Shri Basavaraj Gurunanjaiah Hiremath , Gulbarga V. The Income Tax Officer Ward-1 & TPS , Gulbarga

ITA 368/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4544 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-09-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 01-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K.MALLAHA RAO
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Additional evidence; Question of law; Fair market value; Set aside; Capital Gains
• Section: 68; 56(2)(vii)(b); 50C; 48; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO . 368/ BANG / 2019 ASSESSMENT YEAR : 2016 - 17 SHRI BASAVARAJ GURUNANJAIAH HIREMATH, H.NO.1-891/70/98, OM NILAYA, CORPORATION LAYOUT, GULBARGA 585 102. PAN: ABBPH 6333B VS. THE INCOME TAX OFFICER, WARD 1 & TPS, GULBARGA. APPELLANT RESPONDENT APPELLANT BY : SHRI K. MALLAHA RAO, ADVOCATE RESPO NDENT BY : SHRI PRIYADARSHI MISHRA , A DDL . C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 15 . 0 9 .2021 DATE OF PRONOUNCEMENT : 27 .0 9 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS), KALABURAGI DATED 27.12.2018 FOR THE A SSESSMENT YEAR 2016-17. 2. THE FIRST ISSUE FOR CONSIDERATION IS WITH REGARD TO SUSTAINING THE ADDITION OF RS.36 LAKHS BY INVOKING THE PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961 [THE ACT] SUSTAINED BY THE CIT (APPEALS). ITA NO. 368/BANG/2019 PAGE 2 OF 15 3. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD A PROPERTY BEARING 4/94 ADMEASURING 7787.14 SQ.M. SIT UATED AT SY.NO.61/2 & 61/3 OF SIRNOOR VILLAGE, KALABURAGI TALUK & DIST. O N 23.11.2015 FOR A CONSIDERATION OF RS.48 LAKHS. HOWEVER, IT WAS NOT ICED BY THE AO THAT THE SAID PROPERTY WAS REGISTERED AT A STAMP DUTY VALUAT ION OF RS.84 LAKHS. THE AO BROUGHT THIS DIFFERENCE AS ADDITIONAL CAPITAL GA IN BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. 4. THE ASSESSEE HAS FILED APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENCE OF THE COPY OF CASH BOOK STATEMENT FOR THE PERIOD 1.4.2016 TO 31.3.2017 AND THE FOLLOWING DOCUMENTS: SL. NO. DESCRIPTION 1 THE COPY OF THE INCOME TAX RETURNS FOR THE ASSESSME NT YEAR 2015- 16 ALONG WITH STATEMENT OF INCOME. 2 THE COPY OF THE INCOME TAX RETURNS FOR THE ASSESS MENT YEAR 2016- 17 ALONG WITH STATEMENT OF INCOME. 3 THE COPY OF THE BALANCE SHE ET AND PROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2015-16. 4 THE COPY OF THE LOAN LEDGER STATEMENT FOR THE RELEV ANT FOR PERIOD. 5 THE COPY OF THE BANK ACCOUNT OF VIJAYA BANK FOR T HE ASSESSMENT YEAR 2015-16 ALONG WITH STATEMENT OF INCOME. 6 THE COPY OF THE AGREEMENT FOR SALE DATED 03.06.20 13 BETWEEN BASAVARAJ AND RAGHAVENDRA. 7 THE COPY OF THE SALEDEED DATED 23.11.2015 BETWEEN BASAVARAJ AND RAGHAVENDRA. 5. IN THE APPLICATION UNDER RULE 29 OF THE APPELLAT E TRIBUNAL RULES, 1963 THE ASSESSEE HAS SUBMITTED THAT DUE TO INADVER TENCE THE ABOVE DOCUMENTS WERE NOT FILED BEFORE THE LOWER AUTHORITI ES AND PRAYED FOR ITA NO. 368/BANG/2019 PAGE 3 OF 15 ADMISSION OF THE SAME. WE HAVE GONE THROUGH THE AD DITIONAL EVIDENCE AND ADMIT THE SAME FOR THE PURPOSE OF ADJUDICATION. 6. THE ASSESSEE SUBMITTED THAT THE ASSESSEE ENTERED INTO AGREEMENT FOR OF SALE OF PROPERTY ON 3.6.2013 UNDER WHICH THE PROPERTY WAS AGREED TO BE SOLD BY THE ASSESSEE FOR A CONSIDERATION OF RS.4 8 LAKHS OUT OF WHICH RS.51,000 HAS BEEN RECEIVED BY THE ASSESSEE AS ADVA NCE IN CASH FROM THE PURCHASER. ACCORDING TO THE ASSESSEE, THE TRANSFER TOOK PLACE VIDE SALE AGREEMENT ON 3.6.2013 AND NOT VIDE SALE DEED DATED 23.11.2015. HE PLACED RELIANCE ON SECTION 47 OF THE INDIAN REGISTR ATION ACT, 1908 WHICH PROVIDE THAT REGISTERED DOCUMENT SHALL OPERATE FROM THE TIME WHEN IT WOULD HAVE COMMENCED TO OPERATE, IF NO REGISTRATION THERE OF HAD BEEN REQUIRED OR MADE, AND NOT FROM THE TIME OF ITS REGISTRATION. A CCORDING TO HIM, IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE PROVISIONS OF SECTION 50C CANNOT BE INVOKED. FOR THE PURPOSE HE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SRI AYI VAMAN NARASIMHA ACHARYA IN ITA NO.1527/BANG /2019 DATED 10.2.2021 WHEREIN IT WAS HELD AS UNDER:- 8. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS AND I FIND THAT THE SALE DEED IN THE PRESENT CASE W AS EXECUTED BY THE ASSESSEE SELLING TWO SHOPS AT CAVALRY ROAD ON 1 0.08.2009. THE SALE DEED OPERATES FROM THE DATE ON WHICH IT WA S EXECUTED AND THERE ARE NO COVENANTS REGARDING THE PERIOD OF OPERATION OF SALE UNDER THE SALE DEED TO HAVE BEEN POSTPONED. BE CAUSE OF DISPUTE WITH REGARD TO VALUATION, THE REGISTRATION COULD BE COMPLETED ONLY ON 26.06.2010. THAT WILL NOT POSTPON E THE DATE OF VESTING OF TITLE IN FAVOUR OF THE TRANSFEREE FROM T HE DATE OF SALE. AS PER SECTION 47 OF THE INDIAN REGISTRATION ACT, 1 908, THE SALE BY THE ASSESSEE TO THE TRANSFEREE WOULD OPERATE FRO M 10.08.2009. THEREFORE TRANSFER BY WAY OF SALE OF THE PROPERTY T OOK PLACE ON 10.8.2009. 9. UNDER SECTION 45(1) OF THE ACT, THE CHARGE ON CA PITAL GAIN IS IN THE YEAR OF TRANSFER. SECTION 45(1) OF THE ACT CLEA RLY LAYS DOWN THAT ANY GAIN ARISING ON THE TRANSFER OF THE CAPITA L ASSET EFFECTED IN ITA NO. 368/BANG/2019 PAGE 4 OF 15 THE PREVIOUS YEAR SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GAIN AND SHALL BE DEEMED TO BE THE I NCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. SEC TION 2(47) OF THE ACT DEFINES TRANSFER WHICH INCLUDES A SALE. THE TRANSFER IN THE PRESENT CASE IS SALE AND SINCE SALE IN THE PRESEN T CASE HAS TAKEN PLACE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT Y EAR 2010-11, THE CAPITAL GAIN IN QUESTION CANNOT BE BROUGHT TO T AX IN ASSESSMENT YEAR 2011-12. THIS ASPECT HAS BEEN ACCEP TED BY THE AO IN THE ORDER OF ASSESSMENT. BECAUSE THE ASSESSME NT FOR ASSESSMENT YEAR 2010-11 WAS BARRED BY TIME AND COUL D NOT BE REOPENED, HE RESORTED TO THE PROVISIONS OF SEC.50C OF THE ACT AND TAXED DEEMED ACCRUED CAPITAL GAIN. SECTION 48 OF TH E ACT LAYS DOWN THAT CAPITAL GAIN HAS TO BE COMPUTED BY REDUCI NG FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y IN CONNECTION WITH SUCH TRANSFER AND THE COST OF ACQUI SITION OF THE ASSET AND THE COST OF IMPROVEMENT IF ANY. SEC.50C O F THE ACT IS A SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION C ERTAIN CASES AND IT LAYS DOWN THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITA L ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AU THORITY:') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. SEC.50C OF THE ACT SUBSTITUTES THE FULL VALUE OF CO NSIDERATION RECEIVED OR ACCRUING ON TRANSFER WHICH OTHERWISE WO ULD BE THE VALUE AS ENVISAGED U/S.48 OF THE ACT. SEC.50C OF TH E ACT IS THEREFORE AN EXCEPTION TO SEC.48 OF THE ACT IN CERT AIN CIRCUMSTANCES. SECTION 50C OF THE ACT DOES NOT OPER ATE TO CHANGE THE YEAR OF TRANSFER AS LAID DOWN IN SECTION 45(1) OF THE ACT. 10. SECTION 45 OF THE ACT IS A CHARGING SECTION AS FAR AS CAPITAL GAIN ON TRANSFER OF CAPITAL ASSET IS CONCERNED. SEC TION 48 IS A MACHINERY OR COMPUTATION PROVISION. A TRANSACTION T O WHICH THOSE PROVISIONS CANNOT BE APPLIED MUST BE REGARDED AS NEVER INTENDED BY SECTION 45 OF THE ACT TO BE A SUBJECT O F CHARGE. THIS INFERENCE FLOWS FROM THE GENERAL ARRANGEMENT OF THE PROVISIONS IN THE ACT WHEREUNDER EACH HEAD OF INCOME THE CHARGING PROVISION ITA NO. 368/BANG/2019 PAGE 5 OF 15 IS ACCOMPANIED BY A SET OF PROVISIONS FOR COMPUTING THE INCOME SUBJECT TO THAT CHARGE. REFERRING TO THE FUNDAMENTA L INTEGRALITY OF THE STATUTORY SCHEME PROVIDED FOR CAPITAL GAINS, TH E SUPREME COURT OBSERVED IN B.C. SRINIVASA BETTY'S CASE 128 I TR 294 (SC) AT P. 299 OF THE REPORT; 'SECTION 45 CHARGES THE PROFITS OR GAINS ARISING FR OM THE TRANSFER OF A CAPITAL ASSET TO INCOME-TAX. THE ASSE T MUST BE ONE WHICH FALLS WITHIN THE CONTEMPLATION OF THE SEC TION. IT MUST BEAR THAT QUALITY WHICH BRINGS S. 45 INTO PLAY . TO DETERMINE WHETHER THE GOODWILL OF A NEW BUSINESS IS SUCH AN ASSET, IT IS PERMISSIBLE, AS WE SHALL PRESENTLY SHOW, TO REFER TO CERTAIN OTHER SECTIONS OF THE HEAD, 'CAPIT AL GAINS'. SECTION 45 IS A CHARGING SECTION. FOR THE PURPOSE O F IMPOSING THE CHARGE, PARLIAMENT HAS ENACTED DETAILE D PROVISIONS IN ORDER TO COMPUTE THE PROFITS OR GAINS UNDER THAT HEAD. NO EXISTING PRINCIPLE OR PROVISION AT VA RIANCE WITH THEM CAN BE APPLIED FOR DETERMINING THE CHARGE ABLE PROFITS AND GAINS. ALL TRANSACTIONS ENCOMPASSED BY S. 45 MUST FALL UNDER THE GOVERNANCE OF ITS COMPUTATION PROVISIONS. A TRANSACTION TO WHICH THOSE PROVISIONS CANNOT BE APPLIED MUST BE REGARDED AS NEVER INTENDED BY S. 45 TO BE THE SUBJECT OF THE CHARGE. THIS INFERENCE FLOWS FROM THE GENERAL ARRANGEMENT OF THE PROVISIONS IN THE INCOME -TAX ACT, WHERE UNDER EACH HEAD OF INCOME THE CHARGING PROVISION IS ACCOMPANIED BY A SET OF PROVISIONS FOR COMPUTING THE INCOME SUBJECT TO THAT CHARGE. THE CHARACTER OF THE COMPUTATION PROVISIONS IN EACH CAS E BEARS A RELATIONSHIP TO THE NATURE OF THE CHARGE. THUS THE CHARGING SECTION AND THE COMPUTATION PROVISIONS TOGETHER CONSTITUTE AN INTEGRATED CODE. WHEN THERE IS A CASE TO WHICH THE COMPUTATION PROVISIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL WITHIN THE CHARGING SECTION. OTHERWISE ONE WOULD BE DRIVEN TO CONCLUDE THAT WHILE A CERTAIN INCOME SEEMS TO FALL WITHIN THE CHARGING SECTION THERE IS NO SCHEME OF COMPUTAT ION FOR QUANTIFYING IT. THE LEGISLATIVE PATTERN DISCERN IBLE IN THE ACT IS AGAINST SUCH A CONCLUSION. IT MUST BE BORNE IN MIND THAT THE LEGISLATIVE INTENT IS PRESUMED TO RUN UNIF ORMLY THROUGH THE ENTIRE CONSPECTUS OF PROVISIONS PERTAIN ING TO EACH HEAD OF INCOME. NO DOUBT THERE IS A QUALITATIV E DIFFERENCE BETWEEN THE CHARGING PROVISION AND A COMPUTATION PROVISION. AND ORDINARILY THE OPERATION OF THE CHARGING PROVISION CANNOT BE AFFECTED BY THE ITA NO. 368/BANG/2019 PAGE 6 OF 15 CONSTRUCTION OF A PARTICULAR COMPUTATION PROVISION. BUT THE QUESTION HERE IS WHETHER IT IS POSSIBLE TO APPL Y THE COMPUTATION PROVISION AT ALL IF A CERTAIN INTERPRET ATION IS PRESSED ON THE CHARGING PROVISION. THAT PERTAINS TO THE FUNDAMENTAL INTEGRALITY OF THE STATUTORY SCHEME PRO VIDED FOR EACH HEAD. (EMPHASIS SUPPLIED) THE REVERSE INFERENCE THAT CAN BE DRAWN ON THE BASI S OF THE AFORESAID OBSERVATIONS UNDERLINED, IS THAT IF THERE IS NO CHARGE TO TAX ON CAPITAL GAIN IN AY 2011-12 U/S.45(1) OF THE ACT, THE COMPUTATION PROVISION U/S.48 OF THE ACT, CANNOT OPE RATE TO CREATE A CHARGE. 11. THE DECISION REFERRED TO BY THE LEARNED COUNSEL FOR THE REVENUE OF THE CALCUTTA HIGH COURT IS ON DIFFERENT FACTS AND NOT APPLICABLE TO THE PRESENT CASE. IN THE CASE OF BAGR I IMPEX (P.) LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCL E-9, KOLKATA, (2013) 31 TAXMANN.COM 39 CALCUTTA, THE FACTS WERE T HAT THE ASSESSEE WAS OWNER OF 2/5TH SHARE IN A LAND SITUATE AT KOLKATA. THE CASE OF THE ASSESSEE WAS THAT THE LAND IN QUEST ION OR THE INTEREST OF THE ASSESSEE WAS AGREED TO BE SOLD ON 1 5TH OCTOBER, 1996 TO 15 SEVERAL BUYERS. DEEDS OF CONVEYANCE IN F AVOUR OF FIVE BUYERS WERE EXECUTED ON 15.1.1998. THE BALANCE 10 D EEDS OF CONVEYANCE WERE EXECUTED ON 26TH MAY, 2006 AND REGI STERED ON 27TH NOVEMBER, 2007. THE STAMP DUTY WAS ASSESSED ON 27TH NOVEMBER, 2007. THE ASSESSEE OFFERED CAPITAL GAIN O N SALE FOR TAXATION IN AY 2006- 07. THEREFORE IN AY 2006-07 NE ITHER THE SALE DEED WAS EXECUTED NOR REGISTERED. THE AO APPLI ED THE PROVISIONS OF SEC.50-C OF THE ACT AND DETERMINED CA PITAL GAIN BASED ON THE VALUE ADOPTED BY THE REGISTERING AUTHO RITY FOR THE PURPOSE OF STAMP DUTY AND REGISTRATION CHARGES. CAS E OF THE ASSESSEE WAS THAT IT HAD RECEIVED MONEY BEFORE EXEC UTING THE DEED OF CONVEYANCE AND THEREFORE THE PROVISIONS OF SEC.50C OF THE ACT WERE NOT APPLICABLE. SEC.50C OF THE ACT WAS INSERTED BY THE FINANCE ACT, 2002 W.E.F 1-4-2003 AND WAS AS FOL LOWS: 'SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 50C.(1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY:') FOR THE PURPOSE OF PA YMENT ITA NO. 368/BANG/2019 PAGE 7 OF 15 OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALU E SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECT ION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER.' THE PROVISIONS WERE AMENDED BY THE FINANCE ACT, 200 9 W.E.F 1-10-2009 BY ADDING THE WORD ASSESSEABLE AFTER TH E WORD ADOPTED OR ASSESSED . AFTER THE AMENDMENT WITH EFFECT FROM 1ST OCTOBER, 2009 THE PROVISION OF SECTION 50C STOOD AS FOLLOWS: 'SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 50C.(1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY AN Y AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY:') FO R THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER.' THE CASE OF THE ASSESSEE WAS THAT THE PROVISION OF SECTION 50C HAS NO MANNER OF APPLICATION BECAUSE ON THE DATE WH EN HE RECEIVED THE MONEY BY WAY OF SALE PROCEEDS NEITHER THE DEED OF CONVEYANCE HAD BEEN EXECUTED AND NATURALLY IT COULD NOT HAVE BEEN REGISTERED ON THAT DATE. THE HONBLE CALCUTTA HIGH COURT HAD TO DECIDE THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: VIZ., 'WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED TRIBUNAL WAS JUSTIFIED IN LAW IN NOT CONSID ERING THAT THE WORDS 'OR ASSESSABLE' WAS INTRODUCED IN SE CTION 50C(1) OF THE INCOME TAX ACT, 1961 WITH EFFECT FROM 1ST OCTOBER, 2009 AND THUS ERRED IN TAKING THE VALUE OF THE CAPITAL ASSET AS ASSESSED BY THE STAMP VALUATION AU THORITY ON 27TH NOVEMBER, 2007 INSTEAD OF ACTUAL TRANSFER P RICE FOR THE RELEVANT ASSESSMENT YEAR 2006-07?' THE COURT HELD AS FOLLOWS: 7. WE HAVE NOT BEEN IMPRESSED BY THIS SUBMISSION. IT IS TRUE THAT 'TRANSFER' HAS BEEN DEFINED IN SECTION 2( 47) QUOTED ABOVE. BUT THE AFORESAID DEFINITION WAS MADE BEFORE SECTION 50C WAS INTRODUCED TO THE INCOME TAX ACT. ITA NO. 368/BANG/2019 PAGE 8 OF 15 AFTER SECTION 50C WAS INTRODUCED IN THE YEAR 2003, THE VALUE OF THE LAND OR BUILDING OR BOTH SOLD OR OTHER WISE TRANSFERRED HAS TO BE THE VALUE ASSESSED BY THE AUT HORITY OF THE STATE GOVERNMENT FOR THE PURPOSE OF STAMP VALUA TION. THE SUBMISSION THAT IN THE FINANCIAL YEAR 2005-06 W HEN THE CONSIDERATION WAS RECEIVED, THE DEED OF CONVEYA NCE HAD NOT EVEN BEEN EXECUTED HAS NOT FOUND FAVOUR WIT H US FOR THE SIMPLE REASON THAT THE INTENTION OF THE PAR LIAMENT IS THAT IN A CASE WHERE THE LAND OR BUILDING OR BOT H ARE SOLD OR OTHERWISE TRANSFERRED, SUCH TRANSFER SHALL BE DE EMED TO HAVE TAKEN PLACE ONLY AFTER THE STAMP DUTY HAS BEEN ASSESSED BY THE STATE GOVERNMENT, BECAUSE IT IS ON THE VALUATION MADE FOR THE PURPOSE OF STAMP DUTY THAT T HE TAX IS PAYABLE UNDER THE INCOME TAX ACT. THE AMENDMENT MADE IN THE YEAR 2009 MAY HAVE MADE THE THINGS SIMP LER, BUT THE INTENTION OF THE LEGISLATURE WAS VERY CLEAR FROM THE BEGINNING THAT THE VALUE FOR THE PURPOSE OF INCOME TAX SHALL BE THE SAME AS THE VALUE FOR STAMP DUTY. BY A DOPTING DEVICES TO DEFEAT THE PROVISION, THE ASSESSEE CANNO T BE HEARD TO CONTEND THAT SECTION 50C WOULD NOT BE APPL ICABLE MERELY BECAUSE THE DEED OF CONVEYANCE HAD NOT AT TH AT TIME BEEN EXECUTED OR REGISTERED. THE CONTENTION TH AT THE PROPERTY STOOD TRANSFERRED IN THE FINANCIAL YEAR 20 05-06 WHEN THE SALE PROCEEDS WERE RECEIVED ON THE BASIS O F THE DEFINITION APPEARING FROM S.2(47)(V) OF THE I.T. AC T IS WITHOUT ANY SUBSTANCE FOR REASONS ALREADY DISCUSSED . THE ASSESSEE ITSELF DID NOT FOLLOW S.2(47)(V) OF THE I. T. ACT BECAUSE IT DID NOT OFFER THE TRANSFER FOR TAXATION IN THE YEAR 1996 WHEN THE POSSESSION IS CLAIMED TO HAVE BEEN MA DE OVER ON THE BASIS OF THE AGREEMENTS FOR SALE IN ACC ORDANCE WITH S.2(47)(V) QUOTED ABOVE. DESIGNS TO EVADE TAX CANNOT BE PERMITTED. THE ASSESSING OFFICER ON THE DATE OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007 HAD BE FORE HIM THE VALUATION MADE BY THE STATE FOR THE PURPOSE OF STAMP DUTY AND RIGHTLY APPLIED THE SAME. 12. THE AFORESAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THERE WAS NO DEVICE ADOPTED BY THE ASSESSEE TO ENSURE THAT PROVISIONS OF SEC.50C OF THE ACT WERE N OT APPLICABLE TO HIS CASE. SECONDLY, THE REGISTRATION WAS COMPLET ED IN THE CASE BEFORE THE HONBLE CALCUTTA HIGH ON 27.11.2007 I.E. , IN AY 2008- 09 BUT THE CASE BEFORE THE HONBLE COURT RELATED TO AY 2006-07. THE COURT WAS INTERPRETING THE TERM ASSESSEABLE A ND COUNTERED THE CONTENTION OF THE ASSESSEE THAT PRIOR TO THE AM ENDMENT OF ITA NO. 368/BANG/2019 PAGE 9 OF 15 SEC.50C OF THE ACT W.E.F 1-10-2009, IT IS ONLY CASE S WHERE THE VALUATION IS COMPLETED IN THE RELEVANT AY THAT PROV ISIONS OF SEC.50C OF THE ACT CAN BE APPLIED. IN THE PRESENT C ASE, NO SUCH DEVISE TO EVADE TAX HAS BEEN PLEADED BY THE REVENUE NOR A PLEA HAS BEEN TAKEN BY THE ASSESSEE THAT SALE HAVING TAK EN PLACE EARLIER TO THE EXECUTION OR REGISTRATION OF SALE , PROVISIONS OF SEC.50C OF THE ACT ARE NOT APPLICABLE. AS RIGHTLY C ONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, IT WAS A DECI SION RENDERED ON THE SCOPE OF AMENDMENT TO SECTION 50C OF THE ACT W.E.F. 01.10.2009. 13. THE DECISION REFERRED TO BY THE LEARNED DR IN T HE CASE OF J.APPA RAO(SUPRA) IS A CASE WHERE IT WAS HELD THAT APPLICABILITY OF THE PROVISIONS OF SEC.50C OF THE ACT IS MANDATOR Y W.E.F .1-4- 2003. THIS DECISION DOES NOT IN ANY WAY SUPPORT THE CASE OF THE REVENUE REGARDING THE YEAR IN WHICH CAPITAL GAIN IS LIABLE TO BE TAXED. 14. FOR THE REASONS GIVEN ABOVE, I HOLD THAT THE CA PITAL GAIN IN QUESTION CANNOT BE BROUGHT TO TAX IN ASSESSMENT YEA R 2011-12. THE REVENUE AUTHORITIES ERRED IN BRINGING TO TAX TH E CAPITAL GAIN IN ASSESSMENT YEAR 2011-12. THE ADDITION MADE BY TH E AO IS ACCORDINGLY DIRECTED TO BE DELETED. 15. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOWE D. 7. ACCORDING TO HIM, IF IT IS CONSIDERED THAT THE TRANSFER TOOK PLACED ON THE DATE OF AGREEMENT I.E., 3.6.2013, THE DIFFERENC E BETWEEN ACTUAL SALE CONSIDERATION AND SUB-REGISTRAR VALUATION IS NEGLIG IBLE, AS SUCH THERE CANNOT BE ANY ADDITION U/S. 50C OF THE ACT. FOR TH IS PURPOSE, HE RELIED ON THE DECISION OF SRI SANDEEP PATIL IN ITA NO.924/BANG/2019 DATED 9.9 .2020 WHEREIN IT WAS HELD AS UNDER:- 8. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD, A SPECIFIC QUERY WAS PUT TO LD. A.R. AS TO WHETHER TH E THIRD PROVISO TO SECTION 50C(1) OF THE ACT CAN BE APPLIED TO SECT ION 56(2)(VII)(B) OF THE ACT IN THE ABSENCE OF SUCH PRO VISO IN THAT ITA NO. 368/BANG/2019 PAGE 10 OF 15 SECTION. THE LD. A.R. SUBMITTED THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE IN THE HANDS OF THE S ELLER AND PROVISIONS OF SECTION 56(2)(VII)(B) ARE APPLICABLE IN THE HANDS OF BUYER IN RESPECT OF VERY SAME TRANSACTION OF TRANSF ER OF LAND OR BUILDING. HENCE, THERE COULD NOT BE TWO DIFFERENT FAIR MARKET VALUE IN RESPECT OF THE VERY SAME PROPERTY, I.E. O NE IN THE HANDS OF THE SELLER AND ANOTHER IN THE HANDS OF THE BUYER . ACCORDINGLY, HE SUBMITTED THAT THE PRINCIPLES APPLIED TO DETERMI NE THE FAIR MARKET VALUE OF THE PROPERTY IN THE HANDS OF THE SE LLER SHOULD EQUALLY BE APPLIED IN THE HANDS OF BUYER ALSO. 9. W E FIND MERIT IN THE EXPLANATIONS GIVEN BY LD. A.R. WE NOTICE THAT T HE MUMBAI BENCH OF TRIBUNAL HAS EXAMINED AN IDENTICAL ISSUE I N THE HANDS OF JOHN FOWLER INDIA PVT. LTD. (SUPRA) AND, BY FOLLOWI NG THE DECISION RENDERED BY JAIPUR BENCH IN THE CASE OF SM T. SITA BAI KHETAN VS. ITO (ITA NO.823/JP/2013 DATED 27.7.2016) , THE TRIBUNAL HAS HELD THAT THE DIFFERENCE BETWEEN THE V ALUE ADOPTED BY STAMP VALUATION AUTHORITY AND ACTUAL CONSIDERATI ON IS TO BE IGNORED AS THE SAME IS LESS THAN 10%. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW OPERATIVE PORTION OF THE ORDER PASSED BY MUMBAI BENCH. WE HAVE HEARD THE RIVAL SU BMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAW RELIED ON. CONSIDERING THE ENTIRE FACTS OF THE ASSE SSEE'S CASE, THE SUBMISSIONS OF THE ASSESSEE CANNOT BE IGNORED. THE SALE CONSIDERATION OF THESE TWO PLOTS SOLD ON THE SAME D AY THOUGH BE SEPARATED AGREEMENTS, IS MORE THAN THE STAMP DUTY V ALUATION BY RS. 3,00,00,000/-. EVEN ASSUMING FOR A MOVEMENT THA T THE SALE CONSIDERATION IN RESPECT OF PLOT IN SURVEY NO. 22 A ND 42 IS LESS THAN THE STAMP VALUATION IT IS RS. 33,48,284/- WHIC H IS LESS THAN 10% OF THE STAMP DUTY VALUATION OF THE SAID PLOT. T HEREFORE, IN VIEW OF THE RATIO OF THE DECISIONS RELIED ON BY THE ASSESSEE, THE ASSESSEE SHOULD SUCCEEDED IN ITS APPEAL. THE JAIPUR BENCH IN THE CASE OF SMT. SITA BAI KETAN (SUPRA) HELD AS UNDER:- 4.2 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE H ON'BLE COORDINATE BENCH IN ITA NO. 1.543/PN/2007 IN THE CA SE OF RAHUL CONSTRUCTIONS VS. DCIT (SUPRA) HAS HELD AS UN DER:- 'WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASST. VS. HARPREET HOTELS (P) LTD. VIDE ITA NO. 1156- 1160/PN/2007 AND RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE HAD DISMISSED THE FILED BY ITA NO. 368/BANG/2019 PAGE 11 OF 15 THE REVENUE WHERE THE CIT(A) HAD DELETED THE UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTION ON THE GROUND THAT THE DIFFERENCE BETWEEN THE FIGURE SHOWN BY THE ASSESSEE AND THE FIGURE OF THE DVO IS HARDLY 10 PER CENT. SIMILARLY, WE FIND THAT THE PUN E BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. KAADDUJAYGHOSHAPPASAHEBH, THE LEARNED COUNSEL FOR THE ASSESSEE FOLLOWING THE DECISION OF THE J&K HIGH COURT IN THE CASE OF HONEST GROUP OF HOTELS (P) LTD . VS, UT (2002) 177 CTR (J&K) 232 HAD HELD THAT WHEN THE MARGIN BETWEEN THE VALUE AS GIVEN BY THE ASSESSEE AND THE DEPARTMENTAL VALUER WAS LESS THAN 10 PER CENT, THE DIFFERENCE IS LIABLE TO BE IGNORED AND THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. SINCE IN THE INSTANT CASE SUCH DIFFERENCE IS LESS T HAN 10 PER CENT AND CONSIDERING THE FACT THAT VALUATION IS ALWAYS A MATTER OF ESTIMATION WHERE SOME DEGREE OF DIFFERENCE IS HOUND TO OCCUR, WE ARE OF THE CONSIDERED OPINION THAT THE AO IN THE INSTANT CASE IS NOT JUSTIFIED IN SUBSTITUTING THE SALE CONSIDERATIO N AT RS. 20,55,000/- AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS. 149,00,000 DISCLOSED BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO TAKE RS. I9,00,000/- ON LY AS THE SALE CONSIDERATION OF THE PROPERTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED' IN THE INSTANT CASE, THE DIFFERENCE BETWEEN THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY AND DECLARED BY THE ASSESSEE IS LESS THAN 10%. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HON 'FILE COORDINATE BENCH, WE HEREBY DIRECT THE AO TO ADOPT THE VALUE AS DECLARED BY THE ASSESSEE. THI S GROUND OF THE ASSESSED IS ALLOWED'. 8. THEREFORE, RESPECTFULLY FOLLOWING THE SAID DECIS ION WE DIRECT TO AO TO ADOPT THE VALUATION OF SALE CONSIDE RATION AS DECLARED BY THE ASSESSEE. THE ADDITIONS MADE BY THE ASSESSING OFFICER U/S. 50C IS DELETED AND AS GROUND S RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO. 368/BANG/2019 PAGE 12 OF 15 10. WE ALSO NOTICE THAT THE PARLIAMENT HAS INTRODUC ED THIRD PROVISO IN SECTION 50C(1) OF THE ACT, AS PER WHICH THE DIFFERENCE IN STAMP DUTY VALUATION AND ACTUAL CONSIDERATION SH OULD BE IGNORED, IF IT IS LESS THAN 5%/10%. EVEN THOUGH THE SAID PROVISION HAS COME INTO EFFECT FROM 1.4.2019/1.4.2021, WE NOT ICE THAT THE KOLKATA BENCH OF TRIBUNAL HAS HELD IT TO BE CURATIV E IN NATURE IN THE CASE OF CHANDRA PRAKASH JHUNJHUNWALA (SUPRA) AN D ACCORDINGLY HELD THAT THE PROVISO SHALL APPLY SINCE THE DATE OF INSERTION OF SEC.50C OF THE ACT. ACCORDINGLY, THE A BOVE SAID REASONING GIVEN BY THE KOLKATA BENCH OF ITAT ALSO S UPPORTS THE CONTENTIONS OF THE ASSESSEE. 11. IN VIEW OF THE FOREGOING DISCUSSIONS WE FIND ME RIT IN THE PRAYER OF THE ASSESSEE. WE NOTICE THAT THE ADDITION OF RS.15,92,800/- SUSTAINED BY LD CIT(A) WORKS OUT TO LESS THAN 10% OF THE ACTUAL CONSIDERATION OF RS.2,33,00,000/- PAID BY THE ASSESSEE. ACCORDINGLY, WE MODIFY THE ORDER PASSED B Y LD. CIT(A) AND DIRECT THE A.O. TO IGNORE THE DIFFERENCE BETWEEN FAIR MARKET VALUE DETERMINED BY CIT(A) AND THE ACTUAL CO NSIDERATION AS THE SAME IS LESS THAN 10% OF THE ACTUAL CONSIDER ATION. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE SALE AGREEMENT PRODUCED BEFORE THE LOWER AUTHORITIES DATED 13.6.20 13 CANNOT BE RELIED UPON WHEREIN THE ASSESSEE RECEIVED RS.51,000 BY WAY OF CASH OUT OF SALE CONSIDERATION OF RS.48 LAKHS. FURTHER HE SUBMITTED THAT PAYMENT SHOWN IN THE SALE AGREEMENT AT RS.51,000 WHICH PROVES THAT T HIS AGREEMENT IS NOT GENUINE WHICH WAS EXECUTED ON RS.2/- NON-JUDICIAL S TAMP PAPER. ACCORDING TO HIM, IT IS A MADE BELIEVE STORY WHICH CANNOT BE GIVEN ANY CREDENCE TO HOLD THAT ASSESSEE ENTERED INTO SALE AG REEMENT WITH THE BUYER ON 3.6.2013. HE RELIED ON THE ORDERS OF LOWER AUTHO RITIES. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE FIRST PROVISO TO SECTION 50C OF THE ACT READS A S FOLLOWS:- ITA NO. 368/BANG/2019 PAGE 13 OF 15 PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATIO N FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER: 10. THE CASE OF THE ASSESSEE IS THAT THE CAPITAL A SSET IN QUESTION WAS SOLD BY THE ASSESSEE VIDE AGREEMENT DATED 3.6.2013 AND NOT BY SALE DEED DATED 23.11.2015 AND THE VALUE MENTIONED IN SALE AG REEMENT DATED 3.6.2013 TO BE ADOPTED INSTEAD OF VALUE SHOWN IN SA LE DEED DATED 23.11.2015 FOR DETERMINING THE CAPITAL GAIN. 11. IN THE PRESENT CASE, THE ASSESSEE WANTS TAKE AD VANTAGE OF FIRST PROVISO TO SECTION 50C OF THE ACT THAT TRANSFER TOO K PLACE VIDE SALE AGREEMENT DATED 3.6.2013 AND NOT ON 23.11.2015. TH E DATE MENTIONED IN THE SALE AGREEMENT TO BE CONSIDERED AND CORRESPONDI NG VALUATION ON THAT DATE TO BE VALUED. IN OUR OPINION, THE ASSESSEE AD OPTED COLOURABLE DEVICE TO AVOID TAX BY PRODUCING THE SALE AGREEMENT DATED 3.6.2013 WHICH IS EXECUTED ON RS.2/- NON-JUDICIAL STAMP PAPER AND PAY MENT OF RS.51,000 WAS MADE BY CASH. BEING SO, WE CANNOT GIVE ANY CRE DENCE TO THIS AGREEMENT, THOUGH IT WAS IN WRITING. THE PLEA OF T HE ASSESSEE THAT TRANSFER HAVING TAKEN PLACE EARLIER TO EXECUTION AND REGISTR ATION OF SALE DEED CANNOT BE APPRECIATED. ACCORDINGLY, WE ARE OF THE OPINION THAT THE FACTS AND CIRCUMSTANCES OF THE CASE SHOWS THAT THE ASSESSEE H AS ACTUALLY HAS EXECUTED THE TRANSFER OF IMPUGNED PROPERTY ONLY THR OUGH SALE DEED DATED 23.11.2015, AS SUCH THE AO RIGHTLY APPLIED THE VALU ATION AS APPLICABLE ON THIS DATE. WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LOWER AUTHORITIES AND THE SAME IS CONFIRMED. ITA NO. 368/BANG/2019 PAGE 14 OF 15 12. THE NEXT GROUND IS WITH REGARD TO SUSTAINING AD DITION OF RS.27,80,163 U/S. 68 OF THE ACT. THE ASSESSEE HAS SHOWN CASH DEPOSIT INTO BANK ACCOUNT FOR THE DEMONETIZATION PERIOD FRO M 9.1.2016 TO 30.12.2016 AT RS.23,61,630. THE CASH BALANCE OF AS SESSEE SHOWN IN THE RETURN OF INCOME WAS RS.27,80,183 AS ON 31.3.2016. THE AO CONSIDERED THIS AMOUNT AS UNEXPLAINED U/S. 68 OF THE ACT. 13. BEFORE US, THE ASSESSEE SUBMITTED THAT THE ASSE SSEE AVAILED THE FOLLOWING LOANS AND DEPOSITED INTO THE BANK ACCOUNT AND WITHDRAWN THE SAME FOR REDEPOSIT INTO BANK ACCOUNT :- S. NO. NAME OF THE BANK / FINANCER/LENDERS LOAN A/C NO. DATE OF LOAN LOAN AMOUNT OUTSTANDING AS ON 31.3.16 MODE OF LOAN TAKEN PURPOSE OF LOAN 1 KARNATAKA CREDIT CO-OP. BANK 402 30.12.20 20,00,000 20,00,000 CH NO.850413 FAMILY AND/OR BUSINESS 2 SHREE SAMARTH FINANCE CD/28/15 26.05.2015 5,00,000 5,00,000 TRANSFER FAMILY AND/OR BUSINESS 3 SUVARNA FINANCERS & I N VEST COR P CD/113/15 30.11.2015 5,00,000 5,00,000 TRANSFER FAMILY AND/OR BUSINESS 4 SUVARNA FINANCERS & I N VEST COR P CD/119/15 17.12.2015 6,00,000 6,00,000 TRANSFER FAMILY AND/OR BUSINESS 5 SUVARNA SAI FINANCE CD/23/15 27.05.2015 5,00,000 5,00,000 TRANSFER FAMILY AND/OR BUSINE SS 14. HE ALSO DREW OUR ATTENTION TO CASH BOOK FILED BEFORE US TO SHOW THAT IT WAS DULY REFLECTED IN THE CASH BOOK AND REDEPOSI TED IN THE BANK ACCOUNT. IN OUR OPINION, THESE ARE ADDITIONAL EVIDENCE TO BE EXAMINED AT THE END OF THE AO. THEREFORE, WE SET ASIDE THE ORDERS OF LOWE R AUTHORITIES AND REMIT THE ISSUE TO THE AO FOR RE-EXAMINATION AND FRESH DE CISION IN ACCORDANCE WITH LAW. ITA NO. 368/BANG/2019 PAGE 15 OF 15 15. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 27 TH SEPTEMBER, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.