (RS.6,78,17,250 RS.5,05,00,000) OUGHT TO BE TAXED IN THE HANDS OF THE ASSESSEE. 5. THE LD.AR OF THE ASSESSEE HAD EXPLAINED TO THE LD.PCIT THAT THE ASSESSEE HAD ENTERED IN TO A MEMORANDUM OF ASSOCIATION (MOU) ON 10.11.2012 FOR THE PURCHASE OF THE LAND AS WELL AS THE IMMOVABLE PROPERTY FOR RS.9,05,00,000/- AND HAD PAID ADVANCE OF RS.45,00,000/- (RS.40,00,000/- THROUGH BANKING TRANSACTION AND RS.5,00,000/- BY WAY OF CASH). IT WAS FURTHER EXPLAINED THAT AS ON THE DATE OF MOU THE GUIDELINE VALUE OF THE IMMOVABLE PROPERTY WAS RS.8,00,000/- PER ACRE AND THE ASSESSEE HAD AGREED TO PURCHASE FIVE ACRES OF LAND AGGREGATE VALUE OF WHICH IS ONLY RS.40,00,000/-. HENCE THE GUIDELINE VALUE OF THE IMMOVABLE PROPERTY WAS ONLY 4 ITA NO.1770/CHNY /2018 RS.40,00,000/- AS ON THE DATE OF THE MOU. THE LD.AR FURTHER SUBMITTED THAT THE VALUATION MADE BY THE REGISTRATION AUTHORITY DATED 10.02.2017 WAS PRODUCED BEFORE THE LD.PCIT IN ORDER TO ESTABLISH HIS CLAIM. THE LD.AR THEREAFTER PLEADED THAT IN SUCH CIRCUMSTANCES PROVISIONS OF SECTION 56(2)(VII)(B)(II) OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE AND THEREFORE THE LD.AO AFTER EXAMINING THE TRANSACTION HAD PASSED ORDERS U/S.143(3) OF THE ACT PRUDENTLY AND HENCE THE ORDER OF THE LD.AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD.DR THOUGH ARGUED IN FAVOUR OF THE ORDER OF THE LD.PCIT, COULD NOT CONTROVERT TO THE SUBMISSIONS OF THE LD.AR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE MOU SUBMITTED BEFORE US, IT IS EVIDENT THAT ON 10.11.2012, THE ASSESSEE HAD PAID ADVANCE OF RS.40,00,000/- BY WAY OF CHEQUE AND RS.5,00,000/- BY WAY OF CASH FOR THE PURCHASE OF IMMOVABLE PROPERTY AND MOVABLE PROPERTY AND IT IS NOT IN DISPUTE. FURTHER ON PERUSING THE CERTIFICATE DATED 10/02/17 ISSUED BY THE SUB-REGISTRAR, KINATHUKADAVU WE FIND THAT THE PURCHASE CONSIDERATION FIXED FOR THE PURCHASE OF THE IMMOVABLE PROPERTY AS PER THE MOU IS MORE THAN THE GUIDELINE VALUE FIXED BY THE REGISTRATION AUTHORITY OF RUPEES EIGHT LACK PER ACRE. FURTHER 5 ITA NO.1770/CHNY /2018 SINCE THE ASSESSEE HAD PAID RS.40,00,000/- BY WAY OF BANKING TRANSACTION WHICH COULD BE ATTRIBUTED TOWARDS ADVANCE PAID FOR THE PURCHASE OF THE IMMOVABLE PROPERTY, WE ARE OF THE VIEW THAT THE GUIDELINE VALUE OF THE IMMOVABLE PROPERTY AS ON THE DATE OF THE MOU SHOULD BE CONSIDERED FOR THE PURPOSE OF SECTION 56(VII)(B)(II) OF THE ACT. THE PAYMENT OF RS.40,00,000/- PAID BY THE ASSESSEE THROUGH BANKING CHANNEL IS ALSO NOT IN DISPUTE BEFORE US. THEREFORE IN THE CASE OF THE ASSESSEE IT APPEARS THAT ADDITION CANNOT BE MADE BY INVOKING THE PROVISIONS OF SECTION 56(VII)(B)(II) OF THE ACT, BECAUSE THE FIRST AND SECOND PROVISOS TO THE SECTION COMES TO THE PLY WHICH MAKES IT ABUNDANTLY CLEAR THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR THE TRANSFER OF IMMOVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURPOSE OF SECTION 56(VII)(B)(II) OF THE ACT, PROVIDED THE AMOUNT IS PAID OTHER THAN BY CASH. MOREOVER THE LD.REVENUE AUTHORITIES HAS NOT PRODUCED ANY MATERIALS BEFORE US FROM THE ASSESSMENT RECORDS TO ESTABLISH THAT THE LD.AO HAS NOT EXAMINED THE ENTIRE TRANSACTION AND THE FACTS THEREIN BEFORE PASSING ORDER U/S.143(3) OF THE ACT ON 23.12.2016. IN THIS SITUATION WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.AO, JUST BECAUSE THE VALUATION REPORT BY THE SUB-REGISTRAR WAS OBTAINED ONLY ON 10.02.2017 IE., 6 ITA NO.1770/CHNY /2018 AFTER THE DATE OF THE ASSESSMENT ORDER WHICH IS ALSO IN FAVOUR OF THE ASSESSEE. CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE WE HEREBY SET ASIDE THE ORDER OF THE LD.PCIT PASSED U/S.263 OF THE ACT AND REMIT THE MATTER BACK TO HIS FILE FOR EXAMINING THE ISSUE WITH RESPECT TO THE MOU ENTERED INTO BY THE ASSESSEE AND THE CERTIFICATE ISSUED BY THE SUB-REGISTRAR DATED 10/02/2017 AND THEREAFTER DECIDE THE APPEAL AFRESH IN ACCORDANCE WITH LAW AND MERITS AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 25 TH APRIL, 2019 AT CHENNAI. SD/- SD/- ( . ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED 25 TH APRIL, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF