Rama Jogi Reddy Sanepalli , Bangalore V. Income Tax Officer Ward-2(3)(2), Bangalore

ITA 34/BANG/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4173 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 04-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JDIT
• Assessee Lawyers: RAMA JOGI REDDY SANEPALLI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value
• Section: 201; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN , VICE PRESIDEN ITA NO. 34/BANG/2019 ASSESSMENT YEAR : 2015 - 16 SHRI RAMA JOGI REDDY SANEPALLI, 113, FERNS HABITAT, OUTER RING ROAD, MARATHAHALLI, BANGALORE 560 037. PAN: ACYPR 5244F VS. THE INCOME TAX OFFICER, WARD 2(3)(2), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI RAMA JOGI REDDY SANEPALLI , APPELLANT. RESPONDE NT BY : SHRI S. VENKATESH, JDIT DATE OF HEARING : 24 . 01.2019 DA TE OF PRONOUNCEMENT : 15 . 0 2 . 201 9 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 01.08.2018 OF THE CITA-2, BENGALURU RELATING TO ASSESSMENT YEA R 2015-16. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IS AS TO, WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN MAKING AN ADD ITION OF RS.6,25,560 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION O F A PROPERTY BY THE ASSESSEE U/S. 69A/56(2) (VII) (B) OF THE INCOME-TAX ACT, 1961 [THE ACT]. 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS A CHARTERED ACCOUNTANT BY PROFESSION. HE ACQUIRED A PROPERTY FOR A SUM OF RS .1,45,00,000. THE VALUE ADOPTED FOR THE PURPOSE OF STAMP DUTY AND REG ISTRATION BY THE SUB- REGISTRAR WAS A SUM OF RS.2,05,52,400. THERE WAS A DIFFERENCE OF RS.60,52,400 BETWEEN THE ACTUAL VALUE AND THE VALUE FOR WHICH THE ASSESSEE PURCHASED THE PROPERTY. AS PER THE PROVIS IONS OF THE 69A OF THE ITA NO. ITA NO.34/BANG/2019 PAGE 2 OF 4 ACT READ WITH SEC.50C AND 56(2)(VII)(B)(II) OF THE ACT, THE FOLLOWING INCOME SHALL BE CHARGED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES, VIZ., 56. (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUD ED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FROM OTHER SOURCES, IF IT IS NOT CHARGEABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 , ITEMS A TO E. (2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GEN ERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOME S, SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES, NAMELY : ( VII ) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY R ECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, ( A ) .. ( B ) ANY IMMOVABLE PROPERTY, ( I ) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHIC H 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: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR THE TRANSFER OF IMMOVAB LE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE S AME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY B E TAKEN FOR THE PURPOSES OF THIS SUB-CLAUSE: PROVIDED FURTHER THAT THE SAID PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY ANY MODE OTHER THA N CASH ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFE R OF SUCH IMMOVABLE PROPERTY; 4. IN ORDER TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF PURCHASE BY THE ASSESSEE, THE AO MADE A REF ERENCE TO THE DVO. THE DVO ESTIMATED THE FAIR MARKET VALUE OF THE PROP ERTY AT RS.1,51,75,560. THE ASSESSEE WAS CONFRONTED WITH THE REPORT OF THE DVO. THE ASSESSEE ITA NO. ITA NO.34/BANG/2019 PAGE 3 OF 4 SUBMITTED THAT SINCE THE DIFFERENCE BETWEEN THE VAL UE OF THE PROPERTY AT WHICH HE PURCHASED THE PROPERTY AND THE REPORT OF T HE DVO WAS LESS THAN 10%, NO ADDITION SHOULD BE MADE IN RESPECT OF THE D IFFERENCE. HE ALSO SUBMITTED THAT THE DVO HAD NOT CONSIDERED THE ODD S HAPE AND LARGE SIZE OF THE PROPERTY AND THE ENHANCED GUIDELINE VALUE AND A LSO THE FACT THAT THE GUIDELINE VALUE OF THE PROPERTY WAS ENHANCED BY 20% ON 13.11.2014, LESS THAN A MONTH ON WHICH THE ASSESSEE PURCHASED THE PR OPERTY WHICH WAS ON 09.12.2014. THE AO, HOWEVER, DID NOT CONSIDER THE ABOVE PLEA OF THE ASSESSEE AND MADE AN ADDITION OF RS.6,25,560 TO THE TOTAL INCOME OF THE ASSESSEE I.E., DIFFERENCE BETWEEN RS.1,51,75,560 (D VOS ESTIMATE 50,000 (UPTO RS.50000 EXEMPTED - 1,45,00,000 (ACTUAL SALE CONSIDERATION FOR PURCHASE OF THE PROPERTY). 5. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONF IRMED THE ORDER OF AO. 6. BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE RELI ED ON THE DECISION OF ITAT PUNE BENCH IN THE CASE OF SMT. RATNAKANTA B. AGARWAL V. ITO, ITA 587/PUN/2014, ORDER DATED 24.07.2017 WHEREIN THE HONBLE PUNE BENCH TOOK THE VIEW THAT IF THE VARIANCE BETWEEN THE VALU E ESTIMATED AS FAIR MARKET VALUE BY THE DVO AND THE VALUE ADOPTED BY TH E ASSESSEE IS LESS THAN 5%, THEN NO ADDITION SHOULD BE MADE SINCE THE MATTER OF VALUATION IS ALWAYS BASED ON ESTIMATION AND SOME DIFFERENCES DO OCCUR. 7. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS). 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I AM O F THE VIEW THAT THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF SMT. RATNAKANTA B. AGARWAL (SUPRA) IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. WITHOUT GOING INTO THE OBJECTIONS OF THE ASS ESSEE WITH REGARD TO THE REPORT OF THE DVO, I FIND THAT THE DIFFERENCE IN VA LUATION AS ADOPTED BY THE ITA NO. ITA NO.34/BANG/2019 PAGE 4 OF 4 DVO AND THE PRICE PAID FOR THE PROPERTY BY THE ASSE SSEE IS LESS THAN 5%. IN THE GIVEN CIRCUMSTANCES, AS HELD BY THE COORDINA TE BENCH OF PUNE BENCH IN THE CASE OF SMT. RATNAKANTA B. AGARWAL (SUPRA) , VALUATION IS ALWAYS A MATTER OF ESTIMATION AND THE DIFFERENCE OF LESS THAN 5% IS ONLY A DIFFERENCE WHICH SHOULD BE CONSTRUED AS A DIFFERENC E IN ESTIMATION AND THE VALUE ADOPTED BY THE ASSESSEE SHOULD BE ACCEPTED IN SUCH CIRCUMSTANCES. RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT PUN E BENCH, I DIRECT THAT THE ADDITION SUSTAINED BY THE CIT(APPEALS) SHOULD BE DE LETED. 9. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2019. SD/- ( N.V. VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. / DESAI SMURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGA LORE. 6. GUARD FI LE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.