Natwarlal Prabhudas Patel, Ahmedabad V. ITO, Circle-4(2), Ahmedabad

ITA 2104/AHD/2017

AI Insights

The case involves four appeals by different assessees against the orders of the Commissioner of Income-tax (Appeals)-4, Ahmedabad, concerning the Assessment Year 2014-15. The primary issue was the addition made under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961, related to the valuation of property for stamp duty purposes. The assessees argued that the valuation should be based on the date of the purchase agreement rather than the registration date, citing similar precedents where the valuation was accepted from the agreement date. The Tribunal agreed with the assessees, referencing documents and previous cases that supported their claim.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300021 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \ BEFORE Ms. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 2101/Ahd/2017 Assessment Years : 2014-15 Anand Rajendrakumar Patel, Ghanshyam Farm, Nr. Umiya Campus, Gota Highway, Gota, Ahmedabad-380060 PAN : AMNPP 1486 A Vs Income Tax Officer, Ward-4(2)(1), Ahmedabad ITA No. 2102/Ahd/2017 Assessment Years : 2014-15 Archanaben Rajendrakumar Patel, Shan Bungalows, Nr. Meghalaya Flats, Navrangpura, Ahmedabad-380009 PAN : ACMPP 2067 J Vs Income Tax Officer, Ward-4(2)(1), Ahmedabad ITA No. 2103/Ahd/2017 Assessment Years : 2014-15 Shardaben Natwarlal Patel, Shan Bungalows, Nr. Meghalaya Flats, Navrangpura, Ahmedabad-380009 PAN : ACMPP 2064 N Vs Income Tax Officer, Ward-4(2)(5), Ahmedabad ITA No. 2104/Ahd/2017 Assessment Years : 2014-15 Natwarlal Prabhudas Patel, Shan Bungalows, Nr. Meghalaya Flats, Navrangpura, Ahmedabad-380009 PAN : ACMPP 2063 N Vs Income Tax Officer, Circle-4(2), Ahmedabad अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee(s) by : Shri Mehul Thakker, CA Revenue by : Shri R.R. Makwana, Sr. DR सुनवाई क琉 तारीख/Date of Hearing : 15/06/2023 घोषणा क琉 तारीख /Date of Pronouncement : 05/07/2023 ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 2 आदेश आदेशआदेश आदेश/O R D E R These four appeals are filed by different assessee(s) against respective orders of the Commissioner of Income-tax (Appeals)-4, Ahmedabad [“CIT(A)” in short], all dated 14.06.2017, passed for Assessment Year 2014-15. Since the appeals are connected with each other and common issues are involved, these were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. All the four appeals are identical; therefore, firstly we are taking up the appeal being ITA No. 2101/Ahd/2017. 3. The grounds raised by the assessee are as follows:- "1. Both the Ld. A. O. has erred in making addition of Rs. 1,63,776/- u/s 56(2)(vii)(b)(ii) of the Act, 1961 and Ld. CIT(A) has erred in confirming the same even though it was brought to their notice that the agreement for purchase of property in question was actually entered in to with the seller on 10/06/2010 and stamp duty value has to be reckoned from the date of agreement for purchase of property and not from the date of registration as provided in the law. 2. Both the Ld. A.O. and Ld. CIT(A) has erred in not considering (rather overlooked) the crucial part of the submission dated 02/12/2016 (vide para-8 & 9 annexure-5 & 6) establishing the inclusion of survey no. 140/1,140/2 and 140/3 by way of re- conveyance deed and declaration in favour of the appellant. 3. The Ld. CIT(A) has further erred in law and on fact in not considering the following grounds of appeal raised before him on the ground that effective ground of the appeal is against the addition of Rs. 1,63,776/-. (a) The Ld. A.O. has erred in law in making the addition of Rs. 2,18,368/- for the year under consideration as the provisions of section 56(2)(vii)(b)(ii) inserted by the Finance Act, 2013 was given assent by the Parliament on 10/05/2013 whereas registration formalities of the property were completed on or before 10/05/2013. ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 3 (b) The Ld. A.O. has erred in law in making reverse calculation for arriving at the stamp duty valuation by applying stamp duty rate @ 4.9% is against the law because the provisions of section of section 50C does not empower A.O. to work out stamp duty valuation by making reverse calculation. It is mandatory for him to take the valuation as adopted assessed or assessable by Stamp Duty Authority. The Ld. A.O. ought to have provided/furnished the copy of the valuation from the Stamp Duty Authority to the appellant when it was asked to him vide reply dated 15/12/2016 that the assessee could rebut the matter only on receipt of the stamp duty valuation. Had the A.O. provided the same, the appellant would have objected u/s 50C (2) of the Act, to refer the matter to the valuation officer if not agreed with the stamp duty -valuation. (c) The Ld. A.O. has erred in making such addition which is based on deeming provisions of the law where payments for purchase of property over and above the documents value (registration amount) has not been proved/established by the A.O. (d) The Ld. A.O. has erred in making the addition of Rs. 2,18,368/- for the year under consideration in the hands of the assessee without taking cognizance of first proviso to section 56(2)(vii) r.w.s. 50C(2) of the IT Act, where the purchaser also has right to refer the matter to the Valuation Officer in case stamp duty valuation is not acceptable to him. The assessee has also taken an additional ground which reads as under:- “4. The Ld. A.O. has erred in applying the provisions of section 56(2)(vii)(b)(ii) of the Income Tax Act,1961 in case of encumbered property even though the relevant documents/proof were submitted to him showing that the property under reference has no clear title. The Ld. CIT (A)-4, Ahmedabad, has also erred in not taking into consideration the said facts while passing the appellate order.” ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 4 4. The return of income for AY 2014-15 was filed by the assessee on 25.07.2014 declaring total income of Rs.12,69,334/-. Notice under Section 143(2) of the Income-tax Act, 1961 [“the Act” in short] was issued on 28.09.2015 and the same was duly served to the assessee. The Authorized Representative of the assessee submitted the details before the Assessing Officer. The Assessing Officer observed that the assessee is a partner in a partnership firm and earning share income and also earning income from house property and other sources. During the course of assessment proceedings, the assessee furnished the details of bank accounts, details of unsecured loans with contra account and details of investment in property etc. The Assessing Officer further observed that there was higher valuation of land by Sub-Registrar. The assessee filed reply before the Assessing Officer and after taking cognizance, the Assessing Officer held that the agreement dated 23.09.2010 in respect of sale of land bearing Survey No. 139 to 142 was executed between M/s. Durga Recol Industries Pvt. Ltd., Shri Natwarlal Prabhudas Patel and five others including assessee. As per the agreement for sale, the description of the property does not include Survey No. 140/1 and 140/3 as the same was executed between Sanjay Singh Chandrikapratap Singh and Shri Natwarlal Prabhudas Patel and five others. The Assessing Officer, therefore, made addition of Rs.1,63,776/- under Section 56(2)(vii)(b)(ii) of the Act. 5. Being aggrieved by the assessment order, assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 6. The learned AR submitted that the agreement for sale in respect of Survey No. 140/1, 140/2 and 140/3 was clearly ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 5 mentioned in the agreement/re-conveyance deed executed on 23.06.2010 and, therefore, the stamp duty valuation of the said property prevailing on 23.06.2010 should have been adopted by the Assessing Officer as done in one of the co-owners i.e. Shri Ashok Natvarlal Patel by the CIT(A) in that case vide order dated 14.03.2019. The learned AR further submitted that the Assessing Officer has not taken valid cognizance of the documents produced at the time of assessment proceedings and simply made addition of Rs.1,63,776/- u/s 56(2)(vii)(b)(ii) of the Act. 7. As regards the additional ground, the learned AR submitted that the provisions of Section 56(2)(vii)(b)(ii) of the Act inserted by Finance Act 2013-14 and was given assent by the Parliament on 10.05.2013 whereas registration formalities of the property were completed on or before 10.05.2013. The Assessing Officer as well as the CIT(A) was not right in making reverse calculation for arriving at the stamp duty valuation by applying stamp duty rate @ 4.9% as the provisions of Section 50C does not empower the Assessing Officer to work out stamp duty valuation by making reverse calculation. 8. The learned DR submitted that the banakhat was not there and advance of Rs.2 crore as to whether in respect of this property or the property at Survey No. 140/1, 140/2 and 140/3 was not established by the assessee during the assessment proceedings as well as before the CIT(A). The learned DR relied upon the assessment order and the order of the CIT(A). 9. Heard both the parties and perused all the relevant material available on record. From the perusal of the Banakhat dated 10.06.2010, Re-conveyance Deed and Declaration dated ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 6 23.06.2010, Cancellation Deed dated 23.06.2010 and Re- conveyance Deed registered on 23.08.2010 – all these documents are in consonance with Survey No. 139 to 142. Merely there was a difference of transaction in respect of Survey No. 140/1, 140/2 and 140/3 which has a separate banakhat in between the parties, that are M/s. Durga Ricol Industries Pvt. Ltd. and Sanjay Singh Chandrikapratap Singh, cannot be said that the deal was not finalized in respect of all these properties in the name of the assessee and its co-owners as well. In fact, the registered banakhat agreement with M/s. Durga Ricol Industries Pvt. Ltd. dated 24.09.2010 and the order passed by the Deputy Collector, Dholka and Mamlatdar, Sanand dated 24.02.2011 and 17.02.2011 clearly set out the position of the assessee and its co-owners in respect of the Survey No. 139, 140, 141 and 142. Clearance from GIIC and PF Department entry also highlights that the agreement for purchase of property in question was actually entered into with the seller on 10.06.2010 and the stamp duty value has to be reckoned from the date of agreement for purchase of property and not from the date of registration as provided in the law. The submission of the learned AR appears to be justifiable and in fact the Revenue, in one of the co-owners case i.e. Shri Ashok Natvarlal Patel (CIT(A)’s order dated 14.03.2019) has taken a view that the stamp duty valuation of the property mentioned hereinabove prevailing on 23.06.2010 should be adopted. Thus, the Assessing Officer as well as CIT(A) was not correct in making the addition. Thus, Ground Nos. 1 to 3 are allowed. 10. Ground No.4, i.e. the additional ground, is only academic and, therefore, not adjudicated upon. ITA Nos. 2101, 2102, 2103 & 2104/Ahd/2017 Anand R.Patel, Archanaben R. Patel, Shardaben N Patel & Natwarlal P Patel AY : 2014-15 7 11. ITA Nos. 2102/Ahd/2017, 2103/Ahd/2017 and 2104/Ahd/2017 are identical in facts as they are appeals related to the co-owners in respect of the sale agreement of the said land mentioned hereinabove. Therefore, all the appeals filed by the assessee(s) are allowed. 12. In the result, all appeals of the assessee(s) are allowed. Order pronounced in the open Court on 05/07/2023 at Ahmedabad. Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 05/07/2023 *Bt आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय 灹ितिनिध ,आयकर अपीलीय अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Ahmedabad 1. Date of dictation- ...28.06.2023...... 2. Date on which the typed draft is placed before the Dictating Member ...28.06.2023......... Other member.... .......... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ...03.07.2023......... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...05.07.2023 5. Date on which the file goes to the Bench Clerk...05.07.2023..... 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order......... 8. Date of Despatch of the Order..................