Shri Maheshbhai B.Gangani, Surat V. The ACIT.,Circle-6, Surat

ITA 1879/AHD/2010

• Counselvise Citation: 187920514 RSA 2010
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Income from undisclosed sources
• Section: 143(3); 50C; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 SHRI MAHESH BABUBHAI GANGANI. PROP: MAHAVEER STEEL & CEMENT, 1,2, OM NAGAR SOCIETY, NEW KOSAD ROAD, AMROLI, SURAT PAN-ADLPG3109Q APPELLANT VS. THE A.C.I.T., CIRCLE-6 SURAT RESPONDENT DEPARTMENT BY : SHRI S.P. TALATI, D.R. ASSESSEE BY : SHRI M.K. PATEL, A.R. DATE OF HEARING : 06.09.2012 DATE OF PRONOUNCEMENT : 21.09.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-IV, SURAT DATED 16.02.2010. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL:- 1. THAT THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ADDITION OF RS.15,04,405/- MADE U/S 69B OF THE ACT. 2. THAT, ON FACTS AND IN LAW, IT OUGHT TO HAVE BEEN HELD THAT NO ADDITION OF STAMP VALUING AUTHORITY, PARTICULARLY W HEN NO EVIDENCE IS FOUND SUGGESTING ANY EXPLAINED INVESTMENT. 3. BRIEF FACTS OF THE CASE ARE THAT THE A.O., DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE VALUE OF THE PROPERTY PURCHASED BY THE I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 2 ASSESSEE WAS SHOWN VALUING RS.10,36,111/- BUT THE A SSESSEE HAS PAID ADDITIONAL STAMP DUTY OF RS.1,26,370/-, AS PER THE STAMP VALUING AUTHORITY ON THE VALUE OF RS.25,40,516/-. THE ASSESSEE WAS ASKE D TO EXPLAIN PAYMENT IN RESPECT OF PAYMENT ON ADDITIONAL STAMP DUTY OF RS.1 ,26,370/- AS WELL AS DIFFERENTIAL AMOUNT AS PER THE STAMP VALUING AUTHOR ITY AT VALUE OF RS.25,40,516/-. THE ASSESSEES SUBMISSION WAS THAT HE HAD ONLY PAID RS.10,36,111/- FOR PURCHASE OF PROPERTY AND THEREFO RE, VALUE OF PROPERTY CANNOT BE TAKEN AT AN AMOUNT WHICH THE ASSESSEE HAD NOT ACTUALLY PAID. IT WAS FURTHER ARGUED THAT THE ASSESSEE HAD SHOWN THIS PRO PERTY IN THE BOOKS OF ACCOUNT WITH FULL CONSIDERATION OF INVESTMENT MADE BY HIM ALONG WITH THE SOURCE OF INCOME AND THE BOOKS OF ACCOUNT ARE DULY AUDITED. SINCE THE ASSESSEE HAS SHOWN THE ACTUAL PAYMENT MADE TO THE S ELLERS, NON-DISCLOSURE OF FULL CONSIDERATION AND SHOWING THE SAME IN BOOKS OF ACCOUNT DO NOT ARISE. THE ADDITIONAL STAMP DUTY WAS PAID JUST TO GET CLEARANC E OF DOCUMENTS. IT WAS ALSO SUBMITTED THAT NO ADDITION CAN BE MADE IN BLOCK ASS ESSMENT PROCEEDINGS UNLESS THERE IS MATERIAL EVIDENCE OF ACTUAL EXTRA P AYMENTS OVER AND ABOVE THE SALE PROCEEDINGS. RELIANCE WAS PLACED ON VARIOUS C ASE LAWS SUCH AS STATE OF PUNJAB VS. MAHABIR SINGH (1996) 1609, U.P. JAL NIGA M, LUCKNOW VS. KALTRA PROPERTIES P. LTD., AIR 1996 SC 1170. THIS EXPLANA TION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE A.O. AND HE ADDED THE AMOUNT OF R S.15,04,405/- U/S 69B READ WITH SECTION 50C OF THE ACT. 4. THIS ACTION OF THE A.O. WAS CONFIRMED BY LD. CIT (A) BY OBSERVING AS UNDER:- I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 3 I HAVE CONSIDERED THE RIVAL CONTENTS. THE FACT OF THE MATTER IS THAT A GOVT. DEPARTMENT DEALING WITH VALUATION FOR STAMP PURPOSES HAS VALUED THE PROPERTY ON AN ENHANCED LEV EL. DESPITE A SPECIFIC PROVISION FOR CHALLENGING SUCH VALUATION , THE APPELLANT HAS NOT AVAILED IT. IN OTHER WORDS THE APPELLANT H AS AGREED TO IT. SO THERE IS POSITION THAT FOR INCOME TAX PURPOSES T HERE IS A SUPPRESSED VALUE WHILE FOR STAMP DUTY PURPOSES THE VALUE IS MORE. THE QUESTION IS TO ASCERTAIN AS TO WHICH ONE IS CORRECT. THE APPELLANT HAS NOT CHALLENGED THE HIGHER VALUE A DOPTED BY STAMP DUTY AUTHORITIES AND HAS SIMPLY ACCEPTED THE ENHANCED LIABILITY WITHOUT ANY PROTEST. THEREFORE, IN MY VIEW, A.O.S ACTION OF BASING HIS ASSESSMENT ON THE EVIDENCE WIT H REVENUE AGENCY OF STATE GOVT. IS QUITE JUSTIFIED, BECAUSE A CCEPTANCE OF AN AGREEMENT WHICH FACILITATES TWO DIFFERENT REVENUE D EPARTMENTS OF GOVT. CANNOT FIND JUDICIAL APPROVAL. THERE IS NO A GITATION ON PART OF THE APPELLANT VIS--VIS STAMP DUTY. THEREFORE T HE A.O.S ACTION IS CONFIRMED. 5. AT THE TIME OF HEARING, BEFORE US, LD. COUNSEL O F THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ISSUE INVOLVED IN THIS A PPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF THIS TRIBUNAL WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 50C ARE NOT APPLICA BLE IN THE CASE OF PURCHASER OF THE PROPERTY AND SINCE ASSESSEE BEING PURCHASER OF THE PROPERTY, NO ADDITION CAN BE MADE BY APPLYING THE PROVISIONS OF SECTION 5 0C OF THE ACT AND THEREFORE, ADDITION SO MADE BY THE A.O. AND CONFIRMED BY LD. C IT(A) MAY KINDLY BE DELETED. LD. D.R., ON THE OTHER HAND, RELIED ON TH E ORDER OF THE LOWER AUTHORITIES. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE ISSUE IS NOW COVERED BY THE DECISION OF THE TRI BUNAL IN THE CASE OF ASSTT. CIT VS. SHRI RAVJIBHAI P. PATEL IN ITA NO.2658/AHD/2010 WHEREIN FOLLOWING WAS HELD:- 7. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED V IEW THERE IS NO REASON TO TAKE A DIFFERENT VIEW THAT WHAT HAS BEEN TAKEN BY THE I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 4 TRIBUNAL IN THE CASE OF THE CO-OWNER NAMELY SHRI BH ARATKUMAR N. PATEL (SUPRA). IN THAT CASE THE TRIBUNAL HAS OBSER VED AS UNDER:- 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF LAW AS WEL L AS DECISION(S) OF HONBLE SUPREME COURT AND VARIOUS BENCHES RETTED UPON BY THE PARTIES, WE ARE OF THE OPINION THAT THE CIT(APP EALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION BY DRAWING THE ANALOGICAL PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(APPE ALS) CONFIRMED THE ADDITION BY OBSERVING THAT IF THIS PROPOSITION IS TO BE ACCEPTED, THEN THE DEEMING PROVISIONS OF SECTION 50 C OF THE ACT WILL BECOME INOPERABLE. HE, FURTHER, HELD THAT SEC TION 50C OF THE ACT IS APPLICABLE TO THE SELLER AND PROVIDES THAT THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY IS TO BE DEEM ED AS THE CONSIDERATION RECEIVED BY THE SELLER. HAVING SAID SO, THE CIT(APPEALS) FURTHER HELD THAT THE CONVERSE WILL A LSO HAVE TO BE ACCEPTED AS TRUE, I.E. THE VALUATION OF THE STAMP V ALUATION AUTHORITY WILL HAVE TO BE DEEMED AS THE CONSIDERATI ON PAID BY THE PURCHASER OF THE PROPERTY AS WELL. 10.1 WE ARE UNABLE TO AGREE WITH THE AFORESAID ANAL OGY DRAWN BY THE CIT(APPEALS) BECAUSE HAD THE LEGISLATURE INTEND ED TO, IT COULD HAVE EASILY SPECIFIED SUCH A PROPOSITION IN THE PRO VISIONS ITSELF. 11. IN VIEW OF THE SETTLED PROPOSITION OF LAW THAT THE APPELLATE AUTHORITY HAS NO RIGHT EITHER TO ADD OR TO DELETE A NY WORD FROM THE PROVISIONS OF LAW UNLESS AND UNTIL THE SAME ARE FOUND TO HP HAVING SOME AMBIGUITY IN THE SECTION 50C OF THE ACT , WE ARE OF THE OPINION THAT THESE PROVISIONS ARE NOT APPLICABL E TO THE PURCHASER. THE LD. AR HAD REFERRED TO THE JUDGMENT OF ANOTHER CO-OWNER NAMELY SHRI BHAGWANBHAI PREMJIBHAI PATEL, HUF IN IT A NO.1273/AHD/201 FOR ASST. YEAR 2006-07 PRONOUNCED O N 15.10.2010 WHEREIN ALSO FOLLOWING THE DECISION IN T HE CASE OF SHRI BHARATKUMAR N. PATEL SUCH ADDITION WAS DELETED. TH E RELEVANT OBSERVATIONS IN THE CASE OF SHRI BHAGWANBHAI PREMJI BHAI PATEL, HUF (SUPRA) ARE AS UNDER:- 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A HUF DERIVING INCOME FROM INTEREST AND AGRICULTURE. FOR THE ASSE SSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS.1,31,487/-. THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143(3) ON 19.12.2008 DETERMINING TOTAL INCO ME OF RS.15,44,792/- WHEREIN HE MADE ADDITION OF RS.12,20 ,456/- AS UNEXPLAINED INVESTMENT IN PROPERTY UNDER SECTION 69 B ON THE BASIS OF THE VALUE ASSESSED BY THE STAMP DUTY AUTHO RITY AND I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 5 TREATED THE AGRICULTURAL INCOME OF RS.1,92,849/- AS INCOME FROM UNDISCLOSED SOURCES. 3. ON APPEAL, THE LD. CIT(A), SURAT IN THE IMPUGNED ORDER DELETED THE ADDITION OF RS.12,20,456/- MADE UNDER SECTION 6 9B RELYING ON THE DECISION DATE D29.8.2008 OF ITAT, AHMEDABAD IN THE CASE OF SHRI BHARATKUMAR N. PATEL VS. ACIT, CIRCLE-3, SURAT VIDE ITA NO.1749/AHD/2008 ON THE GROUND THAT DEEMING PROVISI ON OF SECTION 50C OF THE INCOME-TAX ACT IS APPLICABLE ONL Y IN CASE OF SELLER. 8. THE PROPOSITION LAID DOWN IN THE ABOVE DECISION OF THE CO- OWNER IS THAT PROVISION OF SECTION 50C ARE NOT APPL ICABLE IN THE CASE OF PURCHASER OF THE PROPERTY. SIMILAR VIEW HA S BEEN TAKEN BY THE DELHI TRIBUNAL IN THE CASE OF FITWELL LOGIC SYSTEM (P) LTD. (2010) 1 ITR 286 (DEL) (TRIB) WHEREIN ALSO THE PROP OSITION HAS BEEN LAID DOWN THAT THE DIFFERENCE BETWEEN THE CONS IDERATION SOLD IN THE SALE DEED AND VALUATION TAKEN FOR STAMP PURP OSES CANNOT BE ADDED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE PURCHASER. THE PROPOSITION THAT PROVISION OF SECTI ON 50C DO NOT APPLY TO THE PURCHASER OF PROPERTY IS ALSO HELD IN THE CASE OF SMT. KUSUM GULATI IN ITA NO.1576/DEL/2008 (BCAJ A 16 VOL UME 41-B PART VI MARCH, 2010). IN VIEW OF ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF REVENUE. 7. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE A .O. BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT IN THE CASE OF ASSESSEE WHO WAS THE PURCHASER OF THE PROPERTY IS NOT SUSTAINABLE AND TH EREFORE, THE ADDITION, SO MADE BY THE A.O. AND SUSTAINED BY LD. CIT(A) IS HER EBY DELETED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21.09.2012 SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TY AGI) ACCOUNTANT MEMBER JUDICIAL MEMBER N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT I.T.A. NO.1879/AHD/2010 A. Y. 2006-07 6 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD