The ITO, Ward-4(2), Ahmedabad V. Jay Gurudev Texturised (P) Ltd., Ahmedabad

ITA 2935/AHD/2010

• Counselvise Citation: 293520514 RSA 2010
• Duration Of Justice: 4 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Deemed to accrue or arise in india; Additional evidence; Fair market value
• Section: 6; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] I.T.A. NO.: 2935 (AHD) OF 2010 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER WARD 4(2),AHMEDABAD ....................APPELLANT VS. JAY GURUDEVTEXTURISED (P) LTD. . .RESPONDENT 103, PARSHWA TOWERS, OPP. RAJPATH CLUB, SG HIGH WAY, AHMEDABAD. PAN AABCJ 2447 G APPEARANCES BY: J.P. JANGID, FOR THE APPELLANT G.C. PIPARA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JULY 7, 2015 DATE OF PRONOUNCING THE ORDER: JULY 8 , 2015 O R D E R PER PRAMOD KUMAR, AM : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLED INTO QUESTION THE CORRECTNESS OF ORDER DATED 31 ST AUGUST 2010 PASSED BY THE LEARNED CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 1 43(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2007-08. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S: 1.1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.72,79,475/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY U/S 6 9B OF THE ACT, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER . 1.2 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE VALUE OF THE INVESTMENT SHOWN BY THE ASSESSEE AT RS.12,75,000/- IN THE SAID PROPERTY WAS GROSSLY UNDERSTATED, TAKING INTO CONSIDERATION THAT THE VAL UE OF THE SAID PROPERTY AS DETERMINED BY THE STATE REVENUE AUTHORI TY FOR THE STAMP DUTY PURPOSES WAS RS.85,54,475/-. 1.3 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN COMPLETELY DISREGARDING THE SAID VALUE OF THE PROPERTY DETERMI NED BY THE STATE REVENUE AUTHORITY AT RS.85,54,475/- ON THE GR OUND THAT THE PROVISIONS OF SECTION 50C DO NOT APPLY TO THE PURCH ASER OF THE PROPERTY. 1.4 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF THE P ROVISIONS OF RULE 46A OF THE INCOME-TAX RULES, 1962 REGARDING TH E CLAIM OF THE ASSESSEE ABOUT THE PENDING LITIGATION IN RESPEC T OF THE SAID PROPERTY, CLAIM OF THE ASSESSEE REGARDING DAMAGE TO THE SAID PROPERTY AND ABOUT THE OUTSTANDING LIABILITY OF RS. 42,95,927/- IN RESPECT OF THE SAID PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE ASSESSING OFFICER. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF THE SCRUTINY ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSE HAS PURC HASED FOUR SHOPS AT A STATED CONSIDERATION OF RS 12,75,000 BUT THE STAMP DUTY VALUATION IN RESPECT OF THIS PROPERTY WAS RS 85,54,475. IT WAS NOTED THA T THE ASSESSE HAS PAID IN THIS REGARD WAS RS 7,18,7578. IT WAS IN THIS BACKDR OP THAT THE ASSESSE WAS REQUIRED TO SHOW CAUSE AS TO WHY ADDITION NOT BE MA DE FOR SUPPRESSED INVESTMENT IN THE SHOPS. REJECTING THE EXPLANATIONS OF THE ASSESSE, THE ASSESSING OFFICER PROCEEDED TO MAKE AN ADDITION OF RS 72,79,475 AND CONCLUDE THAT CONSIDERING THE ABOVE, THE DIFFERENC E IN THE VALUE OF PROPERTY AS DETERMINED BY THE STATE REVENUE AUTHORITY, AMOUN TING TO RS 72,79,465 AS DEEMED INCOME OF THE ASSESSE COMPANY AS DEEMED INCO ME OF THE ASSESSE UNDER SECTION 69B OF THE ACT, BEING UNDISCLOSED INV ESTMENT IN THE ABOVE PROPERTY. AGGRIEVED, ASSESSE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE BY OBSERVING AS FOLLOW S: 4.1. I AGREE WITH THE CONTENTION OF THE LEARNED AR THAT THE VALUATION BY THE STAMP VALUATION AUTHORITY IS BASED ON THE CIRCLE RATES, WHICH ADOPT UNIFORM RATE OF LAND FOR AN ENTI RE LOCALITY BY INHERENTLY DISREGARDING PECULIAR FEATURES OF A PART ICULAR PROPERTY AS IN THE INSTANT CASE OF THE APPELLANT AS ENUMERAT ED HEREINABOVE. EVEN IN A PARTICULAR AREA, ON ACCOUNT OF LOCATION F ACTORS AND POSSIBILITIES OF COMMERCIAL USE, THERE CAN BE WIDE VARIATIONS IN THE PRICES OF LAND. HOWEVER, CIRCLE RATES DISREGARD ALL THESE FACTORS AND ADOPT A UNIFORM RATE FOR ALL PROPERTIES IN THAT PARTICULAR AREA. HENCE, THE ARGUMENT OF THE AR THAT THE ADOPTION OF CIRCLE RATE FIXED BY THE STAMP VALUATION AUTHORITIES IN ALL SIT UATIONS REGARDLESS OF FACTS AND CIRCUMSTANCES OF EACH CASE WOULD BE WH OLLY UNJUSTIFIED AND UNREALISTIC SINCE THE SWEEPING GENE RALIZATIONS INHERENT IN THE CIRCLE RATES CANNOT HOLD GOOD IN AL L SITUATIONS. KEEPING IN VIEW THE ABOVE FACTS AND THE PECULIAR CI RCUMSTANCES STATED BY THE APPELLANT BEFORE THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS AND BEFORE ME IN THE COURSE OF APPELLATE PROCEEDINGS, I AM OF THE CONSIDERED OPINION THAT AD OPTION OF VALUE TAKEN BY THE STAMP VALUATION AUTHORITY FOR THE PURP OSE OF STAMP DUTY IN A MECHANICAL MANNER IS WHOLLY JUSTIFIED AND UNWARRANTED. I ALSO FIND SUPPORT FROM THE DECISIONS RENDERED BY VA RIOUS COURTS OF LAW AS CITED BY THE APPELLANT IN THE WRITTEN SUBMIS SIONS FILED, WHICH JUSTIFIES MY OPINION AND THE CONTENTIONS OF T HE AR. THE OBSERVATIONS OF THE VARIOUS COURTS IN THE SAID DECI SIONS CAN BE BRIEFLY SUMMARIZED AS UNDER : (I) MERELY BECAUSE FOR PURPOSE OF STAMP DUTY, PROPE RTY IS VALUED AT HIGHER COST, IT CANNOT BE SAID THAT ASSESSEE HAS MA DE MORE PAYMENT THAN WHAT IS STATED IN SALE DEED. (II) MERELY ON THE BASIS OF FAIR MARKET VALUE NO A DDITION CAN BE MADE UNDER SECTION 69B. (III) THE BURDEN IS ON THE REVENUE TO PROVE THAT REAL INVESTMENT EXCEEDED THE INVESTMENT SHOWN IN ACCOUNT BOOKS OF T HE ASSESSEE. (IV) THE VALUATION BY THE STAMP VALUATION AUTHORITY IS BASED ON THE CIRCLE RATES. IF THE CIRCLE RATE FIXED BY THE STAMP VALUATION AUTHORITIES WAS TO BE ADOPTED IN ALL SITUATIONS, TH ERE WAS NO NEED OF REFERENCE TO THE DVO UNDER SECTION 50C(2). THE SWEEPING GENERATION INHERENT IN THE CIRCLE RATES CA NNOT HOLD GOOD IN ALL SITUATIONS. 4.2. THE LD. AR DURING THE COURSE OF APPEAL FURTHER RELIED UPON THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE O F ITO VS. KUSUM GILANI IN ITA NO.1576/DEL/2008 AND THE DECISION OF JURISDICTIONAL ITAT, AHMEDABAD BENCH B IN THE CASE OF ITO VS. HARLEY STREET PHARMACEUTICALS LTD. ITA NO.2492/AHD/2007 WHEREIN I NTERALIA IT IS HELD THAT THE DEEMING PROVISIONS OF SECTION 50C DO NOT APPLY TO THE PURCHASER OF THE PROPERTY. IT APPLIES ONLY IN C ASES OF DETERMINATION OF THE CORRECT AMOUNT OF SALE CONSIDE RATION FOR THE PURPOSES OF COMPUTING CAPITAL GAINS AS IT EVIDENT F ROM THE WORKINGS OF THE SAID SECTION AND THE LEGISLATIVE IN TENT. THE EXTRACT OF THE SAID DECISION HAS BEEN FILED BEFORE ME. RESP ECTFULLY FOLLOWING THE SAID DECISION AND THE RATIO LAID DOWN BY VARIOUS OTHER COURTS OF LAW AS DISCUSSED HEREINABOVE, I AM OF THE CONSIDERED OPINION THAT THE DEEMING PROVISIONS OF S ECTION 50C ARE NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE AT ALL SINCE THE APPELLANT IS A PURCHASER OF THE PROPERTY AND HENCE THE ENTIRE ADDITION IS BASED ON A WRONG PREMISE. THUS, KEEPING IN VIEW THE ENTIRE FACTS OF THE CASE AND THE LEGAL POSITION, TH E ADDITION OF RS.72,79,475/- IS HEREBY DELETED. 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A)N AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE IN T HE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. IT IS ONLY ELEMENTARY THAT THE PROVISIONS OF SEC TION 50C, AS IN FORCE AND WHICH ADOPTS THE STAMP DUTY VALUATION AS DEEMED CON SIDERATION FOR SALE OF PROPERTY, APPLY ONLY IN THE CONTEXT OF THE COMPUTAT ION OF CAPITAL GAINS IN THE HANDS OF THE SELLER, AND THE FICTION OF THIS SECTIO N STOOD LIMITED TO THAT ASPECT ONLY. THE ACTION OF THE ASSESSING OFFICER THUS WAS WELL BEYOND THE MANDATE OF THE SECTION 50C.THERE WAS INDEED NO OCCASION TO INVOKE THE VALUATION AS PER STAMP DUTY VALUATION FOR ASSUMING THE ACTUAL IN VESTMENT AS WELL. IN ANY CASE, AS IS THE SETTLED LEGAL POSITION, IN THE LIGH T OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF K P VERGHESE VS ITO [(1981) 131 ITR 597 (SC)] NOBODY CAN BE EXPECTED TO PROVE A NEGATIVE OF NOT H AVING PAID ANYTHING MORE THAN THE STATED CONSIDERATION. LEARNED CIT(A) WAS Q UITE JUSTIFIED IN DELETING THE SAME. WE APPROVE HER ACTION AND DECLINE TO INTE RFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON 8 TH DAY OF JULY, 2015. SD/- SD/- RAJPAL YADAV PRAM OD KUMAR (JUDICIAL MEMBER) (AC COUNTANT MEMBER) AHMEDABAD, THE 8 TH DAY OF JULY, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD