Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 2499 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 9 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-01-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
26-01-2022
Assessment Year
2014-2015
Appeal Filed On
15-04-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.383/SRT/2017 (AY 2014-15) (Hearing in Virtual Court) Kantibhai Bhikhusha Chaute, Chaue, Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: AANPC 9702 E Vs The Income Tax Officer, Ward-1(2)(2), Surat. Appellant/ Revenue Respondent/ Assessee ITA No.384/SRT/2017 (AY 2014-15) Krishnadas Bhikhusha Chaute, Chaue Est., Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: ABFPC 0101 N Vs The Income Tax Officer, Ward-1(2)(2), Surat. Appellant/ Revenue Respondent/ Assessee ITA No.385/SRT/2017 (AY 2014-15) Smt.SumitrabenKantibhaiChaute, Chaute Est., Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: AANPC 9701 H Vs The Income Tax Officer, Ward-1(2)(4), Surat. Appellant/ Revenue Respondent/ Assessee ITA No.284/SRT/2018 (AY 2014-15) Smt.MandabenSuryakantChaute, Chaue Est., Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: AAMPC 2507 J Vs The Income Tax Officer, Ward-1(2)(3), Surat. Appellant/ Revenue Respondent/ Assessee Kantibhai B. Chaute & (05) Others AY 2014-15 2 ITA No.285/SRT/2018 (AY 2014-15) Smt.Laxmiben Narayan Chaute, Chaue Est., Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: ABFPC 0082 L Vs The Income Tax Officer, Ward-1(2)(3), Surat. Appellant/ Revenue Respondent/ Assessee ITA No.681/SRT/2018 (AY 2014-15) Smt. Shantaben K. Chaute, Chaue Est., Op. Kapadia Health Club, New Civil Road, Surat – 395011. PAN: AAMPC 2510 P Vs The Income Tax Officer, Ward-1(3)(5), Surat. Appellant/ Revenue Respondent/ Assessee Assessee by Shri Manish J.Shah – AR Revenue by Mrs.Anupma Singla – Sr.DR Date of hearing 27/01/2022 Date of pronouncement 31/01/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This set of six appeals are directed against the separate orders of ld. Commissioner of Income Tax(Appeals)-2, Surat dated 18.10.2017, 18.10.2017, 18.10.2017, 02,02,2018, 28.02.2018 and 18.07.2018respectively all for A.Y. 2014-15. In all the appeals, facts are common, all the assessee have raised certain identical grounds of appeal, therefore, all appeals were Kantibhai B. Chaute & (05) Others AY 2014-15 3 clubbed, heard together and are decided by a consolidated order. With the consent of parties, appeal in ITA No.383/SRT/2017 for the A.Y. 2017 was treated as lead case. The order passed in this lead appeal will be followed in all remaining appeals. The grounds raised by the assessee as follows: “1. The C.I.T.(Appeals) erred in law and on facts in confirming the addition of Rs.18,36,875/- made by the Assessing Officer by invoking provision of section 56(2)(vii) of the I.T.Act, 1961 without appreciating the facts and law of the case properly. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing.” 2. Brief facts of the case are that during the scrutiny assessment for assessment year (AY) 2014-15, the Assessing Officer (AO) noted that the assessee along with Seven other co-owners have purchased an immovable property of 3470 Sq meter, out of Survey No.24/1, Block No.30, Dindoli, Surat for a consideration of Rs.1.48 crore. The assessee is having 1/8 th share i.e. Rs.18,50,000/-. The transaction of sale was registered with Sub-registrar on 20.09.2013. The assessee has paid Stamp Duty of Rs.14,45,300/- on the transaction of transfer of land. The AO find that Stamp Valuation Authority (SVA) determined the Fair Market Value(FMV) of property for the purpose of Stamp Duty at Rs.2,94,95,000/-, thus there was a difference of Rs.1,46,95,000/-. On the basis of difference between the value determined Kantibhai B. Chaute & (05) Others AY 2014-15 4 by the Stamp Valuation Authority and the sale consideration shown by assessee and his Co-owner, the AO took his view that on the transaction, the provision of section 56(2)(vii)(b)(ii) of the Income Tax Act are applicable. The AO was of the view that the difference between the stamp value and the consideration shown by assessee is chargeable under the head “Income from Other Sources”. On the basis of aforesaid observation, the AO issued show cause notice vide notice dated 07.10.2016 as to why proportionate addition ofRs.18,36,875/- out of total difference of Rs.1,46,95,000/- should not be made under section 56(2)(vii)(b)(ii) of the Act. 3. The assessee in response to the said show cause notice filed its reply dated 13.10.2016. The contents of reply filed by the assessee is recorded/extracted in para 3.2 of assessment order. In the reply, in sum and substance submitted that section 56(2)(vii)(b)(ii) of the Income Tax Act was substituted by Fiancé Act, 2013 w.e.f. 01.04.2014. The assessee explained fact of his case and stated that a Satakat (Agreement to sale) was executed on 23.01.2008 by Shri A. S. Choute – Karta of A.S. Choute-HUF with Mohanbhai Lallubhai Patel to purchase Agricultural Land admeasuring 3470 Sq.mtrs for a consideration of Rs.1.31 crore, being final Plot No.69, Block No.30 Revenue Survey No.24/1 in village Dindoli, Surat. On executing of Kantibhai B. Chaute & (05) Others AY 2014-15 5 agreement of token cash advance of Rs.1.00 lakh was paid in cash. Out of balance of Rs.1.30 crore, part of it was to be paid for conversion of land from Agricultural to Non-Agricultural and remaining amount left thereafter to the seller. The peaceful possession was to be handed over only on payment of full consideration. The conversion of land from Agricultural use to Non-Agricultural use was the responsibility of Seller/ owner Mohanbhai Lallubhai Patel. The seller made application with Collector Tenancy Division, Nanpura, Surat on 26.08.2010 for conversion of land from Agricultural to Non-Agricultural. Before the Collector, Tenancy Division, Surat could act upon on the application for conversion of land from agricultural to non-agricultural (NA), Mohanbhai Lallubhai Patel expired on 30.01.2011.Mohanbhai Lallubhai Patel left behind Smt. Lilavatiben-Widow of Shri Mohanbhai Lallubhai Patel, Smt. Parulben, Married and Smt.Jifishaben, Married Daughters of Shri Mohanbhai Lallubhai Patel. On the death of owner, the names of his Legal heirs were required to be mutated in the Revenue record. The assessee stated that after the death of owner of the land, there was no male member in the family who could follow up the matter before Collector, Tenancy Division, which was the responsibility of seller as per the terms of agreement dated 24.01.2008. Therefore, in Kantibhai B. Chaute & (05) Others AY 2014-15 6 continuation of earlier agreement dated 24.01.2008 of second agreement dated 24.01.2013 was executed between the Legal Heirs of Mohanbhai Lallubhai Patel and Anand S Chaute – Karta and Seven Others. 4. In the second agreement dated 24.01.2013, the consideration was revised from Rs. 1.31 Crore to Rs.1.48 crore. This second agreement dated 24.01.2013 the advance received by their purchaser interest of Rs.1.00 lakh was confirmed and balance of Rs.1.47 crore was to be utilised for premium of conversion of land from Agriculture to Non-Agricultural and the balance if any to be paid on execution of sale deed. In pursuance of second agreement, the purchaser/assessee and his Co-owner paid Rs.1,17,98,000/- on account of premium for conversion of land from Agricultural to Non- Agricultural on 25.03.2013. The said conversion charges were paid by the assessee and his group on behalf of the assessee. Thus, out of the total consideration before the time of execution of final sale deed, the assessee paid total of Rs.1,18,98,000/-, which is 83.39% and remaining amount i.e. Rs.10 lakhs was paid on 02.09.2013 and other remaining amount of Rs.9,02,000/- was paid on 04.09.2013 on, on finnaly executing of sale deed on 17.09.2013. The assessee further explained that the amount of addition worked as out by the AO at Rs.18,36,875/- by invoking the provision of Kantibhai B. Chaute & (05) Others AY 2014-15 7 section 56(2)(vii)(b)(ii) of the Income Tax Act is not liable to be added. Section 56(2)(vii)(b)(ii) was substituted by Finance Act, 2013, applicable w.e.f. 01.04.2014 i.e. A.Y. 2014-15. It was further stated that, that at the time of execution of first agreement, the assessee and his Co-owner has paid advance of Rs.1.00 lakh which was confirmed in second agreement 24.01.2013 and final sale deed executed on 17.09.2013. The second agreement was in continuation of the earlier agreement dated 23.01.2008. The assessee along with his Co-owner paid substantial part of sale consideration i.e. being more than 80% prior to 31.03.2013, thus, performed substantial part of contract prior to 31.03.2014, though the final sale deed was executed on 17.09.2013 by legal heirs of original transferor. The additional stamp duty was paid as per the working of stamp value applicable on the date of execution of final sale deed. The stamp duty applicable at the time of first agreement was Rs.2000/- per sq.mtr. On the basis of aforesaid submission, the assessee claimed no addition in the income of assessee is not liable to be added. 5. The reply of assessee was not accepted by AO. The AO held that before the execution of sale deed, there was no transfer of possession of or any right of the land and that provision of section 56(2)(vii)(b)(ii) of the Income Tax Act Kantibhai B. Chaute & (05) Others AY 2014-15 8 is clearly applicable in case of assessee. The assessee has received the possession of property, vide sale deed dated 17.09.2013 which is much after the operation of clause-ii of section 56(2)(vii)(b) of the Income Tax Act. Before the execution of sale deed, no rights of property was transferred to the assessee, thus, the assessee cannot claim that assessee has received immovable property prior to 17.09.2013. On document i.e. agreement dated 23.01.2018, the AO held that the document is not even notarised. There is no legal sanctity of this document. The so-called payment is made in cash and there is no evidentiary value of the payment received in token. The names of witness are not mentioned on the said agreement. The addresses of witness is not available, thus, the identity of the so-called witnesses is not attached[unverifiable]. Thus, the agreement dated 23.01.2008 is nothing but a piece of paper without any evidentiary value in the eyes of law and is not admissible in the proceedings. On the second agreement dated 23.01.2008, the AO observed that there is serious defect in the agreement. The stamp paper is not purchased either in the name of purchaser or in the name of seller, possibly ante dated stamp paper purchased later on and used to show the bogus transaction. No signature of seller or buyer as mandated on the first or second page. It is not signed on every page by buyer and seller. Kantibhai B. Chaute & (05) Others AY 2014-15 9 Signature of seller and purchaser are legible, however, no inference could be drawn with respect to contents of page no.1 to 3 of said memo of understanding (MOU). On the basis of the aforesaid observation, the AO held that the signature of seller on Satakat 23.01.2008 are differing from other actual signature as appended on the application moved for conversion from Agricultural Land to Non-Agricultural Land. On the basis of the aforesaid discrepancies identified by the AO, the AO held that the difference on account of stamp valuation and consideration shown on the sale deed is liable to be treated as income in the hand of assessee under the Income from ‘Other Sources’, thereby while passing the assessment order made addition of Rs.18,36,875/-. 6. Aggrieved by the additions, the assessee filed appeal before the ld.CIT(A). Before the ld.CIT(A), the assessee filed almost similar submission as filed before the AO. The ld.CIT(A) after considering the assessment order and submission of assessee identified the following anomalies in the transaction: The so-called Satakhat/MOU dated 23.01.2008 whereby supposedly token cash advance of Rs.1,00,000/- was made is an inconsequential document. This document was not even been notarized nor registered. The names and addresses of witnesses are not mentioned and hence the identity of the witnesses is not ascertainable. Kantibhai B. Chaute & (05) Others AY 2014-15 10 Even the stamp paper of so-called Satakhat dated 23.01.2008 has not been issued either in the name of purchaser or in the name of seller. There are no signatures of the seller or the buyer on the mandatory first, second and third page of the Satakhat. The MOU is not signed on the every page by the seller or by the buyer. On page 4 and 5 of MOU, signatures of Mohanbhai Lallubhai Patel and Anand S. Chaute are appearing; however no inference could be drawn by these pages with respect to contents of pages 1 to 3 of the MOU. The signature lacks the date of signing of the agreement which is the prime condition for execution. All above defects become very apparent when compared with the actual satakhat dated 24.01.2013 wherein due procedure has been followed in all the above respect. The so-called inadmissible satakhat or agreement dated 23.01.2008 fixing the amount of consideration at Rs.l,31,00,000/- did not result in any finalization as the instant land transaction has been made on basis of the satakhat or agreement dated 24.01.2013 fixing consideration at Rs.l,48,00,000/- paid as on 25.03.2013 of Rs.l,17,98,000/- towards premium; on 02.09.2013 of Rs.l0,00,000/-;on 04.09.2013 of Rs.l0,00,000/-;on 06.09.2013 of Rs.09,02,000/- The payment of consideration was made only after 25.03.2013. After the satakhat was struck on 23.01.2008 the seller (Shri Mohanbhai Lallubhai Patel) made the application to the Collector, Tenancy Division, Nanpura, Surat on 26.08.2010 for conversion of land from agriculture to non-agriculture after more than 30 months. In the so-called Satakhat dated 23.01.2008 the appellant claimed of make payment of Rs.l.00 lakh in cash whereas second proviso : to section 56(2) Kantibhai B. Chaute & (05) Others AY 2014-15 11 (vii) provides that first proviso will apply only in a case where the amount of consideration referred therein or part thereof has been paid by any mode other than cash or before the date of agreement for transfer of such property. 7. On the basis of the above mentioned anomalies the ld CIT(A) held that the Satakhat dated 23/01/2008 has got no evidentiary value. It was held that the document was signed between the seller Shri Mohanlal Lallubhai Patel and Shri Anand S. Choute (HUF).This Agreement to Sale lapsed/abated, on the day Shri Mohanlal Lallubhai Patel expired i.e. on 30.01.2011. Since this document was not registered, there existed no legal sanctity of such 'agreement to sale' with the death of one of the signatories. Further aggrieved, the assessee has filed present appeal before this Tribunal. 8. We have heard the submissions of Sh Manish J Shah Advocate, learned Counsel/ authorised representative (AR) for the assessee and Ms Anupma Singla learned Additional Commissioner/ Senior Departmental representative (DR) for the revenue and perused the order of lower authorities carefully. The Ld. AR of the assessee submits that he has filed chronology of events to explain the facts of the present case. The ld. AR of the assessee by referring the chronology of dates of events submits that first agreement to sale was entered with Lt. Mohanbhai Lallubhai Patel on Kantibhai B. Chaute & (05) Others AY 2014-15 12 23.01.2008, copy of is placed on record. In the said agreement, a consideration of Rs.1.31 crores was fixed. Out of consideration, the assessee along with other intended purchasers made advance payment of Rs.1.00 lakh in cash. The nature of land was agricultural land. The assessee and his other co-owners are non-agriculturists, therefore the seller was asked to obtain necessary approval for convergent of agricultural land to non-agricultural land. The owner made application before Competent Authority for convergent on 26.08.2010, the copy of such application is also filed on record. Before the land use could be converted from agricultural to non- agriculture the seller passed away leaving behind his widow and two married daughters. The legal heirs of seller filed fresh application for convergent of land on02.01.2013. To avoid any hardship with the legal heirs of seller, the assessee along with his co-owners entered into a fresh agreement on 26.01.2013. The second agreement was executed on similar terms & conditions except variation of consideration by increase of Rs.17.00 lakh, thereby making total sale consideration at Rs.1.48 crores. The consideration was increased keeping in view the extra procedure and formality to be carried out by legal heirs. The legal heirs of seller, accepted and acknowledged the receipt of Rs.1.00 lakh paid in cash at the time of Kantibhai B. Chaute & (05) Others AY 2014-15 13 execution of initial agreement. The conversion charges were to be paid by the seller party. The assessee out of sale consideration paid non-conversion charges of Rs.1.18 crores in the officer of Collector, Tenancy Division of State Government. On payment of such convergent charges, the Deputy Collector passed the order of convergent of agricultural land into non- agricultural land; a copy of said order is also placed on record. After change of land use registered Sale Deed was executed in favour of assessee along with other seven co-owners. While executing the Sale Deed, the transferee accepted and acknowledged the payment receipt on 23.01.2018. The assessee and his co-owners paid convergent charge on behalf of transferee on 28.03.2013 while particulars which are duly recorded in the Sale Deed and acknowledged by the seller. 9. The ld. AR of the assessee submits that assessee has made more than 80% of sale consideration on 28.03.2013 i.e., much prior to execution of Sale Deed on 17.09.2013. The Ld. AR of the assessee submits that provisions of sub- clause-ii clause-vii of sub-section (2) of section 56 is not applicable on the transaction as substantial transaction qua the transfer of land was completed before 31.03.2013. The amended provision of sub-clause-ii of clause-vii of sub-section (2) of section 56, is applicable from A.Y 2014-15 so as to enable Kantibhai B. Chaute & (05) Others AY 2014-15 14 the Taxing Authority to tax the different in the consideration, if the consideration is less than the stamp value determined by Stamp Valuation Authority. The Taxing Authority is not entitled to invoke the provisions of sub-clause-ii of clause-vii of sub-section (2) of section 56 as it was not on the statue book on the date of initial agreement as well as on subsequent agreement and before making substantial payment of consideration. 10. The Ld.AR of the assessee submits that the issue involved in the present appeal is covered by the decision of this Tribunal in the case of Parinda Bhaveshkumar Borda Vs. Income Tax Officer Ward-3(3)(5) Surat in ITA No.360/SRT/2018, wherein the Tribunal relied on the two earlier decisions of Visakhapatnam-Tribunal in ACIT vs. Anala Anjibabu (185 ITD 0001) (Visakhapatnam-Trib.) and M Shiv Parvathi & Other vs. ITO [129 TTJ 463] (Visakhapatnam-Trib.) The Ld. AR of the assessee by referring the various paragraphs of decision in Parinda Bhaveshkumar Borda (supra) submits that the facts his case is almost similar. 11. The Ld. AR of the assessee further submits that the lower authorities raised objection that the first agreement to sale is neither notarized nor registered. And there is no signature on each and every page. The name of person in Kantibhai B. Chaute & (05) Others AY 2014-15 15 whose name, the stamp was purchased is not mentioned, date of singing is missing. The Ld. AR of the assessee in reply to particular objection submits that agreement may be written on oral, there is no requirement under law for attestation by Notary Public or registration with Stamp Authority. Oral agreement is acceptable under law. Both the agreements are on non-judicial stamp papers. The first agreement to sale is signed by witnesses. The Assessing Officer and Ld. CIT(A) have not made any investigation about the non-authenticity of the documents. The Assessing Officer has not investigated about the purchase of stamp papers from the stamp vendor. The conclusion arrived at by lower authorities are merely based on assumption. On the other objection, that there was delay of 30 months in making application for conversion of use of land, the ld. AR of the assessee submits that there is long and complex procedure involving 40 different government departments for seeking clearance for conversion of land use, thus, the delay is oblivious. On the objection, that signature of seller is not matching on the first agreement and application of convergent. 12. The Ld. AR of the assessee submits that he has furnished the report of Forensic expert to substantiate that there is no difference in the signature of seller on first agreement and on the application filed with revenue Kantibhai B. Chaute & (05) Others AY 2014-15 16 department for conversion of land use and the same has been accepted by Ld. CIT. On the objection of Ld. CIT(A) that agreement to sale must be registered as per the provision of Section 17 of Registration Act, 1908, the ld. AR of the assessee submits that the registration is mandatory only for seeking protection under section 53A of Transfer of Property Act 1882, when possession is given. It is undisputed fact that possession was agreed to be given on full and final payment on execution of Sale Deed. Even otherwise, unregistered agreement to sale can be considered for collateral purposes as held by Apex Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC). On the objection that first agreement laps on the death of original seller (Mohanbhai Lallubhai Patel), the ld. AR of the assessee submits that first agreement to sale does not lapse on the death of seller, in fact, right was created in favour of purchaser and the legal heirs got encumbrance on the title of the property and was bound by condition of agreement to sell. Even otherwise, as per clauses of agreement, the lapse of party to the agreement was binding on the legal heirs of the parties to the agreement. The ld. AR of the assessee submits that second proviso of Section 56(2)(vii)(b) to be construed reasonable in view of the peculiar facts of the case. To support, his other contentions, the Ld. AR of the assessee Kantibhai B. Chaute & (05) Others AY 2014-15 17 also relied upon the following orders; Chandrashekar Naganagounda Patil vs. Dy. CIT (2020) 117 taxmann.com 520 (Bangalore-Trib.), Moole Rami Reddy vs. ITO ITA No. 311/Viozag/2010 dated 10.12.2010; M/s Lahiri Promoters vs. ACIT,Circle-1(1)ITA No.12/Vizag/2009 dated 22.06.2010; Sanjeev Lal vs. CIT, Chandigarh (2014) 46 taxmann.com 300 (SC); K.P.Varghese vs. Income Tax Officer (1981) 7 Taxman 13 (SC); CIT vs, Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 622 Taxman 471 (SC) and Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC). 13. The assessee also filed following documents on record:- Sr.No. Description of documents 1 Written submissions before CIT(A) 2 Zoning certificate from SUDA (Surat Urban Development Authority) dated 03.08.20 3 Death certificate of Lt Shri Mohanbhai Lallubhai Patel 4 Show cause notice issued by A.O dt.07.10.2016 5 Reply to show cause notice dated 13.10.2016 6 Memorandum of Understanding (Agreement to Sale) dated 23.01.2008 7 Application for conversion of land use to N.A Kantibhai B. Chaute & (05) Others AY 2014-15 18 8 Receipt of premium paid for land use conversion 9 Death certificate, Pedhinama and entry of names of legal heirs in Village Form No.6 10 Jantry rate of land in the year 2008 11 Supplementary Memorandum of Understanding (Agreement to Sale) dated 26.01.2013 12 Orders for land use conversion to N.A by Dy. Collector 13 Copy of Sale Deed dated 17.09.2013 14 Write up on documents required to be notarized 15 Circular for stamp duty dated 24.04.2008 16 Demand notice dated 31.10.2016 17 Assessment order dated 31.10.2016 18 Forensic report of signature by J.K. Consultancy dated 05.12.2016 19 Write up on genesis of section 56(2)(vii) 20 Remand Report submitted by AO during appellate proceedings before CIT(A) dated 05.01.2018 21 Rejoinder to remand report dated 26.02.2018 14. On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities/ Ld. Sr-DR for the Revenue submits that agreement dated 23.01.2008 is not valid agreement and signature of parties are not appearing on each and every pages. It is a self-serving document. The ld DR for the assessee submits that Section 17 of the Registration Act,1908 makes it Kantibhai B. Chaute & (05) Others AY 2014-15 19 mandatory for Registration of Agreement to Sale and Sale Deed after making request stamp duty. Entire stamp duty is not payable at the time of registration of agreement, whatever stamp duty is paid at the time of agreement, the same is adjustable against the actual stamp duty pay at the time of registration of Sale Deed. The Government of Gujarat had made the mandatory registration for the agreement to sale. Initially the sale consideration in the agreement was agreed at Rs.1.31 crores. The contention of assessee is that old Satakat / agreement is the basic of Sale Deed is misplaced of the fact that in fact and law the Sale Deed dated 17.09.2013 is an independent instrument where actual transfer of property was effected. The final payment of consideration was paid as per Memorandum of Understanding (‘MoU’ for short) dated 23.01.2013.The transaction of the sale of the property is held only in the month of September 2013 on execution on 17.09.2013, thus the provisions of section 56(2)(vii)(b)(ii) are clearly applicable on the transaction. 15. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on the various case laws relied by the ld AR for the assessee. The AO made addition of Rs.18,50,000/- by taking view that before the Kantibhai B. Chaute & (05) Others AY 2014-15 20 execution of sale deed, there was no transfer of possession of or any right of the land and that provision of section 56(2)(vii)(b)(ii) of the Income Tax Act is clearly applicable in case of assessee. The assessee has received the possession of property, vide sale deed dated 17.09.2013 which is much after the operation of section 56(2)(vii)(b)(ii) of the Income Tax Act. Before the execution of sale deed, no rights of property was transferred to the assessee, thus, the assessee cannot claim that assessee has received immovable property prior to 17.09.2013. On the first agreement, the AO raised the objection that the same is not notarized and has no legal sanctity etc., On second agreement dated 26.01.2013, the AO raised his doubt that stamp paper is not purchased in the name of purchaser or seller and that signature of parties are not on each and every page. The ld. CIT(A) confirmed the action by identifying certain anomalies on the transaction, which we have recorded in para 6 above. We find that there is no dispute that the assessee entered into agreement initially with the original owner, and on his death, second agreement to sale/ supplementary agreement to sale was executed by legal heirs of owner and the purchaser [Assessee’s Group]. The lower authorities have not investigated with the legal heirs about the validity or execution of agreement to sale. It is also a matter of fact that in the Kantibhai B. Chaute & (05) Others AY 2014-15 21 conveyance deed, the legal heirs of original owner accepted the payment of Rs.1.00 lakhs in cash at the time of execution of initial agreement on 23.01.2008, Rs. 1,17,98,000/- on 25.03.2013, Rs.10,00,000/-on 02.09.2013, Rs.10,00,000/- on 04.09.2013 and Rs.9,02,000/- on 06.09.2013. We find that Rs. 1,17,98,000/- was paid by assessee and his group by way of cheque in the office of Collector Tenancy. As per the agreement with the original owner, which was ratified by his legal heirs, the amount Rs. 1,17,98,000/- was paid as a part of consideration. The AO has not brought any evidence on record that the amount paid on account of conversions charges was not part of sale consideration, except presuming the fact that it was not executed in proper way. Further, neither the AO nor ld CIT(A) investigated about the validity of the agreement from the legal heir of the original owner of the land. Moreover, the legal heirs of the original owner acknowledged the act of their predecessor in interest before the Sub Registrar. So the lower authorities is not entitled to raise questions on the first and the second agreement in question. Now, in our considered view, the short question which is left for our adjudication is whether the amended provision of section 56(2)(vii)(b)(ii) are applicable on the transaction or not or that the assessee is eligible for the benefit of the second proviso of 56(2)(vii)(b)(ii). Kantibhai B. Chaute & (05) Others AY 2014-15 22 The ld.AR of the assessee vehemently submitted that more than 80% of sale consideration was paid by assessee and his group before the amendment in section came into effect and that the assessee is eligible of benefit of second proviso of section 56(2)(vii)(b)(ii), and that the grounds of appeal raised by assessee are covered by the decision of Tribunal in case of Moole Rami Reddy vs. ITO (supra) and Lahiri Promoters vs. ACIT (supra), which was followed by this Bench in Parinda Bhaveshkumar vs. ITO (supra). We find that more than 80% of the sale consideration was paid by the assessee and the assessee is eligible of benefit of second proviso of section 56(2)(vii)(b)(ii). The revenue has not disputed the quantum of sale consideration nor bring on record that the assessee and his group paid any other amount except the sale consideration shown in the final sale deed. On careful comparison of facts, we find that facts of the present case are similar as in Parinda Bhaveshkumar vs. ITO (supra). This Bench in case of Parinda Bhaveshkumar vs. ITO(supra) by following the earlier decision of co- ordinate Bench in Moole Rami Reddy vs. ITO (supra) and Lahiri Promoters vs. ACIT (supra) passed the following order: “6. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We have also seen the various document placed on record, which consist of written submissions before Kantibhai B. Chaute & (05) Others AY 2014-15 23 ld CIT(A), reply to the show cause notice before AO, copy of registered sale deed dated 10.09.2013, copy of the agreement to sale dated 28.03.2013, copies of the bank statement of purchaser showing the payments through cheques. We have also deliberated on the various case laws relied by the ld. AR for the assessee. During the assessment the AO made addition of Rs. 10,35,918/- by taking view that the assessee along with her co-owners have shown sale consideration at Rs. 1.16 Crore, however, the SVA at the time of registration of sale deed valued the property at Rs. 2.9 Crore. The assessee is having 1/10 share in the said property, thereby the difference thereof (to the extent of assessee’s share) was added under section 56(2)(vii)(ii) of the Income-tax Act. As recorded above the assessee filed detailed written submissions before ld CIT(A). We find that the ld CIT(A) concurred with the finding of the AO by holding that that Finance Bill, 2013 was introduced in February, 2013 and the same was amended to include cases of inadequate consideration. The amendment was widely known in February, 2013 itself. It was also held that the contention of the assessee that agreement executed prior to March 2013 will not be covered under section 56(2)(vii)(b)(ii), the agreement appears made in March, 2013 is not registered, the date cannot be independently verified and probably the agreement composition being anti date too. We find that neither the AO nor the ld CIT(A) investigated about the non- genuineness of the agreement. No notice to the seller was issued by ld CIT(A) before taking view that ‘probably the agreement composition being anti date too’. The ld CIT(A) took his view only on his presumption and assumption . The AO invoked the provision of section 56(2)(vii)(b)(ii), without having any evidence of excess consideration over and above the sale deed. in addition to the sale consideration. We further find that the assessee entered in to agreement with the seller on 28.03.2013. The substantial part of the sale consideration was also paid to the seller, which is about 80% of the total sale consideration. Though, ultimately the sale deed was registered on 10.09.2013. The details of sale consideration is also mentioned in the registered sale deed, which strengthen the claim of the assessee that substantial part of consideration was paid on the day of Kantibhai B. Chaute & (05) Others AY 2014-15 24 execution of the initial agreement. The assessee claimed that the possession of the land was also obtained by them at the time of agreement. This fact is not disputed by the AO. 7. Before us, the ld AR for the assessee vehemently submitted that when the assessee entered in agreement with the seller, paid substantial consideration and obtained possession, the sub-clause-(ii) of clause (vii) of sub-section (2) of section 56 was not on the statue book and it was brought by way of amendment in Finance Act-2013 w.e.f. 01.04.2014 and relied on the decision of Tribunal in ACIT Vs Anala Anjibabu (supra). We find the coordinate bench of tribunal in ACIT Vs Anala Anjibabu (supra), while considering almost similar facts held as under; “6.2. -----------------. Thus where any individual or Hindu Undivided Family receives any immovable property without consideration, the stamp duty value of such property required to be considered as the consideration paid and the said amount to be taxed u/s 56(2)(vii)(b) of the Act. In the instant case, as discussed earlier the assessee has paid the consideration and there was no evidence from the department to show that the assessee has paid the excess consideration over and above the sale deed. With effect from 01.04.2014, the Act has been amended and the new sub clause (ii) has been introduced to section 56(2)(vii)(b)in the statute which reads as under : (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,— (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,— (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Kantibhai B. Chaute & (05) Others AY 2014-15 25 As per the provisions the Act from the A.Y.2014-15 sub clause (ii) has been introduced so as to enable the AO to tax the difference consideration if the consideration paid is less than the stamp duty value. The AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement.” 8. Thus, in view of the aforesaid factual and legal discussions, we find that in absence of sub-clause (ii) in the statue book as on the date of agreement to sale of the property, the AO was not entitle to invoke the said provision. Hence, the ground of appeal raised by the assessee is allowed. The AO is directed to delete the entire addition under section 56(2)(vii)(b)(ii). 9. In the result, the appeal of the assessee is allowed. 16. In view of the aforesaid factual and legal discussions, we find that the ratio of the aforesaid decision is squarely applicable on the facts of the present case and the assessee is eligible of benefit of second proviso of section 56(2)(vii)(b)(ii) . Hence, the sole ground of appeal raised by the assessee is allowed. 17. In the result, the appeal filed by the assessee is allowed. 18. Considering the facts, that in all remaining appeals, all the assessee’s have raised identical grounds of appeal, facts in all appeals are common, being co-owner of the plot of land purchased by them jointly, therefore, the remaining appeals of all the assessee are allowed with similar directions. 19. In the result, all the appeals are allowed. Kantibhai B. Chaute & (05) Others AY 2014-15 26 20. Copy of this order be kept in all respective appeals record. Order pronounced in open court on 31 January 2021 and the result was also placed on the notice board. Sd/- sSd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 31/01/2022 /SGR* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order / / TRUE COPY / / Sr.Pvt. Secretary, ITAT, Surat
