The ACIT, Circle-3, Surat V. Shri Tushar Harjibhai Ghelani, Surat

ITA 2388/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85530 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 56

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD 0 0 , , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO . 2388 / AHD/ 201 1 [ [ / ASSESSMENT YEAR : 200 6 - 07 ACIT, CIRCLE - 3, SURAT VS SHRI TUSHAR HARJIBHAI GHELANI, PROP. OF GHELANI CORPORATION F - 1 & 2, JOLLY ARCADE, GHOD DOD ROAD, SURAT PAN : ABKPG 0870 B / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR. DR. ASSESSEE(S) BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 06 / 01/2015 / DATE OF PRONOUNCEMENT: 09 / 01 /201 5 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II, SURAT DATED 04 .0 7 .2011 FOR ASSESSMENT YEAR 200 6 - 0 7 . 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - II, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.63,14,230/ - TOWARDS UNACCOUNTED INVESTMENT IN PROPERTIES U/S 69B OF THE IT ACT WITHOUT NOTING THAT THE ASSESSEE FAILED TO ADEQUATELY EX PLAIN THE VAST DIFFERENTIAL BETWEEN THE JANTRI VALUE AND THE DOCUMENTED PRICE IN SUBSTANTIATION OF HER CLAIM. ITA NO. 2388/AHD/2011 ACIT VS.SHRI TUSHAR HARJIBHAI GHELANI FOR AY 2006 - 07 2 3. THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A BUILDER AND , DURI NG THE YEAR UNDER CONSIDERATION , HE WAS ENGAGED IN THE BUSINESS ACTIV ITY OF CIVIL CONSTRUCTION AND LABOUR WORK. THE A SSESSING O FFICER FOUND THAT THE ASSESSEE HAD , DURING THE YEAR FINANCIAL YEAR 2005 - 06, PURCHASED TWO PROPERTIES FOR TOTAL CONSIDERATION OF RS. 77,70,500/ - , WHEREAS STAMP DUTY VALU ATION OF THE PROPERTIES WAS RS. 1,43,20,000/ - . HE , THEREFORE , SHOW CAUSED THE ASSESSEE AS TO WH Y THE DIFFERENCE OF RS. 63,14,230/ - IN THE VALUES AS PER PURCHASE DEED VIS - A - VIS STAMP DUTY VALUATION SHOULD NOT BE TAXED U/S 69B OF THE ACT. THE ASSESSEE OBJECTED TO THE ABOVE SHOW - CAUSE , VIDE LETTER DTD. 03.9.2010. THE MAIN GROUND BEING THAT UNLIKE THE PROVISIONS OF SECTION 50C OF THE ACT, THERE IS NO SUCH PROVISION IN SECTION 69B OF THE ACT, FOR THE PURPOSE OF ADOPTING THE VALUE AS PER THE STAMP DUTY AUTHORITY AND THERE BEING NO MATERIAL EVID ENCE OF ADDITIONAL PAYMENT, NO ADDITION IS JUSTIFIED U/S 69B OF THE ACT. THE A SSESSING O FFICER DID NOT ACCEPT THE ABOVE REPLY OF THE ASSESSEE FOR THE FOLLOWING REASON: - 'THE ASSESSEE MISERABLY FAILED TO EXPLAIN THE DIFFERENCE OF J ANTRI RATE AND VALUE SHOWN IN THE BOOKS OF A/C OF THE ABOVE PROPERTIES. IN THE INSTANT CASE, THE ASSESSEE HAS SHOWN PAYMENT OF R S .75,70,500/ - ONLY FOR THE SAID PROPERTIES IN HIS BOOKS OF A/C FOR WHICH VALUATION BY STAMP DUTY AUTHORITIES HAS BEEN FIXED FOR R S .1,43,20, 000 / - . THE ASSESSEE WAS CALLED UPON TO PAY ADDITIONAL STAMP DUTY BY STAMP DUTY AUTHORITIES WHICH THE ASSESSEE HAS NOT CONTESTED IN THE APPELLATE AUTHORITIES TO S TAMP D UTY D EPARTMENT, WHICH MEANT VALUATION OF S TAMP D UTY A UTHORITIES , WAS ACCEPTED BY THE ASSESS EE AND THE PROPERTIES WERE REGISTERED ACCORDINGLY. THIS INTER - ALIA PROVES THAT ASSESSEE HA D PAID UNACCOUNTED MONEY OVER AND ABOVE THE PRICE SHOWN IN THE SALE DEED. SECTION 50C OF THE A CT MAY BE DEEMING PROVISION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS Y ET, IT LAYS DOWN A VERY BASIC PRINCIPLE WHICH IS THAT ANY TRANSACT I ON WITHIN A PARTICULAR AREA WILL HAVE TO MATCH THE J ANTR Y PRICE FIXED FOR THE AREA AND THE SALE CONSIDERATION WOULD BE THE RATE AT WHICH THE PROPERTY IS EXPECTED TO BE SOLD IN A THAT AREA. THUS, THE J ANTR I RATES ARE NOT SIMPLY A BLANKET GUIDELINE AND IT TAKES INTO ACCOUNT/CONSIDERATION ALL RELEVANT FACTORS OF / IN AN AREA AND IS FIXED BY THE F IELD S TAMP D UTY A UTHORITIES. THE POINT TO NOT E IS THAT ONCE IT IS DEEMED AND ACCEPTED THAT THE PROPE RTY HAS ITA NO. 2388/AHD/2011 ACIT VS.SHRI TUSHAR HARJIBHAI GHELANI FOR AY 2006 - 07 3 BEEN SOLD FOR A PARTICULAR PRICE WHICH IS THE FAIR MARKET VALUE IN A GIVEN AREA TH E N IT WOULD ALSO HAVE TO BE DEEMED AND ACCEPTED THAT THE PURCHASER HAS PAID THE SAME AMOUNT.' IN VIEW OF THE ABOVE ADDITION, ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S . 69B OF THE ACT WAS MADE TO THE TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: - 4. 1. I HAVE DULY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND FIND THAT THE FACTS OF THE CASE ARE SAME AS IN THE CASE RELIED UPON BY THE APPELLANT. AS THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT AN AMOUNT OF RS. 63,14,230 / - HAS BEEN P AID BY THE APPELLANT TO THE SELLER OF THE PROPERTY OVER AND ABOVE THE AMOUNT APPEARING IN THE SALE DEED, DURING THE YEAR, I HOLD THAT ON THE B ASIS OF D IFFERENCE IN THE JANTRI RATES ( STAMP DUTY VALUATION) FOR THE PURPOSE OF REGISTRATION OF SALE DEED, ADDITION MADE U/S 69B OF THE ACT, I S NOT SUSTAINABLE. THIS ISSUE HAS ALREADY BEEN DECIDED BY THE ITAT, AHMEDABAD IN ITA NO.2104/AHD/2010 WITH CO NO .1 71/AHD/2010 VIDE ORDER DTD. 29.10.2010 IN THE CASE OF SHRI PREMJIBHAI GOPALBHAI PATEL (A.Y.2006 - 07) AND IN THE CASE RELIED UPON BY THE APPELLANT, WHEREIN SIMILAR FACT WAS INVOLVED. I, THEREFORE, FOLLOWING THE ABOVE TWO D ECISIONS OF THE ITAT, AHMED A BAD, ALLOW THE GROUND OF APPEAL OF THE APPELLANT AND DELETE THE ADDITION. 5. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER , WHEREAS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED BEFORE US A COPY OF THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARJAN REALITIES LTD, (2013) 40 TAXMANN.COM 398 (GUJARAT), AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT DEEMING FICTION CREATED BY SECTION 50C WHICH SUBSTITUTES CONSIDERATION RECEIVED ON SALE OF A CAPITAL ASSET BY STAMP DUTY VALUATION IS APPLICABLE ONLY IN CASE OF A SELLER AND NOT BUYER OF PR OPERTY. HE FURTHER SUBMITTED THAT IN THE CASE OF THE ASSESSEE , THE ASSESSMENT YEAR IS 2006 - 07 AND AMENDMENT TO SECTION 56 (2) (VII)(B) WAS MADE BY ITA NO. 2388/AHD/2011 ACIT VS.SHRI TUSHAR HARJIBHAI GHELANI FOR AY 2006 - 07 4 FINANCE ACT, 2013 WITH EFFECT FROM 01.04.2014 WHEREBY IT WAS PROVIDED THAT ANY IM MOVABLE PROPERTY FOR CONSIDER ATION WHICH IS LESS THAN STAMP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING RS.50,000/ - , THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEED S SUCH CONSIDERATION SHALL BE CHARGABLE TO INCOME - TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. HE, THEREFORE, S UBMITTED THAT THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ADDITION OF RS.63,14,230/ - WAS MADE BY THE ASSESSING OFFICER BY ASSUMING THE DIFFERENCE BETWEEN THE JANTRI PRICE AND SALE CONSIDERATION AS DEEMED INVESTMENT. THE CIT(A) DELETED THE SAME BY RELYING UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHRI PREMJIBHAI GOPALBHAI PATEL (SU PRA). THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE CIT(A) WHICH ALSO FINDS SUPPORT FROM THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARJAN REALITIES LTD (SUPRA), WHEREIN IT WAS HELD THAT PROVI SIONS OF SECTION 50C IS APPLICABLE IN THE HANDS OF THE SELLER AND NOT THE PURCHASER. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON F R I D A Y , 0 9 T H D A Y OF JANUARY, 2015 AT AHMEDABAD. SD/ - SD/ - (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 0 9 / 01 /201 5 BIJU T., PS ITA NO. 2388/AHD/2011 ACIT VS.SHRI TUSHAR HARJIBHAI GHELANI FOR AY 2006 - 07 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - II, SURAT 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD