ITO, New Delhi V. M/s. Sheoran Infrastructure Pvt. Ltd., New Delhi

ITA 5523/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77561 (ITAT-DELHI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: S K CHATURVEDI
• Keywords: Sale consideration of property below Jantri Value; Notional interest
• Section: 50C; 133(6); 69

Judgement Text

1 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER I.T.A.NO.5523/DEL/2013 ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, VS SHEORAN INFRAS TRUCTURE PVT. LTD., WARD-8(2), GF 25A , INDRAPRAKASH, NEW DELHI. BARAKH AMBA ROAD, NEW DELHI.-1100001 (APPELLANT) (RESPONDENT) APPELLANT BY: MS Y.S. KA KKAR, SR. ADV. RESPONDENT BY : SHRI S.K. CHATURVEDI, CA O R D E R PER JOGINDER SINGH, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XI, NEW DELHI DATED 11.07.2013. THE FIRST GROUND RAISED BY THE REVENUE PERTAINS TO DELE TING THE ADDITION OF RS.10,95,000 MADE ON ACCOUNT OF DIFFERENCE BETWEEN PURCHASE CONSIDERATION AND CIRCLE RATE OF THE PROPERTY. THE CRUX OF THE A RGUMENT ON BEHALF OF THE REVENUE ADVANCED BY MS. Y.S. KAKKAR, LD. SR. DR IS IN SUPPORT TO THE ASSESSMENT ORDER BY SUBMITTING THAT THE ADDITION WA S RIGHTLY MADE BY THE AO. ON THE OTHER HAND, SHRI S.K. CHATURVEDI, LD. C OUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION DRAWN IN THE IMPUGNED ORDER . 2 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSI ON WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE IMPUGNED OR DER:- 6.1 GROUND NO. 1 OF APPEAL IS AGAINST THE ADDITION OF RS. 10,95,000/- MADE BY THE A.O. THE AO MADE THE ADDITION AS IT WAS FOUND BY HIM THAT THE APPELLANT COMPANY PURCHASED THE LAND AT A VALUE OF RS. 40 LAC , WHICH WAS LESS THAN THE VALUE OF SAID LAND AS PER C IRCLE RATES (RS.50,95,OOO/-). THE INQUIRY LETTER U/S 133( 6) OF THE ACT ISSUED BY THE AO REMAINED UNSERVED DUE TO T HE DEATH OF THE SELLER, WHICH WAS BROUGHT TO HIS NOTIC E BY THE APPELLANT. THE A.O. MADE THE ADDITION MERELY ON THE GROUND THAT CIRCLE RATE OF THE PROPERTY WAS MORE TH AN THE AMOUNT SHOWN IN THE SALE DEED. HOWEVER, IN HIS OVER - ENTHUSIASM, THE A.O. LOST SIGHT OF THE FACT THAT PR OVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE ON THE SEL LER ONLY FOR COMPUTING THE CAPITAL GAINS. PROVISIONS OF SEC. 50C IS A DEEMING PROVISION WHICH CREATES A LEGAL FICTION F OR A DEFINITE PURPOSE AND ITS ONUS SHOULD NOT BE EXTENDE D BEYOND THE PURPOSE FOR WHICH IT BEEN CREATED. IN TH E CASE OF THE PURCHASER, IT IS THE ONUS OF THE A.O. TO EST ABLISH THROUGH INQUIRES THAT THE PURCHASER HAD ACTUALLY PA ID MORE THAN WHAT IS WRITTEN IN THE SALE DEED. MERELY WRITING AN INQUIRY LETTER TO THE SELLER U/S 133(6) OF THE ACT FOR CONFIRMATION OF SALE AMOUNT OR ASKING THE AR FO R APPROACHING THE LEGAL HEIRS OF THE DECEASED SELLER TO CONFIRM THE SALE AMOUNT DIRECTLY TO THE AO CANNOT B E TERMED AS ANY FRUITFUL INQUIRY MADE BY THE AO. BY D OING SUCH UNILATERAL EXERCISE, THE AO DID NOT FIND ANY A DVERSE MATERIAL TO ESTABLISH THAT THE APPELLANT COMPANY PA ID THE AMOUNT AS PER CIRCLE RATES AND NOT THE AMOUNT AS MENTIONED IN THE SALE DEED. FURTHER, IT WAS NOT THE LIABILITY OF THE ASSESSEE TO OBTAIN THE CONFIRMATIO NS FROM THE LEGAL HEIRS OF THE DECEASED SELLER, AS THE DOCU MENTARY EVIDENCE IN THE SHAPE OF SALE DEED WAS SUFFICIENT F OR THE 3 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 PURCHASER AS FAR AS TRANSACTION AMOUNT WAS CONCERNE D. THE APPELLANT HAS RELIED UPON VARIOUS DECISIONS, INCLUDING THAT OF HON'BLE JURISDICTIONAL TRIBUNAL I N SUPPORT OF ITS ARGUMENT THAT THE DIFFERENCE IN THE VALUE AS PER ACTUAL COST AND THE VALUE AS PER STAMP AUTHORIT Y CANNOT BE TAXED IN THE HANDS OF THE PURCHASER OF TH E PROPERTY IN THE ABSENCE OF SOME ADVERSE EVIDENCE AVAILABLE TO PROVE AND CORROBORATE THE DIFFERENCE. 6.2. THE APPELLANT HAS FURTHER ARGUED THAT THE ADD ITION MADE BY THE AO CANNOT BE JUSTIFIED AS PER PROVISION OF SECTION 69 OF THE ACT ALSO. TO INVOKE THE PROVISION S OF SECTION 69 OF THE ACT, THERE MUST BE SOME UNDISCLOS ED INVESTMENT FOR WHICH THE ASSESSEE CANNOT EXPLAIN TH E SOURCE. THE ARGUMENT OF THE APPELLANT HAS FORCE SIN CE THERE WAS NO DISPUTE REGARDING THE SOURCE OF THE AM OUNTS MENTIONED IN THE SALE DEED AND THERE WAS NO MATERIA L EVIDENCE GATHERED BY THE AO, WHICH COULD PROVE THAT THE APPELLANT HAD MADE ANY UNDISCLOSED INVESTMENT IN TH E PURCHASE OF THE SAID PROPERTY. THE APPELLANT HAS AL SO RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COU RT IN SUPPORT OF ITS ARGUMENT. 6.3. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 10,95,0 00/- I.E. THE DIFFERENCE BETWEEN THE VALUE OF THE PROPER TY AS PER CIRCLE RATE AND THE PURCHASE PRICE SHOWN AS PER SALE ,DEED IN THE HANDS OF THE PURCHASER COMPANY. THE SA ME IS DIRECTED TO BE DELETED. THE GROUND OF APPEAL NO. 1 IS ALLOWED. 3. IF THE CONCLUSION DRAWN IN THE IMPUGNED ORDER, O BSERVATION MADE IN THE ASSESSMENT ORDER, ASSERTION MADE BY THE LD. COU NSEL AND THE MATERIAL AVAILABLE ON RECORD ARE KEPT IN JUXTAPOSITION AND A NALYZED, WE FIND THAT THE 4 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 LD. AO MADE THE ADDITION ON THE GROUND THAT THERE W AS DIFFERENCE BETWEEN THE CIRCLE RATE AND THE AMOUNT SHOWN IN THE SALE DE ED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE PURCHASED AGRICULTURAL LAND FROM SHRI RAGHU NATH ON A TOTAL CONSIDERATION OF RS.40 LAKH AND ALSO SPENT RS.3,61, 840 ON THE REGISTRATION OF THE SAME. THE DETAILS OF PAYMENT WERE FILED BY THE ASSESSEE. THE LD. AO WAS OF THE VIEW THAT THE CIRCLE RATE OF THE LAND WA S RS.50,95,000 AND THUS, HE MADE ADDITION OF DIFFERENTIAL AMOUNT OF RS.10,95,00 0. THE LD.AO SENT THE NOTICE TO THE SELLER OF THE LAND BUT DUE TO HIS DEA TH, THE SAME COULD NOT BE SERVED. THE ASSESSEE FILED THE DEATH CERTIFICATE O F THE SELLER. ADMITTEDLY, NO ADVERSE MATERIAL WAS BROUGHT ON RECORD BY THE AO. NOW THE QUESTION ARISES WHETHER ADDITION U/S 50C CAN BE MADE UNDER THE FACT S NARRATED HEREINABOVE. WE ARE OF THE CONSIDERED OPINION THAT THE PROVISION S OF SECTION 50C OF THE ACT ARE APPLICABLE ON THE SELLER FOR THE PURPOSES O F COMPUTING CAPITAL GAINS. SECTION 50C IS A DEEMING PROVISION WHICH CREATES LE GAL FICTION FOR A DEFINITE PURPOSE AND THE ONUS SHOULD NOT BE EXTENDED BEYOND THE LIMIT/PURPOSE FOR WHICH IT WAS CREATED. IN THE CASE OF THE PURCHASER , A HEAVY BURDEN IS CAST UPON THE AO THAT THE ASSESSEE ACTUALLY PAID MORE TH AN MENTIONED ON THE SALE DEED. UNDER THE FACTS AVAILABLE ON RECORD, NO ADVE RSE MATERIAL HAS BEEN BROUGHT TO OUR NOTICE ON THE BASIS OF WHICH IT CAN BE ESTABLISHED THAT ANY UNDERHAND MONEY TRANSACTED HANDS BETWEEN THE SELLER AND THE PURCHASER. 5 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 THE ASSESSEE HAS DISCHARGED ITS ONUS BY PRODUCING T HE COPY OF THE SALE DEED AND THE SOURCE OF THE MONEY WHICH WAS UTILIZED FOR PURCHASING THE PROPERTY AND FURTHER NO UNDERHAND TRANSACTION WAS MADE. EVE N OTHERWISE FOR INVOKING SECTION 69 OF THE ACT, THERE MUST BE SOME UNDISCLOSED INVESTMENT FOR WHICH THE ASSESSEE IS UNABLE TO DISCLOSE THE SO URCE. EXCEPT THE AMOUNT MENTIONED IN THE SALE DEED, NO ADVERSE MATERIAL WAS BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE IN FACT MADE UNDISCLOSED IN VESTMENT FOR PURCHASING THE PROPERTY. IN VIEW OF THIS FACTUAL FINDING RECO RDED BY THE LD. CIT(A), WE FIND NO INFIRMITY IN THE SAME AS THE SAME HAS NOT B EEN CONTROVERTED BY THE REVENUE WITH THE HELP OF ANY CORROBORATIVE MATERIAL . ON THIS GROUND, THE STAND OF THE LD. CIT(A) IS AFFIRMED, RESULTING INTO DISMISSAL OF THIS GROUND. 4. THE LAST GROUND RAISED BY THE REVENUE PERTAINS T O DELETING THE ADDITION OF RS.1 LAKH MADE ON ACCOUNT OF INTEREST. THE GRIE VANCE OF THE REVENUE IS THAT THE AO WAS NOT DIRECTED TO CARRY OUT FURTHER I NVESTIGATION. THE LD. SR. DR DEFENDED THE ADDITION WHEREAS THE LD. COUNSEL FO R THE ASSESSEE SUPPORTED THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. ON PER USAL OF RECORD AND AFTER HEARING THE RIVAL SUBMISSIONS, WE NOTE THAT THE ADD ITION WAS MADE BY THE AO AS NOTIONAL INTEREST ON ADVANCE OF RS. 1 CRORE TO S HRI DEEPAK ANSAL ON THE PLEA THAT THE ASSESSEE ADVANCED THE AMOUNT TO HIM F OR PURCHASING THE PROPERTY. IN THE ABSENCE OF ANY PURCHASE/SALE AGREE MENT, THE AO OPINED THAT 6 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 THE AMOUNT OF RS. 1 CRORE WAS INTEREST BEARING LOAN AND HE MADE ADDITION OF RS. 1 LAKH ON ACCOUNT OF INTEREST FOR ONE MONTH. T HE CLAIM OF THE ASSESSEE IS THAT THE AMOUNT OF RS. 1 CRORE WAS MADE TO SHRI DEE PAK ANSAL AGAINST PROPERTY NO. 1201C, ANTARIKSH BHAVAN, DELHI AS ADVA NCE MONEY. TO SUBSTANTIATE ITS CLAIM, THE ASSESSEE FILED THE DETA ILS OF BANK ACCOUNT, ITR AND CONFIRMATION. THE ASSESSEE FURTHER CLAIMED THAT IT WAS OUT OF INTEREST FREE CAPITAL OF THE ASSESSEE AND NOT OUT OF INTEREST BEA RING FUNDS. NO EVIDENCE WAS GATHERED BY THE AO TO ESTABLISH WHETHER ANY INT EREST BEARING FUNDS WERE PAID TO SHRI DEEPAK ANSAL. IN VIEW OF THIS FACT, W E FIND NO SUBSTANCE IN MAKING THE ADDITION AND THUS, AFFIRM THE STAND OF T HE LD. CIT(A). CONSEQUENTLY, WE FIND NO SUBSTANCE IN THE APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO ME RIT, THEREFORE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING ON 9 TH APRIL, 2014. SD/- SD/- (S.V. MEHROTRA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDI CIAL MEMBER DT. APRIL 2014 GS COPY FORWARDED TO- 7 ITA NO. 5523/DEL/2013 ASSTT.YEAR: 2010-11 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR