The DCIT.(OSD), Circle-8, Ahmedabad V. Sunderdeep Infrastructure Pvt.Ltd., Ahmedabad

ITA 2051/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6388 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAVANSHI
• Assessee Lawyers: PAUNIL SHAH
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.2051/AHD/2009 A. Y.: 2006-07 THE D. C. I. T.(OSD),CIRCLE-8, 4 TH FLOOR AJANTA COMMERCIAL CENTRE, A WING, ASHRAM ROAD, AHMEDABAD VS SUNDERDEEP INFRASTRUCTURE PVT. LTD., 406, SANIDHYA APARTMENTS, NR. ROSEWOOD APARTMENTS, JODHPUR CHAR RASTA, SATELLITE, AHMEDABAD PA NO. AAHCS 3754 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI G. S. SOURYAVANSHI, SR. DR RESPONDENT BY PAUNIL SHAH, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XI V, AHMEDABAD DATED 17-04-2009, FOR ASSESSMENT YEAR 2006-07, CHAL LENGING THE DELETION OF ADDITION OF RS.12,20,000/- U/S 69 OF TH E IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS PURCHASED A PLOT OF LAND OF SURVEY NO. 295, JODHPUR CHAR RASTA, AHMEDABAD FOR A SUM OF RS.47,97,470/- I NCLUDING STAMP DUTY AND OTHER CHARGES. THE ASSESSEE WAS ASKED TO E XPLAIN WHETHER LAND HAS BEEN PURCHASED AT CIRCLE RATE OR AT LOWER RATE BECAUSE IT WAS SEEN THAT LAND WAS REGISTERED FOR A SUM OF RS.54,90 ,000/- AGAINST PURCHASE PRICE. THE ASSESSEE WAS ASKED WHY THE DIFF ERENCE SHOULD NOT BE ADDED U/S 69 READ WITH SECTION 50C OF THE IT ACT. THE ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 2 ASSESSEE IN REPLY FURNISHED THE DETAILS OF PAN OF 1 1 PERSONS FROM WHOM THE PROPERTY WAS PURCHASED. IT WAS SUBMITTED T HAT THOUGH FOR THE PURPOSE OF STAMP DUTY VALUATION HAS BEEN SHOWN AT HIGHER PRICE BUT NO ADDITIONAL AMOUNT HAS BEEN PAID BY THE ASSES SEE COMPANY. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO MAKE THE ADDITION WITH THE HELP OF SECTION 50C OF THE IT ACT. THE AO HOWEV ER, DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION O F RS.12,20,000/-. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT( A) AND IT WAS SUBMITTED THAT SECTION 50C OF THE IT ACT IS APPLICA BLE TO DETERMINE SALE VALUE FOR THE PURPOSE OF WORKING OUT CAPITAL G AIN AND IT IS NOT APPLICABLE TO THE PURCHASE OF PROPERTIES. NO EVIDEN CE IS BROUGHT ON RECORD TO PROVE ANY UNDISCLOSED INVESTMENT IN THE P ROPERTY. THE ASSESSEE ALSO EXPLAINED THAT FAIR MARKET VALUE HAS BEEN SHOWN IN THE SALE DEED. THE VALUE FOR THE PURPOSE OF STAMP DUTY SHOULD NOT BE TAKEN AS THE BASE FOR MAKING THE ADDITION. THERE AR E SEVERAL FACTORS I.E. LOCALITY OF THE PROPERTY AND COMMERCIAL USE ET C. WHICH DETERMINE THE VALUE OF THE PROPERTY, THEREFORE, ADDITION CANN OT BE MADE IN SUCH CIRCUMSTANCES. IT WAS ALSO SUBMITTED THAT DVOS BLI ND REFERENCE OF CIRCLE RATE IS UNJUSTIFIED. THE ASSESSEE RELIED UPO N CERTAIN DECISIONS IN SUPPORT OF THE CONTENTION. THE LEARNED CIT(A) CO NSIDERING THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITION. T HE FINDINGS OF THE LEARNED CIT(A) IN PARA 2.3 ARE REPRODUCED AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS AS ADVANCED BY THE A. R. OF THE APPELLANT. IT IS SEEN FROM THE DETAILS FURNISHED TH AT PROVISIONS OF SEC. 50C ARE APPLICABLE ONLY WHERE TH E CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 3 BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVT. FOR THE PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER A ND THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SEC. 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. FURTHER, THE AO DID NOT BRING ANY MATERIA L OR EVIDENCE ON RECORD TO ESTABLISH ANY PAYMENT MADE OV ER AND ABOVE THE PAYMENT SHOWN AS PURCHASE VALUE BY TH E APPELLANT AND HAS MERELY PROCEEDED TO APPLY THE DEEMING PROVISIONS OF SEC. 50C OF THE ACT. I FIND F ORCE IN THE SUBMISSION OF THE A. R. THAT AS THERE WAS A DIS PUTE IN THE SAID PROPERTY PURCHASED BY THE APPELLANT, THE M ARKET VALUE WAS FULLY JUSTIFIED AND THE RATE AS PER THE S TAMP VALUATION AUTHORITY CANNOT BE BLINDLY APPLIED EVEN TO THE PURCHASE CONSIDERATION SO AS TO CONCLUDE THAT THE APPELLANT HAD MADE UNEXPLAINED INVESTMENT U/S. 69 O F THE ACT. THERE IS ALSO FORCE IN THE ARGUMENT OF THE A. R. THAT IF THE CIRCLE RATE FIXED BY THE STAMP VALUATION AUTHOR ITIES WAS TO BE ADOPTED IN ALL SITUATIONS, THERE WAS NO NEED OF REFERENCE TO THE DVO UNDER SEC. 50C (2) AND THE BLI ND RELIANCE ON DVO ON CIRCLE RATE WAS NOT JUSTIFIED AS SUCH REPORT SHOULD BE BASED ON CONSIDERATION STATED IN T HE REGISTRATION DOCUMENTS FOR COMPARABLE TRANSACTIONS, AS ALSO FACTORS SUCH AS INPUTS FROM OTHER SOURCES ABOU T THE MARKET RATES. I AM ALSO IN AGREEMENT WITH THE ARGUM ENT OF THE A. R. THAT SINCE THE A. O. DID NOT REFER THE CA SE TO THE DVO FOR VALUATION, THE ADDITION MADE WAS NOT WARRAN TED, WHICH FINDS SUPPORT FROM THE DECISION IN THE CASE O F MEGHRAJ BAID VS ITO (2008) 23 SOT 25 (JODH). THE VA LUE ADOPTED BY THE STAMP DUTY AUTHORITY CANNOT BE TAKEN AS PURCHASE PRICE IN THE HANDS OF THE PURCHASER. IN FA CT WHEREVER THE LEGISLATURE WANTED, STAMP DUTY VALUE I S ADOPTED AS VALUE OF THE TRANSACTION. SEC. 50C IS ON E SUCH EXAMPLE WHERE STAMP DUTY VALUATION IS TAKEN AS SALE S CONSIDERATION IN THE HANDS OF THE SELLER. HOWEVER, THE SAME CANNOT BE APPLIED FOR MAKING ADDITION U/S. 69 OF THE ACT. IT IS NOT OPEN TO ANYBODY TO REWRITE THE TERMS AND CONDITIONS OF THE AGREEMENT ENTERED INTO BY THE APP ELLANT. THIS VIEW IS SUPPORTED BY THE DIRECT DECISIONS OF T HE HON. ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 4 GUJARAT HIGH COURT DT. 21-04-2005 IN THE CASE OF MO HIT MARKETING LTD. VS DCIT (TAX APPEAL NO.157 OF 2000) WHEREIN IT IS HELD THAT IT IS NOT OPEN TO ANY THIRD PARTY INCLUDING THE REVENUE TO REWRITE THE AGREEMENT ENTE RED INTO BETWEEN THE PARTIES. THE APPELLANT HAS FURTHER SUBMITTED THAT THERE IS NO SUCH PROVISION UNDER THE SCHEME OF THE ACT TO ADJUST THE PURCHASE PRICE OF T HE LAND SO PURCHASED BY THE APPELLANT. ON ACTUAL AND REAL INCOME, BASED ON THE NATURE AND CHARACTER OF THE SA ME, HAS TO BE TAKEN INTO CONSIDERATION, UNLESS IT IS ES TABLISHED BY REVENUE THAT THE ASSESSEE HAD RECEIVED THE INCOM E OUTSIDE THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IN THE INSTANT CASE, THERE IS NO SUCH EVI DENCE BROUGHT ON RECORD. THEREFORE, THE ADDITION REGARDIN G NOTIONAL INCOME WHICH SHOULD HAVE BEEN CHARGED OR EARNED MUST FAIL. IN THIS CONNECTION, RELIANCE IS P LACED ON THE FOLLOWING DECISIONS:- I) CIT V. CALCUTTA DISCOUNT CO. LTD. 91 ITR 8 (SC) II) CIT V. A. RAMAN & CO., 67 ITR 11 (SC) III) CIT V. SHIVAKAMI CO. (P) LTD., 159 ITR 71 (SC) IV) SHOORJI VALLABHDAS & CO., 46 ITR 144 (SC) V) CIT V. CHAMANLAL MANGALDAS & CO., 39 ITR 8 (SC) VI) CIT V. BIRLA GWALIOR LTD., 89 ITR 266 (SC) VII) GODHRA ELECTRICITY CO. LTD. V. CIT 225 ITR746 (SC) AFTER THE INTRODUCTION OF SEC. 50C OF INCOME TAX AC T, THE MARKET VALUE AS PER THE STAMP DUTY PAYABLE HAS TO B E TAKEN ONLY FOR CALCULATION OF CAPITAL GAIN, ON SALE CONSIDERATION IN THE HANDS OF THE SELLER. THIS CANN OT BE APPLIED TO THE PURCHASE PRICE IN THE HANDS OF THE PURCHASER AND THE ADDITION CANNOT BE MADE U/S. 69 O F THE ACT, AS IT IS A DEEMING SECTION AND IT IS TO BE APP LIED ONLY FOR THE CAPITAL GAIN AND NOT FOR ANY OTHER PURPOSE. I ALSO FIND THAT THE HONBLE RAJASTHAN HIGH COURT HAS HELD IN THE CASE OF CIT V. KISHAN KUMAR REPORTED IN 215 CTR 181 (RAJ), THAT IF THE CONSIDERATION SHOWN IN THE CONVE YANCE DOCUMENT IS A DEFLATED FIGURE, THEN IT IS FOR THE D EPARTMENT TO LEAD POSITIVE EVIDENCE ABOUT THE FAIR MARKET VAL UE OF THE PROPERTY AND FURTHER TO SHOW THAT THE PROPERTY WAS ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 5 UNDERVALUED IN THE DOCUMENT OF SALE AND THAT STAMP VALUE AUTHORITYS RATE CANNOT BE TAKEN AS THE PURCHASE PR ICE FOR WHICH THE PROPERTY WAS PURCHASED BY THE PURCHASER. I HAVE ALSO GONE THROUGH THE PAGE NO.16 OF THE PURCHA SE DEED WHEREIN THERE IS A MENTION ABOUT THE OBJECTION S RAISED BY ONE SHRI RAJUBHAI AMRUTBHAI DESAI REGARDI NG HIS CLAIM IN THE SAID LAND. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES AND RELYING ON THE ABOVE CITED CASE L AWS, I HOLD THAT THE ADDITION MADE OF RS.12,20,000/- U/S. 69 IS NOT AS PER LAW AND THEREFORE THE SAME IS DIRECTED T O BE DELETED. 3. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND RELI ED UPON UNREPORTED ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MOHIT MARKETING LTD. VS. DCIT IN TAX APPEAL NO.157/ 2000 DATED 21-04-2005 IN WHICH IT WAS HELD THAT PARTIES ARE BO UND BY THE TERMS OF THE CONTRACT AND IT IS NOT OPEN TO THE THIRD PAR TY INCLUDING THE REVENUE TO REWRITE THE TERMS OF CONTRACT. COPY OF T HE ORDER IS PLACED ON RECORD. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD AND DO NOT FIND ANY JUSTIFICATI ON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). IT IS ADMITTED FAC T THAT THE ASSESSEE IS A PURCHASER OF THE LAND IN QUESTION. ITAT AHMEDABAD BENCH IN THE CASE OF ITO VS VENU PROTEINS INDUSTRIES 4 ITR (TRIB .) 602 (AHD) CONSIDERING ITS EARLIER DECISION HELD THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN THE CASE OF THE PURCHASER . DEPARTMENTAL APPEAL WAS ACCORDINGLY DISMISSED. ON CONSIDERATION OF THE FACTS OF THE CASE, WE FIND THAT THERE IS NO FOUNDATION IN MA KING THE ADDITION ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 6 AGAINST THE ASSESSEE. THE AO HAS NOT BROUGHT ANY EV IDENCE ON RECORD TO SHOW THAT THE ASSESSEE MADE EXCESS PAYMEN T OVER AND ABOVE THE SALE CONSIDERATION SHOWN IN THE REGISTERE D DOCUMENTS. THE AO MERELY ON THE BASIS OF CIRCLE RATE PRESUMED HIGH ER VALUE OF THE PROPERTY. THE ABOVE PROVISIONS WERE APPLICABLE IN C APITAL GAINS ONLY. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECOR D TO JUSTIFY THE FINDINGS OF THE AO, THE LEARNED CIT(A) ON PROPER AP PRECIATION OF THE FACTS RIGHTLY DELETED THE ADDITION. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL BEFORE US AND FURTHER THAT THE FINDINGS OF THE LEARNED CIT(A) HAVE NOT BEEN REBUTTED THROUGH ANY MATERIAL ON RECO RD, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WE CONFIRM THE FINDINGS OF THE LEARNED CIT(A) AND D ISMISS THIS GROUND OF APPEAL OF THE REVENUE. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-06-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : -06-2011 LAKSHMIKANT/- ITA NO.2051/AHD/2009 DCIT (OSD), CIRCLE-8, AHMEDABAD VS SUNDERDEEP INFRA STRUCTURE PVT. LTD. 7 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 D Y. REGISTRAR, ITAT, AHMEDABAD