Maxsas Facility Management Pvt. Ltd., Ghaziabad V. DCIT, Circle- 1, Ghaziabad

ITA 468/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1675 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K BANSAL SENIOR
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Initiation of penalty proceedings; Valuation report; Set aside
• Section: 50C; 69B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.468/DEL./2018 (ASSESSMENT YEAR : 2014-15) M/S. MAXSAS FACILITY MANAGEMENT VS. DCIT, CIRCLE 1 , PRIVATE LIMITED, GHAZIABAD. C 37, 1 ST FLOOR, METRO PLAZA, SECTOR 15, GHAZIABAD. (PAN : AAHCM6399J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. YADAV, ADVOCATE REVENUE BY : SHRI N.K. BANSAL, SENIOR DR DATE OF HEARING : 06.06.2019 DATE OF ORDER : 11.06.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. MAXSAS FACILITY MANAGEMENT PVT. LT D. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.10.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD QUA THE ASSESSMENT YEAR 2014-15 ON THE GROUNDS INTE R ALIA THAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD COMMISSIONER OF INCOME TAX (APPEALS), G HAZIABAD [HEREINAFTER REFERRED TO AS CIT(A)] GROSSLY ERRED I N DISMISSING ITA NO.468/DEL./2018 2 THE APPEAL OF THE APPELLANT, WHICH IS BAD IN LAW AN D NOT CALLED FOR. (GROUND NO.1) 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LEARNED ASSESSING OFFI CER, (HEREINAFTER REFERRED TO AS LD. AO) IS BAD IN LAW A ND THE ADDITION MADE U/S 69B OF THE IT ACT, 1961 IS LIABLE TO BE DE LETED. 2.1. THAT WITHOUT PREJUDICE, AND UNDER THE FACTS A ND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. AO IS PERVERSE, WITHOUT APPLICATION OF MIND, ILLEGAL AND UNJUSTIFIED. 2.2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(APPEALS) HAS ERRED IN LAW BY NO T ALLOWING THE APPELLANT ADEQUATE OPPORTUNITY TO REPRESENT BEF ORE: A. NOT ACCEPTING THE ADDITIONAL EVIDENCE PRODUCED D URING THE PROCEEDINGS AND; B. BY JUST EXAMINING THE VERACITY OF THE EVIDENCE I N THE LIGHT OF A CLERICAL TYPING ERROR BY THE LD. REGISTERED VA LUER. (GROUND NO.2) 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW, AS WELL AS ON FACTS OF THE CASE IN SUSTAINING ADDITION OF RS.58,5 1,000/- U/S. 69B OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNDISCLOS ED INVESTMENT (I.E. DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND ACTUAL PURCHASE CONSIDERATION PAID FOR THE IMMOVABL E PROPERTY PURCHASED). 3.1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW ON THE BASIS OF EXPLANATION, DOCUMENTS AND EVID ENCES FURNISHED, THE LD. AO HAS ERRED IN LAW BY MAKING AD DITION WITHOUT REFERRING THE VALUATION OF PROPERTY TO THE DVO AS PER THE PROVISION OF SUB SECTION (2) OF SECTION 50C OF THE ACT. 3.2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW ON THE BASIS OF EXPLANATION, DOCUMENTS AND EVID ENCES FURNISHED, THE LEARNED CIT(APPEALS) HAS ERRED IN LA W BY NOT ADMITTING THE ADDITIONAL EVIDENCES FILED BY THE APP ELLANT IN THE FORM OF VALUATION REPORT, JUST BECAUSE THE APPELLAN T NOT SPECIFICALLY QUOTED REFERENCE TO RULE 46A / MOVED S EPARATE APPLICATION IN THAT REGARDS. (GROUND NO.3) 4. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C) OF THE LT. ACT 1961 IS MECHANICAL AND WITHOUT RECORDIN G ANY ITA NO.468/DEL./2018 3 ADEQUATE SATISFACTION FOR SUCH INITIATION WHICH IS UNCALLED FOR UNTENABLE AND BAD IN LAW DESERVES TO BE QUASHED. (GROUND NO.4) 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : DURING ASSESSMENT PROCEED INGS, ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PUR CHASED TWO IMMOVABLE PROPERTIES FOR RS.51,00,000/- AND RS.49,9 0,000/- WHEREAS PERUSAL OF THE SALE DEED SHOWS THAT THE CIR CLE RATE OF THE PROPERTY WAS RS.84,39,000/- AND RS.75,02,000/- AGAI NST WHICH STAMP DUTY OF RS.5,90,800/- AND RS.5,25,200/- RESPE CTIVELY WAS PAID. AO, DECLINING THE PLEA TAKEN BY THE ASSESSEE THAT HE HAS PURCHASED THE PROPERTIES AT LOWER VALUE THAN THE CI RCLE RATE, TREATED THE PROPERTIES IN QUESTION HAVING BEEN PURCHASED @ RS.84,39,000/- AND RS.75,02,000/- AND THEREBY MADE AN ADDITION OFR S.58,51,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMI SSING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.468/DEL./2018 4 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, ASSESSEE SHOWN TO HAVE PURCHASED T HE PROPERTIES IN QUESTION FOR RS.51,00,000/- AND RS.49 ,90,000/- AS AGAINST THE CIRCLE RATE OF RS.84,39,000/- AND RS.75 ,02,000/- BY MAKING THE PAYMENT OF STAMP DUTY OF RS.5,90,800/- A ND RS.5,25,200/- RESPECTIVELY, IT IS ALSO NOT IN DISP UTE THAT SECTION 50C IS NOT APPLICABLE TO THE BUYER. 6. THE LD. AR FOR THE ASSESSEE CONTENDED INTER ALIA THAT THE ASSESSEE HAS ACTUALLY PURCHASED IMMOVABLE PROPERTIE S FOR RS.51,00,000/- AND RS.49,90,000/- AND HAS BROUGHT O N RECORD REPORT OF THE APPROVED VALUER; THAT MERELY ON THE B ASIS OF THE VARIATION IN THE CIRCLE RATE, ADDITION CANNOT BE MA DE AND RELIED UPON THE DECISION RENDERED BY THE CIT VS. KHOOBSURAT RESORT PVT. LTD. 256 CTR 0371 (DEL.) AND JAGNATH SALEJA VS. ITO TC A-142 OF 2019 DATED 15.02.2019-MADRAS . 7. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE CONTENDED THAT STAMP DUTY ACT, 2008 CONFERS A RIGHT ON THE ASSESSEE TO DISPUTE THE VALUE OF THE PROPERTY FOR F IXATION OF VALUE ON THE BASIS OF RATE FIXED BY THE COLLECTOR AND AS SUCH, ASSESSEE HAS ADMITTED AND ACCEPTED THE VALUE OF THE PROPERTY DET ERMINED IN ITA NO.468/DEL./2018 5 ACCORDANCE WITH THE STAMP DUTY ACT AND RELIED UPON THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY THE LD. CIT (A). 8. PERUSAL OF PARA 5.2.2 OF THE IMPUGNED ORDER PASS ED BY THE LD. CIT (A) GOES TO SHOW THAT THE VALUATION REPORT HAS BEEN IGNORED BY THE LD. CIT (A) ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY APPLICATION FOR ADDITIONAL EVIDENCE AS PER PROVISIO NS CONTAINED UNDER RULE 46A OF THE INCOME-TAX RULES, 1962. WE A RE OF THE CONSIDERED VIEW THAT MERELY ON THE GROUND THAT THE ASSESSEE HAS NOT CHALLENGED THE CIRCLE RATE UNDER THE STAMP DUTY ACT , 2008, ADDITION CANNOT BE MADE BEING THE VARIATION IN THE CIRCLE RA TE AS WELL AS THE RATE CLAIMED BY THE ASSESSEE BECAUSE ACT OF MAKING THE PAYMENT OF STAMP DUTY AT THE CIRCLE RATE DOES NOT BAR THE ASSE SSEE FOR CLAIMING THE ACTUAL SALE CONSIDERATION PAID TO THE VENDOR, I NVARIABLY TO AVOID LITIGATION AND TO BUY PEACE OF MIND. MOREOVER, SAL E DEED IS READ IN ENTIRETY WHEREIN THE PURPOSE OF MAKING PAYMENT OF S TAMP DUTY AT CIRCLE RATE IS EXPLAINED BY THE VENDOR AND VENDEE. 9. HONBLE HIGH COURT OF DELHI IN CASE CITED AS CIT VS. KHOOBSURAT RESORT PVT. LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE THAT EXPRESS PROVISIONS CONT AINED U/S 50C ENABLING THE REVENUE TO TREAT THE VALUE DECLARED BY THE ASSESSEE FOR PAYMENT OF STAMP DUTY IPSO FACTO CANNOT BE A LEGITI MATE GROUND FOR HOLDING THAT THERE WAS UNDER VALUATION IN THE PURCH ASE OF ITA NO.468/DEL./2018 6 IMMOVABLE PROPERTY. OPERATIVE PART OF THE FINDINGS RETURNED BY THE HONBLE HIGH COURT ARE EXTRACTED FOR READY PERUSAL AS UNDER :- 15. THIS COURT IS OF THE OPINION THAT THE EXPRESS PROVISION OF SECTION 50-C ENABLING THE REVENUE TO T REAT THE VALUE DECLARED BY AN ASSESSEE FOR PAYMENT OF STAMP DUTY, IPSO FACTO, CANNOT BE A LEGITIMATE GROUND FOR CONCL UDING THAT THERE WAS UNDERVALUATION, IN THE ACQUISITION O F 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 AS SESS INCOME ON THE BASIS OF A SIMILAR FICTION IN THE CAS E OF THE ASSESSEE WHO ACQUIRES SUCH AN ASSET. NO DOUBT, THE DECLARATION OF A HIGHER COST FOR ACQUISITION FOR ST AMP DUTY MIGHT BE THE STARTING POINT FOR AN INQUIRY IN THAT REGARD; THAT INQUIRY MIGHT EXTEND TO ANALYZING SALE OR TRAN SFER DEEDS EXECUTED IN RESPECT OF SIMILAR OR NEIGHBOURING PROP ERTIES, CONTEMPORANEOUSLY AT THE TIME OF THE TRANSACTION. Y ET, THE FINDING CANNOT START AND CONCLUDE WITH THE FACT THA T SUCH STAMP DUTY VALUE OR BASIS IS HIGHER THAN THE CONSID ERATION MENTIONED IN THE DEED. THE COMPULSION FOR SUCH HIGH ER VALUE, IS THE MANDATE OF THE STAMP ACT, AND PROVISI ONS WHICH LEVY STAMP DUTY AT PRE-DETERMINED OR NOTIFIED DATES. IN THE PRESENT CASE, THE REVENUE DID NOT RELY ON AN Y OBJECTIVE FACT OR CIRCUMSTANCES; CONSEQUENTLY, THE COURT HOLD S THAT THERE IS NO INFIRMITY IN THE APPROACH OF THE LOWER AUTHORITIES AND THE TRIBUNAL, GRANTING RELIEF TO THE ASSESSEE. THIS QUESTION IS ACCORDINGLY ANSWERED IN FAVOUR OF THE A SSESSEE, AND AGAINST THE REVENUE. 10. WHEN THE ASSESSEE HAS COME UP WITH SPECIFIC CAS E THAT HE HAS PURCHASED THE PROPERTIES FOR A PARTICULAR AMOUN T AND UNDER THE MANDATORY PROVISION OF STAMP DUTY ACT, HE HAD TO GE T THE SALE DEED EXECUTED AT THE CIRCLE RATE AND TO PROVE HIS C ASE BROUGHT ON RECORD VALUATION REPORT WHICH HAS BEEN IGNORED BY T HE LD. CIT (A) ON FLIMSY GROUNDS, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE BECAUSE UNDER TH E PREVALENT ITA NO.468/DEL./2018 7 PROVISION OF LAW APPLICABLE TO THE FACTS AND CIRCUM STANCES OF THE CASE, AO HAS NO POWER TO REACH THE CONCLUSION THAT ASSESSEE HAS SHOWN UNDER-VALUATION OF THE IMMOVABLE PROPERTIES P URCHASED MERELY ON THE GROUND OF VARIATION IN THE SALE CONSI DERATION PAID AND VALUE DECLARED FOR PAYMENT OF STAMP DUTY BY RELYING UPON SECTION 2(XIX) OF STAMP DUTY ACT WHEREIN DEFINITION OF MAR KET VALUE IS GIVEN AND BY RELYING ON THE PROVISIONS CONTAINED IN STAMP DUTY ACT THAT ASSESSEE HAS NOT CHALLENGED THE CIRCLE RA TE FIXED BY THE COLLECTOR. THERE WAS NO MATERIAL AVAILABLE WITH TH E AO/CIT(A) THAT THE ASSESSEE HAS MADE UNDER-VALUATION OF THE P ROPERTY IN ORDER TO EVADE THE TAX WHICH APPROACH IS NOT SUSTAINABLE IN THE EYES OF LAW. 11. AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE BY WA Y OF SALE DEEDS OF THE ADJOINING PROPERTIES TO SHOW THAT THE ASSESSEE HAS UNDER-VALUED THE IMMOVABLE PROPERTIES PURCHASED RAT HER MERELY PROCEEDED ON CIRCLE RATE WHICH CANNOT BE A BASIS FO R ADDITION IN THIS CASE. SO, FOLLOWING THE DECISION RENDERED BY THE H ONBLE DELHI HIGH COURT IN CIT VS. KHOOBSURAT RESORT PVT. LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT SECTION 50C IS ONLY APP LICABLE TO THE SELLER OF THE PROPERTY IN ORDER TO COMPUTE THE CAPI TAL GAIN AND IT CANNOT BE EXTENDED IN CASE OF THE PURCHASER IN ORDE R TO ESTIMATE THE UNDISCLOSED INVESTMENT. ITA NO.468/DEL./2018 8 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND FO LLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN CA SE CITED AS CIT VS. KHOOBSURAT RESORT PVT. LTD. (SUPRA), AO/CIT (A) HAVE ERRED IN MAKING ADDITION OF RS.58,51,000/- ON ACCOU NT OF UNDISCLOSED INVESTMENT I.E. BEING THE DIFFERENCE IN THE STAMP DUTY VALUE AND ACTUAL SALE CONSIDERATION PAID FOR THE IM MOVABLE PROPERTY PURCHASED BY THE ASSESSEE. CONSEQUENTLY, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) IS ORDER ED TO BE DELETED, HENCE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF JUNE, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF JUNE, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.