ACIT, CENTRAL CIRCLE-5(4), Mumbai V. M/S. SHREM TRADING LLP, Mumbai

ITA 3079/MUM/2022

AI Insights

The case involves the Income Tax Department appealing against the decision of the CIT(A) which had deleted an addition made by the Assessing Officer under section 69B of the I.T. Act. The addition pertained to a difference between the purchase consideration of a property and its stamp duty valuation. The Assessing Officer had treated this difference as unexplained investment, while the CIT(A) found no material evidence to support this claim, leading to the deletion of the addition. The Tribunal, referencing decisions from the Gujarat High Court and Kolkata Tribunal, agreed with the CIT(A)'s decision, emphasizing the lack of material evidence to prove any additional payment beyond the recorded purchase consideration.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124004 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 05-12-2022
• Other Referred Cases: PCIT vs. Dharmaja Infrastructure, DCIT vs. Global Mercantiles (P) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Reassessment proceedings
• Section: 50C; 69B; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘G’ BENCH, MUMBAI. Before Shri B.R. Baskaran (AM) & Shri Pavan Kumar Gadale (JM) I.T.A. No. 3079/Mum/2022 (A.Y. 2017-18) ACIT, Central Circle-5(4) Room No. 1927 19 th Floor Air India Building Nariman Point Mumbai-400 021. Vs. M/s. Shrem Trading LLP 1101, Viraj Tower Junction of Andheri Kurla Road, Andheri East Mumbai-400 069. PAN : ABYFS9682H (Appellant) (Respondent) Assessee by Shri Prateek Jain Department by Shri Paresh Deshpande Date of Hearing 30.01.2023 Date of Pronouncement 31.01.2023 O R D E R Per B.R.Baskaran (AM) :- The Revenue has filed this appeal challenging the order dated 30.9.2022 passed by the learned CIT(A)-53, Mumbai and it relates to A.Y. 2017-18. 2. The Revenue is aggrieved by the decision of the learned CIT(A) in deleing the addition of Rs. 1.48 crores made by the Assessing Officer under section 69B of the I.T. Act. 3. The facts relating the issue are stated in brief. The return of income was filed by the assessee for the year under consideration on 4.8.2017 declaring Nil income. Subsequently, the Assessing Officer reopened the assessment of the year under consideration by issuing notice under section 148 of the Act on 30.3.2021. In the reassessment proceedings, the Assessing Officer noticed that the assessee has purchased a property on 26.10.2016 for M/s. Shrem Trading LLP 2 a consideration of Rs. 40 lakhs, while stamp duty value of the said property was Rs.1,88,27,550/-. Hence the Assessing Officer asked the assessee as to why the difference amount of Rs.1.48 crores should not be treated as income of the assessee. In response thereto, the assessee submitted that the property was having certain deficiencies, viz., it was not having proper approach and further in that area power supply was erratic. Hence, the seller of the property had to sell the property at a lower rate than the stamp duty value. The assessee also submitted that the statutory provision to assess the difference between purchase consideration and stamp duty valuation in the hands of purchaser was introduced in section 56(2)(x)(b) only in respect of purchases made on or after the first day of April, 2017. Since the present transaction has taken place prior to the date of introduction of provisions of section 56(2)(x)(b) of the Act, it was contended that the difference amount pointed out by the AO is not liable to tax. 4. The Assessing Officer, however, did not accept the explanations of the assessee. He took the view that the above said difference of Rs.1.48 crores is assessable as unexplained investment under section 69B of the Act. Accordingly, the Assessing Officer made the addition of Rs.1.48 crores under section 69B of the Act. In the appeal filed by the assessee, the learned CIT(A) deleted the addition and hence the Revenue has filed this appeal before us. 5. The Learned DR submitted that the actual purchase consideration shown in the conveyance deed is far less than the stamp duty valuation and hence it clearly shows that the assessee has paid on-money in purchasing the property. Accordingly he submitted that the Assessing Officer was justified in making addition. 6. On the contrary, the learned AR submitted that the assessee has purchased the property at cheaper price on account of deficiencies attached to the property. He further submitted that the Assessing Officer did not have M/s. Shrem Trading LLP 3 any material to show that the assessee has paid any money over and above purchase consideration shown in the sale deed. Since the transaction has taken place prior to 1 st April 2017, the provisions of section 56(2)(x)(b) of the Act which was introduced for purchases made on or after 1.4.2017 is also not applicable in the instant case, since the impugned property was purchased by the assessee on 2.10.2016, i.e., prior to 1.4.2017. 7. The Ld A.R further submitted that the addition u/s 69B of the Act can be made, only on the basis of any credible material found by the AO. In the absence of any material to show that the assessee has paid any money over and above consideration shown in the conveyance deed, the addition made by the Assessing Officer under section 69B of the Act was rightly deleted by the learned CIT(A). 8. We have heard the rival contention and perused the record. We notice that the learned CIT(A) has deleted the addition by placing reliance on the decision rendered by Hon'ble Gujarat High Court in the case of Dharmaja Infrastructure 107 taxman.com 281 and Global Mercantiles (P) Ltd. 67 taxman.com 166 (Kolkata Tribunal). For the sake of convenience, we extract below the decision rendered by the learned CIT(A) on this issues :- 9.3.2 The AO has made addition u/s 69B of Rs. 1,48,27,550/- being difference between the value of the property determined by the Stamp Duty Valuation Authority and purchase consideration shown in the registered sale deed. Now the issue which requires adjudication is that whether the addition can be made by the AO u/s 69B in respect of difference between the value of the property determined by the Stamp Duty Valuation Authority and the purchase consideration paid by the assessee. In the case of the appellant, the purchase consideration was Rs. 40,00,000/- whereas value of the said property determined by the Stamp Duty Valuation Officer was Rs.1,88,27,550/- which resulted into the difference of Rs. 1,48,27,550/-. The similar issue came before the Hon'ble Gujarat High Court in the case of PCIT vs. Dharmaja Infrastructure reported in 107 taxmann.com 281. In this case, the amount of difference between the stamp duty value and M/s. Shrem Trading LLP 4 agreement value was added by the AO u/s 69B of the Act. The Hon'ble Gujarat High Court after considering the facts of the case and provisions of section 69B deleted the addition on the ground that the department failed to bring any material on record to show that assessee had paid any amount higher than amount stated in registered deed of sale of plots. The relevant portion of the decision is reproduced hereunder:- "As is evident from the facts as noted hereinabove, the Assessing Officer has sought to treat the difference between the market value assessed by the stamp authority and the purchase price as shown by the respondent assessee as an unexplained investment under section 69B Section 50C of the Act by deeming fiction substitutes the consideration received on sale of a capital asset by stamp duty valuation. Such deeming fiction however, is applicable only in the case of a seller for the purpose of section 48 of the Act. In the facts of the present case, it is an admitted position that the respondent assessee is the purchaser and not the seller and hence, the valuation adopted by the Stamp authority could not have been made the basis from coming to the conclusion that there is unexplained investment. Moreover, as observed by the Commissioner (Appeals), no material was brought on record by the Assessing Officer to prove that the assessee had in fact made investments over and above that recorded in the books in the year under consideration. [Para 4] In the aforesaid premises, it is not possible to say that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law so as to warrant interference. The appeal, therefore, fails and is, accordingly, dismissed. [Para 5]" The Kolkata Tribunal in the case of DCIT vs. Global Mercantiles (P.) Ltd. reported in 67 taxmann.com 166 has also taken similar view on the same issue. The relevant part of the decision of the Tribunal is reproduced as under- "In order to invoke the provisions of section 69B, the burden is on the revenue to prove that the assessee has invested in property over and above what is disclosed in its balance sheet. There is nothing on record to show that the assessee had made any additional investment in addition to what has been stated in the books of account. Therefore, no addition could be made in the hands of the purchaser on the basis of stamp duty charged by the sub-registrar. [Para 2.3] The valuation adopted by stamp valuation authority is only for the purpose of capital gain as prescribed under section 50C which has got very limited scope. This legal fiction has been created for M/s. Shrem Trading LLP 5 computation of capital gain only in the case of seller of any asset. The same cannot be extended in the case of the purchaser to estimate the undisclosed investment 9.3.3 The facts of the case of the appellant are identical to the cases decided. The Hon'ble Gujarat High Court and the ITAT Kolkata. Thus, respectfully following the decision in the case of PCIT vs. Dharmaja Infrastructure (supra) and DCIT vs. Global Mercantiles (P) Ltd. (supra), the addition of Rs. 148.27 550 made us 600 of the Act in respect of difference between value adopted by Valuation Officer and purchase value mentioned in the Sale deed is hereby deleted.” 9. At this juncture, we may refer to the provisions of section 69B of the Act and the same read as under : “69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.” A careful perusal of the above said section would show the Assessing Officer should “find” that amount expended on making investment actually exceeds the amount recorded in the books of account. In the absence of any finding by the Assessing Officer, he could not invoke section 69B of the Act. There should not be any doubt that one can give “finding” only on the basis of some material evidence. Our view gets support from the two decisions referred above, which were relied upon by Ld CIT(A). 10. In the instant case, the fact remains that the Assessing Officer did not bring any material on record to give his finding that the assessee has given money over and above the purchase consideration of Rs.40.00 lakhs declared by the assessee. We notice that the AO has made the addition merely for the reason that the stamp duty valuation is more that the value of purchase consideration shown in the sale deed. Hence, we are of the view that the M/s. Shrem Trading LLP 6 learned CIT(A) was justified in deleting the addition made by the Assessing Officer under section 69B of the Act. Accordingly, we confirm the order passed by the learned CIT(A) on this issue. 11. In the result, appeal filed by the Revenue is dismissed. Pronounced in the open court on 31.1.2023 Sd/- Sd/- (PAVAN KUMAR GADALE) (B.R. BASAKARAN) Judicial Member Accountant Member Mumbai; Dated : 31/01/2023 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai