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Income Tax Appellate Tribunal, PUNE BENCH “A” : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
This assessee’s appeal for assessment year 2014-15, arises against the Pr. CIT-3, Pune’s order dated 22.03.2019, passed in case No. Pn/Pr.CIT-3/263/BKS/2018-19, involving proceedings under Section 143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties. Case file perused.
The assessee has raised the following substantive grounds in the instant appeal :
1. “On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be held that, the order passed
2 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune. by learned Pr. Commissioner oflncome Tax u/s.263 is without satisfying the requirements of the said section and without properly resuming the jurisdiction of the said section for the following issues.
Issue no 1 on account of tax calculated at 30% under provision of Section 115BBE of the Act, the issue so raised be deleted.
2. Issue no 2 and 10 raised on account of investments made and interest on such investments and advances is not as per provisions of Section 36(1)(iii) of the Act. The issue raised be deleted. 3. Issue no 3 raised on account of deemed rent u/s 23 by the first level appellate authority is not in accordance with the provisions of the Act. The issue raised be deleted. 4. Issue no 4 raised u/s 56(2)(vii) on account of difference between stamp duty valuation and consideration is not in accordance with the provisions of the Act. 5. Issue no 7 raised on account of disallowance not made u/s 43B is not according to the provisions of the Act The issue raised be thus deleted. 6. Issue no 9 raised on account of difference in claim of TDS and income offered to tax is not according to the provisions of section 199 (1) of the Act. The issue thus raised be deleted and proper relief be granted to the assessee.
3 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune.
Issue no 11 raised on account of deemed rent not included in stock in trade is not as per provisions stated under section 23 of the Act. The issue hence raised should be deleted. The order passed u/s. 263 for the abovementioned issues be held to be unwarranted, unjustified, and contrary to the provisions of the Act. The order so for the above mentioned issues passed be cancelled.
2. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing.”
4. The assessee’s ground no.2 is rejected as general in nature.
5. We next proceed to deal with the assessee’s seven folded pleadings in his former substantive ground so far as the issue of correctness of the PCIT’s revision directions herein terming the Assessing Officer’s regular assessment dated 16.12.2016 as an erroneous one causing prejudice to the interest of Revenue, is concerned.
6. Learned counsel does not press the assessee’s sub- substantive grounds qua the issue(s) of section 115BBE computation as well as regarding 43B disallowance, TDS claim vis- à-vis income offered to tax u/s.199(1) and deemed rent issue with 4 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune. liberty to raise appropriate contentions before the Assessing Officer in consequential proceedings. Rejected in very terms.
7. This leaves us with the first and foremost issue of PCIT's revision directions regarding the applicability of interest disallowance u/s.36(1)(iii) of the Act. Mr. Khandelwal took-us to assessee’s detailed paper book dated 05.07.2022 containing all the relevant details. He invited our attention, inter alia, to pages 253, 255, 314 [the Assessing Officer’s queries] in statutory notice(s) issued u/s.143(2) r.w.s.142(1) of the Act followed by replies thereto at pages 233 onwards. Mr. Khandelwal’s case, therefore, is that the assessing authority had duly applied its mind during the course of scrutiny, and, therefore, the assessment framed in assessee’s case has been wrongly held to be an erroneous one causing prejudice to interest of the Revenue. All these assessee’s arguments fail to evoke our acceptance since we do not find even a single question or enquiry from the Assessing Officer’s side alleging diversion of interest bearing funds for non-business purposes, attracting section 36(1)(iii) interest disallowance. Faced with the situation, we conclude that the PCIT herein has rightly termed the Assessing Officer’s assessment completed without making the adequate enquiries in light of section 263 Explanation (2) inserted in the Act by Finance Act, 2015 w.e.f. 01.06.2011 as well as Malabar Industrial Company Ltd., vs. CIT [2000] 243 ITR 83 (SC).
5 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune. 7.1. We further note from perusal of the PCIT's revision directions that he has already directed the Assessing Officer to examine the issue of applicability of section 14A r.w. Rule 8D in his findings at page-13 para-10 of the revision order. The Revenue could hardly dispute that the Assessing Officer had duly disallowed an amount of Rs.5,05,42,113/- in his assessment and, therefore, the same could not be termed an instance of lack of enquiry as it is alleged at the PCIT’s behest. We reverse the PCIT’s revision directions to the limited extent of applicability of section 14A read with Rule 8D disallowance therefore.
Next comes the deemed rent computation issue raised in the learned PCIT’s revision directions. We note from a perusal of the relevant discussion in page-9 para-3 that neither the assessee could clarify before us about the number of house properties owned in the relevant previous year nor could he rebut his computation in the subsequent assessment year 2015-16 qua the same. Faced with the situation, we upheld the PCIT’s revision directions that the Assessing Officer had neither enquired nor examined the issue of assessee’s rental income from house property u/s. 23 of the Act. The assessee’s arguments to this effect are rejected accordingly.
Lastly comes the issue of section 56(2)(vii) made applicable in assessee’s case on account of alleged difference between stamp valuation and actual purchase consideration qua the sale deed executed in the relevant previous year.
6 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune. 9.1. A perusal of the said sale deed dated 31.12.2013, and more particularly, the schedule of payment therein at page-16 indicates that the assessee had already paid an amount of Rs.50,000/- on 20.09.2016 by way of bank cheque which followed the agreement itself dated 05.10.2006. Faced with the situation, we quote 1st and 2nd proviso to sec.56(2)(viib) of the Act that the consideration amount in such a transfer of immovable property at the time of agreement could also be accepted in case whole or part thereof had been paid in any mode other than cash on or before the date of the agreement, for the transfer of such immovable property.
Learned CIT-DR could hardly dispute that the legislature had introduced similar provision(s) in sec.50C(1) vide Finance Act 2016 w.e.f. 01.04.2017 which have already been held as carrying retrospective effect being curative in nature in Dharmashibhai Sonani vs. ACIT [2016] 161 ITD 627 [Ahd.]. We, therefore, are of the opinion that the only difference in sec.50C vis-à-vis sec.56(2)(vii) is that the former applies in case of transfer of a capital asset in the hands of the vendor whereas the latter one gets attracted in the purchaser/vendee’s case, respectively. We thus conclude that the PCIT has erred in law and on facts in directing the Assessing Officer to frame his assessment afresh in light of section 56(2)(vii) of the Act in very terms. His directions to this limited extent are reversed accordingly. The assessee’s instant former substantive ground succeeds in part therefore.
7 ITA.No.855/PUN/2019 Shri Bharat Keshavlal Shah, Pune. 11. No other ground or argument has been pressed before us.
This assessee’s appeal is partly allowed in above terms.
Order pronounced in the open Court on 13.12.2022.