Shri Parinda Bhaveshkumar Borda, Surat v. Income Tax Officer, Ward 3(3)(5), Surat

ITA 360/SRT/2018 | 2014-2015
Pronouncement Date: 31-08-2021 | Result: Allowed
Expert Summary: Where the assessee had entered into agreement to sale cum possession of immovable property and paid substantial consideration prior to the date of amendment of the section 56(2)(vii)(b)(ii) of the act (i.e., if the consideration paid is less than the stamp duty value, the difference in consideration shall be deemingly taxable), the AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement although the final sale deed was executed and registered after the amendment in Section 56(2)(vii).

Appeal Details

RSA Number 36025614 RSA 2018
Assessee PAN BBWPB2243J
Bench Surat
Appeal Number ITA 360/SRT/2018
Duration Of Justice 3 year(s) 3 month(s) 22 day(s)
Appellant Shri Parinda Bhaveshkumar Borda, Surat
Respondent Income Tax Officer, Ward 3(3)(5), Surat
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 31-08-2021
Assessment Year 2014-2015
Appeal Filed On 09-05-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH SURAT BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND DR. ARJUN LAL SAINI ACCOUNTANT MEMBER ITA NO. 360/SRT/2018 (AY 2014-15) (H EARING IN VIRTUAL COURT) PARINDA BHAVESHKUMAR BORDA B-32 SADHNA SOCIETY MINI BAZAR VARACHHA ROAD SURAT-395006 PAN : BBWPB 2243 J VS INCOME TAX OFFICER WARD-3(3)(5) AAYKAR BHAVAN MAJURA GATE SURAT-395001 ASSESSEE / APPELLANT REVENUE /RESPONDENT ASSESSEE BY SHRI MEHUL R. SHAH C.A REVENUE BY MS. ANUPAMA SINGLA SR-DR DATE OF HEARING 04 .0 8 .2021 DATE OF PRONOUNCEMENT 31.08.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 SURAT DATED 31.03.2018 FOR ASSESSMENT YEAR (AY) 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.10 35 918/- U/S 56(2)(VII)(B)(II) OF I.T. ACT ON ACCOUNT OF DIFFERENCE BETWEEN THE CONSIDERATION AMOUNT PAID AND STAMP DUTY VALUE OF PROPERTY. 2. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY PLEASE BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND HAS SHOWN INCOME OF FROM INTERIOR DESIGNING CONSULTANT FOR THE YEAR ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 2 UNDER CONSIDERATION. THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2014-15 ON 26.02.2015 DECLARING TOTAL INCOME OF RS.2 35 300/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT THE ASSESSING OFFICER ON THE BASIS OF AIR INFORMATION NOTED THAT ASSESSEE ALONG WITH OTHER CO- OWNERS HAS PURCHASED IMMOVABLE PROPERTY FOR RS.1.16 CRORES ON 30.10.2013.THE ASSESSEE WAS ASKED TO SUBMIT COPY OF PURCHASED DEED. THE ASSESSEE FURNISHED THE COPY OF REGISTERED PURCHASED DEED WHEREIN ASSESSEES SHARE IS 1/10 TH I.E. 10% OF THE ENTIRE LAND. ON PERUSAL OF SALE DEED THE ASSESSING OFFICER NOTED THAT STAMP VALUATION AUTHORITY (SVA) DETERMINED THE STAMP VALUE OF LAND AT RS.2.19 CRORES ON THE BASIS OF VALUE DETERMINED BY STAMP VALUATION AUTHORITY. THE ASSESSEES SHARES IS RS.21 95 918/-. THERE WAS A DIFFERENCE OF RS.10 35 918/- ( 21 95 918 11 60 000 ) VIZ-A VIZ THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE DETERMINED BY SVA. ON THE BASIS OF DIFFERENCE THE ASSESSING OFFICER TOOK HIS VIEW THAT ASSESSEE UNDER STATED THE VALUE OF PROPERTY IN QUESTION. ACCORDINGLY SHOW CAUSE NOTICE WAS ISSUED ON 25.10.2016 AS TO WHY THE DIFFERENCE OF RS.10 35 918/- SHOULD NOT BE ADDED TO THE INCOME OF ASSESSEE UNDER SECTION 56(2)(VII)(B)(II) OF THE INCOME TAX ACT 1961 (THE ACT). THE ASSESSEE FILED REPLY OF SAID SHOW CAUSE NOTICE VIDE DATED 16.11.2016. IN REPLY THE ASSESSEE STATED THAT HE ALONG WITH OTHER CO-OWNERS PURCHASED THE PROPERTY ON 28.10.2013 THE ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 3 PROVISION OF SECTION 56(2)(VII)(B)(II) WHICH IS INVOKED AGAINST THE ASSESSEE IS EFFECTIVE FROM ASSESSMENT YEAR 2014-15. THE ASSESSEE ALONG WITH OTHER CO- OWNERS PURCHASED THE PROPERTY PRIOR TO AMENDMENT. THE ASSESSEE ALONG WITH OTHER CO-OWNERS PAID THE CONSIDERATION OF RS.87.99 LAKH ON 28.12.2012 THAT IS PRIOR TO 01-04-2013. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER BY TAKING VIEW THAT TRANSFER OF IMMOVABLE PROPERTY CAN BE LEGALLY AND LAWFULLY TRANSFER ONLY IN REGISTERED DEED AND MERE AGREEMENT AND AGREEMENT IS NOT A VALID MODE OF TRANSFER OF IMMOVABLE PROPERTY. ACCORDINGLY ASSESSING OFFICER MADE THE ADDITION OF DIFFERENCE OF RS.10 35 918/-. 3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) [CIT(A)] THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION AND ALSO RELIED ON THE VARIOUS CASE LAW. THE SUBMISSION OF ASSESSEE IS RECORDED IN PARA-7 OF THE ORDER OF LD. CIT(A). IN THE WRITTEN SUBMISSIONS THE ASSESSEE STATED THAT ASSESSEE PURCHASED LAND WITH HIS CO-OWNERS FOR CONSIDERATION OF RS.1.16 CRORES THE ASSESSEES SHARE IS 10%. DURING THE ASSESSMENT THE AO ASKED THE ASSESSEE TO FURNISH COPY OF THE SALE DEED. THE ASSESSEE FILED THE SALE DEED ON RECORD. ON PERUSAL OF SALE DEED THE AO NOTED THAT SVA VALUED THE PROPERTY AT RS. 2.19 CRORE. IT WAS SUBMITTED THAT THE ASSESSEE WITH OTHER PURCHASER ENTERED INTO AGREEMENT TO SALE CUM POSSESSION DATED 28.03.2013 COPY OF WHICH WAS ALSO ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 4 FURNISHED. IT WAS EXPLAINED THAT THE FINAL PAYMENT OF THE SALE CONSIDERATION WAS PAID IN AY 2013-14 AND THE TRANSFER WAS AFFECTED PRIOR TO 01.04.2013 AND POSSESSION OF THE PROPERTY WAS TAKEN PRIOR THERETO. THE ASSESSEE CLAIMED THAT PROVISION OF SECTION 56(2)(VII)(II) WHICH WAS INTRODUCED BY FINANCE ACT 2013 W.E.F 01.04.2013 IS NOT APPLICABLE ON THE FACTS OF THE ASSESSEE AS AGREEMENT TO SALE WAS EXECUTED ON 28.03.3013. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE CONCURRED WITH THE FINDING OF THE ASSESSING OFFICER. THE LD. CIT(A) FURTHER HELD THAT FINANCE BILL 2013 WAS INTRODUCED IN FEBRUARY 2013 AND THE SAME WAS AMENDED TO INCLUDE CASES OF INADEQUATE CONSIDERATION. THE AMENDMENT WAS WIDELY KNOWN IN FEBRUARY 2013 ITSELF. THUS THE CONTENTION OF THE ASSESSEE THE AGREEMENT EXECUTED PRIOR TO MARCH 2013 WILL NOT BE COVERED UNDER SECTION 56(2)(VII)(B)(II) AND THAT THE AGREEMENT APPEARS TO BE HAVE BEEN MADE IN MARCH 2013 THE AGREEMENT IS NOT REGISTERED THE DATE CANNOT BE INDEPENDENTLY VERIFIED AND PROBABLY THE AGREEMENT COMPOSITION BEING ANTI DATE TOO. FURTHER AGGRIEVED THE ASSESSEE WAS FILED PRESENT APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. SR. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE. THE LD AR FOR THE ASSESSEE SUBMITS THAT AT THE TIME OF EXECUTION OF THE AGREEMENT CUM POSSESSION ON 28.03.2013 THE ASSESSEE HAS PAID MORE THAN ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 5 80% OF THE SALE CONSIDERATION. THE SUBSTANTIAL TRANSFER TOOK PLACE ON HANDING OVER POSSESSION ON 28.03.3013 THE SUBSTANTIAL PART OF CONSIDERATION WAS PAID THROUGH CHEQUES. THE DETAILS OF ALL THE CHEUQUES PAYMENTS ARE DULY MENTIONED IN THE AGREEMENT DATE 28.03.2013. THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT SUB-CLAUSE-(II) WAS INTRODUCED TO SECTION 56(2)(VII) FROM AY 2014-15 SO AS TO ENABLE THE AO TO TAX DIFFERENCE CONSIDERATION IF CONSIDERATION IS LESS THAN STAMP DUTY. THE AO IS NOT PERMITTED TO INVOKE THE PROVISIONS OF SUB-CLAUSE (II) AS IT WAS NOT ON THE STATUE ON THE DATE OF AGREEMENT. TO SUPPORT HIS SUBMISSIONS THE LD. AR FOR THE ASSESSEE RELIED ON THE DECISIONS OF TRIBUNAL IN ACIT VS ANALA ANJIBABU (185 ITD 0001) (VISAKHAPATNAM- TRIB) AND M SHIV PARVATHI & OTHER VS ITO [129 TTJ 463 (VISAKHAPATNAM- TRIB). 5. ON THE OTHER HAND THE LD. SR DR FOR THE REVENUE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT TRANSFER OF THE IMMOVABLE PROPERTY TAKES PLACE ONLY ON THE EXECUTION OF REGISTERED SALE DEED WHICH TOOK PLACE ONLY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES CAREFULLY. WE HAVE ALSO SEEN THE VARIOUS DOCUMENT PLACED ON RECORD WHICH CONSIST OF WRITTEN SUBMISSIONS BEFORE LD CIT(A) REPLY TO THE SHOW CAUSE NOTICE BEFORE AO COPY OF ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 6 REGISTERED SALE DEED DATED 10.09.2013 COPY OF THE AGREEMENT TO SALE DATED 28.03.2013 COPIES OF THE BANK STATEMENT OF PURCHASER SHOWING THE PAYMENTS THROUGH CHEQUES. WE HAVE ALSO DELIBERATED ON THE VARIOUS CASE LAWS RELIED BY THE LD. AR FOR THE ASSESSEE. DURING THE ASSESSMENT THE AO MADE ADDITION OF RS. 10 35 918/- BY TAKING VIEW THAT THE ASSESSEE ALONG WITH HER CO-OWNERS HAVE SHOWN SALE CONSIDERATION AT RS. 1.16 CRORE HOWEVER THE SVA AT THE TIME OF REGISTRATION OF SALE DEED VALUED THE PROPERTY AT RS. 2.9 CRORE. THE ASSESSEE IS HAVING 1/10 SHARE IN THE SAID PROPERTY THEREBY THE DIFFERENCE THEREOF (TO THE EXTENT OF ASSESSEES SHARE) WAS ADDED UNDER SECTION 56(2)(VII)(II) OF THE INCOME-TAX ACT. AS RECORDED ABOVE THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS BEFORE LD CIT(A). WE FIND THAT THE LD CIT(A) CONCURRED WITH THE FINDING OF THE AO BY HOLDING THAT THAT FINANCE BILL 2013 WAS INTRODUCED IN FEBRUARY 2013 AND THE SAME WAS AMENDED TO INCLUDE CASES OF INADEQUATE CONSIDERATION. THE AMENDMENT WAS WIDELY KNOWN IN FEBRUARY 2013 ITSELF. IT WAS ALSO HELD THAT THE CONTENTION OF THE ASSESSEE THAT AGREEMENT EXECUTED PRIOR TO MARCH 2013 WILL NOT BE COVERED UNDER SECTION 56(2)(VII)(B)(II) THE AGREEMENT APPEARS MADE IN MARCH 2013 IS NOT REGISTERED THE DATE CANNOT BE INDEPENDENTLY VERIFIED AND PROBABLY THE AGREEMENT COMPOSITION BEING ANTI DATE TOO. WE FIND THAT NEITHER THE AO NOR THE LD CIT(A) INVESTIGATED ABOUT THE NON-GENUINENESS OF THE AGREEMENT. NO ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 7 NOTICE TO THE SELLER WAS ISSUED BY LD CIT(A) BEFORE TAKING VIEW THAT PROBABLY THE AGREEMENT COMPOSITION BEING ANTI DATE TOO . THE LD CIT(A) TOOK HIS VIEW ONLY ON HIS PRESUMPTION AND ASSUMPTION . THE AO INVOKED THE PROVISION OF SECTION 56(2)(VII)(B)(II) WITHOUT HAVING ANY EVIDENCE OF EXCESS CONSIDERATION OVER AND ABOVE THE SALE DEED. IN ADDITION TO THE SALE CONSIDERATION. WE FURTHER FIND THAT THE ASSESSEE ENTERED IN TO AGREEMENT WITH THE SELLER ON 28.03.2013. THE SUBSTANTIAL PART OF THE SALE CONSIDERATION WAS ALSO PAID TO THE SELLER WHICH IS ABOUT 80% OF THE TOTAL SALE CONSIDERATION. THOUGH ULTIMATELY THE SALE DEED WAS REGISTERED ON 10.09.2013. THE DETAILS OF SALE CONSIDERATION IS ALSO MENTIONED IN THE REGISTERED SALE DEED WHICH STRENGTHEN THE CLAIM OF THE ASSESSEE THAT SUBSTANTIAL PART OF CONSIDERATION WAS PAID ON THE DAY OF EXECUTION OF THE INITIAL AGREEMENT. THE ASSESSEE CLAIMED THAT THE POSSESSION OF THE LAND WAS ALSO OBTAINED BY THEM AT THE TIME OF AGREEMENT. THIS FACT IS NOT DISPUTED BY THE AO. 7. BEFORE US THE LD AR FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT WHEN THE ASSESSEE ENTERED IN AGREEMENT WITH THE SELLER PAID SUBSTANTIAL CONSIDERATION AND OBTAINED POSSESSION THE SUB-CLAUSE-(II) OF CLAUSE (VII) OF SUB-SECTION (2) OF SECTION 56 WAS NOT ON THE STATUE BOOK AND IT WAS BROUGHT BY WAY OF AMENDMENT IN FINANCE ACT-2013 W.E.F. 01.04.2014 AND RELIED ON THE DECISION OF TRIBUNAL IN ACIT VS ANALA ANJIBABU (SUPRA). WE FIND THE COORDINATE ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 8 BENCH OF TRIBUNAL IN ACIT VS ANALA ANJIBABU (SUPRA) WHILE CONSIDERING ALMOST SIMILAR FACTS HELD AS UNDER 6.2. -----------------. THUS WHERE ANY INDIVIDUAL OR HINDU UNDIVIDED FAMILY RECEIVES ANY IMMOVABLE PROPERTY WITHOUT CONSIDERATION THE STAMP DUTY VALUE OF SUCH PROPERTY REQUIRED TO BE CONSIDERED AS THE CONSIDERATION PAID AND THE SAID AMOUNT TO BE TAXED U/S 56(2)(VII)(B) OF THE ACT. IN THE INSTANT CASE AS DISCUSSED EARLIER THE ASSESSEE HAS PAID THE CONSIDERATION AND THERE WAS NO EVIDENCE FROM THE DEPARTMENT TO SHOW THAT THE ASSESSEE HAS PAID THE EXCESS CONSIDERATION OVER AND ABOVE THE SALE DEED. WITH EFFECT FROM 01.04.2014 THE ACT HAS BEEN AMENDED AND THE NEW SUB CLAUSE (II) HAS BEEN INTRODUCED TO SECTION 56(2)(VII)(B)IN THE STATUTE WHICH READS AS UNDER : (VII) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY RECEIVES IN ANY PREVIOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF OCTOBER 2009 BUT BEFORE THE 1ST DAY OF APRIL 2017 (A) ANY SUM OF MONEY WITHOUT CONSIDERATION THE AGGREGATE VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES THE WHOLE OF THE AGGREGATE VALUE OF SUCH SUM; (B) ANY IMMOVABLE PROPERTY (I) WITHOUT CONSIDERATION THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES THE STAMP DUTY VALUE OF SUCH PROPERTY; (II) FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION: AS PER THE PROVISIONS THE ACT FROM THE A.Y.2014-15 SUB CLAUSE (II) HAS BEEN INTRODUCED SO AS TO ENABLE THE AO TO TAX THE DIFFERENCE CONSIDERATION IF THE CONSIDERATION PAID IS LESS THAN THE STAMP DUTY VALUE. THE AO IS NOT PERMITTED TO INVOKE THE PROVISIONS OF SECTION 56(2)(VII)(B)(II) IN THE ABSENCE OF SUB CLAUSE (II) IN THE ACT AS ON THE DATE OF AGREEMENT. 8. THUS IN VIEW OF THE AFORESAID FACTUAL AND LEGAL DISCUSSIONS WE FIND THAT IN ABSENCE OF SUB-CLAUSE (II) IN THE STATUE BOOK AS ON THE DATE OF AGREEMENT TO ITA NO.360/SRT/2018 PARINDA B BORDA (A.Y.14-15) 9 SALE OF THE PROPERTY THE AO WAS NOT ENTITLE TO INVOKE THE SAID PROVISION. HENCE THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. THE AO IS DIRECTED TO DELETE THE ENTIRE ADDITION UNDER SECTION 56(2)(VII)(B)(II). 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER ANNOUNCED ON 31 AUGUST 2021 BY PLACING THE RESULT ON THE NOTICE BOARD. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT DATED: 31/08/2021 DKP. OUT SOURCING P.S COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A)-SURAT 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR ITAT SURAT