SHRI RAM GOSWAMI,DELHI vs. ITO, WARD- 35(3), NEW DELHI

Since, the issues involved in both the appeals are common, they were heard together and are being disposed off by common order.

In ITA Nod. 444/Del/2018 & 445/Del/2018, following grounds have been raised by the assessee: 1. “That the order of the Ld. CIT(A) dated 17.11.2017 upholding the addition of Rs. 84,45,000/- made by the Assessing Officer u/s 56(2)(vii)(b) of the Income-tax Act, 1961 (the Act) is bad in law and on facts.

Being aggrieved, the assessee filed an appeal before Ld. CIT(A), wherein the assessee has filed an application under Rule 46A of the I.T. Rules, 1965 stating that following documents should be admitted as additional evidence: 1. Copy of agreement to sale dated 12.10.2012; 2. Copy of circle rate of the property as on 12.10.2012; 3. Copy of circle rate of the property as on 23.04.2013.

Being aggrieved, the assessee filed this appeal before this Tribunal.

Ld. Counsel for the assessee submitted that the AO made addition on the ground that prior to the execution of said sale deed dated 23.04.2013, there was no agreement to sell and no such agreement was produced during the course of assessment proceedings. It was contended that as per clause (5) of the sale deed the same refers to denial of any prior sale of any property has not been transferred in any manner whatsoever in favour of any other person or persons and the vendor has a good marketable title. This clause item is generally written in the sale deed to guard against any sale by way of legal assurance. It does not mean or imply that prior to the Registered Sale Deed, there was no agreement to sell between the vendor and the vendee. Its existence is clearly proved, in unmistakable terms, from page 6 of the registered sale deed where the particulars of the payments by cross account payee cheques aggregating to Rs. 20 lakhs made through the agreement to sell dated 12.10.2012 have been clearly mentioned as under: i) Rs. 5,00,000/- Ch. No. 153624 dated 11.10.2012 ii) Rs. 5,00,000/- Ch. No. 182173 dated 11.10.2012 iii) Rs. 5,00,000/- Ch. No. 153623 dated 12.10.2012 iv) Rs. 5,00,000/- Ch. No. 182174 dated 11.10.2012 9. The Ld. Counsel further submitted that the AO never asked for production of agreement to sell dated 12.10.2012 and, as such, the same was not produced before him during the assessment proceedings. However, during the appeal proceedings, the same was sought to be produced as additional evidence under Rule 46A of the Income-tax Rules, 1962 but the CIT(A) has declined to admit and consider the same while deciding the appeal on merits and agreed with the observation of the AO. It was submitted that the lower authorities have committed a grave error in invoking sub clause (b) of clause (vii) of sub section (2) of section 56 of the Income Tax Act substituted by the Finance Act – 2013 and made the same as applicable from AY 20014-15 onwards. In the present case, the assessee has agreed to purchase an industrial property for a consideration of Rs. 1.30 crores vide agreement to sell entered into on 12.10.2012, relevant to AY 2013-14. It has been held by various Courts that in respect of immovable property of value exceeding Rs. 100/-, the transfer can be said to be effected on the date of execution of conveyance documents and not on the date on which a document was registered in the books of Registrar. The ld. Counsel has also placed reliance in support of his view in the following cases: 1. Allapati Venkataramiah vs. CIT (1965) 57 ITR 185 (SC) 2. CIT vs. Poddr Cement P. Ltd. (1997) 226 ITR 625 (SC) 3. CIT vs. Vishnu Trading and Investment Company (2003) 259 ITR 724 (Raj.) 10. Ld. Counsel further submitted that as per ground No. 6 of appeal, no opportunity was given by the Ld. AO in treating the excess of the stamp duty valuation over the actual sale consideration as deemed income allowing the appellant to show that the actual sale consideration was the real market price and that the stamp duty value was artificial and unreal. It was, therefore, requested that the additional evidence filed before Ld. CIT(A) under Rule 46A may be admitted and the matter may be restored back to the file of the AO for fresh consideration of the assessment as denovo. The Ld. Counsel further submitted that as per best of their knowledge and belief, in the case of seller Shri Rakesh Kukreja S/o Shri Shyam Das Kukreja of C-276, Prashant Vihar, Delhi – 110085 (PAN AAHPK9089N), the actual sale consideration as per the agreement to sell and sale deed has been accepted and no addition on account of capital gains u/s 50C (whose provisions are perimateria with those of section 56(2)(vii) of the Act) has been made. Therefore, it was requested that the assessment order in each of the two cases may be set aside to the file of the AO for giving an opportunity to the appellants to produce the agreement to sell and other relevant evidence to show that the purchase consideration represents the real market price at which the purchase was made and no addition is required to be made. The AO should be directed to permit the appellants to raise relevant issues including the submissions that the provisions of section 56(2)(viib) of the Act are not applicable.

Per contra, the Ld. Sr. DR submitted that as per clause (5) of registered sale deed there is no subsisting agreement to sell the registered sale deed entered between the vendor and vendee. Therefore, agreement to sell dated 12.10.2012 which has been produced as additional evidence before Ld. CIT(A) have been rightly rejected. However, he has no objection, if the matter is set aside to the file of the AO with a direction to examine the authenticity and genuineness of the agreement to sell dated 12.10.2012 for purchase of the said property.

We have heard the rival submission and perused the relevant material on record. We have gone through the findings of the lower authorities and it appears that the AO has not asked production of agreement to sell dated 12.10.2012. Therefore, it appears that the same was not produced before him during the assessment proceedings. However, this agreement goes to the root of the matter, therefore, these are allowed to be admitted in the interest of justice. Such evidence made ultimately turn out to be benefit of either tax payer or Revenue. We find support from the judgment of Hon`ble Delhi High Court in the case of CIT v. Text Hundred India (P)Ltd.[2011] 351 ITR 57 (Del): 197 Taxman 128(Del) : 51 DTR 241(Del) wherein it was observed as follows: “13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motu action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well-settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect.”

In the light of above facts and circumstances and relying on aforesaid decision, we admit the additional evidence filed by the assessee and restored the issue to the file of AO to decide all the issue involved afresh. The AO is therefore, directed to decide the issue after examining additional evidence and examined their authenticity and genuineness of agreement to sell dated 12. 10. 2012 and any other evidence as may be filed by the assessee before him in support of his claim. The AO may decide the issue after making such enquiries as necessary as deem fit and submit further evidence as required in the interest of justice in accordance with law and facts of the case. Accordingly, entire assessment is set- aside to the file of the AO for denovo consideration after affording proper opportunity of being heard. Nevertheless to say that the assessee will cooperate in the enquiry and assessment proceedings and furnish necessary evidences as the assessee would like and as required by the AO. in the case of Shri Ram Bhaj Goswami AY 2014-15: -

Since the facts are identical in the case of Shri Ram Goswami, therefore, our findings given in Shri Ram Bhaj Goswami for AY 2014-15. Accordingly, entire assessment is set-aside to the file of the AO for denovo consideration after affording proper opportunity of being heard. Nevertheless to say that the assessee will cooperate in the enquiry and assessment proceedings and furnish necessary evidences as the assessee would like and as required by the AO.

In the result, both the appeals of assessee are allowed for statistical purposes.