UMESH RAOSAHEB PAWAR PATIL, THANE V. PR. CIT-2, THANE

ITA 2602/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1267 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 26-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR LD
• Assessee Lawyers: KETAN VAJANI LD
• Keywords: Sale consideration of property below Jantri Value
• Section: 43CA; 143(3); 13; 263

Judgement Text

ITA NO.2602/MUM/2019 ASSESSMENT YEAR: 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2602/MUM/2019 ( / ASSESSMENT YEAR: 2014-15) SHRI UMESH RAOSAHEB PAWAR PATIL 102, SHREE GANGA PRASAD GHANTALI SAINATH CHOWK RAM GANESH GADKARI ROAD NAUPADA, THANE-400 602. / VS. PR. C IT ASHAR I.T. PARK, B WING, 6 TH FLOOR WAGLE INDUSTRIAL ESTATE THANE (WEST)-400 604 PAN/GIR NO. AAUPP - 3270 - B ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ASSESSEE BY : SHRI KETAN VAJANI LD. AR REVENUE BY : SHRI AJAY KUMAR-LD. DR / DATE OF HEARING : 23/11/2020 / DATE OF PRONOUNCEMENT : 16/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. BY WAY OF THIS APPEAL, THE ASSESSEE CHALLENGES T HE VALIDITY OF REVISIONAL JURISDICTION U/S. 263 AS EXERCISED BY LE ARNED PR. COMMISSIONER OF INCOME-TAX-2, THANE [IN SHORT REFERRED TO AS PR .CIT], FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15, VIDE O RDER DATED 25/02/2019. THE EFFECTIVE GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER:- ITA NO.2602/MUM/2019 ASSESSMENT YEAR: 2014-15 2 (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PRINCIPAL COMMISSIONER OF INCOME-TAX, HEREINAFTER REFERRED TO AS THE 'PR. CIT ', HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961 IN THE CASE OF THE APPELLANT. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PR. CIT HAS ERRED IN CONCLUDING THAT THE PROVISIONS OF SECTION 43CA ARE APPLICABLE IN RESPECT OF A FLAT, HELD AS STOCK IN TRADE, TRANSFERRED BY THE APPELLANT PRIOR TO 1-4-20 13 AND THEREBY ERRED IN CONCLUDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. (C) THE APPELLANT RESPECTFULLY SUBMITS THAT THE ASSESSMENT ORDER IN HIS CASE IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E AND ACCORDINGLY THE PROVISIONS OF SECTION 263 OF THE ACT CANNOT BE INVOKED IN HIS CAS E. IN VIEW OF THIS, THE APPELLANT PRAYS THAT THE ORDER DATED 25 TH FEBRUARY, 2019, PASSED U/S. 263 OF THE ACT SHALL P LEASE BE QUASHED. (D) WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PR. CIT HAS ERRED IN NOT CONSIDERING VARIOUS ALTERN ATE CONTENTIONS OF THE APPELLANT AND THEREBY ERRED IN PASSING AN ORDER U/S. 263 IN CONTR AVENTION OF THE PROVISIONS OF LAW. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING SUBMISSIONS M ADE DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING REVISIONAL PROCEEDINGS. THE JUDICIAL PRECEDENTS AS CITED DURING THE COURSE OF H EARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT M ATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED AS BUILDERS & DEVELOPER, WAS A SSESSED U/S. 143(3) ON 12/09/2016 ACCEPTING RETURNED INCOME OF RS.117.5 3 LACS. THE ASSESSMENT ORDER IS A SHORT ORDER AND THERE IS NO M ATERIAL DISCUSSION, WHATSOEVER, REGARDING ISSUES CONSIDERED BY LD. AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS. 3.2 SUBSEQUENTLY, LEARNED PR.CIT, UPON PERUSAL OF C ASE RECORDS AND INVOKING THE PROVISIONS OF SEC.263, OBSERVED THAT T HE ASSESSEE SOLD FLAT NO. B/102 FOR RS.24 LACS AS AGAINST STAMP DUTY VALU E (SDV) OF RS.31.45 LACS WHICH WOULD ATTRACT THE PROVISIONS OF SEC.43CA WHICH WAS NOT CONSIDERED BY LD. AO AND THEREFORE, THE ORDER WAS E RRONEOUS AND ITA NO.2602/MUM/2019 ASSESSMENT YEAR: 2014-15 3 PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDI NGLY, THE ASSESSEE WAS SHOW-CAUSED REGARDING INVOCATION OF PROVISIONS OF S EC.43CA. 3.3 THE ASSESSEE DEFENDED THE ASSESSMENT ORDER BY S UBMITTING THAT THE FLAT WAS SOLD IN EARLIER YEAR VIDE AGREEMENT DA TED 26/04/2012 AND THE ENTIRE SALE PROCEEDS WERE ALREADY RECEIVED IN F INANCIAL YEAR 2012-13. THE OCCUPATION CERTIFICATE WAS RECEIVED ON 07/09/20 13. THE ASSESSEE FOLLOWED PROJECT COMPLETION METHOD TO OFFER THE INC OME TO TAX AND THEREFORE, THIS SALE WAS SHOWN IN THE BOOKS IN AY 2 014-15. THE ATTENTION WAS DRAWN TO THE FACT THAT SEC.43CA AS INTRODUCED B Y FINANCE ACT, 2013 AND WOULD APPLY TO TRANSACTIONS OF IMMOVEABLE PROPE RTY HELD AS STOCK-IN- TRADE FROM 01/04/2014 I.E. FROM AY 2014-15 ONLY. VA RIOUS OTHER SUBMISSIONS WERE MADE IN SUPPORT OF THE FACT THAT S INCE TRANSFER OF THE PROPERTY TOOK PLACE IN EARLIER YEAR, THE PROVISIONS OF SEC.43CA WOULD NOT BE APPLICABLE TO THE STATED TRANSACTION. 3.4 HOWEVER, LD. PR.CIT OPINED THAT WHAT WAS EXECUT ED ON 26/04/2012 WAS MERE AGREEMENT TO SALE AND NOT REGISTERED SALE DEED OR CONVEYANCE DEED. THE MERE AGREEMENT DOES NOT CONVEY ANY TITLE OR INTEREST IN THE IMMOVEABLE PROPERTY. BY ENTERING IN TO THE AGREEMENT, THE BUYER WOULD MERELY GET A RIGHT TO PURCHASE THE PROP ERTY AND THE SAME COULD NOT BE EQUATED WITH OWNERSHIP OF PROPERTY. TH E RIGHT TO PURCHASE PROPERTY, IN ITSELF, IS DISTINCT & TRANSFERABLE INT ANGIBLE ASSET. SINCE THE ASSESSEE HAS OFFERED THE INCOME IN THIS YEAR, THE P ROVISION OF SEC.43CA WOULD APPLY TO THE FACTS OF THE CASE. IT WAS NOTED IN THE ORDER THAT THE ASSESSEE HAD SUBMITTED DETAILS OF BOOKINGS / ADVANC ES WHEREIN THE ASSESSEE HIMSELF SUBMITTED AGREEMENT VALUE AND MARK ET VALUE OF ALL FLATS IN WHICH THE BOOKING WAS CONFIRMED. THEREFORE , THE PROVISIONS OF SEC.43CA WOULD APPLY AND NON-CONSIDERATION OF THE S AME BY LD. AO ITA NO.2602/MUM/2019 ASSESSMENT YEAR: 2014-15 4 WOULD MAKE THE ORDER AMENABLE TO REVISION U/S 263. FINALLY LD. AO WAS DIRECTED TO REDO THE ASSESSMENT DE-NOVO AFTER AFFOR DING ADEQUATE OPPORTUNITY TO THE ASSESSEE. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US CHALLENGING THE VALIDITY OF REVISIONAL JURISDICTION AS EXERCISED BY LD. PR.CIT U/S 263. 4. UPON PERUSAL OF DOCUMENT ON RECORD, IT IS EVIDEN T THAT THE ASSESSEE ENTERED INTO REGISTERED AGREEMENT FOR SALE OF PROPO SED FLAT NO. B/102 IN CERTAIN PROJECT ON 26/04/2012 FOR AN AGREED CONSIDE RATION OF RS.24 LACS AS AGAINST STAMP DUTY VALUE OF RS.31.45 LACS. THIS DOCUMENT IS A REGISTERED DOCUMENT. UPON PERUSAL OF TERMS AND COND ITIONS, IT IS EVIDENT THAT THE SALE CONSIDERATION OF THE FLAT WAS FIXED A T RS.24 LACS AND SPECIFIC RIGHTS WERE CREATED IN A FUTURE PROPERTY. THE ASSESSEE WAS OBLIGATED TO HAND OVER THE POSSESSION WITHIN A PERI OD OF 24 MONTHS FROM THE DATE OF AGREEMENT. AFTER GOING THROUGH THE TERM S OF THE AGREEMENT, IT IS EVIDENT THAT SPECIFIC PURCHASE RIGHTS WERE CREAT ED IN FAVOR OF PURCHASER IN A SPECIFIC PROPERTY. THIS BEING THE CA SE, THE SUBSEQUENT EXECUTION OF SALE / CONVEYANCE DEED AND HANDING OVE R THE POSSESSION WOULD MERELY BE IMPROVEMENT IN THE EXISTING TITLE O F THE PURCHASER. THE SAME IS SUPPORTED BY THE FACT THAT WHOLE OF THE SAL E CONSIDERATION WAS ALREADY RECEIVED BY THE ASSESSEE BY MAY, 2012 WHICH FALL IN FINANCIAL YEAR 2012-13. THE LD. AR HAS MADE A STATEMENT THAT NO SALE DEED OR CONVEYANCE DEED WAS EXECUTED IN FY 2013-14. THE SAL E HAS BEEN OFFERED IN THIS YEAR ONLY DUE TO THE FACT THAT THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD. UNDISPUTEDLY, THE PROVIS IONS OF SEC.43CA WERE APPLICABLE ONLY FROM AY 2014-15. IT IS ANOTHER FACT THAT DETAILS OF AGREEMENT VALUE AS WELL AS STAMP DUTY VALUE WAS ALR EADY PLACED BEFORE ITA NO.2602/MUM/2019 ASSESSMENT YEAR: 2014-15 5 LD. AO DURING THE COURSE OF ORIGINAL ASSESSMENT PRO CEEDINGS AND LD. AO CHOSE NOT TO INVOKE THE PROVISIONS OF SEC. 43CA. THIS BEING THE CASE, THE REVISIONAL JURISDICTION AS EXERCISED BY L D. PR.CIT COULD NOT BE SUSTAINED IN THE EYES OF LAW. THE PRIMARY CONDITION TO INVOKE THE PROVISIONS OF SEC.263 REMAINS UNFULFILLED. ACCORDIN GLY, WE QUASH THE REVISIONAL ORDER DATED 25/02/2019 AND RESTORE THE A SSESSMENT FRAMED BY LD.AO. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 16 TH DECEMBER, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 16/12/2020 SR.PS:-JAISY VARGHESE '# $# / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,$- , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.