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Income Tax Appellate Tribunal, AHMEDABAD ‘A’ BENCH, AHMEDABAD
Per Pramod Kumar, AM:
This appeal is directed against the order dated 31st March, 2015 passed by the 1. ld. CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12.
Grievances raised by the appellant are as follows :-
“1.1 The CIT(A) has erred in law and on facts in deleting the addition of Rs.1,88,02,500/- made on account of unexplained investment u/s.69B of the Act.
1.2 The facts of the case of Hon’ble ITAT Ahmedabad Bench in the case of DCIT vs. Virjibhai Kalyanbhai Kukadia (2012) 138 ITD 255 as relied by the CIT(A) are different from the facts of the present case.
1.3 The CIT(A) has erred in law and on facts by not considering the Jantry value as fixed by the Registrar.”
ITA No.1862/Ahd/2015 Assessment Year: 2011-12 Page 2 of 4 3. To adjudicate on this appeal, only a few material facts need to be taken note of.
There is no dispute that the impugned addition is made solely on the basis of market value of land, as adopted by the sub-registrar, as true value of purchase of land. Learned Representatives fairly agree that this issue is now covered, in favour of the assessee, by a decision of the co-ordinate bench in the case of DCIT vs. Virjibhai Kalyanbhai Kukadia (138 ITD 255) wherein the co-ordinate bench has, inter alia, observed as follows :- 8. We have heard the rival submissions and perused the material on record. In the present case before us, the issue is applicability of provisions of section 69B. Section 69B reads as under: "Amount of investments, etc., not fully disclosed in books of account - Where in any financial year the assessee had made investments or is found to be the owner of any bullion, jewellery, or other valuable article, and the A.O. finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the A.O., satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year." When we examine the provisions of Sec.69B, we find that section 69B is a deeming fiction. It is provided that addition can be made by the A.O. when the following three conditions are satisfied: (1) If it is found that the assessee has made investment or the assessee is found to be the owner of any bullion, jewellery or other valuable article, and (2) If it is found that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in that behalf in the books of account maintained by the assessee, and (3) Either the assessee offers no explanation about such extra amount or the explanation offered by him is not satisfactory. 9. The above conditions are cumulative. If all these circumstances exist, the excess amount may be deemed to be the income of the assessee for the financial year in which the said investment was made or the assessee became the owner of bullion etc. 10. The factual position is that during the year the assessee had acquired land. It has been submitted by the assessee that it had paid the consideration for purchase of land in F.Y. 2000-01 and got the possession of land in F.Y. 2000-01 but the documents could not be executed in F.Y. 2000-01 and were therefore executed in the F.Y. 2005-06 relevant to A.Y. 2006-07. The assessee had also brought on record the copies of the agreement. The Ld. D.R. could not controvert this fact by bringing any material to the contrary on record. A.O. was of the view that market rate during the period cannot be less than the jantri price of land. He
ITA No.1862/Ahd/2015 Assessment Year: 2011-12 Page 3 of 4 accordingly, taking into consideration the prevailing jantri price of land, estimated the undisclosed investment at Rs.3,62,54,200/-. After adjusting for the value disclosed in the books of accounts of Rs.1,06,27,995/-considered Rs.2,56,26,205/- as the net undisclosed income. The A.O. has thus relied on the jantri price and on that basis presumed that the amount expended is more than the amount recorded in the books. The A.O. has failed to bring on record any material to support his estimated price. 11. Section 50C is a deeming provision where under the stamp duty rate is treated as full value of consideration for the purpose of computing capital gain under section 48. It is applicable to the seller of property and therefore cannot be invoked in case of purchaser of property for the purpose of section 69B. CIT(A) has given a finding that the A.O. has not made any independent enquiry or collected corroborative evidence to justify the addition. 12. In the case of Naresh Khattar (HUF) (supra) the Hon'ble Delhi High Court has held that to invoke the provisions of Sec.69B, the burden is on the Revenue to prove that the real investment exceeds the investment shown in the books of accounts of the assessee. 13. In the case of Smt. Amar Kumari Surana (supra) (Raj.) the Hon'ble High Court has observed as under: "10. It is true that merely on the basis of fair market value no addition can be made u/s. 69B of the Act, 1961, but on the basis of sufficient material on record some reasonable inference can be drawn that petitioner has invested more amount than the shown in account books, then only the addition u/s. 69B can be made. The burden is on the Revenue to prove that real investment exceeds the investment shown in account books of the assessee." 14. In the case of Harley Street Pharmaceuticals Ltd. (supra) it has been held that provisions of Sec.50C are applicable only for computation of capital gains in real estate transaction in respect of seller only and not for the purchaser. Legal fiction cannot be extended any further and has to be limited to the area for which it is created. Section 50C creates a legal fiction for taxing capital gains in the hands of the seller and it cannot be extended for taxing the difference between apparent consideration and valuation done by Stamp Valuation Authorities as undisclosed investment u/s. 69. 15. In view of the totality of aforesaid facts and relying on the decisions of the Hon'ble High Courts and of the co-ordinate Bench, we are of the view that provisions of Sec.50C cannot be applied for making addition u/s. 69B. In the present case, since the A.O. has relied on the jantry rates without bringing any material on record to prove that assessee has in fact made investments over and above than that recorded in the books, no addition can be made in the present case and therefore no interference is called for to the order of CIT(A). We thus uphold the order of CIT(A). In the result the appeal of the Revenue is dismissed.”
We see no reasons to take any other view of the matter than the view so taken by our esteemed colleagues. Respectfully following the same, we uphold the stand of the learned CIT(A), who has followed the co-ordinate bench decision, and decline to interfere in the matter.
ITA No.1862/Ahd/2015 Assessment Year: 2011-12 Page 4 of 4
In the result, the appeal is dismissed. Pronounced in the open court on this 6th 6. day of June, 2018.
Sd/- Sd/- Rajpal Yadav Pramod Kumar (Judicial Member) (Accountant Member) Dated: 6th June, 2018.
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Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File
By order
Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad