DCIT, Circle-7(1), Hyd, Hyderabad V. Praveen Kumar Agarwal, Hyd, Hyderabad

ITA 872/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98582 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' (SMC) : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.872/HYD/2015 ASSESSMENT YEAR 2007-2008 THE DCIT , CIRCLE - 7(1) , HYDERABAD. VS. MR. PRAVEEN KUMAR AGARWAL, HYDERABAD-12. PAN AEOPK6599Q APPELLANT RESPONDENT REVENUE BY: MR. M. SITARAM ASSESSEE BY: MR. S. RAMA RAO DATE OF HEARING: 12 . 1 0.201 5 DATE OF PRONOUNCEMENT: 16 . 1 0.201 5 O R D E R PER B. RAMAKOTAIAH, AM: THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, HYDERABAD DATED 17.04.2015 FOR A.Y. 2007-2008. THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS : 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS. 2. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE TRANSFER AS PER SECTION 53A OF TRANSFER OF PROPERTY ACT WOULD OCCUR ONLY AFTER REGISTRATION OF THE PROPERTY WHICH WAS UPHELD BY THE DECISION OF HONBLE SUPREME COURT OF INDIA IN SLP(C).NO.13917 OF 2009 DATED 11.10.2011, IN THE CASE OF M/S. SURAJ LAMP & INDUSTRIES P. LTD., VS. STATE OF HARYANA AND ANOTHER, AND THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT PAID OF RS.3,80,000 SHOWN AS ADVANCE IS ONLY A PART PAYMENT. ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 2 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE COULD NOT PROVE BY ANY COGENT EVIDENCE THAT HE HAD NOT PAID ANY AMOUNT OTHER THAN THE AMOUNT CLAIMED TO HAVE BEEN PAID, IN THE LIGHT OF THE FACT THAT THE PROPERTY WAS VALUED AT RS.66,50,000 BY THE SRO. 4. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND THERE FORE, IT NEED NOT BE ADJUDICATED. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE AN INDIVIDUAL IS THE PROPRIETOR OF M/S. NAV DURGA DAL INDUSTRIES WHICH IS ENGAGED IN MANUFACTURING AND TR ADING OF PULSES. FOR THE IMPUGNED ASSESSMENT YEAR, THE AS SESSEE FILED ITS RETURN OF INCOME ON 08.10.2007 DECLARING INCOME OF RS.6,12,709. THE RETURN WAS PROCESSED UNDER SECT ION 143(1) OF THE ACT ON 28.07.2008 DETERMINING THE TAX ABLE INCOME OF THE ASSESSEE AT RS.11,66,718. 2.1. IN THIS CASE, A SURVEY OPERATION UNDER SECTIO N 133A OF THE I.T. ACT, 1961 WAS CONDUCTED ON 19.09.2 010 AT THE BUSINESS PREMISES OF THE ASSESSEE. AT THE TIME OF SURVEY, A SALE DOCUMENT BEARING PLOT NO.206 (PART), 207, 208 AND 209 ADMEASURING 1900 SQ. YARDS AT ALKAPOOR TOWNSHIP, SECTOR-III, BLOCK-B, RAJENDRANAGAR MANDAL , R.R. DISTRICT VIDE REGISTERED SALE DEED DATED 09.03.2007 WAS IDENTIFIED JOINTLY WITH HIS BROTHERS VIZ., MR. RAJE NDER KUMAR AGARWAL, MR. ASHOK KUMAR AGARWAL FOR AN AMOUN T OF RS.66,50,000 WHEREAS THE REGISTERED SALE DEED SH OWS THE VALUE AT ONLY RS.11,40,000. ADMITTEDLY, THE LAND IN ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 3 QUESTION WAS ALLOTTED TO ASSESSEE AND THE OTHER CO- OWNERS VIDE ALLOTMENT LETTER DATED 30.07.2005 ISSUED BY VI NDHYA DEVELOPERS AND BUILDERS P. LTD., (VDB) AND THE SALE CONSIDERATION OF RS.11,40,000 WAS PAID BY WAY OF CH EQUES BY ASSESSEE AND HIS BROTHERS THROUGH BANKING CHANN ELS TO THE VENDOR SMT. G. SUDHAKIRAN (THROUGH AGPA HOLDER, MR. G. APPA RAO). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COPY OF REGISTERED SALE DEED DATED 09.03.2007. IN RESPONSE, THE LEARNED A.R. FOR THE ASSESSEE FURNISHED COPY OF SAL E DEED AND BANK ACCOUNT STATEMENT OF THE ASSESSEE, IN SUPP ORT OF PAYMENT OF RS.3,80,000 (BEING 1/3 RD SHARE ON RS.11,40,000) MADE BY THE ASSESSEE TO THE LAND OWNE R MR. SUDHA KIRAN (VENDOR). THE A.O. OBSERVED THAT AS PER THE STATEMENT FILED BY THE VENDOR MR. SUDHA KIRAN BEFOR E THE SRO, RAJENDRA NAGAR, THE TOTAL MARKET VALUE OF THE ABOVE MENTIONED PROPERTY AS ON THE DATE OF REGISTRATION W AS AT RS.66,50,000 AND IT IS EVIDENT FROM THE REGISTERED SALE DEED THAT THE STAMP DUTY OF RS.5,89,470 AND REGISTRATION FEE OF RS.33,950 WERE PAID BY THE ASSESSEE AND HIS BROTHER S ON 09.03.2007 ON THE CHARGEABLE VALUE OF RS.66,50,000. THEREFORE, THE A.O. CALLED FOR EXPLANATION OF ASSES SEE IN RESPECT OF THE DIFFERENCE OF RS.55,10,000 BETWEEN T HE MARKET/CHARGEABLE VALUE OF RS.66,55,000 AND THE TOT AL CONSIDERATION OF RS.11,40,000 AS PER THE SALE DEED. IN RESPONSE TO THE SAID NOTICE, ASSESSEE SUBMITTED THA T THE PLOTS WERE ALLOTTED TO THEM VIDE ALLOTMENT LETTER D ATED 30 TH JULY, 2005 WHEREIN IT IS CLEARLY MENTIONED THAT THE PLOTS IN QUESTION SHALL BE REGISTERED UPON THE COMPLETION OF THE ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 4 DEVELOPMENT WORK AND REGISTRATION COULD NOT TAKE PL ACE AS THE SAID PROPERTY ALONG WITH FEW OTHER PLOTS WERE MORTGAGED TO HUDA AS PER THEIR NORMS AND THE REGIST RATION WOULD BE TAKEN PLACE ONLY UPON RELEASE OF MORTGAGE PLOTS BY HUDA. ACCORDINGLY, AFTER RELEASE OF THE MORTGAGE D PLOTS BY HUDA, THE PLOTS IN QUESTION ALLOTTED TO THE ASSE SSEE AND HIS BROTHERS WAS REGISTERED ON 09.03.2007 AND THE ASSESSEE AND HIS BROTHERS HAVE NOT PAID ANY OVER AN D ABOVE SUM. THE ADDITIONAL STAMP DUTY PAID WAS ONLY TO FULFIL THE GOVERNMENT NORMS AND THERE IS NO UNDISCL OSED INVESTMENT TOWARDS PURCHASE OF THE SAID PROPERTY BY THE ASSESSEE AND HIS BROTHERS. HOWEVER, THE A.O. HAS NO T CONVINCED WITH THE EXPLANATION OFFERED BY THE ASSES SEE AND BY INVOKING THE PROVISIONS OF SECTION 69B OF THE AC T, MADE ADDITION OF RS.22,16,667 (RS.3,80,000 + RS.18,36,66 7) BEING THE ASSESSEES SHARE OF 1/3 RD OF RS.66,50,000 WHICH WAS THE MARKET VALUE AS ON THE DATE OF REGISTRATION . 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) CONTENDIN G INTER ALIA THAT THE A.O. HAS MADE THE ADDITION ONLY ON PRESUMPTION AND SURMISES AND THERE IS NO DOCUMENTAR Y EVIDENCE BEFORE HIM THAT ANY EXTRA CONSIDERATION WA S PAID BY ASSESSEE AND HIS BROTHERS. THEREFORE, THE A.O. I S NOT JUSTIFIED IN TREATING THE STAMP DUTY VALUE OF RS.66 ,50,000 AS THE CONSIDERATION AND THAT THE A.O. HAD ERRONEOU SLY APPLIED SECTION 50C WHILE INVOKING SECTION 69B WHIC H HAD NO BASIS. THE LD. CIT(A) AFTER CAREFUL PERUSAL OF T HE PROVISIONS OF SECTION 50C AND 69B OF THE ACT, DELET ED THE ADDITION OF RS.18,36,667 BY OBSERVING THAT THE A.O. HAS ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 5 ERRED REFERRING THE PROVISIONS OF SECTION 50C, WHIL E APPLYING THE PROVISIONS OF SECTION 69B. SECTION 50C APPLIES FOR COMPUTATION OF CAPITAL GAINS AND CONSEQUENTLY I S APPLICABLE FOR THE SELLER OF A CAPITAL ASSET AND NO T ITS PURCHASER AS IN THE CASE OF ASSESSEE. THE PRESUMPTI ON CREATED BY SECTION 50C, HAS NO RELEVANCE FOR THE AS SESSEE. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE AS UNDER : 5.1. I HAVE CONSIDERED THE FACTS ON RECORD AND THE SUBMISSIONS OF THE AR. THE SALE CONSIDERATION RECORDED IN THE SALE DEED DATED 09.03.2007 IS ADMITTEDLY RS.11,40,000, OF WHICH THE APPELLANT'S SHARE WAS RS.3,80,000. THIS SUM OF RS.3,80,000 IS ALSO THE AMOUNT RECORDED IN THE STATEMENT OF AFFAIR S OF THE APPELLANT AS ON 31.03.2006 AS THE AMOUNT PAID F OR THE LAND. THERE IS NO DIRECT EVIDENCE OF ACTUAL PAY MENT OF ANY SUM OVER AND ABOVE THE SUM OF RS.3,80,000 (APPELLANT'S SHARE) OR THE AGGREGATE AMOUNT OF RS.11,40,000. 5.2. THE PRESUMPTION CREATED BY SEC.50C APPLIES FOR COMPUTATION OF CAPITAL GAINS AND CONSEQUENTLY IS APPLICABLE FOR THE SELLER OF A CAPI TAL ASSET AND NOT ITS PURCHASER AS IN THE CASE OF THE APPELLANT. THE PRESUMPTION CREATED BY SEC.50C, THEREFORE, HAS NO RELEVANCE FOR THE APPELLANT. 5.3. THERE IS NO DOUBT THAT IN APPLYING SEC.69B, THE ASSESSING OFFICER HAS NOT REFERRED TO THE PROVI SIONS OF SEC.50C. HOWEVER, BY ADOPTING THE MARKET VALUE A S PER THE SRO AS THE SALE CONSIDERATION, THE ASSESSIN G OFFICER HAS INVOKED THE RATIO OF SEC.50C WHICH IS N OT PERMITTED. SEC.69B WOULD REQUIRE THE ASSESSING OFFI CER TO ESTABLISH THAT AN INVESTMENT HAD BEEN ACTUALLY MADE BY THE APPELLANT FOR WHICH THE SOURCES HAD NOT BEEN EXPLAINED. IN THE APPELLANTS CLAIM, THERE IS NO EVIDENCE OF SUCH AN INVESTMENT IN THE FIRST PLACE. 5.4. THE REASONING ADOPTED BY THE ASSESSING OFFICER IN CONCLUDING THAT THERE WAS AN INVESTMENT ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 6 OVER AND ABOVE THE AMOUNT RECORDED IN THE SALE DEED IS AT BEST TENUOUS AND PRESUMPTIVE. THE ASSESSING OFFICER HAS REFERRED TO THE FACT THAT THE PAYMENT F OR THE LAND WAS DESCRIBED IN THE STATEMENT OF AFFAIRS AS A N 'ADVANCE' AND THAT THEREFORE, THE SUM OF RS.3,80,00 0 COULD NOT BE CONSIDERED AS FULL SALE CONSIDERATION. I DO NOT AGREE WITH THIS VIEW. UNTIL SUCH TIME THAT THE LAND WAS REGISTERED IN FAVOUR OF THE APPELLANT, ANY PAYM ENT MADE FOR IT WAS REQUIRED TO BE RECORDED AS AN ADVAN CE WHETHER IT WAS A PART PAYMENT OR A FULL PAYMENT. TH E REFERENCE TO THE SUM OF RS.3,80,000 AS AN 'ADVANCE' CANNOT, THEREFORE, LEAD TO ANY INFERENCE ADVERSE TO THE APPELLANT. 5.5. THE ASSESSING OFFICER HAS ALSO REFERRED TO THE FACT THAT THE LAND IN QUESTION WAS PART OF THE LAND MORTGAGED TO HUDA AND THEREFORE, COULD NOT HAVE BEEN TRANSFERRED TO THE APPELLANT. INDEED, IT IS ADMITTED BY THE APPELLANT THAT THE LAND HAD NOT BEE N TRANSFERRED IN 2005 ITSELF DUE TO THIS SPECIFIC RES TRICTION PLACED ON IT. IF THE DEVELOPER WAS BARRED FROM EVEN ENTERING INTO AN AGREEMENT FOR THE TRANSFER OF SUCH LAND, AN AGREEMENT OF SALE (AS EVIDENCED BY THE ALLOTMENT LETTER) WOULD CONSTITUTE A VIOLATION OF T HE MORTGAGED TERMS WITH HUDA. HOWEVER, BY NO STRETCH OF IMAGINATION CAN IT BE CONSIDERED EVIDENCE OF PAYMENT OF EXTRA UNRECORDED CONSIDERATION. 5.6. IN VIEW OF THE ABOVE, I FIND THAT THERE IS NO EVIDENCE OF ANY UNEXPLAINED INVESTMENT BY THE APPELLANT NOR HAS THE ASSESSING OFFICER DISCHARGED THE BURDEN CAST ON HER TO ESTABLISH FACTS AND CIRCUMSTANCES FROM WHICH A REASONABLE INFERENCE CAN BE DRAWN THAT THE APPELLANT HAD NOT CORRECTLY DISCLOSED THE CONSIDERATION PAID BY HIM. 5.7. THE ADDITION OF RS.18,36,667 TO THE TOTAL INCOME UNDER SECTION 69B IS THEREFORE, DIRECTED TO BE DELETED AND THE APPEAL IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LEARNED D.R. HA S ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 7 STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFIC ER. THE LD. COUNSEL WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES PRAYED FOR CONFIRMATION OF THE ORDER OF THE LD. CIT(A). 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITH RESP ECT TO GROUND NOS.2 AND 3, THE CASE LAW RELIED ON BY THE R EVENUE IN THE CASE OF AMARKUMARI SURANA VS. CIT (1996) 89 TAXMANN 554 (RAJ) WAS NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE. IN THAT CASE, THE HONBLE SUPREME COU RT HELD THAT THE BURDEN WAS ON THE REVENUE TO PROVE THAT TH E ACTUAL CONSIDERATION WAS MORE THAN WHAT WAS DISCLOS ED BY THE ASSESSEE. IT IS EVIDENT FROM THE MATERIAL ON RE CORD THAT THE SALE CONSIDERATION WAS AT RS.11,40,000 WHICH WA S RECEIVED BY THE VENDOR. IN MY VIEW MERE PAYMENT OF EXTRA STAMP DUTY TO FULFIL THE GOVERNMENT NORMS, MAY NOT COME IN THE LINE OF ANY UNEXPLAINED INVESTMENT BY THE AS SESSEE AND HIS BROTHERS IN PURCHASE OF PROPERTY IN QUESTIO N, UNLESS ANY EVIDENCE IS AVAILABLE WITH THE DEPARTMEN T THAT THE ASSESSEE AND HIS BROTHERS HAS PAID ANY EXTRA SU M, FOR INVOKING THE PROVISIONS OF SECTION 69B. IN THE INST ANT CASE, THE A.O. HAS MADE THE ADDITION ON TWO COUNTS I.E., (1) THE SUM OF RS.3,80,000 IS ONLY AN ADVANCE AND (2) THOUG H, THE PLOTS WERE ALLOTTED IN THE YEAR 2005, THE REGISTRAT ION TOOK PLACE IN THE YEAR 2007 BY PAYING THE BALANCE CONSID ERATION. 5.1. AS COULD BE SEEN FROM THE ALLOTMENT LETTER D ATED 30.07.2005 AS WELL AS THE EXPLANATION OFFERED BY TH E ASSESSEE VIDE LETTER DATED 07.02.2014 DURING THE CO URSE OF ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 8 ASSESSMENT PROCEEDINGS, THE REGISTRATION COULD NOT TAKE PLACE DUE TO MORTGAGE OF PLOTS WITH THE HUDA AND ON RELEASE OF THE MORTGAGED PLOTS BY HUDA ON 31.01.200 7 VIDE LR.NO.7676/MP2/PLG/HUDA, THE REGISTRATION TOOK PLACE ON 09.03.2007. THE A.O. COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE THAT THE ASSESSEE AND HIS BROT HERS MADE UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTY . EVEN IF AT ALL ANY UNEXPLAINED INVESTMENT HAS BEEN MADE BY THE ASSESSEE AND HIS BROTHERS IN PURCHASE OF PRO PERTY, THE SAID SUM COULD NOT BE BROUGHT TO TAX IN THIS YE AR AS ASSESSEE PURCHASED SAME IN AN EARLIER YEAR. A.O. SI MPLY CAME TO THE CONCLUSION THAT UNEXPLAINED INVESTMENT HAS BEEN MADE BY THE ASSESSEE AND HIS BROTHERS IN PURCH ASE OF PROPERTY IN QUESTION IN THIS YEAR EVEN THOUGH THE D EED ITSELF SPECIFIES THE FACT OF PURCHASE IN AN EARLIER YEAR AND REASONS FOR NON-REGISTRATION IN THAT YEAR. EVEN THE CONSIDERATION PAID BY ASSESSEE IN ADVANCE WAS SPECI FIED. IN VIEW OF THE ABOVE, I FIND NO MERIT IN REVENUE GROUN DS AND ACCORDINGLY THEY ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.1 0.2015. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH OCTOBER, 2015 VBP/- ITA NO.872/HYD/2015 MR. PRAVEEN KUMAR AGARWAL, HYD. 9 COPY FORWARDED TO: 1. THE DCIT, CIRCLE 7(1), 2 ND FLOOR, B - BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. MR. PRAVEEN KUMAR AGARWAL, 15 - 9 - 358/14, 1 ST FLOOR, MUKHTIAR GUNJ, HYDERABAD 12. 3. THE CIT(A) - I II , HYDERABAD. 4. THE CIT - I I I , HYDERABAD. 5. THE DR ' A ' (SMC) BENCH, ITAT, HYDERABAD 6. GUARD FILE