VIKAS BHAGOJI SHINDE,PIMPRI PUNE V. INCOME TAX OFFICER WARD 8(4) AKURDI , NIGDI PRADHIKARAN

ITA 1879/PUN/2024

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The case revolves around the assessment of income and capital gains tax on a property transaction involving Vikas Bhagoji Shinde. The Assessing Officer added Rs. 30,50,000 to the assessee's income under section 56(vii)(b) of the IT Act, claiming the property was purchased below market value, and another Rs. 2,30,29,600 as short-term capital gain, treating an unregistered agreement as a sale deed. The CIT(A) upheld these additions, which led to the appeal before the Income Tax Appellate Tribunal. The Tribunal found that the total amount paid by the assessee, including payments for cancellation of previous deeds, exceeded the market value, and no effective transfer of property occurred as per legal standards, thus no capital gains tax was applicable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361037 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Other Referred Cases: Sanjay Sharma vs. Kotak Mahindra Bank Ltd, CIT vs. Balbir Singh Maini, Smt. Beena Shammi Choudhary vs. ITO, ACIT vs. Shri Jawahar Lal
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: BHARAT SHAH
• Keywords: Fair market value; Cost of acquisition
• Section: 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1879/PUN/2024 िनधाŊरण वषŊ / Assessment Year : 2014-15 Vikas Bhagoji Shinde, 517/2496, Akshay HSG Society, Sant Tukaram Nagar, Pimpri- 411018. PAN : ADYPS0967P Vs. ITO, Ward-8(4), Akurdi. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 07.08.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2014-15. 2. The assessee has raised the following grounds of appeal :- “1) The authorities below erred in making and confirming the addition of Rs. 3050000 u/s 56(vii)(b) of the Income Tax Act when the amount paid to the seller as well as to others for cancellation of deeds of this property is more than the market valuation. The addition made on this account be deleted and just and proper relief be granted to the assessee in this respect. Assessee by : Shri Bharat Shah Revenue by : Shri Arvind Desai Date of hearing : 27.02.2025 Date of pronouncement : 23.05.2025 ITA No.1879/PUN/2024 2 2) The authorities below erred in making and confirming addition of short term capital gain to the returned income by treating the land transaction as complete only on the basis of an agreement on the stamp paper of Rs. 100 and also when the possession of the property was not given and hence there is no transfer of asset and hence no capital gain. The addition made on this account be deleted and just and proper relief be granted to the assessee in this respect. 3) The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any ground of appeal before or at the time of hearing.” 3. Facts of the case, in brief, are that the assessee is an individual and furnished his return of income on 24.02.2016 declaring total income of Rs.5,79,930/- only. The case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued and served along with a questionnaire. During the course of assessment proceedings, the Assessing Officer found that the assessee and one other has purchased a piece of land on 28.04.2013 for Rs. 4,15,00,000/- (Including Stamp duty of Rs.4,38,70,400/-) the market rate of which was Rs.4,74,00,000/-, therefore the property appears to be purchased lesser than the market value. Accordingly, the Assessing Officer made addition of Rs.30,50,000/- which according to him was the 50% share of the difference of Fair market value & the actual consideration paid by the assesse, in the hands of the assessee as his income as per provisions of section 56(vii) of the IT Act. ITA No.1879/PUN/2024 3 3.1 It was also found by the Assessing Officer that the assessee and one other has entered into an un-registered agreement on Rs.100/- stamp paper on 28.09.2013 for sale of above land with M/s. Automatic IT Services and Vrinda Bal for a consideration of Rs.10.00 crore. Out of this amount, an amount of Rs.4,50,50,000/- was received by the assessee from M/s. Automatic IT Services Private Limited. Accordingly, the Assessing Officer held that the assessee has paid an amount of Rs.2,20,20,400/- as his share towards the purchase of the impugned property and has received an amount of Rs.4,50,50,000/- as his share towards the sale of the above property and accordingly an amount of Rs.2,30,29,600/- (4,50,50,000 - 2,20,20,400) was determined as short term capital gain on so-called sale of above impugned property. The Assessing Officer completed the assessment u/s 143(3) of the IT Act by determining total income at Rs.2,66,59,530/- as against the income returned by the assessee at Rs.5,79,930/-. The above assessed income includes two additions i.e. Rs.30,50,000/- as per the provisions of 56(vii) of the IT Act and another addition of Rs.2,30,29,600/- as short term capital gain on so-called sale of impugned property. ITA No.1879/PUN/2024 4 4. In first appeal after considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee, however the relief of Rs.1,00,000/- only was allowed to the assessee by reducing the addition u/s 56(vii) of the IT Act of Rs.30,50,000/- to Rs.29,50,000/-. However the addition of Rs.2,30,29,600/- as short term capital gain on so-called sale of impugned property was confirmed by learned CIT appeal. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from the side of the assessee submitted before the Bench that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR submitted before us that the impugned property was purchased on 28.04.2013 for 4.15 crores and assessee paid Rs.2,20,20,400/- as his share. It was further submitted by Ld. AR that apart from above payment an amount of Rs.4,84,87,400/- was also paid to the consenting parties for cancellation deed. It was contended by Ld. AR that the assessee himself has paid an amount of Rs.5,00,20,400/- in all for the purchase of impugned property and even if it is treated that the assessee has received Rs.5.00 crores as his share out of Rs.10 crores received on the so- called sale of impugned property there cannot be any short term ITA No.1879/PUN/2024 5 capital gain since the payment to acquire the property is more than the so called sale value . However, Ld. AR contended that the impugned property has not been sold since no stamp duty was paid and the agreement was made only on an un-registered stamp paper of Rs.100/-. It was contended that even as per Hon’ble Supreme Court the ownership does not pass until the deed is registered, even if possession is transferred, and consideration is paid, Sanjay Sharma vs. Kotak Mahindra Bank Ltd 2025 (2) TMI 796. In support of its contentions learned AR further relied on the order passed by Hon’ble Supreme Court in the case of CIT vs. Balbir Singh Maini vide Civil Appeal No.15619 of 2017 and also on Coordinate Bench decisions passed in the case of Smt. Beena Shammi Choudhary vs. ITO in ITA No.1849/PUN/2018 order dated 17.02.2022 and in the case of ACIT vs. Shri Jawahar Lal in ITA No.1844/MUM/2012 order dated 28.09.2016. Accordingly, Ld. AR prayed before the Bench to delete both the additions made by the Assessing Officer and sustained by Ld. CIT(A)/NFAC. 6. Ld. DR appearing from the side of the Revenue supported the orders passed by subordinate authorities and requested to confirm the same. ITA No.1879/PUN/2024 6 7. We have heard Ld. counsels from both the sides and perused the material available on record including the paperbook & case law relied on/furnished by the assessee. In this regard, we find that the assessee has jointly purchased the impugned property and paid Rs.4,15,00,000/- as per the registered sale deed. It was the contention of Ld. AR that apart from above payment extra amount was also paid to the consenting parties for cancellation of deed earlier made in their favour by the original owners of the impugned property. As per the contention of Ld. AR, total amount paid to the present owners as well as to other parties for cancellation of the deed amounts in all to Rs.5.00 crores and more and therefore addition of Rs.30 lakhs cannot be made as per the provisions of 56(vii)b of the IT Act, since the market value of the impugned property was Rs.4,74,00,000/- whereas the assessee made payment of more than Rs.5.00 crores for the purchase of above property towards his share. It was also the contention of Ld. AR of the assessee that only the advance was received on the basis of an unregistered agreement on a stamp paper of Rs.100/- and no stamp duty was paid, & even possession was not handed over to the so called purchaser although in the unregistered agreement it was ITA No.1879/PUN/2024 7 mentioned that the peaceful possession has been given. Accordingly, it was contended that the Assessing Officer erred in treating that the property has been sold. However, it was also the contention of Ld. AR that even if it is treated that the property has been sold and the assessee has received Rs.5.00 crores as his share out of total advance of Rs.10,00,00,000/- , no short-term capital gain can be said to arise since the assessee himself has paid Rs.5,00,20,400/- for the purchase of the impugned property as well as for cancellation of deed to the consenting parties and accordingly the Ld. AR submitted that no short-term capital gain arises on the so-called sale of the impugned property. 8. In this regard, we find that the assessee sought video conferencing from Ld. CIT(A)/NFAC and the same was granted also but the assessee remained absent and Ld. CIT(A)/NFAC decided the appeal on the basis of submission earlier made by the assessee and also on the basis of material available on the record. We further find that the assessee also furnished written submission on 30.11.2023 but Ld. CIT(A)/NFAC did not acknowledge the same in his order. From the contentions of Ld. AR, & on the basis of material available on record we find that admittedly the assessee ITA No.1879/PUN/2024 8 has paid some extra amount to consenting parties apart from the consideration to the seller of the property for cancellation of deed and the same fact has not been considered either by the Assessing Officer or by Ld. CIT(A)/NFAC, though the same fact was brought in the knowledge of the Assessing Officer as well as before Ld. CIT(A)/NFAC. Considering the totality of the facts of the case & in the light of the fact that the Revenue has not brought any evidence on record that the assessee has actually handed over the possession of the property to the purchaser and that the purchaser has started using the same, therefore, under these circumstances we find force in the arguments of learned counsel of the assessee that the property was not sold and therefore, there is no question of any short term capital gain. The Assessing Officer as well as Ld. CIT(A)/NFAC erred in treating the unregistered agreement on stamp paper of Rs.100/- as the sale deed. We further find that the assessee has paid Rs.5,00,20,000/- in all to the seller and consenting parties for cancellation of deed and therefore the question of purchasing the property at less than the fair market value does not arise since the market value of Rs.4,74,00,000/-, is less than the total cost of acquisition i.e. Rs.5,00,20,000/-. ITA No.1879/PUN/2024 9 Accordingly, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete both the additions made i.e. as per the provisions of section 56(vii)(b) of the IT Act as well as of short-term capital gain calculated on the basis of so-called sale of immovable property. Thus, the grounds of appeal raised by the assessee are allowed. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 23rd day of May, 2025. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 23rd May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "