Appeal details
Counselvise Citation
[2023] 101 COUNSELVISE.COM (IT) 3260 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-05-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
19-04-2023
Assessment Year
2018-2019
Appeal Filed On
22-01-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 202/Mum/2023 (A.Y: 2018-19) Benudhar Gokulanand Biswal, H 302, Shanti Complex, Saki Vihar Road, Powai, Mumbai – 400072, Vs. National E assessment Centre, Room.no 401,2 nd Floor, E Ramp, Jawaharlal Nehru Stadium, New Delhi-110003. PAN/GIR No. : ADOPB9106B Appellant .. Respondent Appellant by : Mr.Tanmay Phadke.AR Respondent by : Ms.Naina K Kumar.DR Date of Hearing 20.04.2023 Date of Pronouncement 29.05.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi/CIT(A) passed U/sec 250 of the Act. The assessee has raised the following grounds of appeal: 1.On the f acts and in the circumstances of the case and as per the law, the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) ["the learned Commissioner (Appeals)]despite concluding that th e agreemen t f or sale was ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 2 - entered into on 13.07.2009 (i.e. prior to 01.04.2017), failed to appreciate that the provisions of Section 56(2)(x) of the Act which was inserted vide Finance Ac t, 2017 and made expressly applicable f rom 01.04.2017 are not applicable to the f acts under consideration. The addition of Rs. 9,88,343/(50% of Rs. 19,76,686/-) as conf irmed by the Learned Commissioner (Appeals) under Section 56(2)(x) of the Ac t is bad in law and may be deleted. 2. Without prejudice to the above and on the f acts and in the circumstances of the case and as per the law, the Appellant mentions that the date of agreement was inadvertently stated as 13.07.2009 instead of 08.10.2009 bef ore the learned assessing officer and the learned Commissioner (Appeals). Since the payment of Rs. 2,00,000/- and the date of agreement (i.e. 08.10.2009) is the same, the benef it of the second proviso to Section 56(2)(x) of the Act is available and the addition of Rs. 9,88,343/(50% of Rs. 19,76,686/) under Section 56(2)(x) of the Act is not tenableThus, the said addition may be deleted. 3. Without prejudice to the above and on the f acts and in the circumstances of the case and as per the law, the learned Commissioner (Appeals) erred in confirming the addition of Rs. 9,88,343/(50% of Rs. 19,76,686/) under Section 56(2)(x) of the Act on the observation that since the f irst payment of Rs. 2,00,000/by way of cheque was made on 08.10.2009 which was subsequent to the date of agreement i.c. 13.07.2009the benef it of the second proviso to Section 56(2)(x) of the Act is not available. Thus, the addition of Rs. 9,88,343/- (50% of Rs. 19,76,686/) as confirmed by the Learned Commissioner (Appeals) under Section 56(2)(x) of the Ac t is bad in law and may be deleted. ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 3 - 4. Without prejudice to the above, the learned commissioner (Appeals) failed to appreciate that the section 56(2)(x) of the Act including its second proviso was incorporated on 01.04.2017 and the transaction was entered into on 13.07.2009 on which there was neither deeming f iction of Section 56(2)(x) of the Act nor was the benefit as carved out under the second proviso available. The Appellant cannot be fastened with a tax liability by invoking the proviso which was not available on the statute book on the date of execution of the agreement. Thus, the addition of Rs. 9,88,343/ - (50% of Rs. 19,76,686/-) as conf irmed by the Learned Commissioner (Appeals) under Section 56(2)(x) of the Act is bad in law and may be deleted. 5. Without prejudice to the above, for the sake of presumption wi thout any admission, it is considered that the provisions of Section 56(2)(x) of the Act were applicable to the present case, in such a scenario, the second proviso to the section would be read down to achieve its purpose when there was no observation by the Revenue that the Appellant had paid over and above the sale consideration and the addition of Rs. 9,88,343/(50% of Rs. 19,76,686/-) as conf irmed by the Learned Commissioner (Appeals) under Sec tion 56(2)(x) of the Act may be deleted. 6. The Appellant craves leave to add, alter, rescind, or amend any of the above grounds of appeal 2. The brief facts of the case are that, the assessee is engaged in the business of manufacturing of transformers and electrical intermediate items. The assessee has filed the return of income for the A.Y 2018-19 on 28.10.2018 disclosing a total income of ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 4 - Rs. 9,50,340/- and the return of income was processed u/s 143(1) of the Act. Subsequently the Assessing Officer (AO) has received the information that the assessee has purchased property on 14.07.2017 for a consideration of Rs.32,97,500/-, whereas the stamp valuation of the property is Rs. 52,74,186/-, therefore the AO invoked the provisions of Sec. 56(2)(x) of the Act as the assessee has failed to disclose fully material facts to the extent of Rs.19,76,686/-. Subsequently, the AO has issued notice u/s 143(2) and 142(1) of the Ac along with the questionnaire. In compliance to the notice, the Ld. AR of the assessee has filed the details on 12.02.2021 and furnished copy of purchase deed and some copies of payment proofs and the assessee has not filed other details as per the questioner. 3. Further, the AO has issued a show cause notice and it was duly complied by the assessee. The AO on perusal of details and purchase agreement found that the assessee has purchased a property from HDIL at an agreed price of Rs.32,97,500/- and got registered in the year 2017 at market value of Rs. 52,74,186/- and the stamp valuation and registration fee of Rs. ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 5 - 2,94,000/- was paid. Further the AO has observed that the assessee has not furnished bank account details including the foreign bank account highlighting the payments relating to purchase of property and also the initial agreement with the seller was not produced. Finally the AO has made an addition u/s 56(2)(x) of the Act being the difference in value of property which worked out to Rs.19,76,686/- and assessed the total income of Rs. 29,27,030/- and passed order u/s 143(3) r.w.s 143(3A)&143(3B) of the Act dated 18.03.2021. 4. Aggrieved by the order, the assessee has filed an appeal with the CIT(A), whereas the CIT(A) has considered the grounds of appeal, findings of the A.O and the assessee submissions which could not be filed in the assesseement proceedings referred at page 7 to 9 of the order and CIT(A) has granted partial relief to the assessee and observed at Para 7 of the order read as under: 1The purchase agreement is clearly stating that the assessee is the part o wner ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 6 - of the property. But the officer has included entire additional income and interest in the assessee income In f act, assessee o wns only 50% of the property. Copy of agreement is attached. 2All the documents pertaining to co-owner Brajakishore Madan Panigrahi that were asked by the officer at the time of assessment which consists of Income Tax Return, Computation Sheet and Balance Sheet, Prof it and Loss were submitted on February 23, 2021We are attaching again f or your ready ref erence. 3The original purchase agreement date was 13th July, 2009 which is mentioned on the agreement but f or the purpose of registration the M/s Housing Development and Inf rastructure Limited (HD IL) (seller) had changed the year of purchase manually f rom 2009 to 2017. HDIL is currently under investigation in Mumbai f or various frauds with Banks and other legal agencies. Copy of purchase agreement is attached. 4The M/s HD IL (seller) had changed the agreement date to 2017 f rom 2009on the top page of the agreement However, on page 18 at clause 10 of the purchase agreement, it is mentioned that all the paymen t f or the property has to be done till 30.06.2011. Hence, it is proved that the property is purchased in 2009Also, major payments f or the property were made starting f rom 2009 and copies of receipts were submitted to the learned assessing officer on February 12, 2021. Copies of receipts are attached f or ready reference. 5The assessee and his ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 7 - co-owner had made payments f or the said property as mentioned below Sr. No. D ate of Payme nt Receipt N o. C he qu e N o. Amo un t 1 22. 10. 09 HD ILKPRB 2 009Oc t0 0 1 06 2 88 22 7 90, 00 0 2 22. 10. 20 09 HD ILKPRB 2 009OC T0 010 5 6 75 38 0 2, 90, 00 0 3 8. 1 0. 2 00 9 HD ILKPRB 2 009OC T0 002 3 2 88 21 8 2, 00, 00 0 4 20. 10. 20 12 1 10 0/ 202 1/ 16 00 0071 17 1 00 02 3 5, 00, 00 0 5 20. 10. 20 12 1 10 0/ 201 2/ 16 00 0071 20 3 00 14 5 50, 00 0 6 20. 10. 20 12 1 10 0/ 201 2/ 16 00 0007 119 2 00 03 1 50 00 0 7 18. 05. 20 13 1 10 0/ 201 3/ 16 00 0035 84 1 00 03 3 52, 07 8 8 18. 05. 20 13 1 10 0/ 201 3/ 16 00 0035 81 1 00 03 5 15, 40 0 9 18. 05. 20 13 1 10 0/ 201 3/ 16 00 0035 80 6 33 69 0 67, 47 7 10 09. 09. 20 17 1 10 0/ 201 7/ 16 00 0507 0 2 07 44 6 36, 60 0 11 09. 09. 20 17 1 10 0/ 201 7/ 16 00 0050 69 2 07 44 6 22, 24 7 12 09. 09. 20 17 1 10 0/ 201 7/ 16 00 0050 68 0 33 93 0 14, 35 3 13 09. 09. 20 17 1 10 0/ 201 7/ 16 00 0050 66 0 33 93 0 37, 90 6 14 09. 09. 20 17 1 10 0/ 201 7/ 16 00 0050 67 0 33 93 0 6, 588 T otal 14, 32, 6 49 The above receipts were duly submitted to the learned assessing off icer. As Ms/HDIL (seller) is under liquidation and its o wners are in judicial/police custody and not available we are trying to arrange more receipts f or payments made. 1. The off icer has issued order under section 56(2)(x) the Income Tax Act, 1961 which is effective f rom 01.04.2017, as the property is purchased in 2009 the af oresaid section does not apply to the assessee. Since the initial transaction started in 2009. 2Screen shot of submissions made as per the ef iling website is attached f or ready ref erence. ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 8 - 3In view of the above, we kindly pray that kindly delete the additions made by the Learned Assessing officer and also consequential interest and initiation of penalty proceedings 7. I have considered the f acts of the case, assessment order and assessee purchased a property f rom HD IL on 14-07-2017 f or total consideration of Rs. 32,97,500/value of which was determined at Rs. 52,74,186/by the stamp authority f or stamp duty purposeThe AO was of the vie w that this transaction attracted the provisions of sec. 56(2)(x) of the Act and the assessee did not disclose fully and truly all the material f acts relating to the income of Rs. 19,76,686/- during the relevant year. The AO being not satisfied wi th the assessee's reply, made the addition of Rs. 19,76,686/- u/s. 56(2)(x) of the Act. In the written submissions uploaded on the ITBA Portal, the appellant has submitted that he had furnished all requisite documents bef ore the AO to prove that he was the part owner (50%) of the property and other 50% was owned by co-owner Sh. Brajkishore Madan Panigrahi The appellant has submitted that the original purchase agreement was executed on 13-7- 2009 but the HDIL had changed the year of purchase manually f rom 2009 to 2017, but on page no18 at Clause 10 of the agreement it was mentioned that all the paymen t for the property had to be done till 30-06-2011The appellant has provided the details of payments in tabular form to emphasize that major payment towards purchase of property was made prior to the AY 2018-19The appellant has contended that since transaction started in 2009, theref ore, provisions of section 56(2)(x) of the Act are not applicable to the AY ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 9 - 2018-19. Considering the f acts of the case, am inclined to agree with the appellant's claim. I have gone through registered purchase deed dated 14-07-2017 and upon perusal of the same, f ind that the said document contains names of two persons as purchasers, f irst is Sh. Benudhar Gokulanand and second is Sh. Brajakishore Panigrahi This fact is f urther strengthened f rom the payment receipts towards purchase from the HDIL which are duly acknowledged by HDIL wherein also name of the appellant and name of Brajakishore Panigrahi are clearly ref lecting Thus, there remains no doubt that the property in question was purchased by two persons and the appellant was not the only o wner/purchaser of said property. Therefore, it is wrong on the part of the AO to hold that the assessee was the only owner of the said property. Further, in the instant case, the AO invoked the provisions of section 56(2)(x) of the Ac, therefore, it is imperative to ref er to the provisions of sec. 56(2)(x) which read as under: "Income f rom other sources. 4356. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income f rom other sources", if it is not chargeable to income-tax under any of the heads specif ied in section 14, items A to E. (2) In particular and without prejudice to the generality of the provisions of sub-section (1)the following incomes, shall be chargeable to income-tax under the head " Income from other sources "namely:- x) on or after the 1st day of April2017,- ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 10 - any sum of money, without considerationthe aggregate value of which (a) exceeds f if ty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property.- (A) without consideration, the stamp duty value of which exceeds f if ty thousand rupees, the stamp duty value of such property; for a consideration which is less than the stamp duty value of the property by an amount exceeding f if ty thousand rupees, the s tamp duty value of such property as exceeds such consideration: (B) Following item (B) shall be substituted f or the existing item (B) of sub-clause (b) of clause (x) of sub-section (2) of section 56 by the Finance Act, 2018, w.e.f . 1-4-2019: for a consideration, the stamp duty value of such property as (B) exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:- (1the amount of fifty thousand rupees; and (ii) the amount equal to f ive per cent of the consideration: Provided that where the date of agreement fixing the amount of consideration for the transf er of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken f or the purposes of this sub-clause: ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 11 - Provided f urther that the provisions of the f irst proviso shall apply only in a case where the amoun t of consideration ref erred to therein or a part thereof, has been paid by way of an account payee cheque or an account payee bank draf t or by use of electronic clearing system through a bank account, on or bef ore the date of agreement f or transf er of such immovable property: Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50Cthe Assessing Officer may ref er the valuation of such property to a Valuation Officer and the provisions of section 50C and sub-section (15) of section 155 shall, as f ar as may be, apply in relation to the stamp duty value of such property f or the purpose of this sub-clause as they apply for valuation sections;........ From the plain reading of section, it is clear that provisions of section 56(2)(x) apply to any person wh o receive any sum of the money or property having value exceeding the specified amount on or af ter 01.04.2017 from any person or persons during the previous year. Further, the f irst proviso to section 56(2)(x)(b) of the Act provides that wh ere the date of agreement fixing the amount of consideration for the transf er of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be considered. The f irst proviso only comes into play if the assessee satisf ies condition mentioned in second proviso to sub clause of 9(x) of clause (2) of section 56 of the Act which provides that THENT provisions of the f irst proviso ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 12 - shall apply only in a case where the amoun t of consideration ref erred to therein, or a part thereof , has been paid by way of an account payee cheque or an account payee bank draf t or by use of electronic clearing system through a bank account, on or bef ore the date of agreement f or transf er of such immovable property. In the instant case, it is noted that the date of agreement fixing the amount of consideration f or the transf er of immovable property and the date of registration are not the same. The date of agreement as submitted by the appellant is 13-07-2009 wh ereas purchase deed was registered on 14-07- 2017. Ho wever, f rom the details of payments given in a tabular Form in para 6 (supra)it is seen that the f irst payment of Rs2,00,000/- by way of cheque has been made on 08-10-2009 vide cheque no. 288218. This date i.e. 08-10-2009 is subsequent to the date of agreement i.e. 13-07-2009 therefore as per second proviso to section 56(2)(x) of the Act, the appellant's claim is not allo wable. However, as the appellant is only 50% owner of the property purchased, only 50% of the diff erence in the stamp duty value and purchase consideration is to be added in the hands of the appellant. Thus, the addition of Rs. 19,76,686/- made by the AO is reduced to 50% of this amountthe appellant gets partial relief The ground raised by the appellant regarding this issue is partly allo wed. ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 13 - Finally the CIT(A) has partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal. 5. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in granting partial relief and sustaining the addition to the extent of 50% difference of stamp duty value as per SRO and purchase consideration as the agreement overlooking the material facts that the purchase agreement is dated 13.07.2009 and it was registered on 14-7-2017. Whereas the purchase agreement was entered much prior to 01.04.2017 and the provisions of Sec. 56(2)(x) of the Act are incorporated from Finance Act 2017 and is applicable prospectively from 01.04.2017. The Ld.AR substantiated the Submissions with the factual paper book, judicial decisions and prayed for allowing the appeal. Per contra, the Ld.DR relied on the order of the CIT(A). 6. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that, the CIT(A) has erred in sustaining addition to the extent of 50% of ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 14 - difference in stamp duty value of the flat as per SRO and purchase consideration as per agreement overlooking the various facts and the evidences. We find that the purchase agreement is dated 13.07.2009 and it was registered on 14-7-2017 placed at page 1 to 37 of the paper book and the purchase agreement was entered much prior to 01.04.2017 and the provisions of Sec. 56(2)(x) of the Act are incorporated from Finance Act 2017 and is applicable prospectively from 01.04.2017. The Ld. AR submitted that the date of agreement was inadvertently mentioned as entered on 13.07.2019 instead of 08.10.2009. Further, the first/initial payment of Rs.2 Lakhs was made by cheque by the assessee, Whereas the date of agreement and date of initial cheque payment are prior to the incorporation of Sec. 56(2)(x) of the Act in the Finance Act 2017 effective from A.Y 2017-18. The Ld.AR has relied on the fallowing judicial decisions.(i)Principal Commissioner of income tax Vs Naina Saraf (2022)142 taxmann.com 147(Rajasthan)(9- 05-2022)(ii) Rajib Rathindra Saha Vs Income Tax Off icer (International Taxation)(2022)139 taxmann.com 211(Mumbai Trib)(21-02-2022 and (iii)Shri Ashutosh ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 15 - Jha (HUF) VS I.T.O Ranchi in ITA No.188/Ran/2019 dated 30-4-2021. 7. We find that the assessee has purchased the flat vide agreement dated 13.07.2009 and the section 56(2)(x) of the Act was not in the statute book, and also it is well settled principle of Law that a charging section cannot be pressed into service retrospectively unless it is specifically provided for by the legislature. The provisions of Sec. 56(2)(x) of the Act are incorporated in the Finance Act 2017 with the prospective applicability from A.Y.2017-18 and the transactions entered into prior to 1.04.2017 would not suffer any implications of the section. Whereas in the present case, the transaction of purchase of flat is vide agreement dated 13.07.2009 and it was registered on 14-7-2017 in the F.Y.2018-19. Further, merely because the first payment of Rs.2 lakhs was made on 8-10-2009 subsequently after date of agreement, the revenue cannot rely on the second proviso to section 56(2)(x) of the Act and tax the difference in stamp duty value of flat as per SRO and purchase consideration as per agreement. Since the section56(2)(x) of the Act is not applicable to the ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 16 - assessee, as the agreement was entered prior to 1- 04-2017, hence the second proviso cannot be made applicable and the assessee cannot be fastened the liability in the light of second proviso to section 56(2)(x) of the Act. We considering the facts, circumstances, submissions, ratio of the judicial decisions set-aside the order of the CIT(A) and direct the Assessing officer to delete the addition and allow the grounds of appeal in favour of the assessee. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on .05.2023. Sd/- Sd/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIALMEMBER Mumbai, Dated 29 .05.2023 KRK, PS /Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT (Judicial) 4. The PCIT ITA No. 202/Mum/2023 Benudhar Gokulanand Biswal., Mumbai. - 17 - 5. DR, ITAT, Mumbai 6. Guard File ान ु सार/ BY ORDER, //True Copy//() 1. ( Asst. Registrar) ITAT, Mumbai
AI Insights
The case revolves around an appeal by Benudhar Gokulanand Biswal against the order of the National Faceless Appeal Centre (NFAC), which confirmed an addition of Rs. 9,88,343 under Section 56(2)(x) of the Income Tax Act, 1961. The addition was based on the difference between the stamp duty value and the purchase consideration of a property transaction. The assessee argued that the transaction was completed before the enactment of Section 56(2)(x), and thus, the section should not apply. The Tribunal agreed with the assessee, noting that the agreement was dated 13.07.2009, well before the relevant section came into effect on 01.04.2017.
