PATAKAMUIRI CECIL,GUNTUR vs. THE INCOME TAX OFFICER, WARD-1, , NARASARAOPET

All the grounds of appeal are related to the addition of Rs.24,77,367/- u/s 69B of the Income Tax Act, 1961 (in short ‘Act’). During the assessment proceedings, the Assessing Officer (AO) found that the assessee has purchased the property in Narsaraopet town old survey No.464, T.S.No.743, Guntur District admeasuring Ac.2.45cts or 11,858 sq.yds of land for a consideration of Rs.45,50,000/- along with Sri Velagapudi Vasudeva Rao on 15.06.2012 vide document No.9571/2012 on 15th June 2012. During the assessment proceedings, the AO called for the details, but the assessee failed to furnish the details. Therefore, the AO treated the assessee as co-owner for 50% share of the property and accordingly taxed 50% of the sale consideration along with stamp duty of Rs.24,77,367/- as unexplained sources u/s 69B of the Act.

3. Against which the assessee filed appeal before the CIT(A) and argued that he had only the interest of 10% in the said property, thus requested to consider his share at 10% instead of 50% assessed by the AO. However, no evidence was brought on record to establish that the assessee was only 10% share holder in the property. The registered document also did not throw any light in the share holding of the property. Therefore, the Ld.CIT(A) rejected the assessee’s contention and held that the AO has rightly taxed the property treating the assessee as co-owner for 50% share in the property. Further, the Ld.CIT(A) observed that the AO has taken the stamp duty of Rs.4,04,734/- instead of Rs.10,54,800/- being the 50% of total stamp duty of Rs.21,09,600/-, hence directed the AO to adopt 50% of the share in the stamp duty along with consideration paid for acquiring the land for making addition u/s 69B of the Act.

On the other hand, the Ld.DR vehemently opposed and argued that since the impugned property was acquired in the year under consideration, the entire consideration paid by the assessee as well as the stamp duty required to be brought to tax in the assessment year.

We have heard both the parties and perused the material placed on record. As per sale deed dated 15.06.2012, co owners have paid the consideration as per the schedule given above and out of which only sum of Rs.5.50 lakhs was paid in the impugned assessment year. Apart from sum of Rs.5,50,000/- stamp duty of Rs.21.09 lakhs was also incurred in the relevant A.Y.2013-14. Therefore, 50% of the consideration paid during the impugned assessment year amounting to Rs.13.295 lakhs required to be brought to tax in the A.Y.2013-14 as per section 69B of the Act. As per section 69B, where in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable articles or the investment made recorded in the books of accounts but offers no explanation, required to be taxed. From the perusal of the sale deed, the assessee has made the investment to the extent of Rs.26.59 lakhs jointly along with other co- owners in the F.Y.2013-14 for which the assessee could not explain the source. Therefore, we hold that the sum of Rs.13,29,500/- (being 50% of 26.59 lakhs) required to be brought to tax and the remaining amount should be deleted. Hence, we set aside the order of the Ld.CIT(A) and direct the AO to verify the actual payments made during the year and decide the issue. The appeal is remitted to the file of the AO for a limited purpose of verifying the actual dates and the actual payment made in the impugned assessment year and to make the addition representing the investment made in the impugned assessment year. Accordingly, the appeal of the assessee is partly allowed for statistical purpose.

In the result, appeal of the assessee is partly allowed for statistical purpose.