Anil Kumar Garg, Ghaziabad V. DCIT, Circle- 1, Ghaziabad

ITA 456/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4012 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: PRAVEEN K AGARWAL; ASHUTOSH MOHAN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice
• Section: 50C; 147; 69; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, ACCOUNTANT MEMBER ITA NO. 456 /DEL/201 8 : ASSTT. YEAR : 2009 - 10 ANIL KUMAR GARG, 17 - A, HERITAGE DIVINE APARTMENTS, GYAN KHAND - II, INDIRAPURAM, GHAZIABAD VS DCIT, CIRCLE - 1 GHAZIABAD (APPELLANT) (RESPONDENT) PAN NO. A BFPG5598R ASSESSEE BY : SH . PRAVEEN K. AGARWAL, CA & SH. ASHUTOSH MOHAN, CA REVENUE BY : MS. ASHIMA NEB , SR. DR DATE OF HEARING : 07.06 .201 8 DATE OF PRONOUNCE MENT : 13 .08 .201 8 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17.10 .2017 OF LD. CIT(A ) , GHAZIABAD . 2. FOLLOWING GROUNDS HAVE BEE N RAISED IN THIS APPEAL: 1. THAT THE ORDER AS PASSED THE LD. CIT (APPEAL) IS BAD, ARBITRARY AND ERRONEOUS IN LAW AND ON FACTS OF THE CASE. TAX DEMAND OF RS. 444350/ - C ONFIRMED BY THE LD. CIT (APPEAL ) IS ALSO WRONG AND AGAINST THE FACTS OF THE CASE AND I N LAW. 2. THAT THE LD. CIT (APPEAL ) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O FOR ISSUE OF NOTICE U/S 148 EVEN THOUGH REASONS RECORDED BY THE A.O. WERE VALID AND SUSTAINABLE ON FACTS OF CASE. 3. THAT THE LD. CIT (APPEAL ) HAS ERRED IN CONFIRMING THE ADDITION OF RS,1014550/ - EVEN THOUGH SECTION 50 - C WAS NOT APPLICABLE ON THE APPELLANT (PURCHASER OF PROPERTY). ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 2 SECTION 56(2)(VII) WAS ALSO NOT APPLICABLE IN THE YEAR UNDER APPEAL. 4. THAT THE LD. CIT (APPEAL) HAS ERRED IN IGNORING THE VITAL FACTS THAT THE HOUSE PROPERTY WAS PURCHASED UNDER FLAT BUYER AGREEMENT FRO M THE BUILDER IN FY 2006 - 2007 ( AY 2007 - 2008) AND HAVE PAID RS.3526387/ - IN THAT YEAR, BEING 95% OF THE TOTAL PURCHASE VALUE OF PROPERTY. 5. THAT THE LD. CIT( APPEAL) HAS WRONGLY CONFIRMED THE ADD ITION OF RS.10145 50/ - BY APPLYING SECTION 69 - B ( WITHOUT AND SHOW CAUSE NOTICE AND OPPORTUNITY OF BEING HEARD ON SUCH NEW SECTION). SECTION 69B WAS NOT THE SUBJECT MATTER OF ASSESSMENT ORDER, AS 95% OF THE PROPERTY VALUE WAS PAID IN FY 2006 - 2007 (AY 2007 - 20 08). 6. THAT THE ACTION OF THE LD. CIT (APPEAL) IS ABSOLUTELY WRONG AND ILLEGAL BY IMPOSING SECTION 69B, WHILE CONFIRMING THE ADDITION , ON FACTS OF THE CASE AND IN LAW. THERE WAS NO FINDING OF THE AUTHORITIES BELOW THAT THE APPELLANT HAS MADE UNEXPLAINED INVESTMENT IN THE YEAR UNDER CONSIDERATION. 7. THAT THE APPELLANT CRAVES, LEAVE, TO ADD, AMEND OR TO MODIFY ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE ARG UED ONLY THE GROUND NOS. 5 & 6 AND GAVE IN WRITING AS UNDER: ONLY GROUND NOS. 5 & 6 ARE PRESSED BEFORE HON BLE BENCH OF ITAT. SD/ - (PRAVEEN K. AGARWAL) CA 07.06.2018 ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 3 4. FROM THE ABOVE GROUND NOS. 5 & 6, IT IS GATHERED THAT ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF ADDITION OF RS.10,14,550/ - . 5 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 31.07.2009 DECLARING TOTAL INCOME OF RS.13,54,740 / - WHICH WAS PROCESSED U/S 143(1 ) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE HAD PURCHASED IMMOVABLE PROPERTY AMOUNTING TO RS.46,50,000/ - DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERAT ION. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID INVESTMENT. IN RESPONSE, THE ASSESSEE CONFIRMED THE PURCHASE OF PROPERTY AND SUBMITTED THAT TOTAL PURCHASE CONSIDERATION WAS ONLY RS.36,35,450/ - . THE AO , H OWEVER, OBSERVED THAT THE SOURCES OF INVESTMENT OF RS.36, 35,450/ - WERE NOT SUPPORTED BY DOCUMENTARY EVIDENCES. HE, THEREFORE, RECORDED THE REASONS WHEREIN IT WAS BELIEVED THAT INCOME OF RS.10,14,550/ - (RS.46,50,000/ - RS.36,35,450/ - ) HAD NOT BEEN DISCLOSED AND HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. ACCORDINGLY, NOTICE U/S 148 R.W.S. 147 OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED THE RETURN OF INCOME ON 01.04.2016. THE AO ASKED THE ASSESSEE TO FURNISH THE SOURCE OF INVESTM ENT OF THE PROPERTY, LOAN CERTIFICATE, IF ANY, AND PURCHASE DEED OF ALL THE PROPERTIES PURCHASED. IN RESPONSE, THE ASSESSEE FILED THE REPLY DATED 20.10.2016 BEFORE THE AO, THE RELEVANT PORTION OF THE SAME READ AS UNDER: ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 4 1. I HAVE TO REITERATE THAT I HAD P URCHASED A RESIDENTIAL HOUSE IN MAY, 2006 FOR RS 36 ,35,450/ - AGAINST AN A DVANCE OF RS.35,26,387 AS UNDER : DD NO 222092 DATED 1' MAY,2006 RS . 1,95,085 CASH PAYMENT ON 1 ST MAY, 2006 RS. 20,303 CHEQUE NO . 374196 DATED 13 TH MAY, 2006 RS. 4,3 1,931 HOME LOAN FROM BIRLA HOME FINANCE RS. 25,00,000 CHEQUE NO . 374199 DATED 15 TH JUNE, 2006 RS . 3,79,068 TOTAL ADVANCE RS. 35,26,387 THE BALANCE AMOUNT OF RS. 1,09,063 WAS PAID THROUGH DD NO 200233 DATED 28 TH JULY 2008 TO THE BUILDER AT THE TIME OF REGISTRATION OF PURCHASE DEED. THUS, THE TOTAL CONSIDERATION WAS PAID AT RS 36,35,450 / - . (RECEIPT OF BUILDER FOR ALL ABOVE ARE ATTACHED FOR RE FERENCE A S ANNEXURE - 1). 2. THE COPY OF AGREEMENT DATED 3 1 ST MAY 2006 IS ATTACHED HEREWITH FOR YOUR KIND PERUSAL AND RECORDS. IT CAN BE SEEN THAT THE PAYMENT OF RS 35,26,387 WAS MADE THROUGH BANK AT THE TIME OF ENTERING INTO AGREEMENT THAT CONSTITUTED 97 PER CENT OF TOTAL P URCHASE CONSIDERATION, (ANNEXUR E - 2 ) 3. THE STAMP VALUE RATE, I.E., THE CIRCLE RATE ON THE DALE OF AGREEMENT WAS RS 10,000/ - PER SQUARE METER WHEREAS IT WAS SUBS EQUENTLY ENHANCED TO RS. 26,000/ - AT THE TIME OF REGISTRATION OF TRANSFER DEED IN D EC, 2008. THE COPY OF THE CIRCLE RATE PREV ALENT AT TIME OF PURCHASE AGREEMENT IS ATTACHED FOR YOUR KIND REFERENCE AND RECORDS. (ANNEXURE - 3 ) 4. COPY OF THE REGISTRATION DEED OF DEC, 2008 IS ALSO ATTACHED FOR YOUR KIND REFERENCE IN WHICH SALE CONSIDERATION OF 36,35,450 / - IS ALSO CLEARLY MENTIONED . (ANNEXURE - 4) MADAM, Y OU WILL KINDLY APPRECIATE THAT T HE ASSESSE E HAD MADE T HE 97 PER CENT PAYMENT THROUGH CHEQUES AT THE TIME OF AGREEMENT IN THE YEAR 2006. IN VIEW OF THIS, THE PROVISIONS OF SEC. 50C ARC NOT APPLICABLE TO THE INSTANT CASE. THE ASSESSES , THEREFORE, HUMBLY REQUESTS YOUR GOODSELF TO KINDLY PASS THE ORDER KEEPING IN VIEW THE AFOREMENTIONED ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 5 FACTS AND PROVISIONS OF SECTION 50C SO AS TO AFFORD THE NATURAL JUSTICE TO T HE ASSESSEE. 6 . THE AO, HOWEVER, WAS NOT SATISFIED FROM THE REPLY OF THE AS SESSEE AND MADE THE ADDITION OF RS.10,14,550/ - BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT AND OBSERVED THAT THE SALE DEED EXECUTED ON 22.12.2008 REVEALED THAT SALE CONSIDERATION WAS OF RS.36,35,450/ - BUT VALUE ADOPTED BY THE GOVERNMENT FOR STAMP DUTY WAS OF RS.46,50,000/ - . 7 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE PROVISIONS OF SECTION 50C AND 56(2)(VII) OF THE ACT WERE NOT APPLICABLE FOR THE ASSESSMENT YEAR 2009 - 10 FOR THE PURPOSE OF SECTION 69 O F THE ACT. 8 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE ADMITTED THE VALUE OF SAID PROPERTY BEFORE STAMP DUTY AUTHORITIES I.E. PAYMENT OF STAMP DUTY HA D BEEN MADE ON THE VALUE AS PER CIRCLE RATE WHICH WAS BASED ON MARKET VALUE OF THE PROPERTY AND THAT THE STAMP DUTY ACT, UP, 2008 PERMITS THE ASSESSEE TO DISPUTE THE VALUATION OF PROPERTY FOR FIXATION OF VALUE ON THE BASIS OF RATE FIXED BY THE COLLECTOR. HOWEVER, NO SUCH CHALLENGE HAD BEEN MADE BY THE ASSESSE E WHO ADMITTED AND ACCEPTED THE VALUE OF PROPERTY DETERMINED IN ACCORDANCE WITH THE STAMP DUTY ACT. SHE FURTHER OBSERVED THAT THERE CANNOT BE DIFFERENT VALUES OF THE PROPERTY FOR THE DIFFERENT AUTHORITIES HERE STAMP VALUATION AUTHORITY AND INCOME TAX AUTHO RITY. ACCORDINGLY, ADDITION OF RS.10,14,550/ - WAS SUSTAINED U/S 69B OF THE ACT. ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 6 9. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AO/CIT(A) HAVE FAILED TO BRING ON RECORD ANY EVIDENCE FOR ALLEGED UNDER STATEMENT BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) INVOKED THE PROVISIONS OF SECTION 69B OF THE ACT IN HASTE WITHOUT DISPOSING OFF THE RESPONSIBILITY OF BRINGING ON RECORD A CON CRETE EVIDENCE OF UNDERSTATEMENT. IT WAS FURTHER SUBMITTED THAT THE AO INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT WHICH ARE APPLICABLE ONLY ON THE SELLER AND NOT ON THE BUYER. THEREFORE, THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: KP VARGHESE VS ITO [1981 (9) TMI 1 - SC] CIT VS PV KALYANASUNDARAM (2006) 203 CTR 449 (MAD.) CIT VS PV KALYANASUNDARAM [2007 (9) TMI 25 SC] CIT VS NARESH KHATTER (HUF) (2003) 261 ITR 664 (DEL.) AMAR KUMARI SURANA VS CIT ( 1997) 226 ITR 344 (RAJ.) CIT VS DINESH JAIN HUF (2013) 352 ITR 0629 (DEL.) CIT, DELHI - II VS KHOOBSURAT RESORTS PVT. LTD. [2012 (11) TMI 590 - DEL.] DCIT, CIRCLE - 9 VS VIRJIBHAI KALYANBHAI [2012 (10) TMI 791 ITAT AHD.] ITO, WARD - 4(3) VS HARLEY STREET PHARMACE UTICALS LTD. (2010) 6 ITR 182 (AHD.) DCIT, CIRCLE - 30(1) VS M/S NIHALSONS REAL ESTATE DEVELOPERS [2012 (9) TMI 231 - ITAT DEL.] ITO VS FITWELL LOGIC SYSTEM P. LTD. (2010) 1 ITR (TRIB.) 286 (DEL.) PR. CIT - 4 VS HI - ENERGY REALTORS PVT. LTD. [2017 (10) TMI 599 - DE L.] 10. IN HER RIVAL SUBMISSIONS, THE LD. SR. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 7 ASSESSEE DID NOT FILE ANY OBJECTION WHEN THE PROVISIONS OF SECTION 50C OF THE ACT WERE INVOKED BY THE AO. IT WAS FURTHER SUBMITTED THAT NO EVIDENCE WAS FURNISHED BY THE ASSESSEE THAT THE VALUE OF THE SAID PROPERTY WAS RS.36,35,450/ - AND NOT RS.46,50,000/ - . THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS FULLY JUSTIFIED. 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, I T IS AN ADMITTED FACT THAT THE ASSESSEE PURCHASED THE PROPERTY FOR A SUM OF RS.36,35,450/ - AND AS PER THE CIRCLE RATE, THE VALUE OF THE PROPERTY WAS AT RS.46,50,000/ - . THESE FACTS WERE MENTIONED IN THE SALE DEED AS HAS BEEN POINTED OUT BY THE AO AT PAGE NO. 2 OF THE ASSESSMENT ORDER DATED 15.11.2016. 12 . ON A SIMILAR ISSUE, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS KHOOBSURAT RESORTS PVT. LTD. ( SUPRA) HAS HELD AS UNDER: 15. THIS COURT IS OF THE OPINION THAT THE EXPRESS PROVISION OF SECTION 50 - C ENABLING THE REVENUE TO TREAT THE VALUE DECLARED BY AN ASSESSEE FOR PAYMENT OF STAMP DUTY, IPSO FACTO, CANNOT BE A LEGITIMATE GROUND FOR CONCLUDING THAT THERE WAS UNDERVALUATION, IN THE ACQUISITION OF IMMOVABLE PROPERTY. IF PARLIAMENTARY INTENTION WAS TO ENABLE SUCH A FINDING, A PROVISION AKIN TO SECTION 50 - C WOULD HAVE BEEN INCLUDED IN THE STATUTE BOOK, TO ASSESS INCOME ON THE BASIS OF A SIMILAR FICTION I N THE CASE OF THE ASSESSEE WHO ACQUIRES SUCH AN ASSET. NO DOUBT, THE DECLARATION OF A HIGHER COST FOR ACQUISITION FOR STAMP DUTY MIGHT BE THE STARTING POINT FOR AN INQUIRY IN THAT REGARD; THAT INQUIRY MIGHT EXTEND TO ANALYZING SALE OR TRANSFER DEEDS EXECUT ED IN RESPECT OF SIMILAR OR NEIGHBOURING PROPERTIES, CONTEMPORANEOUSLY AT THE TIME OF THE TRANSACTION. YET, THE FINDING CANNOT START AND CONCLUDE WITH THE FACT THAT SUCH STAMP DUTY VALUE OR BASIS IS HIGHER THAN THE CONSIDERATION MENTIONED IN THE DEED. THE ITA NO . 456 /DE L/2018 ANIL KUMAR GA RG 8 COMPULSION FOR SUCH HIGHER VALUE, IS THE MANDATE OF THE STAMP ACT, AND PROVISIONS WHICH LEVY STAMP DUTY AT PRE - DETERMINED OR NOTIFIED DATES, IN THE PRESENT CASE, THE REVENUE DID NOT RELY ON ANY OBJECTIVE FACT OR CIRCUMSTANCES; CONSEQUENTLY, THE COURT HOLDS THAT THERE IS NO INFIRMITY IN THE APPROACH OF THE LOWER AUTHORITIES AND THE TRIBUNAL, GRANTING RELIEF TO THE ASSESSEE. 13. IN THE PRESENT CASE ALSO, THE COMPULSION FOR SUCH HIGHER VALUE WAS THE MANDATE OF STAMP ACT AND NOTHING IS BROUGHT ON RECORD TO SU BSTANTIATE THAT THE ASSESSEE MADE THE PAYMENT IN EXCESS OF RS.36,35,450/ - I.E. THE AMOUNT MENTIONED IN THE PURCHASE DEED (COPY OF WHICH IS PLACED AT PAGE NOS. 27 TO 60 OF THE ASSESSEE S PAPER BOOK). THEREFORE , BY FOLLOWING THE RATIO LAID DOWN BY THE HON BL E DELHI HIGH COURT IN THE AFORESAID REFERRED TO CASE, I AM OF THE VIEW THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. 1 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER P RON OUNCED I N THE OPEN COURT ON 13 /0 8 / 2018 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 13 /0 8 /2018 *SUBODH* C OPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR