The ITO, Ward-3(2), Surat V. Shri Hasmukhbhai Narottambhai Parmar, Surat

ITA 2153/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6324 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 69

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.2153/AHD/2009 A. Y.: 2006-07 THE INCOME TAX OFFICER, WARD 3(2), SURAT ROOM NO.208, AAYAKAR BHAVAN, MAJURA GATE, SURAT VS SHRI HASHMUKHBHAI NAROTTAMBHAI PARMAR, 40, SIDDHI VINAYAK CO-OP. SOCIETY, NR. JOGANI NAGAR, ANAND MAHAL ROAD, SURAT PA NO. ALIPP 9091P (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALBINUS TIRKEY, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , SURAT DATED 23 RD MARCH, 2009, FOR ASSESSMENT YEAR 2006-07, CHALLENGI NG THE DELETION OF ADDITION OF RS.28,36,960/-. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO N OTED THAT DURING THE YEAR THE ASSESSEE HAD PURCHASED LAND WITH ANOTH ER CO-OWNER AT REVENUE SURVEY NO.228, BLOCK NO.289 ADMEASURING HEC . 3-96-59 SQ. MTRS. AS DETAILED IN THE ASSESSMENT ORDER. THE CONVEYANCE DEED WAS DATED 13-06-2005 AND IT SHOWED THAT WHILE THE D OCUMENT PRICE WAS RS.40,50,000/-, THE STAMP VALUATION AUTHORITY ( SVA IN SHORT), SURAT CITY-II HAD ASSESSED THE FAIR MARKET VALUE OF THE SAID PROPERTY ITA NO.2153/AHD/2009 ITO, WARD 3(3), SURAT VS SHRI HASHMUKHBHAI NAROTTAM BHAI PARMAR 2 AT RS.1,18,97,600/- AND CHARGED ADDITIONAL STAMP D UTY OF RS.6,59,200/- WHICH WAS DULY PAID BY THE PURCHASERS . ON THE BASIS OF SUCH INFORMATION, THE AO WORKED OUT THE EXCESS CONS IDERATION BORNE BY THE BUYERS AT (RS.1,18,97,600 + RS.6,59,200/-) - (RS.40,50,000/- + RS.3,40,200/-) = RS.81,05,600/-. THE ASSESSEES S HARE @ 35% WORKED OUT TO RS.28,36,960/- WHICH THE AO TREATED A S UNDISCLOSED INVESTMENT OF THE ASSESSEE U/S 69 B OF THE IT ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE SU BMITTED THAT WHILE DISCLOSING SHORT TERM CAPITAL GAIN (STCG IN S HORT) THE ASSESSEE HAS SHOWN SALE VALUE OF RS.19,25,000/-. TH ERE WERE TWO DOCUMENTS OF SALE OF RS.27,50,000/- EACH WHICH MEAN T THAT THE AGGREGATE SALE VALUE WAS RS.55,00,000/-. THE ASSESS EES SHARE WAS 35% OF THE INVESTMENT AND THEREFORE, THE VALUATION OF THE PROPERTY AS PER THE SVA SHOULD BE TAKEN AS RS. 1,18,97,600/- - RS.40,50,000/- = RS.78,47,600/-; 35% OF THE SAID SUM WORKED OUT TO R S.27,46,660/-. THE AO REFERRED TO THE PROVISIONS OF SECTION 50C OF THE IT ACT AND DWELT ON THE IMPORTANCE AND SIGNIFICANCE OF THE JA NTRI PRICE FIXED BY THE LOCAL GOVERNMENT. HE FURTHER OBSERVED THAT THE ASSESSEE HAD NOT CONTESTED THE VALUATION OF THE SVA AND HAD PAID THE ADDITIONAL STAMP DUTY AND THAT SUCH ACCEPTANCE CLEARLY SHOWED THAT T HE ASSESSEE HAD PAID THE PURCHASE CONSIDERATION WHICH WAS MUCH HIGH ER THAN WHAT HAD BEEN DISCLOSED IN THE SALE DEED. PLACING RELIAN CE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS GEORGE HENDESON AND CO. LTD., THE AO TREATED THE SUM OF RS .28,36,960/- AS THE ASSESSEES UNDISCLOSED INVESTMENT U/S 69 B OF T HE IT ACT AND ADDED HT E SAID SUM TO THE ASSESSEES TOTAL INCOME. ITA NO.2153/AHD/2009 ITO, WARD 3(3), SURAT VS SHRI HASHMUKHBHAI NAROTTAM BHAI PARMAR 3 3. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT ADDITIONAL STAMP DUTY WAS PAID IN ORDER TO AVOID LITIGATION AN D PROVISIONS OF SECTION 50C OF THE IT ACT WOULD NOT APPLY. THE ASSE SSEE RELIED UPON THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CAS E OF BHARAT M. PATEL VS ACIT, CIRCLE-3 DATED 29-08-2008 WHICH IS R EPRODUCED IN THE APPELLATE ORDER IN WHICH THE TRIBUNAL HELD THAT SEC TION 50C WOULD NOT APPLY ON SUCH FACTS. THE LEARNED CIT(A) FOLLOWING T HE ORDER OF THE TRIBUNAL DELETED THE ADDITION. 4. THE LEARNED DR RELIED ON THE ORDER OF THE AO. HO WEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. REQUEST FOR ADJ OURNMENT IS REJECTED. 5. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE AO MERELY ON THE BASIS OF PAYMENT OF ADDITIONAL STAMP DUTY WORKED OUT THE EXCESS CONSIDE RATION AND MADE THE ADDITION. THE AO HAS NOT BROUGHT ANY EVIDENCE O R MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS PAID ANY AMOUN T OVER AND ABOVE WHAT IS MENTIONED IN THE TITLE DEED. THE LEAR NED CIT(A) RIGHTLY RELIED UPON THE DECISION OF ITAT AHMEDABAD BENCH I N THE CASE OF BHARAT M. PATEL (SUPRA) IN WHICH SIMILAR ADDITION H AS BEEN DELETED. FURTHER, ITAT AHMEDABAD BENCH IN THE CASE OF ITO VS VENU PROTEINS INDUSTRIES 4 ITR (TRIB.) 602 HELD AS UNDER : THE ASSESSEE PURCHASED A PLOT OF LAND AND A BUILDING AT A COST OF RS.21,00,000 AND PAID A STAMP DUTY AMOUNTING TO RS.1,76,400. HOWEVER, THE CONCERNED AUTHORITY CHARGED AN ADDITIONAL STAMP ITA NO.2153/AHD/2009 ITO, WARD 3(3), SURAT VS SHRI HASHMUKHBHAI NAROTTAM BHAI PARMAR 4 DUTY OF RS.66,612 VALUING THE PROPERTY AT RS.28,93,000. THE ASSESSING OFFICER REOPENED THE ASSESSMENT AND REJECTED THE CONTENTION OF THE ASSESSEE THAT PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961, WERE NOT APPLICABLE IN THE CA SE OF THE ASSESSEE, CONCLUDED THAT THE ASSESSEE HAD UNDERVALUED THE PROPERTY BY AN AMOUNT OF RS.7,93,000 AND MADE THE ADDITION. THE COMMISSIONER (APPEALS) DELETED THE ENTIRE ADDITION HOLDING THAT APPLICABILITY OF SECTION 50C WAS PRIMA FACIE INCORRECT AS IT PERTAINED TO CHARGING OF CAPI TAL GAINS WHICH WAS TO BE CONSIDERED IN THE HANDS OF TH E SELLER. ON APPEAL BY THE DEPARTMENT: HELD, DISMISSING THE APPEAL, THAT THERE WAS NO INFIRMITY IN THE ORDER OF THE COMMISSIONER (APPEALS ). 5.1 CONSIDERING THE FACTS OF THE CASE AND THAT THE ASSESSEE IS A PURCHASER AND THAT PROVISIONS OF SECTION 50C OF THE IT ACT WOULD NOT BE APPLICABLE IN THE HANDS OF THE PURCHASER AND FUR THER THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD IN SUPPORT OF TH E FINDINGS GIVEN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED CIT(A) FOR DELETING THE ADDITION. WE CONFIRM HIS FINDINGS AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.2153/AHD/2009 ITO, WARD 3(3), SURAT VS SHRI HASHMUKHBHAI NAROTTAM BHAI PARMAR 5 6 IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 24-06-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 24-06-2011 LAKSHMIKANT/- 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