PRABHAKAR GULABRAO SAWANT, Mumbai V. ITO, WARD 34(2)(5), MUMBAI, Mumbai

ITA 3522/MUM/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8681 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 11-02-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 02-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Sale consideration of property below Jantri Value; Salary income; Fair market value
• Section: 56; 56(2)(vii)(b); 143(3); 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI NARENDER KUMAR CHOUDHRY, JM ITA No.3522/Mum/2023 (Assessment Year: 2014-15) Prabhakar Gulabrao Sawant 1/16, M.H.B. Colony, Sardar Nagar No.1, Sion, Koliwada, Mumbai – 400 022 Vs. Income Tax Officer, Ward 34(2)(5), Kautilya Bhavan, BKC, Mumbai – 400 051 (Appellant) (Respondent) PAN No. ABAPS8502L Assessee by : Shri Subodh Ratnaparkhi,AR Revenue by : Shri H.M. Bhatt, Sr. DR Date of hearing: 12-02-2024 Date of pronouncement : 19-02-2024 O R D E R PER PRASHANT MAHARISHI, AM: 1. This appeal [ITA No. 3522/Mum/2023] is filed by Mr. Prabhakar Gulabrao Sawant [Assessee / Appellant] for assessment year 2014-15, against Appellate Order dated 17.8.2023 wherein appeal filed by the Assessee against the Assessment order passed by the Income Tax Officer, Ward 34(2) (5), Mumbai [Ld. AO] under section 143(3) of Page | 2 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 the Income-tax Act, 1961 (the Act) dated 26.12.2016 was partly allowed for statistical purposes. 2. The Assessee is aggrieved and has raised following two grounds of appeal 1. The Hon. CIT (A) erred in confirming addition to the extent of Rs.44, 17, 484 /- u/s 56(2)(vii)(b) of the 1. Tax Act 1961, on account of purchase of agricultural land situated at village Thanenahve, Taluka Khalapur, Dist. Raigad, not appreciating that the provisions of section 56(2)(vii)(b) of the I.T Act, 1961 are not attracted to the facts of the transaction and therefore the entire addition of Rs.44,17,484/- is unjustified and required to be deleted. 2. The Hon. CIT (A) erred in confirming addition to the extent of Rs.44,17,484/- u/s 56(2)(vii)(b) of the I. Tax Act 1961, on account of purchase of agricultural land situated at village Thanenahve, Taluka Khalapur, Dist. Raigad, incorrectly computing the deemed income u/s 56(2)(vii)(b) at Rs. 44,17,484/-, when the actual amount of addition cannot exceed Rs. 10,41,600/-. The excess addition of Rs. 33,75,884/-(44,17, 484/- 10 ,41,600/-) being factually incorrect may kindly be deleted. 3. The appellant craves leave to add, alter, amend and/or vary the grounds of appeal at any time before the decision of the appeal. 3. The brief facts shows that the Assessee is a government servant who has earned income from salary, capital gain and other sources, filed his return of income for the assessment year 2014-15 on 23.7.2014 at a total income of Rs.3,47,620/-. The return was picked up for scrutiny. 4. In the individual transaction statement it was shown that the Assessee jointly with other four persons has entered into an agreement on 7.10.2023 for purchase of immovable property at a total consideration of Page | 3 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 Rs.1,54,00,000/- whose market value as per the stamp duty rates was Rs.3,31,00,000/-. Therefore, the Ld. AO issued the notice that why the differential sum should not be taxed under section 56(2) of the Act. 5. The Assessee submitted that the land acquired is agricultural and Assessee has not paid any sum for acquisition of the property, but consideration is paid by others, and therefore it is not taxable in the hands of Assessee. Assessee also submitted the registered deed. Assessee also stated that he has executed a release date along with others on 24.7.2015 in favour of Shri Murarilal Surajmal Mody and therefore income is not chargeable to tax in the hands of Assessee. It was further stated that purchase of land was for the purpose of charitable activity. 6. The Ld. AO noted that the land purchased by the Assessee and other parties is a non-agricultural land. The agreed value of the consideration is Rs.1.54 crores which has been paid by two other co-owners other than the Assessee whose stamp duty value is Rs.3,31,00,000/- and therefore 1/5 th of the total value of the purchase of land being stamp duty value plus stamp duty registration purchase amounting to Rs.3,45,79,420/- is chargeable to tax being Rs.69,15,884/- in the hands of the Assessee under section 56 (2) (x) of the Act. Assessment order under section 143(3) of the Act dated 26.12.2016 was passed making such additions. 7. Meanwhile , It was further noted that there is a valuation adopted by the District Valuation Officer as report dated 17.8.2017 wherein after inspection of the property and Page | 4 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 considering value report of registered valuer dated 7.10.2013 valuing the property at Rs.1,50,59,000/-, considering objections of the assessee, the value of the property was determined at Rs.2,06,08,000/-. 8. Assessee challenged assessment order before the Ld. CIT (A) who passed the appellate order upholding the addition however, held that the difference is only required to be added between the fair market value of the property and the agreed consideration. Of course, there is a valuation adopted by the District Valuation Officer as value report dated 17.8.2017 wherein after inspection of the property and considering value report of registered valuer dated 7.10.2013 valuing the property at Rs.1,50,59,000/-, considering objections of the assessee the value of the property was determined at Rs.2,06,08,000/-. Accordingly, the Ld. CIT(A) held that the addition required to be made in the hands of the Assessee on the difference of the fair market value of the property, determined by the District Valuation Officer of Rs.2,06,08,000 and agreed value of consideration of Rs.1.54 lakhs. 1/5 th of that would be added in the hands of the Assessee. Accordingly he directed the Ld. Assessing Officer to delete the addition of Rs.69,15,884/- and to restrict the addition to only 1/5 th thereof. 9. Assessee is aggrieved with the above appellate order. The Ld. Authorized Representative has submitted a paper book containing 60 pages and a written submission made before the Ld. CIT (A). The Ld. Authorized Representative also submitted the assessment order in case of Shri Murarilal Surajmal Mody for assessment year 2014-15 wherein the Ld. AO has made the addition under section Page | 5 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 56(2)(vii)(b) of the Act to the tune of Rs.62,06,494/-. Therefore, it was submitted that when complete addition of difference between stamp duty value and consideration as per sale deed has already been added in the hands of Shri Murarilal Surajmal Mody, in whose name the release deed is made by 5 parties, no addition required to be made in the hands of the Assessee. 10. The Ld. DR vehemently supported the orders of the Ld. Lower authorities. 11. We have carefully heard the rival contentions and perused the orders of the lower authorities. The Assessee is one of the party who along with four others entered into a deed of conveyance dated 7.10.2013 for purchase of property being land at Thanenahve, Taluka Khalapur, District Raigad for a consideration of Rs.1,54,00,000/-. The stamp duty value of the said property was Rs.3,31,00,000/-. The Assessee submits that this property was an agricultural land at Village Thanenahve, Taluka Khalapur, District Raigad. This property was purchased for some charitable activities hence subsequently vide release deed dated 24.7.2015 all the five parties released this property in favour of one Mr. Murarilal Surajmal Mody. The property was further valued by the registered valuer M/s. Valuers & Engineers on 7.10.2013 at Rs.1,50,59,000/-. Therefore, the Ld. AO made a reference to the valuation officer, Income Tax Department, Thane to determine fair market value of the property as on 7.10.2013. The district valuation officer after considering the valuation report and inviting objections from the Assessee dealing with them on 17.8.2017 determined fair valuation of the property at Rs.2.6 lakhs. Therefore, in view of the provisions of Page | 6 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 Section 56(2)(vii), if an individual or a HUF receives from any person from 1 st day of October, 2009 but before 1 st day of October 2017 any immovable property for consideration which is less than the stamp duty valuation by an amount exceeding Rs.50,000/-, then the stamp duty of such property in excess of such consideration is the income chargeable under the head income from other sources. Where the value of the property is disputed, the Ld. AO may make the reference for value of such property to the district valuation officer and such valuation shall be final. In the present case, the Assessee received 1/5 th share in the above property in excess of agreed consideration. Therefore, the addition in the hands of the Assessee can only be made at the rate of 1/5 th of the above difference between agreed consideration and valuation made by the Ld. DVO. In fact, this is the only request of the Ld. AR before us. The ground No.1 challenging the valuation of the property as agricultural land was not pressed. The ground No.2 was only made with respect to the restriction of the addition to the extent of 1/5th of Difference between the agreed consideration and Valuation adopted by the ld DVO. . In view of the above facts, we dismiss ground No.1 and allow ground No.2 of the appeal. 12. With respect to the argument of the Ld. AR that Shri Murarilal Surajmal Mody is also taxed on the identical amount, therefore addition could not have been made in the hands of the Assessee is devoid of any merit. This is so because Shri Mody have received the above property on the basis of release deed from the five joint owners including the Assessee. The Assessee received the Page | 7 ITA No.3522/Mum/2023 Prabhakar Gulabrao Sawant; A.Y. 2014-15 property by purchase deed. Therefore, this argument cannot be accepted. 13. In the result, the appeal of the Assessee is partly allowed. Order pronounced in the open court on 19.02.2024. S/- Sd/- (NARENDER KUMAR CHOUDHRY) Sd/- (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 19.02.2024 Mini Pawar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai