THE DCIT, 1(1), Bhopal V. SHRI HEMANT BAPNA, Bhopal

ITA 679/IND/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5667 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Fair market value; Reassessment proceedings
• Section: 50C; 69; 37

Judgement Text

ITA NO. 679/IND/2014 HEMANT BAPNA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 679/IND/2014 ASSESSMENT YEAR: 2008-09 DCIT 1(1) BHOPAL :: APPELLANT VS HEMANT BAPNA BHOPAL ./ PAN: AAFPB 4365E :: RESPONDENT REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI SUMIT NEMA & SHRI AMIT JAIN ! ' #$ DATE OF HEARING 4.10.2016 %&'( #$ DATE OF PRONOUNCEMENT 19.10.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 21.8.2014 OF THE LEARNED CIT(A)-I, B HOPAL. ITA NO. 679/IND/2014 HEMANT BAPNA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT SHRI HEMANT BAPNA IS PROPRIETOR OF M/S BAPNA ENTERPRISES ENGAGED IN THE BUSINESS OF TRADING. HE IS ALSO A DIRECTOR OF M/S B.P. LOGISTIC PVT. LTD. AND DRAWING SALARY FROM THE COMPANY. DURING THE YEAR UNDER CONSIDERATION THE ASSESSING OF FICER RECEIVED INFORMATION THAT THE ASSESSEE HAS PURCHASED IMMOVABLE PROPERTY FOR RS.39,01,000/- WHEREAS THE ASSESSEE HAS SHOWN PURCHASE PRICE OF RS.11 LACS. THEREFORE, THE BALANCE UNACCOUNTED INVESTMENT OF RS.28,01,000/- WAS MADE. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DISCLOSED THE PROPERTY IN TH E BALANCE SHEET. THEREFORE, THE ASSESSING OFFICER HAS MAD E THE ADDITION OF RS. 39,01,000/- TO THE TOTAL INCOME O F THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT. ON APPEAL , THE LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER :- ITA NO. 679/IND/2014 HEMANT BAPNA 3 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. THE ADMITTE D FACT INVOLVED IN THIS CASE IS THAT THE APPELLANT HA D PURCHASED A PROPERTY FROM SHRI YOGESH JAIN AND AS PER SALE DEED, THE SALE CONSIDERATION WAS SHOWN AT RS.11,00,000/-. THE APPELLANT HAD ALSO EXPLAINED THE SOURCE OF PAYMENT OFRS. 11,00,000/-, WHICH AS PER THE AGREED TERMS WITH THE SELLER, WERE PAID DIRECTLY TO M.P. FINANCE CORPORATION IN THE LOAN ACCOUNT OF M/S APICAL E SOLUTIONS LTD. ON VARIOUS DATES. THE APPELLANT HAD EXPLAINED THE SOURCES OF PAYMENT OF RS. 11,00,000/- ON DIFFERENT DATES, WHICH WERE EITHER FROM HIS PERSONAL ACCOUNT WITH HDFC BANK OR WAS WITHDRAWN FROM CAPITAL ACCOUNT IN HIS PROPRIETARY CONCERN M/S BAPNA ENTERPRISES OR WERE WITHDRAWN FROM THE COMPANY M/S B.P. LOGISTIC PVT. LTD. AGAINST HIS SALARY WHICH WAS DULY ITA NO. 679/IND/2014 HEMANT BAPNA 4 SHOWN AS INCOME IN HIS RETURN. THEREFORE, NO ADDITION WAS CALLED FOR ON ACCOUNT OF INVESTMENT TO THE EXTENT OF RS.11,00,000/- MADE BY THE APPELLANT AS SHOWN IN THE SALE DEED REGISTERED. IT MAY NOT BE OUT OF PLACE TO MENTION HERE THAT AS PER SALE DEED REGISTER, THE APPELLANT HAD ALSO PAID STAMP DUTY OF RS.3,90,000/- WHICH WAS WITHDRAWN FROM HIS CAPITAL ACCOUNT WITH M/S BAPNA ENTERPRISES. THUS, THE APPELLANT HAD DULY WITHDRAWN THE AMOUNTS FROM HIS DISCLOSED SOURCES, FOR PAYMENT OF SALE CONSIDERATION OF RS. 11,00,000/- AS WELL AS FOR PAYMENT OF STAMP DUTY ON THE PURCHASE OF THE SAID PROPERTY. NOW THE ISSUE IS REGARDING ADDITION ON ACCOUNT OF DIFFERENCE IN THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY AT RS.39,01,000/- AND THE SALE CONSIDERATION SHOWN IN THE SALE DEED REGISTER AT RS . ITA NO. 679/IND/2014 HEMANT BAPNA 5 11,00,000/- I.E. THE DIFFERENCE OF RS.28,01,000/-. THE A.O. TREATED THIS AMOUNT AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE PURCHASER, THE APPELLANT. IT MAY BE PERTINENT TO NOTE THAT SECTION 50C OF THE ACT IS A DEEMING PROVISION INTRODUCED BY THE FINANCE ACT, 2002, WHICH PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR ARISIN G AS A RESULT OF TRANSFER OF LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE FULL VALUE OF CONSIDERATION AND CAPITAL GAINS SHALL BE COMPUTED ACCORDINGLY U/S 48 OF THE ACT. THUS, THE DEEMING PROVISIONS OF SECTION 50C OF THEN ACT ARE RELATED TO DEEMING THE FULL VALUE OF CONSIDERATION IN THE HANDS OF THE SELLER, IT CANNOT BE ITA NO. 679/IND/2014 HEMANT BAPNA 6 EXTENDED FURTHER TO ASSESS THE UNDISCLOSED INVESTMENT U/S 69 OF THE ACT IN THE HANDS OF THE PURCHASER. THE HON'BLE KERALA HIGH COURT IN CIT VS. KAR VALVES LTD. (1987) 168 ITR 416 (KER.) HELD THAT LEGAL FICTION IS LIMITED TO THE PURPOSE FOR WH ICH THEY ARE CREATED AND COULD NOT BE EXTENDED BEYOND THAT LEGITIMATE FRAME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MOTHER INDIA REFRIGERATION INDUSTRIES (P) LTD. (1985) 115 ITR 711 (SC) ALSO HE LD THAT LEGAL FICTIONS ARE CREATED ONLY FOR SOME DEFIN ITE PURPOSE AND THEY MUST BE LIMITED TO THAT PURPOSE AND SHOULD NOT BE EXTENDED BEYOND THAT LEGITIMATE FIELD. THEREFORE, THE PROVISIONS OF SECTION 50C OF THE ACT WHICH ARE APPLICABLE ONLY FOR THE PURPOSE OF CAPITAL GAINS IN THE HANDS OF THE SELLER CANNOT BE EXTENDED FOR UNEXPLAINED INVESTMENT U/S 69 OF THE ACT IN THE HANDS OF THE PURCHASER, WHERE THERE IS N O ITA NO. 679/IND/2014 HEMANT BAPNA 7 EVIDENCE AVAILABLE ON RECORD TO SHOW THAT SALE CONSIDERATION OVER AND ABOVE WHAT HAS BEEN RECORDED IN THE SALE DEED HAS BEEN MADE BY THE PURCHASER. NOW IN THE INSTANT CASE, THE SALE CONSIDERATION WAS RECORDED IN THE SALE DEED REGISTER AT RS. 11,00,000/- WHICH WAS PAID BY THE APPELLANT FROM HIS DISCLOSED SOURCES. THERE IS NO MATERIAL OR EVIDENCE AVAILABLE ON RECORD TO SHOW THAT THE APPELLANT HAD PAID ANY CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION OF RS. 11,00,000/- RECORDED IN THE SALE DEED FOR THE PURCHASE OF THE SAID PROPERTY. THEREFORE, ON THE BASIS OF VALUATION DONE BY STAMP VALUATION AUTHORITY, NO ADDITION CAN BE MADE AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT IN THE HANDS OF THE APPELLANT PURCHASER. THUS, IN THIS CASE, NO ADDITION WAS WARRANTED ON THE DIFFERENCE BETWEEN THE APPARENT CONSIDERATION ITA NO. 679/IND/2014 HEMANT BAPNA 8 RECORDED IN THE SALE DEED AND THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. IN THIS REGARD REFERENCE CAN ALSO BE MADE TO THE FOLLOWING DECISIONS OF HON'BLE ITAT, AHMEDABAD BENCH :- (I) ITO VS. VENU PROTEIN INDUSTRIES(2010) (TRI.) 602 (AHD.) (II) ITO VS. HARLEY STREET PHARMACEUTICALS LTD.(2010) 6 ITR (TRI.) 182 (AHD.) IN THE ABOVE DECISIONS, THE HON'BLE ITAT AHMEDABAD HELD THAT PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE AT THE INSTANCE OF THE PURCHASER AND, THEREFORE, ADDITION CANNOT BE MADE ON PURCHASER OF THE PROPERTY BASED ON 50C VALUATION FOR STAMP DUTY PURPOSES. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE, I AM O F ITA NO. 679/IND/2014 HEMANT BAPNA 9 THE CONSIDERED OPINION THAT NO ADDITION WAS CALLED FOR THE AMOUNT OF DIFFERENCE BETWEEN THE APPARENT CONSIDERATION RECORDED IN THE SALE DEED AND THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY IN THE HAND S OF THE APPELLANT IN THE ABSENCE OF ANY EVIDENCE FOR PAYMENT OVER AND ABOVE THE SALE CONSIDERATION RECORDED IN THE SALE DEED. HENCE, THE ADDITION OF T HE DIFFERENCE OF RS.28,01,000/- WAS ALSO NO WARRANTED. THUS, THE ADDITION OF RS.39,01,000/- MADE BY THE A.O. AS UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTY IS DELETED. AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LEARNED DR WHILE SUPPORTING THE ASSESSMENT ORDER ARGUED THAT THE LEARNED CIT(A) HAS TOTALLY FAILED TO APPRECIATE THAT THE ADDITION WAS MADE ITA NO. 679/IND/2014 HEMANT BAPNA 10 ONLY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF THE PROPERTY. HE FURTHER ARGUED THAT SINCE THE ASSESSEE HAS FAILED TO FURNISH DETAILS SUBSTANTIATING TH E SOURCE OF INVESTMENT IN PURCHASE OF PROPERTY EVEN DURING THE REASSESSMENT PROCEEDINGS, THE LEARNED CIT( A) WAS TOTALLY UNJUSTIFIED IN DELETING THE ADDITION AND AS SUCH HIS ACTION DESERVES TO BE ANNULLED. 4. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). H E SUBMITTED THAT THE LEARNED CIT(A) HAS DELETED THE ADDITION WHICH WAS MADE IN CONTRAVENTION TO THE VERY SPIRIT OF THE PROVISIONS OF SECTION 50C OF THE ACT. HE, THEREFORE, ARGUED THAT THE ORDER OF THE LEARNED CIT(A) DESERVES TO BE MAINTAINED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN THE WAKE OF THE FACTS OBTAINING IN THIS CASE. FOR ITA NO. 679/IND/2014 HEMANT BAPNA 11 UNDERSTANDING THE ISSUE IN RIGHT PROSPECTIVE, IT WOU LD BE APPROPRIATE TO REPRODUCE SECTION 50C OF THE ACT :- SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEI NG LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN T HIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. FOLLOWING PROVISOS SHALL BE INSERTED TO SUB-SECTION (1) OF SECTION 50C BY THE FINANCE ACT, 2016, W.E.F. 1-4-2017 : PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AM OUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED O R ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VAL UE OF CONSIDERATION FOR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREO F, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOU NT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROU GH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER . (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALU ATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUT ED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY O THER AUTHORITY, COURT OR THE HIGH COURT, ITA NO. 679/IND/2014 HEMANT BAPNA 12 THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND ( 6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, S ECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957) , SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION 1.FOR THE PURPOSES OF THIS SECTION, 'V ALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SEC TION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRAR Y CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED O R ASSESSABLE BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. WE FIND THAT THE SALE CONSIDERATION WAS RECORDED IN THE SALE DEED REGISTER AT RS. 11,00,000/- WHICH WAS PAID BY THE ASSESSEE FROM HIS DISCLOSED SOURCES. THERE IS NO MATERIAL OR EVIDENCE AVAILABLE ON RECORD TO SHOW THAT THE APPELLANT HAD PAID ANY CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION OF RS. 11,00,000/- RECORDED IN THE ITA NO. 679/IND/2014 HEMANT BAPNA 13 SALE DEED FOR THE PURCHASE OF THE SAID PROPERTY. THEREFORE, ON THE BASIS OF VALUATION DONE BY STAMP VALUATION AUTHORITY, NO ADDITION CAN BE MADE AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT IN THE HANDS OF THE ASSESSEE. THUS, IN THIS CASE, NO ADDITION WAS WARRANTED ON THE DIFFERENCE BETWEEN THE APPARENT CONSIDERATION RECORDED IN THE SALE DEED AND THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. WE OBSERVE THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE AT THE INSTANCE OF THE PURCHASER AND, THEREFORE, ADDITION CANNOT BE MADE IN THE HANDS OF THE PURCHASER OF THE PROPERTY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE PARTICULARLY SECTION 50C OF T HE ACT, WE ARE OF THE VIEW THAT THAT NO ADDITION IS WARRANTED FOR THE AMOUNT OF DIFFERENCE BETWEEN THE APPARENT CONSIDERATION RECORDED IN THE SALE DEED AND ITA NO. 679/IND/2014 HEMANT BAPNA 14 THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE FOR PAYMEN T OVER AND ABOVE THE SALE CONSIDERATION RECORDED IN THE SALE DEED. IN THIS VIEW OF THE MATTER, THE ADDITION OF RS.39,01,000/- WAS RIGHTLY DELETED BY THE LEARNED CIT (A) AND WE ENDORSE THE SAME. 6. IN THE RESULT, THE APPEAL OF THE REVENUE FAILS AND I S DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 19 OCTOBER, 2016. SD SD ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER )'* / DATED : 19 OCTOBER, 2016. DN/ ITA NO. 679/IND/2014 HEMANT BAPNA 15