Bajrang Lal Naredi, Ranchi V. ITO,Ward-1(3), Jamshedpur

ITA 327/RAN/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8634 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 25-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHA SINGH MARR
• Keywords: Deemed to accrue or arise in india; Question of law; Set aside
• Section: 56(2)(vii)(b); 143(3); 234B; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 327/RAN/2018 ( ASSESSMENT YEAR : 2014-15) BAJRANG LAL NAREDI CHHATA COMPOUND, BARALAL STREET, UPPER BAZAR, NEAR RANCHI EXPRESS, RANCHI - 834001 / VS. INCOME TAX OFFICER WARD-1(3), JAMSHEDPUR, JHARKHAND ./ ./ PAN/GIR NO. : ABOPN9645F ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ANAND PASARI WITH SHRI NITIN PASARI, ADVOCATES / RESPONDENT BY : SMT. NISHA SINGHMARR, JCIT DATE OF HEARING 05/11/2019 !'# / DATE OF PRONOUNCEMENT 20/01/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), JAMSHEDPUR (CIT(A) IN SHORT), DATED 09.07.2018 ARI SING IN THE ASSESSMENT ORDER DATED 31.08.2016 PASSED BY THE ASS ESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T) CONCERNING AY 2014-15. ITA NO. 327/RAN/18 (BAJRANG LAL NAREDI VS. ITO] AY 2014-15 - 2 - 2. AS PER MULTIPLE GROUNDS OF APPEAL, THE ASSESSEE HAS ESSENTIALLY RAISED TWO GRIEVANCES; (I) APPLICABILITY OF AMENDED PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE; & (II) CHARGEABILITY OF INTEREST UNDER S.234B OF THE ACT O N ADDITIONS MADE. 3. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION REG ISTERED IN HIS NAME, AN IMMOVABLE PROPERTY ON 17.06.2013 AGAINST THE ACT UAL PURCHASE OF PROPERTY ON 15.04.2011 IN FY 2011-12. THE PURCHASE CONSIDERATION WAS DETERMINED AT RS.9,10,000/- AT THE TIME OF AGREEMEN T FOR PURCHASE IN FY 2011-12 AND ACCORDINGLY THE PAYMENT WAS MADE AT THE TIME OF SUCH AGREEMENT TO THE VENDOR. AS NOTED, THE REGISTRATIO N WAS HOWEVER CARRIED OUT AT A BELATED STAGE ON 17.06.2013 ON WHICH DATE THE STAMP DUTY VALUATION STOOD AT A HIGHER FIGURE AT RS.22,60,000/ -. THE AO NOTICED THE ALLEGED UNDER-VALUATION IN THE PURCHASE PRICE OF TH E PROPERTY QUA STAMP DUTY VALUATION AND APPLIED PROVISIONS OF SECTION 56 (2)(VII)(B) OF THE ACT AND WORKED OUT THE ADJUSTED PURCHASE CONSIDERATION OF RS.18,89,350/-. THE AO ACCORDINGLY TREATED THE DIFFERENCE OF RS.9,7 9,350/- AS DEEMED INCOME HAVING REGARD TO THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT AS AMENDED BY FINANCE ACT, 2013 AND APPLICABLE TO AY 2014-15 ONWARDS. 4. IN THE FIRST APPEAL, THE CIT(A) DID NOT GIVE ANY RELIEF ON INAPPLICABILITY OF AMENDED PROVISIONS OF SECTION 56 (2)(VII)(B) OF THE ACT TO THE FACTS OF THE CASE AS CLAIMED BY THE ASSESSEE . 5. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE ISSUE. IN THE INSTANT APPEAL, THE APPLICABILITY OF SECTION 56 (2)(VII)(B) OF THE ACT AS AMENDED BY FINANCE ACT, 2013 AND APPLICABLE TO AY 2 014-15 IN QUESTION. ON A PERUSAL OF PRE-AMENDED PROVISIONS OF SECTION 5 6(2)(VII)(B) OF THE ACT, WE GATHER THAT WHERE AN INDIVIDUAL OR HUF RECE IVES FROM ANY PERSON ANY IMMOVABLE PROPERTY WITHOUT CONSIDERATION, THE P ROVISIONS OF PRE- ITA NO. 327/RAN/18 (BAJRANG LAL NAREDI VS. ITO] AY 2014-15 - 3 - AMENDED SECTION 56(2)(VII)(B) OF THE ACT WOULD APPL Y. THE AFORESAID PROVISIONS WAS HOWEVER SUBSTITUTED BY FINANCE ACT, 2013 AND MADE APPLICABLE TO AY 2014-15 ONWARDS. AS PER THE AMEND ED PROVISIONS, THE SCOPE OF SUBSTITUTED PROVISION WAS EXPANDED TO COVE R PURCHASE OF IMMOVABLE PROPERTY FOR INADEQUATE CONSIDERATION AS WELL. IT IS ALLEGED ON BEHALF OF THE REVENUE THAT THE AMENDED PROVISION WI LL APPLY IN VIEW OF THE FACT THAT REGISTRATION HAS BEEN CARRIED OUT DUR ING THE FY 2013-14 CONCERNING AY 2014-15 WHERE THE AMENDED LAW CAME IN TO FORCE. THE ASSESSEE, ON THE OTHER HAND, SEEKS TO CLAIM THAT HI S CASE WOULD BE COVERED BY PRE-AMENDED PROVISION IN VIEW OF THE FACT THAT A GREEMENT FOR PURCHASE OF THE PROPERTY WAS ENTERED INTO WITH THE PROSPECTI VE SELLER IN FY 2011-12 RELEVANT TO AY 2012-13 AT WHICH TIME THE NEW LAW DI D NOT COME INTO PLAY. IT WAS CLAIMED THAT THE PURCHASE CONSIDERATION WAS DULY PAID AT THE TIME OF AGREEMENT IN FY 2011-12 AND THE PURCHASE WAS DE FACTO COMPLETED EXCEPT FOR THE FORMALITY OF REGISTRATION. IT WAS T HUS SUBMITTED THAT THE TRANSACTIONS ENTERED PRIOR TO THE FY 2013-14 WOULD BE GOVERNED BY THE PRE-AMENDED PROVISION WHICH TRIGGERS THE APPLICABIL ITY OF SUCH PROVISION ONLY WHERE THERE IS A TOTAL LACK OF CONSIDERATION A ND DOES NOT COVER A CASE OF INADEQUACY IN PURCHASE CONSIDERATION. 7. WE FIND MERIT IN SUCH PLEA ADVANCED ON BEHALF OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT PURCHASE TRANSACTIONS OF IMMOVA BLE PROPERTY WERE CARRIED OUT IN FY 2011-12 FOR WHICH FULL CONSIDERAT ION WAS ALSO PARTED WITH THE SELLER. MERE REGISTRATION AT LATER DATE W OULD NOT COVER A TRANSACTION ALREADY EXECUTED IN THE EARLIER YEARS A ND SUBSTANTIAL OBLIGATIONS HAVE ALREADY BEEN DISCHARGED AND A SUBS TANTIVE RIGHT HAS ACCRUED TO THE ASSESSEE THEREFROM. THE PRE-AMENDED PROVISIONS WILL THUS APPLY AND THEREFORE THE REVENUE IS DEBARRED TO COVE R THE TRANSACTIONS WHERE INADEQUACY IN PURCHASE CONSIDERATION IS ALLEG ED. WE THUS FIND MERIT IN THE ISSUE RAISED ON BEHALF OF THE ASSESSEE . THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE AO IS DIREC TED TO DELETE THE ADDITIONS MADE UNDER S. 56(2)(VII)(B) OF THE ACT AN D RESTORE THE POSITION CLAIMED BY THE ASSESSEE. ITA NO. 327/RAN/18 (BAJRANG LAL NAREDI VS. ITO] AY 2014-15 - 4 - 8. SECOND ISSUE CONCERNS CHARGEABILITY OF INTEREST UNDER S. 234B OF THE ACT ON ASSESSED INCOME QUA RETURN INCOME. 8.1 WE FIND THAT IDENTICAL ISSUE HAS COME UP BEFORE THE CO-ORDINATE BENCH OF ITAT IN ITO VS. M/S. ANAND VIHAR CONSTRUCT ION PVT. LTD. ITA NO. 335/RAN/2017 ORDER DATED 28.11.2018 WHEREIN THE ISSUE WAS DEALT WITH AS UNDER: 16. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. PRIMA FACIE THE DISPUTED ISSUE, BEING CHARG ING OF INTEREST U/S.234A & 234B AS ENVISAGED BY LD. AR, IS COVERED BY THE DECISION OF HOB'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AJ AY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140. THE HON'BLE COURT IN PARA23&24 HELD AS UNDER :- '23. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED TH AT IT HAS BEEN ORDERED BY THE AO THAT INTEREST BE CHARGED AS PER R ULE. INTEREST CAN BE LEVIED UNDER SECTION 234A AND 234B OF THE AC T. IT IS SUBMITTED THAT IN VIEW OF THE JUDGMENT OF FULL BENC H OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI VRS. COMMISSIONER OF INCOME-TAX REPORTED IN [2001] THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONLY ON THE INCOME DECLARED IN THE RETURN. T HE REVENUE PREFERRED SLP BEFORE HON'BLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH OF PATNA HIGH COURT, WHI CH WAS DISMISSED BY THE HON'BLE SUPREME COURT ON MERITS VI DE ORDER DATED 01.08.2000 BY SAYING THAT THERE IS NO MERIT I N THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISPU TE THIS LEGAL POSITION. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN TH IS APPEAL THAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSESSEE UNDER SECTIONS 234A AND 234B IS CONCERNED, IN VIEW OF THE FULL BENCH JUDGMENT OF RA NCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ. KUMARI, THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INC OME DECLARED IN THE RETURNS AND NOT ON THE INCOME ASSESSED AND DETE RMINED BY THE AO TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORI TIES BELOW ARE ACCORDINGLY MODIFIED AND INTEREST SHALL BE CHARGEAB LE IN THE LIGHT OF THE FULL BENCH JUDGMENT, REFERRED ABOVE.' 17. LD. AR ALSO PLACED RELIANCE ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI GIRDHARI LAL SHARM A VS. ITO, WARD- 1(4), JAMSHEDPUR IN ITA NO. 31/RAN/2013 BY AN ORDER DATED 07.05.2012 IN PARA NO. 6 RELYING UPON THE ABOVE DECISION OF TH E HON'BLE JHARKHAND HIGH COURT HELD :- 'WE ACCORDINGLY FOLLOWING THE ABOVE DECISION, DIREC T THE ASSESSING OFFICER TO RE-COMPUTE THE INTEREST UNDER SECTION 2348 ITA NO. 327/RAN/18 (BAJRANG LAL NAREDI VS. ITO] AY 2014-15 - 5 - ON THE BASIS OF THE TOTAL INCOME DECLARED BY THE AS SESSEE IN THE RETURN FILED.' 18. WE RESPECTFULLY FOLLOWING THE DECISION OF THE J URISDICTIONAL HIGH COURT AND THE DECISION OF COORDINATE BENCH OF THE T RIBUNAL DIRECT THE AO TO RECOMPUTED THE INTEREST U/S.234B ON THE BASIS OF TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED. THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 8.2 IN CONSONANCE WITH THE VIEW EXPRESSED BY THE CO -ORDINATE BENCH HOLDING THAT INTEREST UNDER S.234A & 234B OF THE AC T IS CHARGEABLE WITH REFERENCE TO RETURNED INCOME ONLY, WE ARE INCLINED TO ADJUDICATE THE LEGAL OBJECTION RAISED BY WAY OF ADDITIONAL GROUND IN FAV OUR OF THE ASSESSEE. 8.3 IN THE RESULT, SECOND ISSUE CONCERNING CHARGEAB ILITY OF INTEREST UNDER S.234B OF THE ACT IS ALLOWED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER RANCHI: DATED 20/01/2020 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 / DR, ITAT, RANCHI 6. 278 9 / GUARD FILE. BY ORDER, SR. PRIVATE SECRETARY ITAT, AHMEDABAD THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/2020