SMT HIRAL DHAVAL KOTHARI, MUMBAI V. INCOME TAX OFFICER WD 30(1) (4), MUMBAI

ITA 223/MUM/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0868 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC-1
• Assessment Year: 2015-2016
• Appeal Filed On: 03-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Deemed to accrue or arise in india; Additional evidence; Set aside
• Section: 56(2)(vii)(b); 56(2); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC-1” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 223/MUM/2022 Assessment Year: 2015-16 Smt. Hiral Dhaval Kothari, B-403, Sanskriti Building, Kedermal Road, Malad (East) Mumbai-400 097. Vs. ITO, Ward-30(1)(4), Kautilya Bhavan, Bandra-Kurla Complex, Mumbai-400051. PAN No. AUMPK 5669 D Appellant Respondent Assessee by : Mr. Prateek Jha & Mr. Prayag Jha, ARs Revenue by : Mr. Kiran P. Unavekar, DR Date of Hearing : 30/05/2022 Date of pronouncement : 30/05/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by assessee against the order dated 22.12.2021 passed by the Ld. Commissioner of Income-Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising the following grounds: Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 2 1. The Ld CIT(A) erred in dismissing the assessee's appeal without granting the assessee reasonable opportunity of heard and without considering the facts and evidences. 2. The Ld CIT(A) erred in sustaining the order of the Ld ITO without appreciating that the assessee was owner of only 50% of the flat which was purchased jointly with her husband and this facts was supported by Agreement for Sale. 3. The Ld CIT(A) erred in ignoring the fact that the Ld ITO had made addition in a routine manner without following the procedure for the purpose of making addition under section 56(2) (vii)(b) of the IT Act. 4. Without prejudice to Ground Nos 1, 2 and 3, the Ld. CIT(A) erred in ignoring the fact that difference between the Stamp Duty Value and cost of purchase was less than 10% and therefore, such difference was to be ignored as per section 56(2) (x)(b)(B). 5. The Ld CIT(A) erred in not appreciating that amendment brought in section 56(2) (x)b)(B) being of beneficial nature was to be applied retrospectively. 6. The above grounds of appeal are without prejudice to one another. 7. The appellant craves leave to furnish Additional Evidence which may be relevant to the above Grounds of Appeal in course of the appeal proceedings 8. The appellant craves leave to amend or alter any of the above Grounds of Appeal or to add new Grounds of Appeal during the course of appeal proceedings. Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 3 2. Briefly stated, the facts of the case are that the assessee filed return of income for the year under consideration on 31.10.2015 declaring Nil income. The return of income filed by the assessee was selected for limited scrutiny to verify the issues inter alia purchase of property, sales mismatch etc. During the scrutiny, the Assessing Officer observed that the assessee along with her husband purchased an immovable property i.e. Flat No. 246, Omkar Alta, Mount Bldg. Kurar Village, Western Express Highway, Mumbai. The transaction value of ₹1,72,60,480/- was recorded in the sale agreement whereas the agreement was registered by the stamp duty value authorities at ₹1,80,45,000/-. The Ld. Assessing Officer accordingly asked the assessee as to why difference in the stamp duty valuation of the property and the value of the transaction shown by the assessee, which amounted to ₹7,84,520/-, be added to the total income of the assessee in terms of provisions of section 56(2)(vii)(b) of the Income Tax Act, 1961 (in short ‘the Act’). No details were provided by the assessee except the claim that Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 4 property was purchased jointly by the assessee along with her husband. The Assessing Officer, therefore treated the difference of ₹7,84,520/- as deemed income of the assessee in terms of section 56(2)(vii)(b) of the Act. In further appeal, the assessee submitted before the Ld. CIT(A) that w.e.f. 01.04.2019 an amendment has been brought to section 56(2)(x)(b)(B), according to which if the difference between the stamp duty consideration and agreed consideration or transaction value, was in excess of 5% of the agreed value, no addition was required to make u/s 56(2)(vii)(b) of the Act. The Hon’ble Parliament has further amended this provision and the difference from 5% has been increased to 10% by the Finance Act, 2020 w.ef. 01.04.2021. The assessee before the Ld. CIT(A) accordingly submitted that the above provision being beneficial provision same should be applied retrospectively, in view of the decision of the Hon’ble Supreme Court in the case of Allied Motors Pvt. Ltd. v. CIT [1997] 224 ITR 677 (SC) and CIT v. Alom Exclusions Ltd. [2009] 319 ITR 306 (SC). The Ld. CIT(A) however, Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 5 rejected this contention of the assessee and upheld the addition observing as under : 5.2 The above provision of law was applicable from 01.10.2009 to 01.04.2017. The case of the appellant is covered by the above provisions of law. The language of the section is very clear without any ambiguity. The fact of the case is also very clear that the assessee along with her husband Shri Dhaval Mahesh Kothari entered into an agreement on 31.12.2014 with M7s Era Realtors Pvt. Ltd and M/s Omkar Realtor and Developer Pvt. Ltd. to purchase Flat No. C- 2406, 24th Floor, C Wing, Omkar Alta Monte, Western Express Highway, Malad (East). Mumbai- 400 097 for a consideration of Rs.1.72.60.480/-. This property was registered on 12.03.2015. For the purpose of payment of Stamp Duty the value of the property was taken at the assessee às income from Other Sources as per the deeming provisions of section 56(2)(vi)(b). There is no requirement in the law that any on money payment need to be established for making the addition. 5.3 The reliance of the appellant on various case laws are misplaced as these are not applicable,to the facts of the case. Further, the appellant has referred to the provisions of section 56(2)(x/b)B). The section 56(2)(x) has been inserted w.e.f. 01.04.2017 only and not applicable to the case of the appellant. Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 6 5.4 Further, the appellant has been given sufficient opportunity by the AO during the assessment proceedings in which a letter dated 20.11.2017 was issued and served on the assessee asking him to show cause as to why the difference of Rs.7,84,520/- being the differences between agreement value and ready reckoner value should not be added to the total income of the assessee according with the provision of section 56(2)(vi)b). In response to the show cause the assessee's AR submitted a letter dated 23.11.2017. The AR stated that the property has been purchased jointly by his assessee alongwith her husband. No other details were submitted in response to the show cause notice other than letter dated 23.11.2017. Now the appellant has submitted various evidences, which cannot be admitted at this stage in view of the provisions of Rule 46A. The case of the appellant doesn't fit with any of the exception clause of this Rule. The appellant has also not made any submissions in this regard. Accordingly, I hereby dismiss the Grounds of appeal raised by the appellant from 1 to 3. 3. Before us, the assessee has filed a Paper Book containing page 1 to 65 and also relied on the decision of the Mumbai Tribunal in the case of Joseph Mudaliar v. DCIT [2021] 130 taxmann.com 250 (Mumbai-Trib.). Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 7 4. We have heard the rival submissions of the parties on the issue-in-dispute and perused the relevant material on record. In the case, the assesseee has purchased a property at a transaction value of ₹1,72,60,480/- vis-à-vis the stamp duty valuation at ₹1,80,45,000/-. As per section 56(2)(vii)(b), if an individual or HUF receive any immovable property for a consideration less than exceeding ₹50,000/-, the stamp duty value of said property has exceeded such consideration, shall be chargeable to Income Tax under the head ‘Income from other Sources’ in the case of the assessee. Accordingly, the Assessing Officer has made addition for difference amount of ₹7,84,520/-. Before us, the plea of the assessee is that in view of the decision of the Tribunal in the case of Joseph Mudaliar (supra) the amendment brought by way of Finance Act, 2018 where in case of 5% difference addition was to be ignored and amendment brought by way of Finance Act, 2020 w.e.f. 01.04.2021 if the difference is of 10% of the consideration then addition is to be ignored. The contention of the Ld. counsel is that in view of the Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 8 decision of the Tribunal (supra), the said amendment has been held to be having retrospective effect and therefore no addition is required in the case of the assessee difference being less than 5% of the consideration value. The relevant finding of the Tribunal (supra) is reproduced as under : “18. Having held so, the second aspect of the issue which requires consideration is whether the exception to section 50C(1) by way of third proviso and section 56(2)(x)(b)(B) would apply prospectively or retrospectively. The issue is no more res integra in view of a number of decisions of different benches of the Tribunal. The Tribunal has consistently expressed the view that since the aforesaid amendments made by Finance Act, 2018 with effect from 01- 04-2019 are curative in nature and beneficial provisions, it would apply retrospectively. In this context, we get support from the following decisions:- 1. Shri Sandip Patil vs ITO (supra) 2. Maria Fernandes Cheryl vs ITO (supra)” 4.1 Respectfully following the finding of the Tribunal, the difference in value of stamp duty value and agreed value being less than 5% (i.e. 4.5%), we set aside the order of the Ld. CIT(A) on the Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 9 issue-in-dispute and delete the addition sustained by him. The Ground Nos. 4 and 5 of the appeal of the assessee are accordingly allowed and the other grounds are rendered academic in nature, therefore, dismissed as infructuous. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court. Sd/- Sd/- (KULDIP SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/05/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai Smt. Hiral Dhaval Kothari ITA No. 223/M/2022 10 Date Initials Original dictation pad is enclosed at the end of file 1. Draft dictated on 01.06.2022 Sr. PS/PS 2. Draft placed before author: 01.06.2022 Sr. PS/PS 3. Draft proposed & placed before the second member: JM/AM 4. Draft discussed/approved by Second Member: JM/AM 5. Approved Draft comes to the Sr. PS/PS: Sr. PS/PS 6. Order pronounced on: Sr. PS/PS 7. File sent to the Bench Clerk: 8. Date on which file goes to the Head Clerk: Sr. PS/PS 9. Date on which file goes to AR 10. Date of dispatch of Order: