SHRI SATENDRA KOUSHIK, JAIPUR V. INCOME TAX OFFICER, WARD-2, JHUNJHUNU

ITA 392/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7948 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-04-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 20-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 56(2)(vii)(b); 143(3); 50C; 139(1); 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S SMC, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM VK;DJ VIHY LA-@ ITA NO. 392/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 SHRI S ATENDRA KOUSHIK C/O. M/S. S.S PROPERTIES, GOLE MARKET, KHETRI ROAD,CHIRAWA, JHUNJHUNU V S. I.T.O., WARD - 2, JHUNJHUNU LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.:AHMPK5188J VIHYKFKHZ@ A PP ELLANT IZR;FKHZ@ RESPOND EN T FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDHARTH RANKA, LD.AR JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROSHANTA MEENA, JCIT, LD.DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/04/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/04/2019 VKNS'K@ ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD.CIT(A), 4, JAIPUR DATED 7-2-2019 FOR THE A.Y. 20 15-16 IN THE MATTER OF AN ASSESSMENT ORDER PASSED U/S. 143(3) OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESS EE:- 1. THAT ON THE LAW AND IN THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE THE LEARNED LOWER AUTHORITIES GROSSLY E RRED IN MAKING AN ADDITION OF RS.34,23,542/- UNDER SECTION 56(2)(VII)(B)(II) OF THE I.T. ACT ON ACCOUNT OF SUP PRESSION OF PURCHASE PRICE OF LAND IN THE HANDS OF THE ASSESSEE APPELLANT. 1.1 THAT ON THE LAW AND IN THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE THE LEARNED LOWER AUTHORITIES GROSSLY E RRED IN NOT CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AP PELLANT ITA NO. 392/JP/19 SATENDRA KOUSHIK 2 THAT THE SAID PURCHASE IS STOCK-IN-TRADE AND IS NOT A CAPITAL ASSET AND HENCE PROVISIONS OF SECTION 56(2)(VII)(B) (II) ARE NOT ATTRACTED, HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT EVEN BOTHERING TO LOOK AT THE STATUTORY PROVISION. 1.2 THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRE D IN ADOPTING THE TOTAL PURCHASE PRICE AT RS.49,23,542/- AS AGAINST TOTAL REGISTRY VALUE OF RS.15,00,000/- OF THE LAND PURCHASED BY THE ASSESSEE APPELLANT. 1.3 THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRE D IN RELYING UPON THE DLC VALUE ADOPTED BY THE SUB-REGISTRAR AND IN IGNORING THE FACTS OF THE INSTANT CASE. 1.4 THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRE D IN NOT CONSIDERING THE FACT THAT SOME LITIGATION IS PENDIN G IN THE CIVIL COURT WITH RELATES TO THE PROPERTY AND THE PROPERTY WAS UNDER HEAVY DISPUTE THEREFORE PURCHASED UNDER THE ACTUAL MARKET VALUE BUT THE LEARNED LOWER AUTHORITIES GROSSLY ERR ED IN TAKING IT OTHERWISE. 2. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY OR AM END ANY GROUND ON OR BEFORE THE DATE OF HEARING. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN REAL ESTATE BUSINESS AND THE RETURN OF INCOME U/S. 139(1) OF TH E ACT FOR THE A.Y 2015-16 WAS FILED ON 26.3.2016 DECLARING TOTAL INCO ME AT RS.8,16,670/-. IN THE YEAR UNDER CONSIDERATION THE APPELLANT ASSES SEE PURCHASE A PIECE OF LAND BY REGISTERED PURCHASE DEED AND A CHEQUE OF RS. 15 LAKHS WAS ISSUED TO THE SELLER, WHICH WAS NOT REALIZED TILL D ATE AND PAYMENT WAS NOT MADE BY THE ASSESSEE. DURING THE ASSESSMENT PROCEED INGS THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN THE PURCHASE O F LAND IN TRADING ACCOUNT. THE ASSESSEE APPELLANT HAS ALSO PAID RS. 3 LAKH TO THE SELLER AND SHOWN THE BALANCE OF RS. 12 LAKHS IN THE LIABILITY SIDE OF BALANCE SHEET. ITA NO. 392/JP/19 SATENDRA KOUSHIK 3 THE AO INVOKED THE PROVISION OF SEC. 56(2)(VII)(B)( II) OF THE ACT ADOPTING THE FULL VALUE OF SALE CONSIDERATION AS ADOPTED BY THE STAMP AUTHORITY AND ADDED THE DIFFERENCE AMOUNT RS. 34,23,542/- IN THE HAND OF ASSESSEE APPELLANT AS DEEMED INCOME OF THE ASSESSEE U/S. 56( 2)(VII)(B)(II) OF THE ACT 5. BY THE IMPUGNED ORDER OF THE LD.CIT(A), THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT THE PROPERTY IS DEFINED IN VERY SPECIFIC WAY IN THE DEFINITION BY MENTIONING PRO PERTY , WHICH MEANS BOTH AGRICULTURAL LAND AND NON-AGRICULTURAL LAND. A CCORDINGLY, THE ORDER PASSED BY THE AO WAS CONFIRMED BY THE LD. CIT(A). 6. THE LD. AR VEHEMENTLY ARGUED THAT THE APPELLANT ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS IN JHUNUJHUNU DISTR ICT AND REGULARLY DEALS IN SALE AND PURCHASE OF LANDS AND BUILDINGS A ND HENCE PROVISIONS OF SECTION 56(2)(VII)(B)(II) ARE ITSELF NOT APPLICABLE IN THE INSTANT CASE AS THE SAID PROVISION WOULD COME INTO CONSIDERATION ONLY I N CASE OF PURCHASE OF CAPITAL ASSET, WHICH IS NOT THE CASE IN THE INSTANT CASE. HE ALSO READ THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT, WHI CH EXTRACTED AS UNDER:- (VII) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAMI LY RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1 ST DAY OF OCTOBER, 2009 [ BUT BEFORE THE 1 ST DAY OF APRIL, 2017]- (A) . (B) ANY IMMOVABLE PROPERTY,- (I) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY; ITA NO. 392/JP/19 SATENDRA KOUSHIK 4 (II) FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP DU TY 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 IMM OVABLE 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 REFERRE D TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY ANY MODE OTHER THAN CASH ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFE R OF SUCH IMMOVABLE PROPERTY;] (C ). (I). (II).. PROVIDED THAT WHERE THE STAMP DUTY VALUE OF IMMOVABLE PROPERTY AS REFERRED TO IN SUB-CLAUSE (B) IS DISPUT ED BY THE ASSESSEE ON GROUNDS MENTIONED IN SUB-SECTIO (2) OF SECTION 50C, THE ASSESSING OFFICER MAY REFER THE VALUATION OF SUCH PROPERTY TO A VALUATION OFFICER, AND THE PROVISIONS OF SECTION 50C AND SUB-SECTION ( 15) OF SECTION 155 SHALL, AS FAR AS MAY BE, APPLY IN RELATION TO THE S TAMP DUTY VALUE OF SUCH PROPERTY FOR THE PURPOSE OF SUB-CLAUSE (B) AS THEY APPLY FOR VALUATION OF CAPITAL ASSET UNDER THOSE SECTIONS: PROVIDED FURTHER THAT THIS CLAUSE SHALL NOT APPLY TO ANY SUM (A). (B), OR ( C)., OR (D).., OR (E ) TO (H). EXPLANATION- FOR THE PURPOSES OF THIS CLAUSE,- (A) ASSESSABLE SHALL HAVE THE MEANING ASSIGNED TO IT IN THE EXPLANATION 2 TO SUB-SECTION(2) OF SECTION 50C: ITA NO. 392/JP/19 SATENDRA KOUSHIK 5 (B) FAIR MARKERT VALUE OF A PROPERTY, OTHER THAN AN IMMOVABLE PROPERTY, MEANS THE VALUE DETERMINED IN ACCORDANCE WITH THE METHOD AS MAY BE PRESCRIBED, (C) . (D) PROPERTY [ MEANS THE FOLLOWING CAPITAL ASSET OF THE ASSESSEE, NAMELY:- (I) IMMOVABLE PROPERTY BEING LAND OR BUILDING OR BOTH; (II) SHARES AND SECURITIES; (III) JEWELLERY; (IV) ARCHEOLOGICAL COLLECTIONS; (V) DRAWINGS; (VI) PAINTINGS; (VII) SCULPTURES; (VIII) ANY WORK OF ART; [ OR] (IX) BULLION ( E ) (E) STAMP DUTY VALUE MEANS THE VALUE ADOPTED OR ASSE SSED OR ASSESSABLE BY ANY AUTHORITY OF THE CENTRAL GOVER NMENT OR A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF AN IMMOVABLE PROPERTY;] 7. AS PER THE LD. AR, THE INTENT IS NOT TO TAX THE TRANSACTIONS ENTERED INTO THE NORMAL COURSE OF BUSINESS OR TRADE, THE PR OFITS OF WHICH ARE TAXABLE UNDER SPECIFIC HEAD OF INCOME. OUR ATTENTIO N WAS INVITED TO THE DEFINITION OF PROPERTY, WHICH HAS BEEN AMENDED TO PROVIDE THAT SECTION 56(2)(VII) WILL HAVE APPLICATION TO THE PROPERTY WHICH IS IN THE NATURE OF A CAPITAL ASSET OF THE RECIPIENT AND THEREFORE WOUL D NOT APPLY TO STOCK-IN- TRADE, RAW MATERIAL AND CONSUMABLE STORES OF ANY BU SINESS OF SUCH RECIPIENT. ITA NO. 392/JP/19 SATENDRA KOUSHIK 6 8. THE LD.AR ALSO CONTENDED THAT THERE IS NO SUCH A LLEGATION OF LAUNDERING OF UNACCOUNTED INCOME BY THE AO, HENCE I NVOCATION OF PROVISION OF SEC. 56(2)(VII) IS BAD IN LAW. HE CONT ENDED THAT THE AO HAS NOT BOTHERED TO REFER THE MATTER TO THE DVO, BEFORE INVOKING THE PROVISION. 9. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 10. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE PROVISIONS OF SECTION 56(2)(VII) WERE INTRODUCED AS A COUNTER EVASION MECHANISM TO P REVENT LAUNDERING OF UNACCOUNTED INCOME. THE PROVISIONS WERE INTENDED TO EXTENT THE TAX NET TO SUCH TRANSACTIONS IN KIND. THE INTENT IS NOT TO TAX THE TRANSACTIONS ENTERED INTO IN THE NORMAL COURSE OF BUSINESS OR TR ADE, THE PROFITS OF WHICH ARE TAXABLE UNDER SPECIFIC HEAD OF INCOME. TH EREFORE, THE DEFINITION OF PROPERTY HAS BEEN AMENDED TO PROVIDE THAT SECTIO N 56(2)(VII) WILL HAVE APPLICATION TO THE PROPERTY WHICH IS IN THE NATU RE OF A CAPITAL ASSET OF THE RECIPIENT AND THEREFORE WOULD NOT APPLY TO STOC K-IN-TRADE, RAW MATERIAL AND CONSUMABLE STORES OF ANY BUSINESS OF S UCH RECIPIENT. HOWEVER, A PROPERTY IS DEFINED IN A VERY SPECIFIC W AY, WHICH INCLUDES AGRICULTURAL AND NON-AGRICULTURAL LAND OR BOTH. IT APPEARS THAT THE LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE RELEV ANT PROVISIONS OF THE ACT WITH REGARD TO THE LAND PURCHASED BY THE ASSESS EE, WHICH IS PART OF STOCK-IN-TRADE. IN THE SUBSTANTIAL INTEREST OF JUST ICE, WE RESTORE THE MATTER ITA NO. 392/JP/19 SATENDRA KOUSHIK 7 BACK TO THE FILE OF THE AO FOR DECIDING THE MATTER AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL, 2019. SD/- JES'K LH 'KEKZ (RAMESH C SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 APRIL, 2019 *PP/SPS VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SATENDRA KOUSHIK C/O. M/S. S.S PROPERTIES,GOLE MARKET, KHETRI ROAD,C HIRAWA, JHUNJHUNU. 2. IZR;FKHZ @ THE RESPONDENT-THE ITO, WARD 2, JHUNJHUNU. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 392/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR