Lalita, New Delhi V. DCIT Central Circle-3, New Delhi

ITA 9874/DEL/2019

AI Insights

The case involves Smt. Lalita, who appealed against the order of the Commissioner of Income-Tax (Appeals), which confirmed the additions made by the Assessing Officer under Section 143(3) read with Section 153A of the Income-Tax Act, 1961 for the assessment year 2014-15. The primary issues in the appeal were the addition of Rs.22,60,000 to the assessee's income, which was deemed as the difference between the circle rate and the actual sales consideration paid for a property, and the addition of Rs.7,00,000 which was treated as an unexplained advance payment for another property. The Tribunal found merit in the assessee's arguments regarding the property valuation and the cash payment issue, leading to the restoration of the valuation issue to the Assessing Officer and the deletion of the Rs.7,00,000 addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300682 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-06-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 29-12-2019
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C; 56(2); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 9874/Del/2019 Assessment Year: 2014-15 Smt. Lalita, 248, Ist Floor, Gujaranwalan Town, Part-III, New Delhi-1100 09 Vs. DCIT, Central Circle-2, New Delhi. PAN :AATPL3102H (Appellant) (Respondent) ORDER PER AMIT SHUKLA, JUDICIAL MEMBER: The aforesaid appeal has been filed by the assessee against order dated 31.10.2019, passed by learned Commissioner of Income- Tax(Appeals), New Delhi for the quantum of assessment passed under Section 143(3) read with section 153A of the Income-Tax Act, 1961 for the assessment year 2014-15. 2. In various grounds of appeal, the assessee has challenged two issues, firstly, the addition of Rs.22,60,000 after invoking the Appellant by Shri G.N. Gupta, Adv. Respondent by Shri Dilip Singh Kothari, CIT DR Date of hearing 14.06.2023 Date of pronouncement 26.07.2023 2 ITA No. 9874/Del./2019 provisions of section 56(2)(vii)(b)(ii) of the Income-Tax Act, 1961 on the ground that circle rate of the property was more than the sales consideration; and secondly, the addition of Rs.7,00,000 by treating the advance payment as unexplained. 3. The brief facts qua the issue are that the assessee had purchased a property located at No.248, Ist Floor, Gujarawalan Town, Part-III, New Delhi-110009 on 10.09.2013. The document in respect of purchase of property was found during the search in the name of the assessee, Smt. Lalita on 13.06.2016. The said document revealed that as per the circle rate, the value was Rs.1,05,20,000, however, the assessee had paid sales consideration of Rs.60,00,000/- only. In response to the show-cause-notice, the assessee submitted that the said property belonged to Shri T.S. Shekho, who lives in Canada and it was a distress sale because the said property was under tenancy. Learned Assessing Officer held that as per Proviso to section 56(2)(vii)(b)(ii) of the Act, the sales consideration is deemed to be as per the circle rate at Rs.1,05,20,000 and since the assessee was half shareholder, therefore, he added 50% of additional value of Rs.45,20,000 which worked out to Rs.1,05,20,000. 3 ITA No. 9874/Del./2019 4. Further, another document was found during the course of search in the case of Late Sudesh Kumar, husband of the assessee which relates to purchase of property No.2/30, Roop Nagar, Delhi jointly by Shri Arvind Manchand and Shri Sudesh Kumar, in the ratio of 60% and 40%. As per the said document, this property was agreed to be sold at a sale consideration of Rs.70,00,000 to the assessee and amount of Rs.9,00,000 was paid as an advance for this property as per receipt dated 30.08.2013 and out of which Rs.7,00,000 was paid in cash. This property was sold to Rs.28,25,000 during the financial year 2013-14. Learned Assessing Officer held that the payment of Rs.7,00,000 made by the assessee is unexplained investment and and accordingly he taxed under Section 115BBE of the Act. The said addition has been confirmed by the learned Commissioner of Income- Tax(Appeals). 5. Before us, the learned counsel for the assessee submitted that the assessee along with her late husband, Shri Sudesh Kumar were residing on the Ist Floor of the property situated at 248 Gujarawala Town as a tenant and paying a rental income of Rs.7,000 per month to Shri T.S. Sekho, who could not find any purchaser and, therefore, he 4 ITA No. 9874/Del./2019 was forced to sell the property at Rs.60,00,000 as a distress sale. It was further submitted that, had the property been vacated or unoccupied, then perhaps the fair market value could have been Rs.1,05,20,000. He further submitted that, once the assessee has challenged the fair market value as per the stamp duty valuation, then the matter should have been referred to the Valuation Officer of the Department in view of the 3 rd proviso to section 56(2) of the Act. He requested that in the interest of justice the matter should be restored back to the file of the Assessing Officer for making reference to the valuation officer to ascertain the correct fair market value of the property as it was a tenanted property. 6. Regarding the addition of Rs.7,00,000, he submitted that it was clear from the record that the said payment was paid by her husband, late Shri Sudesh Kumar and in his case assessment order has already been passed under Section 143(3) of the Act and same has been accepted. Thus, once this payment was made to the purchaser has been accepted in the case of the husband, then, no addition is warranted in the case of the assessee. 5 ITA No. 9874/Del./2019 7. Learned Departmental Representative strongly relied upon the order of the Assessing Officer and learned Commissioner of Income- Tax(Appeals). 8. We have heard the rival submissions and perused the relevant findings given in the impugned order. In so far as addition of Rs.22,60,000 after invoking the deeming provisions of section 56(2)(vii)(b)(ii) of the Act, the assessee’s case has been that the said property in question was occupied by her husband late, Shri Sudesh Kumar who was a police officer along with her and family members for the last several years on a monthly rental income of Rs.7,000 per month. Since the owner of the said property Shri T.S. Sekho was not able to find a suitable purchaser, therefore, he was forced to sale to the assessee at a total sale consideration of Rs.60,00,000. Once the assessee has disputed the value, then, the Assessing Officer should have referred the valuation of such property to the valuation officer in view of 3 rd proviso which reads as under: “Provided that where the stamp duty value of immovable property as referred to in sub-clause(b) is disputed by the assessee on grounds mentioned in sub-section(2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub- 6 ITA No. 9874/Del./2019 section(15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub- clause (b) as they apply for valuation of capital asset under those sections”. 9. Accordingly, this issue is restored back to the file of the Assessing Officer and shall refer the dispute for valuation of the property as on the date of sale to the Valuation officer and proper opportunity of hearing should be given to the assessee. Accordingly, ground nos. 1 to 4 are restored back to the file of the assessee and accordingly the grounds are allowed for statistical purposes. 10. Ground no.5 relating to challenging the addition within the scope of section 153A of the Act in the absence of any incriminating material has not been argued, therefore, the same is dismissed as not pressed. 11. In so far as the addition of Rs.7,00,000 is concerned, on the ground that the assessee has made cash payment to Smt. Shally Vashisth for purchase of property, we find that it is a matter of fact that this property was purchased jointly by Shri Arvind Manchanda and Shri Sudesh Kumar, husband of the assessee in ratio of 60% and 40% and the agreement for this property was of Rs.70,00,000 and an 7 ITA No. 9874/Del./2019 amount of Rs.9,00,000 was paid in advance out of which Rs.7,00,000 was paid in cash by the assessee. It has been brought on record that this amount of Rs.7,00,000 was actually paid by her husband and this matter has already been considered in the assessment order of late Shri Sudesh Kumar vide order dated 30.12.2018 passed under Section 153A/143(3) of the Act wherein the same has been accepted. Once the payment of cash of Rs.7,00,000 has been accepted in the case of her husband, then, no separate addition can be made in the case of the assessee, therefore, the same is directed to be deleted. 12. In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the open court on 26 th July, 2023. Sd/- Sd/- ( G.S. PANNU ) (AMIT SHUKLA) PRESIDENT JUDICIAL MEMBER Dated: 26 th July, 2023. Mohan Lal Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi