DINESH KANAYALAL MANWANI, NASHIK V. DCIT CIRCLE-1, NASHIK

ITA 2067/PUN/2019

AI Insights

The case involves a batch of six cross-appeals related to the assessment year 2016-17, concerning three assessees: Kanayalal Chetandas Manwani, Dinesh Kanayalal Manwani, and Vinod Kanayalal Manwani. The appeals arise from the orders of the CIT(A)-1, Nashik, which partly upheld the Assessing Officer's findings under section 56(2)(vii)(b) of the Income Tax Act, 1961, adding substantial amounts to the assessees' income. The main legal issue was the correctness of these additions, which were based on the difference between the actual consideration and the stamp duty value of immovable property received by the assessees. The Tribunal examined the arguments and evidence presented by both the assessees and the Revenue, including the timing and nature of property transactions and payments made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137913 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 28-12-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 22-12-2019
• Other Referred Cases: Ravula Subba Rao & Anr. vs. CIT, Sumati Dayal vs. CIT, CIT vs. Durga Prasad More
• Laws Referred To: Income Tax Act, 1961, Bombay Stamp Act, 1958, The Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation and Re- settlement Act, 2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 63; 56(2)(vii)(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA.No.2066/PUN./2019 & 15/PUN/2020 Assessment Year 2016-2017 Mr. Kanayalal Chetandas Manwani, 7/A, Holaram Colony, Sadhu Vaswani Road, Sharanpur Road, Nashik – 422 002 Maharashtra. PAN AEGPM7301B vs. The DCIT, Circle-1, Aayakar Bhavan, Gadkari Chowk, Nashik. Maharashtra. PIN – 422 002 (Appellant) (Respondent) / Cross Appellant ITA.No.2067/PUN./2019 Assessment Year 2016-2017 Mr. Dinesh Kanayalal Manwani, 7/A, Holaram Colony, Sadhu Vaswani Road, Sharanpur Road, Nashik – 422 002 Maharashtra. PAN AAPPM8259C vs. The DCIT, Circle-1, Aayakar Bhavan, Gadkari Chowk, Nashik. Maharashtra. PIN – 422 002 (Appellant) (Respondent) ITA.No.16/PUN./2020 Assessment Year 2016-2017 The ACIT, Circle-1, Gadkari Chowk, Old Agra Road, Nashik. Maharashtra. PIN – 422 002 vs. Mr. Dinesh Kanayalal Manwani, 7/A, Holaram Colony, Sadhu Vaswani Road, Sharanpur Road, Nashik – 422 002 Maharashtra. PAN AAPPM8259C (Appellant) (Respondent) 2 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others ITA.No.2068/PUN./2019 Assessment Year 2016-2017 Mr. Vinod Kanayalal Manwani, 7/A, Holaram Colony, Sadhu Vaswani Road, Sharanpur Road, Nashik – 422 002 Maharashtra. PAN AAPPM8258D vs. The DCIT, Circle-1, Aayakar Bhavan, Gadkari Chowk, Nashik. Maharashtra. PIN – 422 002 (Appellant) (Respondent) ITA.No.14/PUN./2020 Assessment Year 2016-2017 The ACIT, Circle-1, Gadkari Chowk, Old Agra Road, Nashik. Maharashtra. PIN – 422 002 vs. Mr. Vinod Kanayalal Manwani, 7/A, Holaram Colony, Sadhu Vaswani Road, Sharanpur Road, Nashik – 422 002 Maharashtra. PAN AAPPM8258D (Appellant) (Respondent) For Assessees : Shri Sanket Joshi For Revenue : Shri M.G. Jasnani Date of Hearing : 29.12.2022 Date of Pronouncement : 08.02.2023 ORDER PER SATBEER SINGH GODARA, J.M. The instant batch of six cross-appeals for assessment year 2016-17 involves three assessees S/Shri Kanayalal Chetandas Manwani, Dinesh and Vinod Kanayalal Manwani. These three assessees’ as many appeals ITA.Nos.2066 to 3 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 2068/PUN./2019 with Revenue’s and cross appeals ITA Nos.15, 16 and 14/PUN/2020 arise against the CIT(A)-1, Nashik's separate orders, all dated 15.10.2019, passed in case nos. NSK/CIT(A)-1/681/2018-19, NSK/CIT(A)-1/677/2018-19 and NSK/CIT(A)-1/675/2018-19 [taxpayer-wise], respectively, involving proceedings us/143(3) of the Income Tax Act, 1961 (in short "the Act"). 2. Heard all these three assessees represented by Shri Sanket Joshi (AR) and the department through Shri M.G. Jasnani (DR). Case files perused. 3. We notice during the course of hearing that the sole substantive issue which arises for our apt adjudication in all these six cross appeals is that of correctness of the CIT(A)'s action partly upholding the Assessing Officer’s corresponding findings making sec.56(2)(vii)(b) addition(s) of Rs.2,29,67,640/- and Rs.2,10,53,670/- each, assessee wise, respectively, as per the following detailed discussion : 4 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 5 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 6 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 7 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 8 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 9 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others These CIT(A)'s foregoing detailed findings partly upholding section 56(2)(vii)(b) addition in light of agreement dt 12.08.1997 leaves all these three assessees’ as well as the department aggrieved. Learned counsel’s precise case as per the assessees’ corresponding substantive grounds is that both the lower authorities have erred in law and on facts in invoking the impugned addition which deserves to be deleted in entirety. The Revenue’s pleadings on the other hand are that the CIT(A) ought to have upheld the Assessing Officer’s action making the impugned addition in all these three assessees’ hands in entirety. It is in this backdrop of facts that we proceed to adjudicate upon the instant sole issue of applicability of sec.56(2)(vii)(b) in all these six cases. There is hardly any dispute between the parties in principle that sec.56(2)(vii)(b) comes into play when an individual or an HUF; as the case may be, “receives” any immovable property having difference between actual consideration and stamp duty value of Rs.50,000/- in the relevant previous year. The legislature has further inserted four proviso(es), inter alia, relating rigor of this provision is an instance of such difference when the agreement date being earlier than the sale deed with a pre-condition of mode of 10 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others payment as a mandatory condition, applicability of sec.50C as well as exemption involving the specified categories, respectively, which would be dealt with in succeeding paragraphs. 4. We take note of the rival contentions first of all. Mr. Joshi has filed a detailed note of the assessees written arguments/additional grounds reading as under : 11 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 12 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 13 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 14 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 15 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 16 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 17 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 18 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 19 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others 5. The Revenue has placed strong reliance on the Assessing Officer’s action adopting the sale price of the land as per the “Ready Reckoner” for F.Y. 2015-16 as Rs.19,85,97,000/- followed by the necessary allocation of assessees’ shares to the extent of 12% and 11% each in case of Shri Kanayalal Chetandas Manwani, Mr. Dinesh Manvani and Mr. Vinod Manwani, respectively. 5.1. We have given our thoughtful consideration to the foregoing vehement rival stands and find no reason to express our agreement with any of the parties’ submissions in entirety. The assessee’s additional ground/first and foremost argument is that they had not actually “received” any exclusive right or title or domain over the land in question contained in Sy.No.883/1/1, Nashik during the relevant previous year. Mr. Joshi has taken pains to refer to not only sec.2(47)(v) r.w.s.56(2)(vii)(b) of the Act but also he invited our attention to the corresponding revenue records that these taxpayers have nowhere been granted exclusive right, title or possession over the said land. And that they had entered into the corresponding agreement with the seller(s) i.e. M/s. Kale family on 12.08.1997 which was regularized by the stamp authorities as on 06.02.2016 in the relevant previous year, the 20 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others consequential exclusive share never devolved on them so as to attract the statutory provision in issue. Mr. Joshi, inter alia, submitted that these assessees’ had in fact executed the purchase agreement way back on 12.08.1997 followed by un- registered possession receipt on 25.01.2021, payment of additional compensation on 04.10.2014, unregistered final payment receipt [Bharna Pavati] dated 09.09.2015, their application before the Collector, stamps seeking registration of the foregoing agreement on 27.01.2016 and the final decision by him u/secs.33 with 39 of the Bombay Stamp Act, 1958; respectively. He further stated that detailing of all these facts forms sufficient material to hold that the land in question was never actually “received” in the assessment year before us i.e., 2016-17. 5.2 These assessees arguments are found to be without any merit. It emerges during the course of hearing that these assessees’ are engaged in the land development business wherein no books or records have been produced for the period starting from the year 1997 to 2014 which could suggest that such an agreement had ever taken place amongst Kale family and their vendors. Learned counsel could also not pin-point any detailed inquiry undertaken by the Stamp 21 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others Collector asking these assessees to prove actual agreement having taken place in the year 1997, or for that, any transfer of possession in the year 2001 (supra), as the case may be. We further wish to emphasize here that none of these assessees’ could produce on record even book entries in their regular course of business that they had either executed the agreement or taken possession as per their respective unanimous stand. We have gone through the relevant provisions in the Bombay Stamp Act ourselves and do not find anything in clear terms that the Stamp Collector; or any other prescribed authority(ies), has to actually verify and take evidence on record before compounding the concerned instrument lacking the prescribed stamp duty payment. 5.3 It is at this stage that we quote Ravula Subba Rao & Anr. vs. CIT (1956) SCR 577 (SC) that the “Income Tax Act is a self contained code exhaustive of the matters dealt with therein, and its provisions show an intention to depart from the common rule”. Their Lordships further hold in Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC) that any explanation tendered in income tax proceedings has to be examined in the light of human probabilities after removing all blinkers. We find that 22 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others these assessees’ i.e. the three members of Manvani family acquired their respective share(s) of 12% and 11% (supra). The remaining of 66% stake inter alia went to S/Shri Praveenchandra Walchand Shah, Rajendra R Shah and Shri Shailesh R Shah to the extent of 37.5%, 25% and 3.5%; respectively, as per the agreement herein registered on 06.02.2016. It is further evident that although these assessees’ had put the date on the said agreement as on 12.08.1997, there is no positive finding by the learned stamp authorities after detailed inquiry(ies) agreeing with their stand. All what the learned stamp collector has done his duty is to impound the aforesaid agreement and compound the same after recovering the corresponding stamp duty. We thus are of the view that provisions of income tax would be deemed to have been having overriding effect on the proceedings undertaken under Bombay Stamp Act so far as a detailed inquiry regarding veracity of the aforesaid agreement is concerned. 5.4. There is one more clinching aspect of the matter regarding the applicability of “The Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation and Re- settlement Act, 2013”. A combined perusal of secs. 61 and 63 23 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others thereof suggests that all proceedings before the prescribed authority(ies) are judicial proceedings wherein jurisdiction of a civil court is also barred. Learned counsel could not dispute in light of these clinching provisions that once the three taxpayers before us had received the statutory compensation of the land strictly to the extent of their respective share acquired by the National Highways Authority of India “NHAI” as per the above statute, they can very well be presumed to have also “received” the corresponding right or title in the land itself so as to attract sec.56(2)(vii)(b) of the Act. Mr. Joshi could not throw any light as to how these assessees could receive compensation qua their exact share of 12% and 11% (supra) despite the alleged revenue entries having gone against them. Nor has he placed on record the assessee’s corresponding compensation applications / petitions filed by all these assessees before the land acquisition authorities. This act only gives rise to our adverse inference against them. We thus are of the view that the mere fact that some stray revenue entries have gone against the assessees or no sale deed had been executed in their favour would not amount to them having not actually “received” the land in issue once they have received the corresponding exact compensation of their respective shares under the land acquisition law. Faced with 24 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others the situation, we find merit in the Revenue’s contentions that the Assessing Officer had rightly invoked sec.56(2)(vii)(b) of the Act in the given facts and circumstances before us. The CIT(A)’s findings treating the agreement dt 12.08.1997 in absence of any corroborative evidence stand reversed. 6. Next comes equally important aspect of applicability of first and second proviso to sec.56(2)(vii)(b) of the Act that in case the dates of sale deed and date of agreement are not the same, stamp value as on the date of latter’s day may be adopted under this sub-clause provided that whole or part thereof had been paid by any mode other than cash on or before the date of agreement. Learned counsel has once again repeated his strong endeavor to reiterate the assessees’ stand that one of the vendee herein in Shah family (supra) had indeed parted with consideration of Rs.3 lakhs at the time of the agreement way back on 12.08.1997 which forms sufficient material to invoke the foregoing beneficial statutory proviso from the received day only. He has also invited our attention to Mr. Shah’s bank statement as well as the corresponding cheque no. given in the agreement. All these assessees’ arguments deserve to be outrightly rejected only once they have not filed the corresponding bank statement of recipient 25 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others vendor on record or the corresponding ledger(s) or books, as the case may be, till date. We again reiterate in light of our foregoing detailed discussion that once these assessees have failed to prove execution of the agreement as on 12.08.1997 or their possession in 2001 (supra), the clinching onus herein of the impugned advance payment also remains undischarged. We accordingly reject assessees’ instant arguments so far as their case drawing support from the agreement date 12.08.1997 or possession in 2001, is concerned. We find part merit in learned counsel’s arguments at the same time that these assessees’ has indeed made payment of the alleged additional compensation as well as sale price on 04.10.2014 which has not been found to have been factually disputed even on 09.09.2015 (Bharna Pavati) as well as 06.02.2016 [registration of the alleged agreement dated 12.08.1997], respectively. This is also not the Revenue’s case that these assessees’ or their co-vendees had not made the said payments as on 04.10.2014 by way of compensation of Rs.42 lakhs by prescribed mode. Faced with the situation, we direct the learned Assessing Officer to adopt stamp price of the land in issue in S.No.883/1/1, Nashik as on 04.10.2014 as the actual sale price in light of sec.56(2)(vii)(b) read with 1 st and 2 nd proviso therein than taking the fair market value as per the 26 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others ready reckoner in issue (supra) as on 06.02.2016 and calculate the impugned addition as per these assessees’ respective share of 12% and 11% each (supra) is assessee’s case, respectively. The Assessing Officer may thereafter re- compute the impugned addition after referring the issue to the DVO u/s 56(2)(vii) 3 rd proviso as per law preferably within three effective opportunities of hearing. 7. Learned counsel lastly invited our attention to the assessees’ stand that the department has not made any addition in other co-vendees hands u/s.56(2)(vii)(b) of the Act. We find no merit in the instant last half-hearted argument once it has been found as per our preceding detailed adjudication that the impugned statutory provision is indeed applicable in the given facts and circumstances of the case(s) (supra). Faced with the situation, we partly accept all these three assessees and Revenue’s six cross-appeals for statistical purposes and direct the learned Assessing Officer to adjudicate the instant sole issue afresh in light of our foregoing specific directions. Ordered accordingly. We make it clear before parting that none of the assessees judicial precedents could help their case in light of 27 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others the peculiar facts and applicability of the land acquisition law (supra) before us. 8. To sum-up, these three assessees’ appeals ITA.Nos.2066 to 2068/PUN./2019 and Revenue’s respective cross-appeals ITA.Nos.15, 16 and 14/PUN./2020; respectively are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 8 th February, 2023. Sd/- Sd/- [INTURI RAMA RAO] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 8 th February, 2023 VBP/ GCVSR Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// //True Copy// Assistant Registrar, ITAT, Pune Benches, Pune. 28 ITA.Nos.2066 to 2068/Pun./2019 and ITA.Nos.14 to 16/Pun./2020 Mr. Kanyalal Chetandas Manwani, Nashik & Others Date 1. Draft dictated on 06.02.2023 Sr.PS 2. Draft placed before author 06.02.2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.