The ITO, Ward-4, Bharuch V. Shri Dipakkumar C.Doshi, Ankleshwar

ITA 1934/AHD/2012

• Counselvise Citation: 193420514 RSA 2012
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset
• Section: 143(3); 50C; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (SHRI A. MOHAN ALANKAMONY, AM AND SHRI KUL BHARAT, AM) ITA NO. 1934/AHD/2012 A. Y.: 2009-10 THE INCOME TAX OFFICER, WARD-4, BHARUCH RANGE, 2 ND FLOOR, ABOVE BANK OF BARODA, STATION ROAD, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOSHI, 206, ANMOL PLAZA, OPP. GIDC BUS STAND, ANKLESHWAR 393 001 P. A. NO. ACIPD 4384 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SAMIR TEKRIWAL, SR. DR RESPONDENT BY NONE DATE OF HEARING: 25-10-2012 DATE OF PRONOUNCEMENT: 27-11-2012 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED CIT ( A)-VI, BARODA DATED 28 TH JUNE, 2012 IN APPEAL NO. CAB/(A)-VI-445/11-12, FOR THE ASSESSMENT YEAR 2009-10 PASSED U/S 250 READ WITH SECTION 143(3 ) AND 254 OF THE ACT. 2. THE LONE EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, (I) THE LEARNED CIT(A) ERRED IN LAW IN DELETING THE ADDITION U/S 69B OF THE ACT OF RS.38,50,408/- HOLDING THAT THERE IS NO PROVISION IN THE ACT TO TAX THE DIFFERENCE BETWEEN VALUATION AS ITA NO.1934/AHD/2012 (AY: 2009-10) ITO, W-4, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOS HI 2 PER STAMP DUTY AND PURCHASE PRICE AND THE SECTION 6 9 OF THE ACT, DOES NOT COVER SUCH CASES. 3. THE ASSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSIN ESS OF TRADING OF SOLUTION FOR ABRASION AND CORROSION FILED ITS RETUR N OF INCOME FOR AY 2009- 10 DECLARING TOTAL INCOME OF RS.3,04,500/- ON 26-09 -2009. INITIALLY AFTER PROCESSING THE RETURN OF INCOME U/S 143(1) OF THE A CT THE CASE WAS TAKEN UP FOR SCRUTINY AND FINALLY ASSESSMENT ORDER WAS PA SSED U/S 143(3) OF THE ACT ON 01-12-2011 DETERMINING TOTAL INCOME OF THE A SSESSEE AT RS.45,94,680/- WHEREIN ADDITION OF RS.38,50,408/- W AS MADE U/S 69B OF THE ACT ON ACCOUNT OF DIFFERENCE BETWEEN VALUATION AS PER STAMP DUTY AND PURCHASE PRICE. ON VERIFICATION OF THE BALANCE SHEE T THE LEARNED AO NOTICED THAT THE ASSESSEE HAD PURCHASED FLAT NO. C- 204, RAJGIRI APARTMENT, MUMBAI AT THE COST OF RS.40,00,000/-. AS PER THE RECEIPT OF THE ASST. SUB REGISTRAR OF STAMP VALUATION AUTHORITY, M UMBAI THE VALUE OF THE PROPERTY FOR THE PURPOSE OF STAMP DUTY WAS STATED A S RS.78,50,408/-. THE ASSESSEE HAD ALSO PAID THE STAMP DUTY BASED ON THE VALUATION OF THE STAMP VALUATION AUTHORITY. SINCE THE ASSESSEE HAD N OT DISPUTED THE VALUATION THE PROPERTY BY THE STAMP VALUATION AUTH ORITY THE LEARNED AO MADE ADDITION OF THE DIFFERENCE OF RS.38,50,408/- B ETWEEN THE STAMP DUTY VALUATION AND THE VALUE SHOWN BY THE ASSESSEE AS UN EXPLAINED INVESTMENT OF THE ASSESSEE U/S 69B OF THE ACT. ON APPEAL BY TH E ASSESSEE, THE LEARNED CIT(A) DELETED THE ADDITION MADE BY THE LEA RNED AO HOLDING THAT THERE IS NO PROVISION IN THE INCOME TAX ACT TO TAX SUCH DIFFERENCE. HIS FINDINGS ARE REPRODUCED HEREIN BELOW FOR REFERENCE: 7.2 I HAVE CONSIDERED REASONS RECORDED BY THE AO A ND SUBMISSION OF THE APPELLANT. ON BEING ASKED BY THE UNDERSIGNED, THE APPELLANT HAS FAILED TO EXPLAIN THE REASONS FOR SUC H HUGE DIFFERENCE IN VALUATION FOR THE PURPOSE OF STAMP DUTY AND PURC HASE PRICE. ITA NO.1934/AHD/2012 (AY: 2009-10) ITO, W-4, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOS HI 3 HOWEVER, ACTION OF THE AO CANNOT BE SUSTAINED BECAU SE THERE IS NO PROVISION IN THE ACT TO TAX SUCH A DIFFERENCE. SECT ION 69 DOES NOT COVER SUCH CASES. IN VIEW OF VARIOUS DECISIONS QUOT ED BY THE APPELLANT, ADDITION OF RS.38,50,408/- MADE BY THE A O U/S 69B OF THE IT ACT IS HEREBY DELETED. 4. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARN ED AO AND PRAYED THAT HIS ORDER MAY BE SUSTAINED. NONE APPEARED ON B EHALF OF THE ASSESSEE. HOWEVER IT WAS DECIDED BY THE BENCH TO HE AR THE CASE EX-PARTE SINCE THE ISSUE INVOLVED IS EXPLICIT AND THERE IS N O DISPUTE WITH REGARDS TO THE FACTS OF THE CASE. 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE OR DERS OF THE AUTHORITIES BELOW. IT APPEARS THAT THE REVENUE HAVE MIXED UP THE SPECIAL PROVISIONS U/S 50C OF THE ACT, WHEREIN THE CONSIDER ATION RECEIVED AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSE T IS DETERMINED BY INVOKING THE DEEMING FICTION BASED ON THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY, ALONG WITH, SECTION 69B OF THE ACT WHEREIN THE AMOUNT OF INVESTMENT NOT FULLY DISCLOSED IN THE BOOKS OF A CCOUNTS IS DEEMED TO BE INCOME OF THE ASSESSEE. SECTION 50C OF THE ACT SPEC IFICALLY PROVIDE THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A R ESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED (O R ASSESSABLE) BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. ITA NO.1934/AHD/2012 (AY: 2009-10) ITO, W-4, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOS HI 4 6. SIMILAR DEEMING FICTION IS STIPULATED U/S 69B OF THE ACT ONLY WITH RESPECT TO ANY INVESTMENTS OR BULLION, JEWELLERY OR ANY VALUABLE ARTICLE. FOR REFERENCE SECTION 69B OF THE ACT IS REPRODUCED HERE IN BELOW FOR REFERENCE:- 69B WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS MA DE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE [ASSE SSING] OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVES TMENTS OR IN ACQUIRING SUCH BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE O F INCOME , AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH E XCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE EXCES S AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR]. 7. THE LEARNED CIT(A) HAD RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF JAWAJEE NAGNATHAM VS R EVENUE DIVISIONAL OFFICER (4 SSC 595) WHEREIN IT WAS HELD BY THE HON BLE APEX COURT THAT THE VALUE ESTIMATED ON THE BASIS OF STANDARD RATES DO NOT REPRESENT THE REAL MARKET VALUE. , AND ON THE VARIOUS DECISIONS OF THE ITAT AHMEDABAD BENCHES WHEREIN IT WAS HELD THAT ADDITIONS MADE U/S 69 B CANNOT BE SUSTAINED BY INVOKING THE PROVISIONS OF S ECTION 50C OF THE ACT., AND THEREBY GRANTED RELIEF TO THE ASSESSEE. THE PR OVISION OF SECTION 50C OF THE ACT IS A SPECIAL PROVISION FOR A DOPTING THE VALUE OF SALE CONSIDERATION IN A SPECIFIC CIRCUMSTANCE WITH RESPE CT TO THE VENDOR OF AN IMMOVABLE PROPERTY AND NOT WITH RESPECT TO THE VEND EE. IF THE ACT INTENDED ITA NO.1934/AHD/2012 (AY: 2009-10) ITO, W-4, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOS HI 5 TO APPLY THE PURCHASE CONSIDERATION IN THE CASE OF THE PURCHASER OF THE IMMOVABLE PROPERTY, IT WOULD HAVE SPECIFICALLY SAID SO. THE DEEMING FICTION CREATED FOR A SPECIFIC PURPOSE CANNOT BE INFUSED FO R ANOTHER APPLICATION UNLESS AND UNTIL IT IS SPECIFICALLY PROVIDED IN THE ACT. FURTHER, WE DERIVE STRENGTH FROM THE DECISION OF THE CASE ITO VS HARLE Y STREET PHARMACEUTICALS LTD., REPORTED IN [2010] 6 ITR (TRI B.) 182 (AHMEDABAD) WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 50C WERE APPLICABLE ONLY FOR THE COMPUTATION OF CAPITAL GAINS IN REAL E STATE TRANSACTION IN RESPECT OF SELLER ONLY AND NOT FOR THE PURCHASER. S ECTION 50C OF THE ACT CREATES A LEGAL FICTION WHEREBY APPARENT CONSID ERATION WAS SUBSTITUTED BY THE VALUATION DONE BY THE STAMP VALU ATION AUTHORITIES AND CAPITAL GAINS WERE CALCULATED ACCORDINGLY. THE LEGAL FICTION COULD NOT BE EXTENDED ANY FURTHER AND HAD TO BE LIMITED T O THE AREA FOR WHICH IT WAS CREATED. SECTION 50C CREATES A LEGAL F ICTION FOR TAXING CAPITAL GAINS IN THE HANDS OF THE SELLER AND IT CAN NOT BE EXTENDED FOR TAXING THE DIFFERENCE BETWEEN THE APPARENT CONSIDER ATION AND THE VALUATION DONE BY THE STAMP VALUATION AUTHORITIES A S UNDISCLOSED INVESTMENT UNDER SECTION 69. SECTION 69 ITSELF WAS A LEGAL FICTION WHEREBY INVESTMENT IN AN ASSET WAS TREATED AS INCOM E IF IT WAS NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. NO FURTH ER LEGAL FICTION FROM ELSEWHERE IN THE STATUTE COULD BE BORROWED TO EXTEND THE FIELD OF SECTION 69. THE ASSESSING OFFICER APPLIED PROVISION S OF SECTION 50C FOR THE COMPUTATION OF UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT WHICH WAS NOT PERMISSIBLE UNDER THE ACT. AP ART FROM THE STAMP DUTY VALUATION, THERE WAS NOTHING ON RECORD W HICH SUGGESTED THAT THE REVENUE HAD PROVED THAT THE ASSESSEE HAD P AID OVER AND ABOVE, WHAT HAD BEEN RECORDED AS PURCHASE CONSIDERA TION OF THE LAND IN THE SALE DEED. THEREFORE NO ADDITION OF UNDISCLO SED INVESTMENT COULD BE MADE BY INVOKING THE PROVISION OF SECTION 69B OF THE ACT. ITA NO.1934/AHD/2012 (AY: 2009-10) ITO, W-4, BHARUCH VS SHRI DIPAKKUMAR CHAMPALAL DOS HI 6 FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH CIT ED SUPRA, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE ORDER OF THE LEA RNED CIT(A) AND ACCORDINGLY, WE CONFIRM THE SAME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-11-2012. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA / DEKA / DEKA / DEKA / COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 20-11-12 DIRECT ON COMPUT ER 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 21-11-12 / OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: