PRINCIPAL COMMISSIONER OF INCOME TAX 3 vs. DHARMAJA INFRASTRUCTURE

Facts

The assessee, Dharmaraja Infrastructure, purchased two properties for Rs. 1,55,00,000 and Rs. 1,35,00,000 respectively. The stamp duty authority valued these properties at Rs. 2,55,45,000 and Rs. 2,22,57,500. The Assessing Officer (AO) treated the difference of Rs. 1,88,02,500 as income from undisclosed sources under Section 69B of the Income Tax Act, 1961, as the assessee could not explain this difference. The Commissioner (Appeals) deleted the addition, holding that the AO relied on jantri rates without proving actual investment exceeding recorded amounts. The Income Tax Appellate Tribunal upheld the CIT(A)'s order. The revenue appealed to the High Court.

Held

The High Court held that the appeal fails and is summarily dismissed. The court noted that Section 50C of the Act provides a deeming fiction for the full value of consideration in cases of transfer of capital assets, substituting the consideration received with the stamp duty valuation for the purpose of Section 48. However, this deeming fiction applies only to the seller. In the present case, the assessee is the purchaser, not the seller. Therefore, the stamp duty valuation could not be the basis for concluding unexplained investment under Section 69B. Furthermore, as observed by the CIT(A), the AO did not bring any material on record to prove that the assessee had actually made investments over and above what was recorded in the books. Thus, the Tribunal's order did not suffer from any legal infirmity giving rise to a substantial question of law.

Key Issues

1. Whether, on the facts and circumstances, the Tribunal erred in upholding the CIT(A)'s deletion of the addition made by the AO under Section 69B of the Act? (Question of law) 2. Whether, on the facts and circumstances, the Tribunal erred in relying on the decision in DCIT v. Virjibhai Kalyanbhai Kukadia, where the facts were different? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The AO correctly treated the difference between the stamp duty valuation and the purchase price as unexplained investment under Section 69B. The Tribunal erred in deleting this addition and relying on a case with different facts.