The ACIT, Circle-3, Surat V. Shri Mahendra C.Patel, Surat

ITA 3396/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6478 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWA LA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value; Tax effect; Set aside
• Section: 143(3); 50C; 260A; 69B; 268A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) I.T.A. NO. 3396/AHD./2009 ASSESSMENT YEAR : 2006-2007 A.C.I.T., CIRCLE-3, SURAT VS- SHRI MAHENDRA C. PATEL, SURAT (PAN : ACSPP 6502C) (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI SAMIR TEKRIWA LA, SR.D.R. RESPONDENT BY : SHRI MANISH J. SHAH, A.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 30-09-2009 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SUR AT FOR DELETING THE ADDITION OF RS.6,47,500/- MADE BY THE AO ON ACCOUNT OF UNEXPLAI NED INVESTMENT UNDER SECTION 69B OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2006-07 . 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 31.03.2007 DECLARING THE TOTAL INCOME AT RS.97,019/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 22.12.2008 WHEREIN HE MADE ADDITION OF RS. 6,47,500 /- ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE I.T. ACT, 1961. THIS ADDITION WAS MADE IN RESPECT OF PURCHASE OF A PLOT OF LAND AT JAHANGIRABAD. THE ASSESSEE ACCOUNTED THE ACTUAL PURCHASE CONSIDERATION WHEREAS THE AO ADOPTED THE S TAMP DUTY VALUATION AND ADDED DIFFERENCE OF RS.6,47,500/- AS UNDISCLOSED INCOME O F THE ASSESSEE UNDER THE PROVISIONS OF SECTION 69B OF THE I.T. ACT, 1961. THE ADDITION WORKED OUT BY THE AO IS AS UNDER: NAME OF PROPERTY PURCHASE VALUE ACCOUNTED FOR VALUE ADOPTED BY STAMP DUTY VALUATION AUTHOR ITY DIFFERENCE OF SHORT ACCOUNTING OF VALUE IN THE BOOKS OF ACCOUNTS ITA NO.3396/AHD/2009 2 PLOT OF LAND AT JAHANGIRABAD RS.30,00,000 [1/6 TH SHARE OF THE ASSESSEE RS.5,00,000/-] RS.68,85,000 [1/6 TH SHARE OF THE ASSESSEE RS.11,47,500] RS.38,85,000 [1/6 TH SHARE OF THE ASSESSEE RS.6,47,500] 3. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O N THE FOLLOWING GROUNDS: (I) THE ADDITION FOR UNDERVALUATION OF PURCHASE OF AFORESAID PROPERTIES IS MADE IN THE HANDS OF THE PURCHASER ON THE BASIS OF DE EMING PROVISIONS OF SECTION 50C OF THE I. T. ACT, WHERE AS THE ADDITION IN THE CASE OF THE ASSESSEE IS MADE U/S. 69B OF THE ACT BEING UNDISCLOSED INVESTMENT. (II) WHAT CANNOT BE DENIED IS THAT SUCH ADDITION I S MADE BY THE AO WITHOUT ANY SUBSTANTIVE OR CORROBORATIVE EVIDENCE TO SHOW THAT THE PURCHASE PRICE ACTUALLY PAID BY THE ASSESSEE WAS MORE THAN WHAT HAS BEEN SH OWN IN THE PURCHASE DEED. (III) RELIANCE IS PLACED ON THE DECISION OF THE HO N. ITAT, AHMEDABAD BENCH IN THE CASE OF BHARAT M. PATEL V/S. ACIT DTD. 29.8. 2008 WHEREIN THE HON. ITAT HAS ON THE IDENTICAL ISSUE DELETED THE ADDITION MAD E BY THE ACIT U/S.69B OF THE ACT. 4. AGGRIEVED WITH THE ABOVE ORDER, THE REVENUE IS I N APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, SHRI SAMIR TEKRIWALA, SR.D.R. APPEARED AND CONTENDED THAT THE DECISION OF THE LD. CIT(A) IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: (I) THE LD. CIT(A) HAS NOT APPRECIATED THAT SECTION 50C OF THE I. T. ACT MAY BE A 'DEEMING PROVISION' FOR THE PURPOSE OF COMPUTATIO N OF CAPITAL GAIN, YET IT LAYS DOWN A VERY BASIC PRINCIPLE THAT ANY TRANSACTI ON WITHIN A PARTICULAR AREA WILL HAVE TO MATCH WITH THE 'JANTRI PRICE' FIXED BY THE STAMP DUTY AUTHORITIES GOVERNED BY GOVT. OF GUJARAT FIXED FOR THE AREA AND THE SALE CONSIDERATION WOULD BE THE RATE AT WHICH THE PROPERTY IS EXPECTED TO BE SOLD IN THE SAID AREA. (II) THE LD. CIT(A) HAS NOT APPRECIATED THAT THE 'J ANTRI RATES' ARE NOT SIMPLY A 'BLANKET GUIDELINES' AND IT TAKES INTO ACCOUNT /CON SIDERATION ALL RELEVANT FACTORS OF AN AREA AND IS FIXED BY THE FIELD STAMP DUTY AUTHORITIES. (III) THE LD. CIT(A) HAS NOT APPRECIATED THAT ONCE IT IS 'DEEMED' AND 'ACCEPTED' THAT THE PROPERTY HAS BEEN SOLD FOR A PA RTICULAR PRICE WHICH IS, THE ITA NO.3396/AHD/2009 3 FAIR MARKET VALUE IN A GIVEN AREA THEN IT WOULD ALS O HAVE TO BE DEEMED AND ACCEPTED THAT THE PURCHASER HAS PAID THE SAME AMOUN T. (IV) THE LD. CIT(A) HAS NOT APPRECIATED THAT THE DEEMING PROVISIONS DO NOT EXIST IN A THIN AIR NOR IT IS JUST AN ABSTRACT CONC EPT. THE DEEMING PROVISIONS HAVE TO BE ANCHORED TO CERTAIN GROUND REALITIES AND DAY TO DAY PRACTICAL INTERACTIONS AND DEALINGS. THEREFORE, WHEN A PROPER TY IS SOLD FOR A PARTICULAR SUM IT FOLLOWS AS A NATURAL COROLLARY THAT IT HAS B EEN BOUGHT AT THE SAME PRICE AS WELL. (V) THE LD.CIT(A) HAS NO APPRECIATED THAT THE JANTR I FACTORS ARE FIXED ON FACTORS LIKE ROAD FACILITY, THE DEVELOPMENT STAGE O F THAT AREA, AND THE AMENITIES AVAILABLE IN THE SAID AREA BY THE GOVERNMENT AUTHOR ITIES AS WELL AS PREVAILING MARKET RATES OF THE LANDS REMAIN FAR GREATER THAN T HE JANTRI RATE FIXED BY THE STAMP DUTY AUTHORITIES. (VI) THE LD.CIT(A) HAS NOT APPRECIATED THAT THE ASS ESSEE HAD ACCEPTED THE UNACCOUNTED INVESTMENT BY WAY OF ACCEPTING THE VALU E DETERMINED BY THE STAMP DUTY AUTHORITIES AND HAS NOT OFFERED ANY EXPLANATIO N TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING WITH REGARD TO THE NATURE AND SOURCES OF SUCH INVESTMENT. VII) THE LD.CIT(A) HAS RELIED UPON THE DECISION OF THE HON. ITAT IN THE CASE OF SHRI BHARAT M. PATEL (ITA NO. 1749/AHD/2008 DTD. 29 .8.2008, WHEREIN THE IDENTICAL ISSUE WAS INVOLVED AND THE HON. ITAT HAS REVERSED THE ORDER OF CIT{A) UPHOLDING THE ORDER OF AO FOR MAKING ADDITIO N U/S. 69B OF THE ACT. THE DECISION OF THE HON. ITAT IN THE CASE OF BHARAT N. PATEL IS NOT ACCEPTED IN PRINCIPLE BY THE DEPARTMENT BUT NO APPEAL U/S, 260A WAS PREFE RRED BY THE DEPARTMENT IN THE SAID CASE AS THE TAX EFFECT INVOL VED IN THE SAID CASE WAS BELOW RS.4 LAKH IN VIEW OF INSTRUCTION NO. 5 OF 200 8 DTD. 15.5.2008 ISSUED BY THE CBDT R.W.S. 268A OF THE ACT . 6. ON THE OTHER HAND, SHRI MITESH MODI, APPEARING O N BEHALF OF THE ASSESSEE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). H E POINTED OUT THAT THE VIEW TAKEN BY THE LD. CIT(A) IS IN ACCORDANCE WITH THE RATIO O F THE DECISION DATED 09.04.2010 OF THE ITAT, D BENCH, AHMEDABAD IN ITA NO.3069/AHD/2 008 IN THE CASE OF REKHABEN RAJENDRA SHAH VS- ACIT. THEREFORE, THE VI EW TAKEN BY THE LD. CIT(A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ITAT, A BENCH, AHMEDABAD I N PARA NO.5 OF THE DECISION ITA NO.3396/AHD/2009 4 DATED 09.04.2010 IN THE CASE OF REKHABEN RAJENDRA S HAH ( SUPRA ), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE PROPERTIES UN DER CONSIDERATION HAVE BEEN PURCHASED BY THE ASSESSEE THROUGH REGISTERED SALE D EEDS. THE ASSESSEE CLAIMED THAT SHE HAS PAID ACTUAL CONSIDERATION WHICH IS REC ORDED IN THE SALE DEEDS. THE ADDITIONAL STAMP DUTY WAS IMPOSED UPON THE ASSESSEE AS PER THE RATE PRESCRIBED BY JANTRI. THE STAMP VALUATION AUTHORITY ADOPTED SUCH VALUATION AS PER THE JANTRI WHICH IS NOTIONAL VALUE FOR THE PURP OSE OF DETERMINING THE STAMP DUTY PAYABLE. THE AO HAS NOT BROUGHT ANY EVIDENCE O N RECORD THAT THE ASSESSEE IN FACT HAD PAID MORE CONSIDERATION AS AGAINST THE CONSIDERATION RECORDED IN SALE DEEDS. NO MATERIAL IS BROUGHT ON RECORD TO PRO VE THAT THE ASSESSEE HAD INVESTED MORE THAN WHAT HAD BEEN SHOWN IN THE SALE DEEDS. IT WAS, THEREFORE, AN INFERENCE OF THE AO THAT ASSESSEE PAID MORE CONS IDERATION AS AGAINST THE CONSIDERATION SHOWN IN THE SALE DEEDS. THE LEARNED CIT(A} NOTED THAT EVEN IF SECTION 50C OF THE IT ACT IS NOT INVOKED BY THE AO BUT THE AO HAS APPLIED ITS PRINCIPLE. WE DO NOT AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) BECAUSE ITAT AHMEDABAD BENCH IN THE CASES OF JALARAM SB CO. AND RICHA NARESH JAIN (SUPRA) HAVE HELD THAT PROVISIONS OF SECTION 50C OF THE IT ACT ARE NOT APPLICABLE IN THE HANDS OF THE PURCHASER. IT WOULD, THEREFORE, SHOW THAT THERE IS NO FOUNDATION FOR MAKING THE ABOVE ADDITIONS AGAINS T THE ASSESSEE. IN THE ABSENCE OF ANY FACTUAL FOUNDATION IN FAVOUR OF THE REVENUE, WE DO NOT FIND IT TO BE A FIT CASE FOR SUSTAINING THE ADDITIONS IN THE H ANDS OF THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. AS A RESULT, GROUND NOS. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 7.1 ADMITTEDLY, IN THE CASE BEFORE US, THERE IS NOT AN IOTA OF ENTRIES WHICH INDICATES THAT THE ASSESSEE HAS PAID ANYTHING MORE THAN RS.30 ,00,000/- MENTIONED IN THE SALE DEED. THEREFORE, DIFFERENCE AMOUNT OF RS.6,47,500/- CANNOT BE ADDED AS UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE I. T. ACT, 1961 . THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONFORMITY WITH THE RATIO OF THE ABOVE DECISI ON CITED BY THE LD. COUNSEL OF THE ASSESSEE. WE, THEREFORE, DECLINE TO INTERFERE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE CO URT ON 09.06.2011 SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09/06/2011 ITA NO.3396/AHD/2009 5 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S.