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Income Tax Appellate Tribunal, DELHI BENCHES “SMC” : DELHI
Before: SHRI R.K. PANDA
ORDER This appeal filed by the Assessee is directed against the Order dated 30.09.2019 of the Ld. CIT(A)-25, New Delhi, relevant to the A.Y. 2010-2011.
Facts of the case, in brief, are that the assessee is a Company and had not filed its return of income for the impugned assessment year. AIR information was obtained
2 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. that assessee has sold immovable property with transaction amount of Rs.30,65,000/- on 15.06.2009 and the said transaction has not been reported by filing return of income. The A.O, therefore, after obtaining due approval of the PCIT, Delhi-8, New Delhi vide approval dated 29.03.2017 reopened the assessment and issued notice under section 148 of the I.T. Act, 1961 on 31.03.2017. Notice was served through email ID available at MCA website. Statutory notice under section 142(1) was also issued to the assessee on 23.06.2017 and again on 06.11.2017. Since there was no compliance from the side of the assessee, the A.O. proceeded to complete the assessment under section 144 of the I.T. Act, 1961. He obtained information from the Registrar of Properties and noted that The assessee-M/s. Shree Land Developers Pvt. Ltd., has sold the property to M/s. SARL Nest Build Pvt. Ltd. and as per the sale deed, the market value of the property is Rs.30.65 lakhs, but, the purchase value is Rs.18 lakhs and stamp duty is Rs.1,84,000/-. Since the assessee has not filed any explanation in the form of documentary evidences with 3 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. respect to the said transaction on account of sale of immovable property to the extent of Rs.30.65 lakhs, the A.O. made addition of Rs.34,30,000/- to the total income of the assessee, the details of which are as under :
(i) Sale price Rs.30,65,000/- (ii) Stamp Duty Rs.3,65,000/-
Before the Ld. CIT(A), the assessee submitted that no notice under section 148 was received by the assessee and, therefore, without service of the notice, the re- assessment is illegal and bad in law. It was submitted that when the notice under section 148 dated 31.03.2017 was issued by the A.O, the name of the assessee-company was already struck-off by the ROC. The A.O. filed an appeal on 07.11.2017 before the NCLT for reviving the name of the assessee-company. Therefore, when the assessee-company was not in existence, such notice issued to a non-existent company is illegal and bad in law. For the above proposition, the decision of Hon’ble Delhi High Court in the case of Spice Infotainment Ltd., vs., CIT 247 CTR 500 (Del.)
4 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. was relied upon. It was also submitted that the PCIT had given mechanical approval for which the re-assessment proceedings are not in accordance with law.
So far as the merit of the case is concerned, it was submitted that the assessee had sold the immovable property for Rs.30,65,000/- which is purchased by the assessee company on 03.06.2008 for a consideration of Rs.30,65,000/-. Further, stamp duty of Rs.1,84,000/- was also paid. Copy of the Purchase Deed was also filed before the Ld. CIT(A). It was submitted that the property was a disputed property and there was some case pending against the seller and ultimately it has been confiscated by the EOW Crime Branch, Delhi. It was argued that the entire sale consideration could not have been taxed without reducing the cost of acquisition. It was submitted that the stamp duty is usually borne by the Purchaser and not by the Seller. It was accordingly argued that if the cost price is reduced from the sale price, there won’t be any surplus to be taxed.
5 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. 5. Based on the arguments advanced by the assessee, the Ld. CIT(A) called for a remand report from the A.O. After considering the remand report of the A.O. and the rejoinder of the assessee to such remand report, the Ld. CIT(A) upheld the validity of re-assessment proceedings and also the addition on merit.
So far as the merits of the case is concerned, the Ld. CIT(A) upheld the action of the A.O. by observing as under :
B. On Merits – “ i. The AO issued notice u/s 148 dated 31.03.2017 and proceeded to make the assessment on account of gains on sale of property by the appellant. The AO has made an addition of Rs.30,65,000/- u/s 50C on account of sale of immovable property and Rs.3,65,000/- on account of approximate stamp duty. The appellant ahs submitted documents to show that the property was acquired on 02/06/2008 for a consideration of Rs.30,65,000/- and sold on 6 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. 15/06/2009 for a consideration of Rs.30,65,000/-. It was submitted that the stamp duty was borne by the buyer. It is seen from the submissions that the said piece of property is a piece of non agricultural plot of land at village Ladivali, Taluka Karjat, Distt Raigad, Maharashtra. There is no material on record by the AO either in assessment order or the appeal order to establish any fact about the amounts involved in respect of the sale consideration and price paid for purchase. It is seen from the material placed on record that the AO has not factored in the purchase price while computation the income of the appellant from this transaction of sale of the piece of land referred above. Having considered the facts of the case, it would be normal to direct the AO to factor in the purchase price of the land piece, while working out the income from the sale transaction referred in the 147/148 order. Any enterprise earns on some investment and it is a finite sum. Similarly in this instance also the benefit of purchase price has to be allowed. However, it is seen
7 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. that the appellant has not submitted any details of having made the payments or mode of the flow of funds before this office also. It is seen from the land deed documents furnished that the appellant had made cash payment of Rs 30,65,000/- of 02/06/2008 ( page 4 of the land purchase deed). The details of source or requisite accounting entries to justify the source of such funds is not furnished, therefore the appellant cannot be allowed benefit of purchase value. In any case, the AO has invoked section 50C to supplant the market value- in such a scenario the appellant cannot be allowed to avail of the benefit of purchase price as this is not a dispute involving computation of capital gains etc. In absence of the requisite details of source of such payments which are substantial amounts, I am unable to consider the request for allowing the benefit of cost of acquisition to the appellant. It is seen from the assessment order that the appellant has sold the property to M/s SARL Nest Build Private limited wherein the purchase value was shown at Rs 18 lakh and the 8 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. stamp duty of Rs 1.84 lakh was paid. The appellant has failed to furnish requisite details in this regard. The appellant has also failed to furnish any documents in this regard also. It is also pertinent to note here that no details were furnished before the AO also. The appellant has also chosen to furnish selective documents before this appeal forum to create a misleading format of information. This is a case, where the source of acquisition is not disclosed nor is the details of sale proceeds filed. The appellant is attempting to actively mislead the revenue. ii. The AO has invoked section 50C in this case, while in this case there is total non compliance of process of law by the appellant. On the facts of the case, there are various possibilities of treatment of the transaction of purchase and sale of the land by the appellant - The piece of land could’ve been ‘’Stock in Trade’ with the appellant company;
9 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. It could be a case of ‘Investment’ and that would have meant invoking of provisions of section 69A by the AO. iii. When the plot of land was an item of stock in trade, normal presumption is that the cost of acquisition must have been claimed as expenses in the period relevant to the date of acquisition. If it was acquired as an investment, the requisite details about costs and considerations and PAN details of the parties involved in the transactions of sale and purchase and other relevant information should have been filed. The AO was not allowed to ascertain the exact nature of the possession of the land and the appellant has also not furnished any such details before this office in respect of how the acquisition was treated in its books. Thus the appellant cannot seek benefits by merely filing appeal without furnishing authentic information. The AO has taken a plausible and possible view of taxing the proceeds in this case, in view of total non compliance by the appellant. The name of appellant was only struck off 10 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. the registers of RoC and the company was not wound up. Hence the mere action of RoC striking off name of the appellant from its registers cannot give shield to the appellant to indulge in non compliance of the statutory notices. In any case the struck off names are restored upon certain processes of compliance to the Company law. Accordingly, in view of its contumacious conduct, the appellant cannot seek any benefit about cost of purchase without discharging onus or indexation or any other benefits in this regard. The AO has appropriately invoked a plausible view in view of the constraints of incomplete information placed on him by the appellant through non compliance and subsequently by filing incomplete details before this office. In view of the peculiar facts as discussed above and also the fact that the company wasn’t wound up- only its name was struck off a list and material information is actively hidden - I am not inclined to accede to the appellant contention of being allowed benefit of cost of acquisition of the piece which is also not properly substantiated.
11 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. The appellant cannot be allowed any relief on any issue raised per this appeal in view of the facts of the case as available and discussions above. The addition made by the AO is, therefore, upheld. All other related grounds are also dismissed consequentially.
C. In the result, the appeal is dismissed”.
Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :
1. “That on the facts and circumstances of the case and the provision of the law, the Ld CIT (A) has failed to appreciate that the initiation of proceeding under section 147 and issue of notice u/s 148 is illegal, bad in law, time barred and without jurisdiction.
2. That on the facts and circumstances of the case and the provision of the law, the Ld CIT (A) has failed to appreciate that the assessment order passed by the Ld AO under Section 144/147 of the Income Tax Act is illegal and bad in law.
12 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi.
3. That on the facts and circumstances of the case and the provision of the law the Ld CIT (A) has failed to appreciate that the assessment order passed is in violation of principle of natural justice and hence, the said assessment order is bad in eyes of law and liable to be quashed.
4. That on the facts and circumstances of the case and the provisions of the law, the Ld. CIT (A) has erred in sustaining addition of Rs.30,65,000/- u/s 50C on account of Sales of immovable property and 3,65,000/- on account of approximate stamp duty.
That the Ld CIT (A) has failed to appreciate that the various observations and findings of the Ld AO in the impugned assessment order are irrelevant, unjustified, baseless and vitiated in the law.
6. That on the facts and circumstances of the case and the provisions of law, the Ld CIT (A) has failed to appreciate that the Ld. AO has erred in charging of an interest u/s 234A and 234B. Without prejudice the interest charged is also excessive.
7. That on the facts and circumstances of the case the Ld CIT (A) has failed to appreciate that the Ld. AO has 13 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. erred in initiating proceedings u/s 271(1)(c) of the income Tax Act,1961.
8. That the appellant craves leave to reserve to it the right to add, alter, amend, vary, modify and/ or withdraw any ground/s) of appeal at or before the time of hearing.
All of the above grounds of appeal are without prejudice and mutually exclusive to each other”.
8. I have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the A.O. in the instant case made addition of Rs.30,65,000/- under section 50C of the I.T. Act, 1961 on account of sale of immovable property and Rs.3,65,000/- on account of approximate stamp duty in the ex-parte order passed by him on the ground that the assessee has not filed the requisite details. I find the Ld. CIT(A) upheld the action of the A.O, the reasons of which have already been reproduced in the preceding paragraph. It is the 14 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. submission of the Learned Counsel for the Assessee that the property was purchased on 02.06.2008 for a consideration of Rs.30,65,000/- and stamp duty of Rs.1,84,000/- was paid. Therefore, merely because assessee has not submitted any details of the payments made or the mode of the flow of funds before the lower authorities and merely because cash was paid for purchase of the property, the same cannot be a ground for not allowing the deduction of cost of land from the sale price.
7.1. I find some force in the above arguments of the Learned Counsel for the Assessee. A perusal of the sale deed entered into between Mr. Ashley Concession and the Assessee, copy of which is placed at page numbers.38 to 66 of the PB shows that assessee purchased the property on 02.06.2008 for a consideration of Rs.30,65,000/- and stamp duty of Rs.1,84,000/- has been paid. For the sake of completeness page numbers.1 and 2 of the sale deed is reproduced as under :
15 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi.
16 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi.
17 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. 7.2. It is an admitted fact that assessee sold the property for a consideration of Rs.30.65 lakhs as mentioned by the A.O. in the body of the assessment order. It is the settled proposition of law that for computing the capital gain or profit from the sale of the land, the cost price of the land has to be deducted from the sale price. In the instant case, the land was sold in the A.Y. 2010-11, but, it was purchased in the A.Y. 2009-10. Therefore, even if the assessee had paid in cash for purchase of the property or had not explained the source of such purchase, the best course of action would have been to tax the same in the A.Y. 2009-10, but, the benefit of deduction of the cost price from the sale price no any circumstances could have denied to the assessee. In the instant case if the cost price of the property at Rs.30,65,000/- and the stamp duty of Rs.1,84,000/- is reduced from the sale price of Rs.30.65 lakhs, there remains no income to be brought to tax. Although the sale deed details of the purchase of the property was filed before the Ld. CIT(A), however, the Ld. CIT(A), in my opinion, on flimsy grounds has denied the 18 ITA.No.9018/Del./2019 M/s. Shree Land Developers Pvt. Ltd., New Delhi. benefit of this deduction from the sale consideration, which, in my opinion, is not justified. I, therefore, set aside the order of the Ld. CIT(A) and direct the A.O. to delete the addition. Since the assessee succeeds on this factual issue, the legal grounds are not being adjudicated being academic in nature.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 21.12.2021.