ACIT, CENTRAL CIRCLE-1, NASHIK, NASHIK vs. RAJENDRA RASIKLAL SHAH, NASHIK

IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES “B”, PUNE

BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER
AND MS. ASTHA CHANDRA, JUDICIAL MEMBER

आयकर अपील सं. / ITA No.1016/PUN/2024
Assessment Year : 2016-17

ACIT, Central Circle-1,
Nashik – 422 001
Maharashtra
PAN : ADBPS2863H
Appellant

Respondent

आदेश / ORDER

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of Revenue is directed against the order framed by ld. Commissioner of Income Tax
(Appeals) Pune-12, dated 26.02.2024 passed u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Assessment Order dated 20.09.2021 passed u/s.147
r.w.s.144B of the Act.

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was registered under Amnesty Scheme on 06.02.2016, the value of the property as on 06.02.2016 as per Circle/Guidelines Rates for Stamp Duty purpose was Rs.19,85,97,000/-. Since the assessee had paid only Rs.10.00 lakh for his share of 25% in the property, ld. AO was of the view that in terms of section 56(2)(vii)(b) of the Act an amount of Rs.4,96,49,250/- deserves to be added in the hands of assessee. In the course of assessment proceedings which was carried out after validly serving notices u/s.143(2) and 142(1) of the Act, the assessee claimed that on 12.08.1997 unregistered agreement was entered into with the seller of the property and part consideration was paid through banking channel but the balance amount was payable since some contractual obligations on part of the seller regarding updation of land revenue records with names of original owners and obtaining relevant permissions were to be carried out. The assessee got the possession of the land on 25.01.2001. Finally, the contractual obligations by seller were completed in the year 2014 but till that time as the assessee had not paid the remaining consideration in the year 1997, the purchase consideration was revised to Rs.72.00 lakh and the same was paid through banking channel on the dates falling during the period 04.10.2014 to 09.09.2015. Based on these facts, it was stated before the AO that the value of the property should be considered on the basis of the date of entering the first agreement dated 12.08.1997 and since consideration paid by the assessee and the co-owners is more than the valuation of the said property, i.e. Rs.63,88,500/- accepted by Collector, Nashik, no addition is called for. But ld.
AO was not satisfied with these contentions and was of the considered view that value of the property as on 06.02.2016 at Rs.19,85,97,000/- is to be adopted as purchase consideration as the registered agreement has been entered into on this date and Rajendra Rasiklal Shah

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accordingly made addition of Rs.4,86,49,250/- u/s.56(2)(vii)(b) of the Act along with other minor disallowances and assessed income at Rs.5,54,08,500/-.

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value in sale deed than actual market value/stamp duty and this loophole has been misused to evade payment of tax or make under hand dealing in cash and to prevent this misuse only the provisions of section 50C and 56(2)(vii)(b) of the Act have been inserted in the legislature.

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(India) Pvt. Ltd. reported in (2017) 391 ITR 154 (P&H). While concluding, Ld. Counsel for the assessee also referred to the affidavit of the vendor No.4 i.e. seller of the property Milind
Balasaheb Kale affirming the receipt of the part consideration through banking channel on 08.01.1997. He therefore prayed that the finding of ld.CIT(A) may be affirmed.

“(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause.
Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property.”

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property by an amount exceeding Rs.50,000/-, the stamp duty value of such property exceeding such consideration is to be treated as ‘Income from other sources u/s.56(2)(vii)(b) of the Act.
But there are two exceptions provided to this provision and they both are relevant for the issue under consideration since it is claimed by the assessee that original agreement to sell was entered on 12.08.1997 and part consideration was paid in advance by banking channel on 08.01.1997 and Stamp Valuation as on 12.08.1997 is to be considered.

Date
Particulars
Page Nos. of Paper Book
Remarks
12.08.1997
Unregistered agreement to purchase land executed by assessee along with five other co- owners from Kale family members
42-49
Total purchase consideration fixed at Rs.30
lakhs, out of which Rs.3,00,000/- paid through bank cheques dated
01.01.1997
and 08.01.1997. Specifically agreed as per Clauses 3
to 5
and 11, that balance
Rajendra Rasiklal Shah

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consideration of Rs.27 lakhs shall be payable only after contractual obligation on part of sellers regarding updating of land revenue records with names of rightful owners and obtaining relevant permissions, is completed by sellers.

Substantial rights in land transferred to purchasers including right to receive TDR in name of purchasers in case of compulsory acquisition of land by Nashik
Municipal Corporation [clause 2].
25.01.2001
Unregistered
Possession
Receipt dated 25.01.2001
55-58
Possession of land received by the assessee with the right to handover the possession to any other person as per discretion of assessee.
04.10.2014
Unregistered
Compensation
Receipt dated 04.10.2014
70-76
Contractual obligations fulfilled by sellers only in 2014. Sellers requested the assessee to pay compensation of Rs.42 lakhs over and above the purchase consideration of Rs.30
lakhs decided as per agreement dated
12.08.1997, in view of the fact that the value of balance consideration of Rs.27 lakhs planned to be paid around
1997
had reduced substantially due to passage of time till 2014, due to delay on part of sellers to complete the relevant legal formalities.
Assessee agreed to the request, in order to avoid protracted litigation, although sellers had no legal right to claim such compensation in view of clear terms of agreement dated
12.08.1997. Total amount of Rs.38 lakhs paid through banking channel (3 lakhs in 1997 and 35 lakhs in 2014)
09.09.2015
Unregistered
Final
Payment
Receipt
(Bharna
Pavti) dated
09.09.2015
88-93
Entire amount of Rs.72 lakhs paid upto 09.09.2015 through banking channel, including balance amount of Rs.34
lakhs paid after
04.10.2014. 06.02.2016
Agreement dated
12.08.1997
was REGISTERED before
Collector of Stamps,
Nashik
94-105
The Agreement to Sale executed on 12.08.1997 was registered with the Collector on 06.02.2016, upon payment of stamp duty and penalty under Amnesty Scheme.

The stamp duty of Rs.5,11,000/- was paid @ 8% on stamp valuation of land as on date of execution of agreement i.e. 12.08.1997, which was assessed at Rs.63,88,000/- by the Collector, Nashik.

Further, penalty of Rs.20,44,000/- was also paid for regularization of the said agreement.
Rajendra Rasiklal Shah

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12. Further, we notice that ld.CIT(A) on considering the fact that the transaction has taken place on 12.08.1997 and part consideration has been paid in advance on 08.01.1997, gave relief to the assessee observing as under :
“Findings:
6.4 I have carefully considered the facts of the case, assessment order, arguments and submissions of the appellant made during the appellate proceedings. On perusal of the same, it is noticed that, the appellant and 5 others had entered into an agreement to purchase the land on 12/08/1997 for a consideration of Rs. 30,00,000/-, out of which an amount of Rs. 3,00,000/-was paid by cheque before the date of the impugned agreement. As per the agreement to purchase, the sellers were to fulfil certain conditions and the purchasers were required to pay the balance consideration on fulfilment of the conditions agreed upon by the sellers. The sellers have fulfilled the conditions agreed upon by them and the impugned agreement to purchase dated 12/08/1997 was registered on 06/02/2016 under the Amnesty Scheme by paying stamp duty of Rs. 5,11,000/- on the value of the land on 12/08/1997 for stamp duty purpose of Rs. 63,88,000/- @ 8% and fine of Rs.
20,44,000/-. In the meantime, the sellers demanded additional consideration of Rs.42,00,000/-, considering the passage of time and inflation as the value of the consideration fixed in the year 1997 and paid to the extent of Rs.27,00,000/- on much later date has substantially decreased. The purchasers have paid the impugned additional consideration considering the inflation and to avoid litigation in the years 2014 and 2015 by account payee cheques.

The AO, however did not allow the benefit of provisions to section 56(2)(vii)(b) to the appellant raising the contentions, which are dealt with as under.