ITO, Erode V. Sri P.Madhanmahan, Erode

ITA 732/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0729 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER .. ITA NO.732/MDS./2012 ASSESSMENT YEAR:2008-09 THE INCOME TAX OFFICER, WARD 1(4), ERODE. VS. SRI P MADHANMAHAN, 81,AVVAIYAR STREET, ERODE 638 001. PAN AGRPM 8759 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T N BETGIRI JCIT D.R RESPONDENT BY : SHRI S.SRIDHAR, ADVOCATE DATE OF HEARING : 27.02.13 DATE OF PRONOUNCEMENT : 27 . 02.13 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVAN CE IS REGARDING DELETION OF AN ADDITION FOR UN-EXPLAINED INVESTMENT ASSESSED IN THE HANDS OF THE ASSESSEE. 2. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN TRA DING, HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR O N 17.03.10 ITA. 732/MDS/12 2 DECLARING AN INCOME OF ` 1,11,140/-. DURING THE RELEVANT PREVIOUS YEAR, ASSESSEE HAD PURCHASED PROPERTY AND IN THE CONVEYANCE DEED, THE PURCHASE PRICE WAS SHOWN ` 4 LAKHS. HOWEVER, FOR THE PURPOSE OF STAMP DUTY THE VALUE C ONSIDERED WAS ` 35,61,309/-. ASSESSEE HAD DISPUTED STAMP DUTY FI XED BY THE AUTHORITIES UNDER THE STAMP ACT AND RDO(STAMPS) , COIMBATORE SCALED DOWN THE VALUE OF PROPERTY TO ` 25,71,000/-. BASED ON THIS ORDER OF RDO(STAMPS), ASSESSING OFFIC ER REACHED ON OPINION THAT ACTUAL CONSIDERATION PAID FOR PURCH ASING THE PROPERTY WAS ` 25,71,000/-. 3. ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF SAID AMOUNT. AS PER THE ASSESSING OFFICER, NO SOURCE WA S PRODUCED BY THE ASSESSEE FOR THE INVESTMENT OF ` 25,71,000/-. HE THEREFORE MADE AN ADDITION OF ` 25,71,000/- TO THE RETURNED TOTAL INCOME AND COMPLETED ASSESSMENT. 4. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF THE ASSESSEE WAS THAT THERE WAS NO GOOD APPROACH ROAD TO THE PRO PERTY AND THERE WAS ONLY AN EIGHT FEET LANE FROM THE MAIN ROA D. AS PER THE ASSESSEE, THE PROPERTY WAS LOCATED 250 FEET AWAY F ROM THE MAIN ROAD. VALUE FIXED BY THE RDO WAS ACCEPTED BY THE A SSESSEE FOR ITA. 732/MDS/12 3 A REASON, THAT DOCUMENT WAS REQUIRED FOR PRESENTATI ON BEFORE THE BANK. ARGUMENT OF THE ASSESSEE WAS THAT ADOPTION O F THE VALUE OF STAMP DUTY AUTHORITY COULD ONLY BE CONSIDERED FOR THE PURPOSE OF ASCERTAINING CAPITAL GAINS, UNDER SECTION 50C OF THE ACT. ASSESSING OFFICER HAD INVOKED SEC.69B OF THE ACT. BUT, THERE WAS NOTHING FOUND BY THE ASSESSING OFFICER TO SHOW ANY AMOUNT IN EXCESS OF THE CONSIDERATION MENTIONED IN THE DOC UMENT. ASSESSEE ALSO PRODUCED A COPY OF TRIAL BALANCE BEFO RE THE CIT(A) TO SHOW THAT COST OF PROPERTY WAS DULY REFLECTED TH EREIN. REMAND REPORT WAS SOUGHT BY THE CIT(A) FROM THE ASSESSING OFFICER. IN SUCH REMAND REPORT, ASSESSING OFFICER STATED THAT THE CASH BOOK WAS PREPARED SUBSEQUENTLY AND INVESTMENT SHOWN IN T HE CASH BOOK WAS ` 5,76,800/- FOR THE SITE. AS PER ASSESSING OFFICER, BANK STATEMENT PRODUCED BY THE ASSESSEE DID NOT REF LECT THE PURCHASE COST PAID FOR THE PLOT. 5. CIT(A) AFTER CONSIDERING THE SUBMISSION AND REMAND REPORT OF ASSESSING OFFICER, WAS OF THE OPINION THAT THERE WAS NOTHING ON RECORD TO SHOW PAYMENT OF ANY AMOUNT OVER AND ABOVE WHAT WAS RECORDED IN THE PURCHASE DEED. NEVERTHELESS, ACCOR DING TO THE LD. CIT(A), THE SUM OF ` 5,76,800/- CLAIMED BY THE ASSESSEE AS INVESTED IN THE SITE, DID NOT TALLY WITH THE ITA. 732/MDS/12 4 BANK STATEMENT. HENCE, ACCORDING TO HIM, CONSIDERA TION PAID FOR PURCHASE OF PROPERTY REMAINED UNEXPLAINED, BUT THE ADDITION HAD TO BE RESTRICTED TO ` 5,76,800/-, AS RECORDED IN THE CASH BOOK OF ASSESSEE. 6. NOW BEFORE US, LD. D.R STRONGLY ASSAILING THE O RDER OF THE CIT(A) SUBMITTED THAT ASSESSING OFFICER HAD CLEARLY MENTIONED IN THE REMAND REPORT THE UNRELIABLE NATURE OF THE CASH BOOK PRESENTED BY THE ASSESSEE. AS PER LD.D.R, THE VALUE FIXED BY STAMP DUTY AUTHORITIES REFLECTED THE CORRECT MARKET VALUE. SOURCE FOR INVESTMENT IN THE PROPERTY WAS NOT EXPLAINED B Y THE ASSESSEE. AS PER LD. D.R. , ASSESSING OFFICER WAS JUSTIFIED IN CONSIDERING THE VALUE FIXED BY THE STAMP AUTHORITY TO BE THE CORRECT PURCHASE PRICE PAID BY THE ASSESSEE. HE WA S THEREFORE, OF THE OPINION THAT ADDITION WAS UNJUSTLY RESTRICTE D BY THE CIT(A). PER CONTRA, LD. A.R SUPPORTED THE ORDER OF THE CIT( A). 7. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORI TIES AND HEARD RIVAL CONTENTIONS. THERE IS NO DOUBT THAT TH E PRICE SHOWN IN THE CONVEYANCE DEED, THROUGH WHICH ASSESSEE PURCHAS ED PROPERTY ON 17.05.07 WAS ONLY ` FOUR LAKHS. THERE IS ALSO NO DOUBT THAT THE VALUE FOR THE PURPOSE OF STAMP DUTY WAS FIXED AT ` ITA. 732/MDS/12 5 25,71,000/- BY RDO (STAMPS) COIMBATORE, WHEN ASSESS EE PREFERRED A DISPUTE, EARLIER VALUE ADOPTED BY THE S UB REGISTRAR BEING ` 35,61,309/-. ASSESSING OFFICER HAD OBVIOUSLY APPL IED SEC 50C OF THE ACT FOR SUBSTITUTING THE VALUE FIXED BY STAMP AUTHORITY AGAINST CONSIDERATION SHOWN IN THE CONVEY ANCE DEED. SEC. 50C IS REPRODUCED HEREUNDER:- 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUI NG 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 BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFER RED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAY MENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED O R ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FUL L VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH 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 BY THE STAMP VALUATION AUTHORIT Y UNDER SUBSECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP V ALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTH ORITY, COURT OR THE HIGH COURT, 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, VALUATION OFFICER SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SEC TION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF1957). ITA. 732/MDS/12 6 EXPLANATION.-2 FOR THE PURPOSES OF THIS SECTION, T HE EXPRESSION ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR A SSESSED, 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 BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHO RITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 8. A READING OF THE ABOVE PROVISION, CLEARLY SHOW THAT IT CAN BE APPLIED WHERE CONSIDERATION IS RECEIVED OR CONSIDER ATION HAS ACCRUED TO AN ASSESSEE AS A RESULT OF TRANSFER OF A CAPITAL ASSET. IN OUR OPINION, THE SAID SECTION COULD NOT HAVE BEE N USED WHERE CONSIDERATION WAS PAID BY AN ASSESSEE FOR ACQUIRING A CAPITAL ASSET. ASSESSING OFFICER HAD MADE AN ADDITION OF ` 25,71,000/- CONSIDERING THE INVESTMENT TO HAVE BEEN MADE OUT O F UNDISCLOSED INCOME. OBVIOUSLY HE HAS APPLIED SEC. 6 9B FOR THIS PURPOSE. SEC.69B IS REPRODUCED HEREUNDER:- AMOUNT OF INVESTMENTS, ETC., NOT FULLY DISCLOSED I N BOOKS OF ACCOUNT. 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE [ASSESSING] OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN AC QUIRING SUCH BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEED S THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE 40[ASSESSING] OFF ICER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. ITA. 732/MDS/12 7 FOR APPLYING THE ABOVE SECTION, ASSESSING OFFICER H AS TO REACH A FINDING THAT AMOUNT EXPENDED FOR MAKING THE INVESTM ENT EXCEEDED THE AMOUNT RECORDED IN THE BOOKS OF ACCOUN T. IN OUR OPINION, VALUE FIXED BY THE STAMP AUTHORITIES FOR THE PURPOSE OF ASCERTAINING THE STAMP DUTY CANNOT PROVE THAT ASSE SSEE HAD PAID ANY AMOUNT IN EXCESS OF WHAT WAS RECORDED IN THE BO OKS. LD. CIT(A) HAS GIVEN A CLEAR FINDING THAT THE ASSESSEE HAD RECORDED A SUM OF ` 5,76,800/- IN ITS BOOKS AGAINST THE PURCHASE OF T HE SUBJECT PROPERTY. NO DOUBT, SINCE IT DID NOT TALLY WITH THE BANK STATEMENT PRODUCED, CIT(A) HAS HELD THAT SUCH AMOUN T TO BE UNEXPLAINED. THUS, WE ARE OF THE OPINION THAT THER E WAS NOTHING IN THE RECORD WHATSOEVER TO SHOW THAT ASSESSEE HAD PAID ANY MONEY IN EXCESS OF WHAT WAS STATED IN THE CONVEYANC E DEED OR IN ITS CASHBOOK. ASSESSING OFFICER HAD NOT EXAMINE D THE SELLER OF THE PROPERTY OR MADE ANY OTHER ENQUIRIES TO SUBSTAN TIATE HIS FINDINGS THAT ACTUAL AMOUNT PAID BY THE ASSESSEE WAS AS PER THE VALUE FIXED BY THE STAMP AUTHORITIES. WE ARE, THER EFORE OF THE OPINION THAT CIT(A) WAS JUSTIFIED IN SCALING DOWN T HE ADDITION OF ` 5,76,800/-. NO INTERFERENCE IS CALLED FOR. ITA. 732/MDS/12 8 9. IN RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 27 TH FEBRUARY, 2013. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 27 TH FEBRUARY, 2013. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 732/MDS/12 9 ITA. 732/MDS/12 10