SURESH KUMAR AGARWAL,RANCHI vs. DCIT,CIRCLE-3, RANCHI

These five different assessees have filed their instant appeals against the CIT(A)’s respective separate orders, dated 14-08-2017, 10-05-2018, 17-05-2018, 31-05-2018 and 22-05-2018 passed in case No. 133/JSR/2016-17, CIT(A), Ranchi/10288/2016-17, CIT(A), Ranchi/10282/2016-17, CIT(A), Ranchi/10369/2016-17 & CIT(A),

It emerges during the course of hearing at the outset that these five assessees challenge correctness on both the lower authorities’ identical action making section 56(2)(vii)(b) additions of Rs.10,00,000/-, Rs. 16,32,463/-. Rs. 22,26,625/-, Rs. 2,72, 068/- and Rs.4,82,635/- (appeal-wise), respectively.

There is hardly any dispute that the said statutory provision applies in the specified circumstances. Section 56(2)(b) 1st and 2nd proviso make it clear that in case where the dates of agreement and payment of consideration regarding immovable property in issue and that of the registration are not the same, the department may take a former date under these sub clause(s) for the purpose of assessment. This is followed by the latter proviso that the earlier one would only apply in case the amount of sale consideration or part thereof has been paid by any other mode than cash on or before the date of agreement relating to transfer of immoveable property. I keep in mind this statutory provision to notice that the 2nd , 4th & 5th assessees i.e S/Sh. Suresh Kr. Agarwal, Nikhil Gupta & Smt. Sarita Gupta had made cheque(s) payments on 30.9.2010, 25.11.11 & 20.11.2012 as against corresponding agreements dtd. 8.3. 12, 30.11.11 and 20.11.2012 respectively. These three assessees’ cases are squarely covered under the said 1st and 2nd proviso to section 56(2)(vii)(b). I accordingly direct the AO to delete the impugned additions involved in these three appeals amounting to Rs. 16,32,463/-, Rs. 2,72, 068/- and Rs. 4,82,635/- respectively. Their appeals ITA Nos. 237, 270 and 281/Ran/2018 for AY 2014-15 are allowed.

Coming to first and third assessees S/Sh Sunil Kumar Kedia & Vivek Kumar in ITA Nos. 231 & 267/Ran/2018, I notice that former tax payer(s) had not executed any earlier agreement coupled with cheque payment(s) since the sale deed is dated 12-12- 2013 whereas the latter assesse(s) paid advance of Rs. 12 lakh on 14.7. 2012 i.e much after the date of agreement dated 5-4-2010. I therefore conclude that these two assesses ‘cases are not covered under first and second proviso to section 56(2)(vii)(b) of the Act.

Next arises yet another namely important aspect of reference to the DVO (Departmental Valuation Officer) u/s. 56(2)(vii)( c ) proviso making it clear that the AO may make necessary reference alike that provided in section 50C(2) of the Act. The Revenue vehemently contends that these two assessees had not prayed for such a reference. I find no merit in the Revenue’s argument. Hon’ble Calcutta high court’s decision in 372 ITR 83 (Cal) holds that a reference u/s. 50C(2) of the Act is mandatory even if an assessee does not raise corresponding plea before the Assessing Officer. I therefore direct the AO to proceed afresh in these two appeals, ITA Nos. 23 & 267/Ran/2018 are restored back to the Assessing Officer for further proceedings as per law. These two assessees appeals are allowed for statistical purpose.

To sum up, ITA Nos. 237, 270 and 281/Ran/2018 for the A.Y 2014-15 are allowed and appeals in 23 & 267/Ran/2018 are allowed for statistical purpose in above terms. A copy of this order be kept in the respective case files.