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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
आदेश/ ORDER
This appeal by the assessee is directed against the order of Commissioner of Income Tax(Appeals) -58 Mumbai [ in short ‘the CIT(A)’ ] dated 23/10/2019 for the Assessment Year 2014-15.
The assessee in appeal has assailed addition of Rs.18,53,457/- u/s. 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 ( in short ‘ the Act’).
Shri Himanshu Gandhi appearing on behalf of the assessee narrating the facts of the case submitted that the assessee had purchased a Flat No.1104 in Zircon Building a Project of Nirmal LifeStyle for a consideration of Rs.68,45,550/-. The assessee had paid earnest money for purchase of the aforesaid flat on 16/04/2010. Thereafter, an agreement was executed between the assessee and Nirmal Lifestyle Ltd. on 31/03/2013. The stamp duty for execution of the agreement was paid by the assessee on 18/3/2013. In support of his contention the ld. Authorized Representative for the assessee referred to the receipt dated 18/03/2013at page 5 of the Paper Book and copy of non- judicial stamp paper and the copy of agreement at page 6 and 10 to 58 of the Paper Book. The ld. Authorized Representative for the assessee pointed that the aforesaid agreement was registered on 02/04/2014. On the date of registration the stamp duty value of the property was Rs.87,02,007/-. In assessment proceedings for Assessment Year 2014-15 the Assessing Officer held that since the agreement was executed in the period relevant to the assessment under appeal provisions of section 56(2)(vii)(b)(ii) of the Act as amended by the Finance Act 2013 w.e.f. 01/04/2014 would be applicable and hence, made addition of the difference between the consideration paid by the assessee and stamp duty value i.e. 18,53,457/-. During the assessment proceedings the assessee vide letter dated 22/12/2016 requested to refer the matter to DVO. The Assessing Officer without referring the matter to DVO made addition of Rs.18,53,457/-.
Aggrieved against the assessment order dated 31/12/2016 the assessee filed appeal before the CIT(A) . In first appellate proceedings, the CIT(A) referred the matter to DVO for adopting the value as on 31/03/2013. The CIT(A) further directed the Assessing Officer to recomputed addition on the basis of value determined by DVO. Hence, present appeal by the assessee.
The ld. Authorized Representative for the assessee vehemently controverting the findings of the authorities below submitted that since the assessee had paid stamp duty on 18/03/2013 and had executed the agreement on 31/03/2013 i.e. the period relevant to the Assessment Year 2013-14, the amended provisions of section 56(2)(vii)(b)(ii) would not apply. Merely for the reason that the agreement was registered on 02/04/2014 i.e. during the period relevant to the assessment year under appeal, the amended provisions would not get attracted. In support of his contention the ld. Authorized Representative for the assessee placed reliance on the decision rendered in the case of Bajrang Lal Naredi vs. ITO in decided on 20/01/2020.
3.1 The ld. Authorized Representative for the assessee made an alternate submission that the CIT(A) while referring matter for valuation to DVO has erred in seeking valuation as on 31/03/2013 instead of 16/04/2010. The ld. Authorized Representative submitted that the assessee had paid earnest money on 16/04/2010, therefore, the CIT(A) should have sought valuation from DVO as on 16/04/2010 and not as on 31/03/2013. The ld. Authorized Representative for the assessee thus submitted that the addition made by the Assessing Officer and confirmed by the CIT(A) is liable to be deleted.
On the other hand, Shri R.A. Dhyani representing the Department vehemently defended the impugned order. The ld. Departmental Representative submitted that the agreement was registered on 02/04/2013, therefore, amended provision of section 56(2)(vii)(b)(ii) would apply. The ld. Departmental Representative further contended that as per the request of assessee the CIT(A) had directed the Assessing Officer to seek valuation report from the DVO. The CIT(A) in a fair and justified manner directed the Assessing Officer to adopt the value determined by DVO as on 31/03/2013i.e. the date of execution of agreement. The ld. Departmental Representative prayed for upholding the impugned order and dismissing appeal of the assessee.
Submissions made by rival sides heard and the orders of authorities below examined.. In so far as the facts of the case are concerned they are not in dispute, however, before proceeding further to decide issue raised in appeal, the relevant dates to decide controversy are tabulated herein below:
Date Events 16/04/2010 Earnest money paid by the assessee for purchase of flat 18/03/2013 Stamp duty paid 31/03/2013 Date of execution of agreement 02/04/2014 Date of registration of agreement.
The primary objection raised by the assessee against addition made u/s. 56(2)(vii)(b)(ii) of the Act is that since the assessee had paid stamp duty and had executed the agreement on or before 31/03/2013, amended provisions of section 56(2)(vii)(b)(ii) of the Act would not get attracted. The sub clause (b) to section 56(2)(vii) was amended by the Finance Act, 2013 w.e.f. 01/04/2014 i.e. from Assessment Year 2014-15. As per the amended provisions, where an individual or HUF receives in any previous year any immovable property for a consideration which is less than stamp duty value of such property, the Assessing Officer can made addition of the difference between the stamp duty value and the consideration paid. Prior to amendment by the Finance Act, 2013 there was no provision u/s.56(2)(vii)(b) of the Act to make addition in respect of consideration less than the stamp duty value. The scope of section 56(2)(vii) has been enlarged after amendment w.e.f. 01/04/2014. Since, in the present case agreement was executed on 31/03/2013 i.e. during the Assessment Year 2013-14, the provisions of section 56(2)(vii)(b) of the Act as applicable to the assessment year 2013-14 would apply. Registration of agreement on the subsequent date would not alter the situation. The registration of agreement is a compliance of a legal requirement under the Registration Act, 1908. Thus, in the facts of case we are of considered view that the authorities below have erred in invoking the provisions of section 56(2)(vii)(b)(ii) as amended by the Finance Act, 2013. Ergo, ground No.2 of the appeal is allowed.
Since, the assessee gets relief on the primary prayer made in ground No.2 of the appeal, the alternate plea raised by way of ground No.3 has become academic and hence, not deliberated upon at this stage.
In ground No.4 of appeal, the assessee has assailed charging of interest u/s. 234A,234B and 234C of the Act. Levy of interest u/s 234A,234B and 234C of the Act is mandatory and consequential, hence, I find no merit in ground No.4 and the same is dismissed as such.
In ground No.5 of appeal, the assessee has assailed initiation of penalty proceedings u/s.271(1)(c) of the Act. Challenge to penalty proceedings u/s. 271(1)(c) at this stage is premature. The ground No.5 of the appeal is dismissed, accordingly.
In ground No.1 of appeal, the assessee has challenged validity of assessment order on the ground that the assessment order is unsigned. The ld. Authorized Representative for the assessee submitted that he is not pressing this ground at this stage. Accordingly, the issue is left open and is not deliberated upon.
In the result, appeal of the assessee is partly allowed in the terms aforesaid.
Order pronounced in the open Court on Monday the 21st day of February, 2022.