Smt. Chander Kalan, Gurgaon V. ITO, Narnaul

ITA 4404/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5557 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: A K KHURANA
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE VICE- PRESIDENT SHRI RAJPAL YADAV : JUDICIAL MEMBER I.T.A. NO. 4404/DEL/2009 ASSESSMENT YEAR: 2006-07 SMT. CHANDER KALAN, VS. INCOME-TAX OFFICER, W/O. SHRI JAWAHAR LAL, WARD-2, JAWAHAR NAGAR, NARNAUL. MOHINDERGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.K. KHURANA, CA RESPONDENT BY: SHRI MANISH GUPT A, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 28.08.2009 PASSED FOR ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE RULE 8 OF ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUMEN TATIVE IN NATURE. IN BRIEF, THE GRIEVANCE OF ASSESSEE IS THAT LEARNED CIT(APPEA LS) HAS ERRED IN SUSTAINING THE ADDITION OF RS.5,04,550. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE H AS FILED HER RETURN OF INCOME ON 29.3.2007 DECLARING AN INCOME OF RS.1,05, 650. IN ORDER TO 2 SCRUTINIZE THE RETURN OF ASSESSEE, A NOTICE UNDER S EC. 143(2) OF THE ACT WAS ISSUED ON 12.10.2007 WHICH WAS SERVED UPON THE ASSE SSEE ON 15.10.2007. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASS ESSING OFFICER THAT ASSESSEE HAS PURCHASED HALF SHARE OF A PLOT SITUATE D AT SARASWATI KUNG, PART- I, GURGAON VIDE PURCHASE DEED DATED 22 ND MARCH 2006 FROM M/S. GULSHAN ARORA W/O SHRI KASTURI ARORA. THE REST OF THE HALF SHARE WAS PURCHASED BY SMT. KAUSHALAYA DEVI W/O SHRI SEVA RAM BAJAJ. THE P URCHASE CONSIDERATION DISCLOSED BY BOTH THE VENDEE IN THE C OMMON PURCHASE DEED AT RS.15 LACS, OUT OF THIS RS.7,50,000 WAS PAID BY THE ASSESSEE. ASSESSING OFFICER ON AN ANALYSIS OF THE DETAILS FOUND THAT FO R THE PURPOSE OF STAMP DUTY, THE REGISTRATION AUTHORITY HAS DIRECTED THE VENDEE AND VENDOR TO PAY THE STAMP DUTY ON RS.25,10,000. ARMED WITH THIS INFORMA TION, ASSESSING OFFICER FORMED AN OPINION THAT ASSESSEE MUST HAVE PAID MORE AMOUNTS OVER AND ABOVE THE ONE MENTIONED IN THE PURCHASE DEED. HE DE PUTED THE INSPECTOR TO CARRY OUT AN INQUIRY IN THE SARASWATI KUNJ CO-OPERA TIVE HOUSE BUILDING SOCIETY AREA AT GURGAON IN RESPECT OF MARKET RATE O F LAND PREVALENT IN THE AREA. ACCORDING TO THE ASSESSING OFFICER, THE INSPE CTOR ON A SPOT INQUIRY REPORTED THE RATES PREVALENT IN THE AREA IN BETWEEN 8500 TO 10000 PER SQ. YD. THE DEPUTY COMMISSIONER OF GURGAON NOTIFIED COLLECT ORS RATES OF 3 RESIDENTIAL PLOT IN SARASWATI KUNG HOUSE BUILDING S OCIETY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AT RS. 5000 PER SQ. YD. HE I NVITED THE EXPLANATION OF THE ASSESSEE AS TO WHY IT SHOULD NOT BE CONSTRUED T HAT PLOT AT SARASWATI KUNG WAS PURCHASED BY THE ASSESSEE ALONGWITH SMT. KAUSHA LYA DEVI FOR A CONSIDERATION OF RS.25,10,000 INSTEAD OF RS.15 LACS DISCLOSED IN THE PURCHASE DEED AS WELL AS IN THE BOOKS OF ACCOUNT. 3. IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICE R, IT WAS CONTENDED THAT SHE HAS NOT MADE ANY PAYMENT OVER AND ABOVE TH E ONE DISCLOSED IN THE PURCHASE DEED. SECTION 50-C IS NOT APPLICABLE IN TH E CASE OF A PURCHASER. IT ONLY AUTHORIZE THE ASSESSING OFFICER TO REPLACE THE SALES CONSIDERATION RECEIVED BY A VENDOR BY APPLYING THE DEEMING FICTIO N CONTEMPLATED IN SEC. 50-C. IT WAS ALSO CONTENDED THAT THERE IS NO EVIDEN CE WITH THE ASSESSING OFFICER WHICH CAN INDICATE THAT ASSESSEE HAS MADE P AYMENT OF ANY AMOUNT OVER AND ABOVE THE ONE DISCLOSED IN THE PURCHASE DE ED. ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE. HE IS OF THE OPINION THAT SEC. 50-C AUTHORIZE HIM TO ESTIMATE EVEN THE V ALUE OF INVESTMENT MADE BY ANY VENDEE EQUIVALENT TO THE VALUE ADOPTED FOR T HE PURPOSE OF STAMP DUTY. THE SECOND REASON ASSIGNED BY THE ASSESSING OFFICER IS THAT INSPECTOR HAS CARRIED OUT SPOT INSPECTION AND REPORTED THE RATES PREVALENT IN THE AREA AT 4 RS.8,500 TO RS.10,000 PER SQ. YD. HE ADOPTED THE PR ICE OF THE PLOT ALLEGED TO HAVE BEEN PAID BY THE ASSESSEE ALONG WITH CO-OWNER AT RS.25,10,000 AND MADE AN ADDITION OF RS.5,04,550 IN THE HANDS OF ASS ESSEE AND HELP OF SEC.69B OF THE ACT. 4. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT IN THE CASE OF A VENDOR THE SALES CONSIDERATION RECEIVED BY HIM ON TRANSFER OF ANY CAPITAL ASSETS CAN BE DEEMED AT PAR WITH THE AMOUNT ON WHIC H STAMP DUTY WAS PAID FOR THE REGISTRATION OF SALE DEED. THIS DEEMED SALE S CONSIDERATION IS PROVIDED BECAUSE OF SEC. 50C OF THE ACT. HOWEVER, IN RESPECT OF A PURCHASER THERE IS NO SUCH DEEMING FICTION PRIOR TO 1.10.2009. WITH EF FECT FROM ABOVE DATE CLAUSE (VII) HAS BEEN INSERTED WITH SEC. 56(2) OF T HE ACT. AFTER INSERTION OF THIS CLAUSE THE ASSESSING OFFICER MAY DEEM THE INVE STMENT BY A PURCHASER IN A PROPERTY EQUIVALENT TO THE AMOUNT ON WHICH STAMP DUTY HAS BEEN PAID FOR GETTING THE SALE DEED REGISTERED. THIS CLAUSE IS PR OSPECTIVE IN NATURE AND APPLICABLE AFTER 1.10.2009. ASSESSING OFFICER HAS S OUGHT TO MADE ADDITION UNDER SEC. 69B OF THE ACT, HE CAN MAKE THE ADDITION UNDER THIS PROVISION ONLY IF HE IS ABLE TO ESTABLISH THAT ASSESSEE HAS M ADE THE INVESTMENT OUT OF 5 BOOKS AND FAILED TO EXPLAIN THE SOURCE OF SUCH INVE STMENT. IN THE PRESENT CASE, ASSESSING OFFICER WAS UNABLE TO BRING ANY SUC H EVIDENCE WHICH CAN INDICATE THAT ASSESSEE HAS MADE THE INVESTMENT OF R S.25,10,000 ALONG WITH CO-OWNER IN THE PLOT IN DISPUTE. HE PRAYED THAT ADD ITION BE DELETED. IN SUPPORT OF HIS CONTENTIONS HE RELIED UPON TWO ITAT S ORDERS RENDERED IN THE CASE OF M/S. GAYLORD BUILDING VS. ITO & K.J. ARORA VS. DCIT IN ITA NOS. 4117, 4116/DEL/05 AND 4126/DEL/06 RESPECTIVELY. LEA RNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF LEARNED CIT(APPEALS). HE POINTED OUT THAT ONCE IN THE CASE OF VENDOR IT IS ACCEPTED THAT SALE S CONSIDERATION IS OF RS.25,10,000 THEN ASSESSING OFFICER HAS EVERY RIGHT TO CONSIDER THE INVESTMENT MADE BY THE ASSESSEE AT THIS AMOUNT. IT IS FOR THE ASSESSEE TO REBUT THAT SHE HAS NOT MADE THE INVESTMENT OF RS.25,10,00 0 ALONG WITH CO-OWNER FOR THE PURCHASE OF THE PLOT. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORDS CAREFULLY. SEC. 69B OF THE INCOME-TAX ACT, 1961, PROVIDED THAT IN ANY FINANCIAL YEAR IF AN ASSESSEE HAS MADE INVESTME NT OR FOUND TO BE THE OWNER OF ANY BULLION, JEWELLERY OR OTHER VALUABLE A RTICLES AND HE WAS UNABLE TO EXPLAIN THE SOURCE OF SUCH INVESTMENT OR ACQUISI TION OF VALUABLE TO THE SATISFACTION OF THE ASSESSING OFFICER THEN ASSESSIN G OFFICER MAY DEEM SUCH 6 INVESTMENT AS INCOME OF THE ASSESSEE FOR SUCH FINAN CIAL YEAR. THUS, THE BASIC REQUIREMENT BEFORE DIRECTING THE ASSESSEE TO EXPLAI N THE SOURCE OF INVESTMENT IS THAT ASSESSING OFFICER SHOULD BE ARMED WITH THE EVIDENCE EXHIBITING INVESTMENT BY THE ASSESSEE OVER AND ABOVE THE ONE D ISCLOSED BY SUCH ASSESSEE IN THE BOOKS OF ACCOUNT. IN THE PRESENT CA SE, THE ONLY EVIDENCE POSSESSED BY THE ASSESSING OFFICER IS THE DEEMED SA LES CONSIDERATION AT RS.25,10,000 WITH THE HELP OF FICTION CREATED IN SE C. 50C OF THE ACT AND THE ALLEGED SPOT INSPECTION REPORT OF THE INSPECTOR. SE C. 50-C OF THE ACT PROVIDES THAT ON TRANSFER OF A CAPITAL ASSETS AN ASSESSEE RE CEIVED ANY CONSIDERATION OR SUCH CONSIDERATION ACCRUED TO HIM IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE OF STAMP VALUATION FOR MAKING THE PAYMENT OF STAMP DUTY WHIL E GETTING THE SALE DEED REGISTERED THEN SUCH VALUE SHALL BE CONSIDERED AS T HE DEEMED SALES PRICE RECEIVED OR ACCRUED TO THE ASSESSEE ON TRANSFER OF SUCH CAPITAL ASSETS. THIS REPLACEMENT OF SALE VALUE ON THE BASIS OF THE STAMP DUTY VALUATION IS NOT ABSOLUTE IN ITSELF, IN CASE IF AN ASSESSEE DISPUTED THE ADOPTION OF SUCH SALE VALUE THEN UNDER SUB-SECTION(2) THE ASSESSING OFFIC ER WAS REQUIRED TO REFER THE VALUATION OF THE CAPITAL ASSETS TO A VALUATION OFFICER BUT NO SUCH MECHANISM IS PROVIDED IN THE CASE OF A PURCHASER. A S FAR AS THE ALLEGED 7 REPORT OF AN INSPECTOR IS CONCERNED, IT IS NEITHER HERE NOR THERE. HE HAS NOT COLLECTED ANY SALE DEED IN THE VICINITY NOR HE HAS RECORDED STATEMENT OF ANY EXPERT, SUCH AN INQUIRY AT THE END OF INSPECTOR CAN BE CONSIDERED AS COLLECTION OF INFORMATION FOR PROBING THE ISSUE FUR THER. THE ALLEGED INSPECTION REPORT OF THE INSPECTOR CANNOT BE TAKEN AS A GOSPEL TRUTH FOR CHARGING ANY ASSESSEE TO TAX, MORE SO, WHEN SUCH RE PORT IS NOT SUPPORTED WITH ANY MATERIAL COLLECTED BY THE INSPECTOR AT THE SPOT. LEARNED CIT(APPEALS) WHILE REJECTING THE APPEAL OF THE ASSE SSEE HAS ADVANCED A REASON THAT IT WOULD BE ILLOGICAL TO CONSIDER A DIF FERENT SALES PRICE IN THE HANDS OF VENDOR AND THE DIFFERENT PURCHASE PRICE IN THE HANDS OF VENDEE FOR THE SAME TRANSACTION. WITH REGARD TO THIS REASON, W E ARE OF THE OPINION THAT IN THE HANDS OF THE VENDOR THE SALES CONSIDERATION ARE REQUIRED TO BE ADOPTED ON THE BASIS OF A DEEMING FICTION PROVIDED IN SECTION 50C OF THE ACT BUT NO SUCH CONDITION IS AVAILABLE FOR THE PURCHASER. AS OBSERV ED IN THE FOREGOING PARAGRAPH THE ADOPTION OF SALES CONSIDERATION IN TH E HANDS OF VENDOR AT RS.25,10,000 IS NOT AN ABSOLUTE PHENOMENA. IT CAN B E DISPUTED AND VALUATION OFFICER COULD GIVE A DIFFERENT VALUE FOR THE PLOT. ASSESSING OFFICER HAS MADE THE ADDITION ONLY ON THE BASIS OF ASSUMPTION AND PR ESUMPTION WITHOUT BRINGING ANY CONCRETE MATERIAL ON RECORD INDICATING THE UNEXPLAINED 8 INVESTMENT MADE BY THE ASSESSEE. ON THE BASIS OF HI S HYPOTHECATION, AN ASSESSEE CANNOT BE CHARGED TO TAX. 7. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THIS G ROUND OF APPEAL AND DELETE THE ADDITION OF RS.5,04,550. 8. THE NEXT ISSUE RELATES TO CHARGING OF INTEREST U NDER SEC. 234-B OF THE ACT. THIS GROUND OF APPEAL IS REJECTED BECAUSE IT I S CONSEQUENTIAL IN NATURE AND NO ARGUMENTS WERE RAISED BY THE ASSESSEE AT THE TIME OF HEARING. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 12.02.201 0 ( G.E. VEERABHADRAPPA ) ( RAJPAL YAD AV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 12/02/2010 MOHAN LAL COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR