The ITO, Ward-3(2), Surat V. Shri Ashokbhai Ramjibhai Rathod, Surat

ITA 2724/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6346 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOORYAWANSHI
• Assessee Lawyers: M K PATEL
• Keywords: Sale consideration of property below Jantri Value; Business income; Income from undisclosed sources; Source of fund; Fair market value; Capital receipt
• Section: 50C; 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA,JM & SHRI A N PAHUJA, AM ITA NO.2724/AHD/2009 WITH CO NO.251/AHD/2009 (ASSESSMENT YEAR:-2006-07) INCOME-TAX OFFICER, WARD- 3(2), ROOM NO. 209, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S SHRI ASHOKBHAI RAMJIBHAI RATHOD, 6, SUNDAR VATIKA, B/H PUNJAB NATIONAL BANK, ADAJAN PATIA, SURAT PAN: AAXPR 7030 E [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI G S SOORYAWANSHI, SR. DR ASSESSEE BY:- SHRI M K PATEL, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AND THE CORRESPONDING CROSS OBJECTION[CO] BY THE ASSESSEE DIRECTED AGAINS T AN ORDER DATED 13-06-2009 OF THE LD. CIT(APPEALS)-II, SURAT FOR TH E ASSESSMENT YEAR 2006-07, RAISES THE FOLLOWING GROUNDS:- ITA NO.2724/AHD/2009[REVENUE] [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE AO OF RS.93,69,001/- U/S 69B OF THE ACT. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET-ASIDE AND THAT OF AO MAY BE RESTORED TO THE ABOVE EXTENT. CO NO.251/AHD/2009[ASSESSEE] [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AS WELL AS ON THE SUBJECT, THE LEARNED CIT-APPEALS, HAS RIGHTLY DELET ED THE ADDITION OF RS.96,69,001/- MADE ON ACCOUNT OF UNACCOUNTED INVES TMENT U/S 69B OF THE ACT. 2 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 YOUR RESPONDENT THEREFORE PRAYS THAT LOOKING TO TH E FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON THE CASE L AWS, THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. YOUR RESPONDENT FURTHER RESERVES HIS RIGHT TO ADD, ALTER, OR TO AMEND ANY OF THE AFORESAID GROUNDS AT THE TIME OF HEARING OF AN APPEAL. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL OF THE REVENUE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT R ETURN DECLARING INCOME OF RS.1,07,189/- FILED ON 26-03-2007 BY THE ASSESSEE, ENGAGED IN THE CONSTRUCTION ACTIVITY, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TA X ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] ON 05-11-200 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION O F THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE PURCHASED LAND AT VARIO US PLACES. THE FIRST SUCH LAND ADMEASURING 19931 SQ. MTRS SITUATE D AT R.S. NO. 214A, T.P. SCHEME 41 (DINDOLI) WAS PURCHASED WITH A CO-OWNER FOR A CONSIDERATION OF RS.29,30,000/- VIDE CONVEYANCE DE ED BEARING NO.4710 DATED 1.02.2006. THE SAID DEED WAS PREPARED ON STAMP PAPERS WORTH RS.2,46,500/-. IN RESPONSE TO A LETTE R/NOTICE DATED 23.07.2008 U/S 133(6) OF THE ACT, THE SUB-REGISTRAR ,SURAT INFORMED THAT THE FAIR MARKET VALUE OF THE SAID PROPERTY WAS RS.1,49,48,300/- AS AGAINST THE DOCUMENT PRICE OF RS.29,30,000/- AND THE CO-OWNERS WERE REQUIRED TO PAY AN ADDITIONAL STAMP DUTY OF RS .10,09,158/-. HOWEVER, THE REGISTERED SALE DEED FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS REVEALED THAT THE SAID LAND WAS REGISTERED AT A PRICE OF RS.83,71,200/- AND THE ADDITIONAL STAMP DUTY PAID WAS RS.4,56,680/- AND NOT WHAT WAS FURNI SHED BY THE SVA AUTHORITY IN ITS CALCULATION SHEET. THUS, THE TOTAL VALUE OF EXCESS CONSIDERATION BORNE BY THE CO-OWNERS OF THIS LAND W ORKED OUT TO RS.55.99,124/- [(RS.83,71.200 PLUS 456.680/- MINUS RS.32,28,756/- (29,30,000/- PLUS 298,756)] AND THE ASSESSEE'S 50% SHARE AMOUNTED TO RS.27,99,562/-. 3 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 2.1. LIKEWISE THE ASSESSEE PURCHASED ANOTHER LAND A DMEASURING 18151 SQ.MTRS. SITUATED AT R.S. NO.214/12+15 BLOCK NO.320, T.P SCHEME 41(DINDOLI) IN TERMS OF CONVEYANCE DEED BEAR ING NO.4711 DATED 27-10.2005 FOR A CONSIDERATION OF RS.26,70,00 0/-. THE SAID DEED WAS PREPARED ON STAMP PAPER OF RS.2,25,000/-. IN RESPONSE TO A LETTER/NOTICE DATED 23.07.2008 U/S 133(6) OF THE ACT, THE SUB- REGISTRAR ,SURAT INFORMED THAT THE FAIR MARKET VALU E OF THE SAID PROPERTY WAS RS.1,36,13,300/- AS AGAINST THE DOCUM ENT PRICE OF RS.26,70,000/- AND AN ADDITIONAL STAMP DUTY OF RS.9 ,18,518/- WAS REQUIRED TO BE PAID. HOWEVER, THE REGISTERED SALE D EED FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS REVEALED THAT THE SAID LAND WAS REGISTERED AT A PRICE OF RS. 76,22,400/- AND THE ADDITIONAL STAMP DUTY PAID WAS RS.4,15,285/- AN D NOT WHAT WAS FURNISHED BY THE SVA AUTHORITY IN ITS CALCULATION S HEET. THUS, THE TOTAL VALUE OF EXCESS CONSIDERATION BORNE BY THE OW NER OF THIS LAND WORKED OUT TO RS.50,94,275/- [RS.76,22,400/- PLUS 4 ,15,285/- LESS RS.29,43,410/- (RS.26,70,000/- PLUS RS.2,73,410/-). 2.2 ANOTHER PIECE OF LAND ADMEASURING 19830 SQ . MTRS. SITUATED AT R.S.NO.228, BLOCK NO.289 WAS PURCHASED BY THE ASSESSEE WITH CO-OWNERS FOR A CONSIDERATION OF RS.27,50,000/- IN TERMS OF CONVEYANCE DEED BEARING NO.5136 DATED 03-04.2006. T HE SAID DEED WAS PREPARED ON STAMP PAPERS WORTH RS.1,65.000/- . IN RESPONSE TO A LETTER/NOTICE DATED 23.07.2008 U/S 133(6) OF THE ACT, THE SUB- REGISTRAR ,SURAT INFORMED THAT THE CO-OWNERS PAID AN ADDITIONAL STAMP DUTY OF RS.3,06,954/-. HOWEVER, THE REGISTERE D SALE DEED FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS REVEALED THAT THE SAID LAND WAS REGISTE RED AT A PRICE OF RS.57,36,600/- AND THE ADDITIONAL STAMP DUTY PAID W AS RS.1,76,328/- AND NOT WHAT WAS FURNISHED BY THE SVA AUTHORITY IN ITS CALCULATION SHEET. THUS, THE TOTAL VALUE OF EXCESS CONSIDERATIO N BORNE BY THE CO- OWNERS OF THIS LAND WORKED OUT TO RS.29,50,328/-[(R S.57,36,600/- 4 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 PLUS RS.1,76,328/-) MINUS RS.29,62,600/- (RS.27,50, 000/- PLUS RS.2,12,600/-)] AND ASSESSEE'S 50% SHARE AMOUNTED TO RS.14,75,164/-. 2.3 IN THE LIGHT OF AFORESAID FACTS, THE AO SH OWCAUSED THE ASSESSE AS TO WHY AN AMOUNT OF RS.93,69,001/- S HOULD NOT BE TREATED AS INVESTMENT MADE FROM UNDISCLOSED SOURCES OF INCOME AND ADDED TO THE TOTAL INCOME IN TERMS OF PROVISIONS OF SEC.69B OF THE ACT. IN RESPONSE, THE ASSESSE SUBMITTED THAT CORREC T AMOUNT WORKED OUT TO RS. 91,66,300/-. THE ASSESSEE PLEADED THAT THE PROVISI ONS OF SECTION 50C BEING DEEMING PROVISIONS WERE APPLICABL E TO THE TRANSFEROR ONLY AND NOT TO THE TRANSFEREE. THE ASSESSEEE ARGUED THAT THE TRANSFEREE CAN NOT BE TAXED WITHOUT ANY EVIDENCE. HOWEVER, THE AO DID NOT ACCE PT THE SUBMISSIONS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS.93,69,001/-[ 27,99,562/- PLUS 50,94,275/- RS.14,75,164/-) TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INVESTMENTS U/S 69B OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON IN THE FOLLOWING TERMS:- 5. IN HIS VERY BRIEF SUBMISSION, THE AR HAS PLACED RELIANCE ON THE DECISION TAKEN BY ME IN THE CASE OF SHRI HAS MUKH N PARMAR, VIDE MY ORDER DATED 23-03-2009 IN CAS/II/28 5/08-09, I: HAS THUS BEEN CONTENDED THAT THE ADDITION OF RS. 93,69,001/- BE DELETED 6. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. THE AR HAS RELIED UPON THE DECISION TAKEN BY ME IN THE CAS E OF SHRI HASMUKH N PALMAR WHERE I HAVE DELETED THE ADDITION MADE UNDER SECTION 69B OF THE ACT, PLACING RELIANCE ON T HE JUDGMENT OF THE ITAT, AHMEDABAD IN THE CASE OF BHARAT M PATE L V/S ACIT, CIR-3, FOR THE AY 2005-06 DATED 29-08-2008 IN ITA NO, 1749/AHD/2003, WHEREIN A SIMILAR ADDITION WHICH WAS CONFIRMED BY ME IN APPEAL, HAS BEEN STRUCK DOWN BY THE ITAT, RELEVANT OBSERVATIONS OF THE ITAT ARE REPRODUCED HE REUNDER: 5 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 10 AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMIS SIONS, FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF LAW AS WELL AS DECISION(S) OF HONBLE SUPREME COURT AND VA RIOUS BENCHES RELIED UPON BY THE PARTIES, WE ARE OF THE O PINION THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION BY DRAWING THE ANALOGICAL PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT IF THIS PROPOSITION IS TO BE ACCEPTED THEN THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT WILL BECOME INOPERABLE. HE, FURTHER HELD THAT SECTION 50C OF TH E ACT IS APPLICABLE TO THE SELLER AND PROVIDES THAT THE VALU ATION MADE BY THE STAMP VALUATION AUTHORITY IS TO BE DEEM ED AS THE CONSIDERATION RECEIVED BY THE SELLER. HAVING SAID SO, THE CIT(A) FURTHER HELD THAT 'THE CONVERSE WILL ALSO HAVE TO BE ACCEPTED AS TRUE, I.E.. THE VALUATION OF THE STAMP VALUATION AUTHORITY WILL HAVE TO BE DEEMED AS THE CONSIDERATION PAID BY THE PURCHASER OF THE PROPERTY AS WELL. 10.1 WE ARE UNABLE TO AGREE WITH THE AFORESAID ANAL OGY DRAWN BY THE CIT(APPEALS) BECAUSE HAD THE LEGISLATU RE INTENDED SO, IT COULD HAVE EASILY SPECIFIED SUCH A PROPOSITION IN THE PROVISION ITSELF, 11. IN VIEW OF THE SETTLED PROPOSITION OF LAW THAT THE APPELLATE AUTHORITY HAS NO RIGHT EITHER TO ADD OR T O DELETE ANY WORD FROM THE PROVISIONS OF LAW UNLESS AND UNTI L THE SAME ARE FOUND TO BE HAVING SOME AMBIGUITY, WE ARE UNABLE TO SUSTAIN THE STAND OF THE CIT(APPEALS), TH ERE BEING NO AMBIGUITY M THE SECTION 50C OF THE ACT, WE ARE OF THE OPINION THAT THESE PROVISIONS ARE. NOT APPLI CABLE TO THE PURCHASER, ' 6.1 RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN THE CASE OF SHRI BHARAT M. RATAL (SUPRA), I DIRECT THE AO TO DELETE THE ADDITION OF THE SUM OF RO.93,59,001/-.. 4 THE REVENUE IS IN APPEAL BEFORE US AGAINST THE AF ORESAID FINDINGS OF THE LEARNED CIT(A) WHILE THE ASSESSEE I N THE CO SUPPORTED THE FINDINGS OF THE LD. CIT(A). THE LEARN ED DR SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT(A) IN THE LIGHT OF DECISIONS 6 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 IN SHANKERLAL NEBHUMAL (HUF) & ORS. VS. DCIT, 80 T TJ (AHD) 69; ACIT VS. SWAMI COMPLEX (P) LTD, REPORTED IN (2 007) TTJ (JP) 531;K P VARGHESE VS. INCOME TAX OFFICER (1981) 131 ITR 597 (SC); BHARATKUMAR N. PATEL V/S. ACIT IN ITA NO.L749/AHD/2 008;JALARAM & CO. V/S. ACIT IN ITA NO. 3964/A/08; NISHABEN MITHA NI V/S. ACIT IN ITA NO. 4120/A/08; TINA RAVI BHATIA V/S. ACIT IN I TA NO. 3276/A/08 AND ITO V. SHRI BHAGWANBHAI PREMJIBHAI PATEL, HUF I N ITA NO.1273/AHD/2010, ORDER DATED 15-10-2010. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. WE FIND THAT THE AO MADE THE ADDITION ONL Y ON THE BASIS OF VALUATION OF THE PROPERTY MADE BY THE STAMP DUTY V ALUATION AUTHORITIES WITHOUT BRINGING ANY MATERIAL ON RECOR D THAT THE VALUE DETERMINED FOR THE PURPOSES OF STAMP DUTY WAS THE ACTUAL CONSIDERATION PASSED BETWEEN THE PARTIES TO THE SALE. WE FIND THAT A CO-ORDINATE BENCH OF THE ITAT IN A DECISION DATED 29.08.2008 IN THE CASE OF BHARATKUMAR N PATEL VS ACIT, CIRCLE- .3, SURAT IN ITA NO.1749/AHD/2008 WHILE ADJUDICATING A SIMILAR ISS UE HELD IN THE FOLLOWING TERMS: 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMIS SIONS, FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF LAW AS WEL L AS DECISION(S) OF HONBLE SUPREME COURT AND VARIOUS BENCHES RELIED UPON BY THE PARTIES, WE ARE OF THE OPINION THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION BY DRAWING THE ANALOGICAL P ROVISIONS OF SECTION 50-C OF THE ACT. THE CIT(APPEALS) CONFIRME D THE ADDITION BY OBSERVING THAT IF THIS PROPOSITION TO BE ACCEPTED, THEN THE DEEMING PROVISIONS OF SECTION 50-C OF THE ACT WILL BECOME I NOPERABLE. HE, FURTHER HELD THAT SECTION 50-C OF THE ACT IS APPLIC ABLE TO THE SELLER AND PROVIDES THAT THE VALUATION MADE BY THE STAMP V ALUATION AUTHORITY IS TO BE DEEMED AS THE CONSIDERATION RECE IVED BY THE SELLER. HAVING SAID SO, THE CIT (APPEALS) FURTHER HELD THAT THE CONVERSE WILL ALSO HAVE TO BE ACCEPTED AS TRUE, I.E . THE VALUATION OF STAMP VALUATION AUTHORITY WILL HAVE TO BE DEEMED AS THE CONSIDERATION PAID BY THE PURCHASER OF THE PROPERTY AS WELL. 10.1 WE ARE UNABLE TO AGREE WITH THE AFORESAID ANAL OGY DRAWN BY THE CIT(APPEALS) BECAUSE HAD THE LEGISLATURE INTEND ED SO, IT COULD HAVE EASILY SPECIFIED SUCH A PROPOSITION IN THE PRO VISION ITSELF. 7 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 11. IN VIEW OF THE SETTLED PROPOSITION OF LAW THAT THE APPELLATE AUTHORITY HAS NO RIGHT EITHER TO ADD OR TO DELETE A NY WORD FROM THE PROVISIONS OF LAW UNLESS AND UNTIL THE SAME ARE FOU ND TO BE HAVING SOME AMBIGUITY, WE ARE UNABLE TO SUSTAIN THE STAND OF THE CIT(APPEALS), THERE BEING NO AMBIGUITY IN THE SECTI ON 50-C OF THE ACT, WE ARE OF THE OPINION THAT THESE PROVISIONS AR E NOT APPLICABLE TO BE PURCHASER. 5.1 ANOTHER CO-ORDINATE BENCH OF THE ITAT IN T HEIR DECISION DATED 24.7.2009 IN THE CASE OF JALARAM AND CO. IN ITA NO.3964/AHD/2008 WHILE ADJUDICATING A SIMILAR ISSUE , CONCLUDED AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE ONLY ISSUE INVOLVED IS WHE THER DIFFERENCE BETWEEN APPARENT CONSIDERATION RECORDED IN THE TRAN SFER DEED AND VALUATION DONE BY THE STAMP VALUATION AUTHORITIES F OR LEVYING STAMP DUTY CAN BE TREATED AS UNDISCLOSED INVESTMENT TO BE TAXED U/S 69. IN OUR CONSIDERED VIEW, THIS PRESUMPTION RAISED BY THE ASSESSING OFFICER AND CIT(A) CANNOT BE LEGALLY SUSTAINED. SEC TION 50C CREATES A LEGAL FICTION THEREBY APPARENT CONSIDERATION IS S UBSTITUTED BY VALUATION DONE BY STAMP VALUATION AUTHORITI ES AND CAPITAL GAINS ARE CALCULATED ACCORDINGLY. LEGAL FICTION CAN NOT BE EXTENDED ANY FURTHER AND HAS TO BE LIMITED TO THE AREA FOR W HICH IT IS CREATED. HON'BLE ANDHRA PRADESH HIGH COURT IN ADDL. CIT V. D URGAMMA P. (1987) 167 1TR 776 (AP) HELD THAT IT IS NOT POSSIBL E TO EXTEND THE FICTION BEYOND THE FIELD LEGITIMATELY INTENDED BY T HE STATUTE. THE HON'BLE COURT WAS DEALING WITH THE PROVISIONS OF SEC. 171(1) OF THE I.T.ACT IN THE CONTEXT OF WHICH IT WAS HELD THAT JO INT FAMILY SHALL BE DEEMED TO CONTINUE FOR THE LIMITED PURPOSE OF ASSE SSING CASES OF JOINT FAMILIES WHICH HAVE BEEN HITHERTO ASSESSED AS SUCH. IT IS NOT POSSIBLE TO EXTEND THAT FICTION TO OTHER CASES. SIM ILAR VIEW WAS TAKEN BY THE HON'BLE KERLA HIGH COURT IN CIT V. KAR VALVE S LTD. (1987) 168 ITR 416 (KER.) WHEREIN IT IS HELD THAT LEGAL FI CTION IS LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND COULD NO T BE EXTENDED BEYOND THAT LEGITIMATE FRAME, HON'BLE KERALA HIGH C OURT WAS DEALING WITH THE CASE WHERE ASSESSEE SOUGHT TO TAKE ADVANT AGE OF SEC.41(2) BY SUBMITTING THAT IF LIABILITIES ARE NOT LIQUIDATED AND OUTSTANDINGS ARE NOT COLLECTED, THEN BU SINESS COULD BE DEEMED TO CONTINUE. HON'BLE ALLAHABAD HIGH COURT IN CONTROLLER OF ESTATE DUTY V. KRISHNA KUMAR DEVI (19 88) 173 ITR 561 (ALL) HELD THAT IN INTERPRETING THE LEGAL FICTION T HE COURT SHOULD ASCERTAIN THE PURPOSE FOR WHICH IT WAS CREATED AND AFTER DOING SO ASSUME ALL FACTS WHICH ARE LOGICAL TO GIVE EFFECT T O THE FICTION. HON'BLE SUPREME COURT IN CIT V. MOTHER INDIA REFRIG ERATION PVT. LTD. 8 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 (1985) 155 ITR 711 (SC) HELD THAT LEGAL FICTIONS A RE CREATED ONLY FOR SOME DEFINITE PURPOSE AND THEY MUST BE LIMITED TO T HAT PURPOSE AND SHOULD NOT BE EXTENDED BEYOND THAT LEGITIMATE FIELD. IN CIT V, BHARANI PICTURES (1981) 129 ITR 244 (MAD,) IT IS HE LD THAT LEGAL FICTIONS ARE FOR A DEFINITE PURPOSE AND ARE LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND SHOULD NOT BE EXTENDED BEYOND ITS LEGITIMATE FIELD. STATUTORY FICTION INTRODUCED IN ONE ENACTMENT CANNOT BE INCORPORATED IN OTHER ACT. THE POINT THAT LEGAL FICTION CANNOT BE EXTENDED TO A NEW FIELD WAS HIGHLIGHTED B Y HON'BLE MADRAS HIGH COURT IN CIT V. RAJAM T.S, (1988) 125 ITR 207(MAD,) WHEREIN IT IS HELD THAT SECTION 41(2) CRE ATES A LEGAL FICTION UNDER WHICH THE BALANCING CHARGE IS TR EATED AS BUSINESS INCOME CHARGEABLE TO TAX BUT WHEN THIS AMOUNT IS DISTRIBUTED TO SHAREHOLDERS THEN IT WOULD NOT BECOME DEEMED DIVIDE ND AND IT WOULD BE ONLY A CAPITAL RECEIPT AND NOT DISTRIBUTIO N OF ACCUMULATED PROFITS. THUS, A LEGAL FICTION WAS INVOKED IN THE H ANDS OF THE ASSESSEE COMPANY AND WAS NOT EXTENDED IN THE HANDS OF THE SHAREHOLDERS. 7. IN THE PRESENT CASE, SECTION 50C CREATES A LEGAL FICTION FOR TAXING CAPITAL GAINS IN THE HANDS OF THE SELLER AND IT CANNOT BE EXTENDED FOR TAXING THE DIFFERENCE BETWEEN APPARENT CONSIDERATION AND VALUATION DONE BY STAMP VALUATION AUTHORITIES A S UNDISCLOSED INVESTMENT U/S 69. IN FACT, SECTION 69 ITSELF IS A LEGAL FICTION WHEREBY INVESTMENT INTO AN ASSET IS TREATED AS INCOME IF IT IS NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. NO FURTHER LEGAL FICT ION FROM ELSEWHERE IN THE STATUTE CAN BE BORROWED TO EXTEND THE FIELD OF SECTION 69. IT IS FOR THE LEGISLATURE TO INTRODUCE LEGAL FICTION TO O VERCOME DIFFICULTY IN TAXING CERTAIN RECEIPTS OR EXPENDITURE WHICH OTHERW ISE WAS NOT POSSIBLE UNDER NORMAL PROVISIONS OF THE ACT. IT IS WITH THIS PURPOSE THAT WHEN IT WAS FOUND DIFFICULT TO PREVENT TAX EVA SION BY UNDERSTATING APPARENT SALE CONSIDERATION AS COMPARE D TO THE VALUATION MADE BY STAMP VALUATION AUTHORITIES FOR T HE PURPOSES OF LEVYING STAMP DUTY THEN IT WAS THOUGHT NECESSARY TO INTRODUCE SECTION 50C FOR SUBSTITUTING APPARENT SALE CONSIDER ATION BY VALUATION DONE BY STAMP VALUATION AUTHORITIES. THIS FICTION C ANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVO KED BY ASSESSING OFFICER TO TAX THE DIFFERENCE IN THE HANDS OF THE P URCHASER. 8. HON'BLE MADRAS HIGH COURT IN CGT V, R. DAM ODARAN (2001) 247 ITR 698 HELD THAT STAMP VALUATION AUTHORITIES HAVE THEIR OWN METHOD OF EVALUATING THE PROPERTY. MERELY BECAUSE FOR THE PURPOSE OF STAMP DUTY, PROPERTY IS VALUED AT HIGHER COST, I T CANNOT BE SAID THAT ASSESSES HAS MADE MORE PAYMENT THAN WHAT I S STATED IN THE SALE DEED. HON'BLE ALLAHABAD HIGH COURT IN DINESH KURNAR MITTAL V. ITO (1992) 193 ITR 770 (ALL.) QUASHED THE ORDER OF AUTHORITIES BELOW, WHEREIN HALF OF THE DIF FERENCE BETWEEN THE 9 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 AMOUNT PAID AND THE VALUE FOR PURPOSES OF STAMP DUT Y WAS ADDED AS INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. IT IS HELD THAT THERE IS NO RULE OF LAW TO THE EFFECT THAT THE VALU E DETERMINED FOR THE PURPOSES OF STAMP DUTY IS THE ACTUAL CO NSIDERATION PASSED BETWEEN THE PARTIES TO THE SALE, I,TAT, SMC AHMEDABAD IN ITA NO. 4120/AHD/2003 IN NISNABEN AMINBHAI MITH ANI DELETED THE ADDITION MADE U/S 69 ON ACCOUNT OF DIFFERENCE BETWE EN APPARENT CONSIDERATION AND VALUATION DONE BY STAMP VALUATION AUTHORITIES AFTER FOLLOWING VARIOUS AUTHORITIES AS REFERRED TO AS ABOVE. AS A RESULT, WE DELETE THE ADDITION AND ALLOW THE A PPEAL OF THE ASSESSEE. 5.2 SIMILAR VIEW WAS TAKEN IN THEIR DECISIONS IN RICHA NARESH JAIN VS. ITO,ITA NO.3997/ AHD./ 2008 AS ALSO IN THE DECISION DATED 11.12.2009 IN THE CASE OF ITO VS. SMT. KUSUM GILAN I IN ITA NO. 1576/DEL./2008 AND ITO VS. OPTEC DISC MANUFACTURIN G, 11 DTR (CHD)(TRIB) 264. MOREOVER, HON'BLE RAJASTHAN HIGH C OURT IN THEIR DECISION IN THE CASE OF CIT VS. KRISHAN KUMAR & OTH ERS, 315 ITR 204(RAJ), HELD THAT IT BECOMES A PURE QUESTION OF FACT, AS TO WHETHER THE CONSIDERATION SHOWN IN THE DOCUMENT OF CONVEYANCE, IS THE ACTUAL AMOUNT PAID BY WAY OF CONSIDERATION, TO BE TAKEN TO BE UNDISCLOSED INCOME OF THE ASSESSEE, OR IT IS A DEFL ATED FIGURE, AND THEREFORE, ADDITION IS REQUIRED TO BE MADE. IF IT I S TAKEN TO BE DEFLATED FIGURE, THEN IT IS FOR THE DEPARTMENT TO L EAD POSITIVE EVIDENCE, ABOUT THE FAIR MARKET VALUE OF THE PROPER TY, AND FURTHER TO SHOW, THAT THE PROPERTY WAS UNDERVALUED IN THE DOCU MENT OF SALE, BEFORE MAKING ANY ADDITION IN THE INCOME, ON THAT COUNT. 5.3 AS OBSERVED BY THE HONBLE APEX COURT IN CIT V S. MOTHER INDIA REFRIGERATION INDUSTRIES PVT. LTD. ,155 ITR 711(SC) WHILE REFERRING TO THEIR DECISION IN BENGAL IMMUNITY COMPANY LIMITED V . STATE OF BIHAR [1955] 2 SCR 603, 606 ; 6 STC 446, IT IS WELL SETTL ED THAT THE LEGAL FICTIONS ARE CREATED ONLY FOR SOME DEFINITE PURPOSE AND THESE MUST BE LIMITED TO THAT PURPOSE AND SHOULD NOT BE EXTEND ED BEYOND THAT LEGITIMATE FIELD. PROVISIONS OF SEC. 50C FALLING UN DER THE CHAPTER CAPITAL GAINS WERE ENACTED WITH A SPECIFIC PURPO SE OF DETERMINING 10 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 THE FULL VALUE OF CONSIDERATION IN CASE OF TRANSFER OF IMMOVABLE PROPERTY FOR THE PURPOSE OF SEC. 48 OF THE ACT. IN THE ABSENCE OF ANY EVIDENCE THAT THE ASSESSEE PAID CONSIDERATION HIG HER THAN STATED IN THE PURCHASE DEED , PROVISIONS OF SEC. 50C CAN NOT BE EXTENDED WHILE MAKING ADDITIONS U/S 69B OF THE ACT. 5.4 ADMITTEDLY, IN THE PRESENT CASE, APART FROM RELYING UPON THE RATES ADOPTED BY STAMP VALUATION AUTHORITY, THERE I S NO OTHER MATERIAL TO SUPPORT THE ADDITION. IN OUR OPINION, R ATES ADOPTED BY STAMP VALUATION AUTHORITY CANNOT BE TAKEN, BY ITSEL F, AS THE PRICE, FOR WHICH THE PROPERTY WAS PURCHASED. IN VIEW THER EOF AND IN THE LIGHT OF AFORESAID DECISIONS OF THE ITAT AND OF THE HONBLE RAJASTHAN HIGH COURT, WE HAVE NO ALTERNATIVE BUT TO UPHOLD TH E FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) . THEREFOR E, GROUND NO. 1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NOS. 2 & 3 IN THE APPEAL OF THE REVENUE BEING MERE PRAYER AND GENERAL IN NATURE, DO NOT REQUIRE ANY SE PARATE ADJUDICATION WHILE GROUNDS RAISED IN THE CO BEING SUPPORTIVE ONLY, ALL THESE GROUNDS ARE DISMISSED. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE U S IN TERMS OF RESIDUARY GROUND IN THE CO, ACCORDINGLY, THIS GROUN D IS ALSO DISMISSED. 8.. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED WHILE CO FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. ORDER PRONOUNCED IN THE COURT TODAY ON 24 -06-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER 11 ITA NO.2724/AHD/09 & CO NO.251/AHD/09 DATED : 24-06-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI ASHOKBHAI RAMJIBHAI RATHOD, 6, SUNDAR VATIK A, B/H PUNJAB NATIONAL BANK, ADAJAN PATIA, SURAT 2. THE ITO, WARD-3(2), SURAT 3. CIT CONCERNED 4. CIT(A)-II, SURAT 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD