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Income Tax Appellate Tribunal, ‘ A’ BENCH : CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S.JAYARAMAN
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER
This is an appeal filed by the assessee against the order of the Principal Commissioner of Income-tax-5, Chennai, passed u/s.263 of the Income Tax Act, 1961 (in short “the Act”) in No.PCIT- 5/ITO(HQ)/JSL/263-2/2018-19 dated 01.10.2018 for the assessment year 2014-15.
Mr.G.Baskar & Mr.I.Dinesh represented on behalf of the Assessee and Mr.AR.V.Sreenivasan represented on behalf of the Revenue.
It was submitted by ld.AR that the assessee had purchased a property being a residential site at Sholingarnallur village, Tambaram Taluk, Kancheepuram district for a consideration of Rs.1,44,00,000/- vide Sale Deed dated 11.09.2013. The assessment u/s.143(3) of the Act was completed on 29.12.2016 wherein addition of Rs.7,40,000/- towards the source of purchase of the said property had been disbelieved and added back to the total income of assessee. It was a submission that the assessment was completed on 29.12.2016.
Subsequently, a show cause notice u/s.263 of the Act came to be issued on 28.08.2018 by which the ld.PCIT-5, Chennai proposed to exercise his revisional power u/s.263 of the Act and bring to tax the differential amount between the market value of the property recorded in the Sale Deed for the purpose of registration which was shown at Rs.1,68,00,000/- and the sale consideration of the property recorded in Sale Deed at Rs.1,44,00,000/- as per Clause-(vii) of Section 56(2) of the Act. It was submitted that the assessee had replied to the show cause notice vide letter dated 18.09.2018 wherein it was brought to the attention of the ld.PCIT that the Registrar had assessed the stamp duty value at a figure much higher than the market value. It was brought to the attention of PCIT that on account of the higher guideline value adopted by the Registrar in various places, the Government of Tamil Nadu revised the same based on the real market value with effect from 09.06.2017 and accordingly, the guideline value of this property was only Rs.2,680/- as per the revised guideline value, which is against Rs.3,500/- adopted by the Registrar when the property was registered in September, 2013. It was further submission that it is also brought to the attention of the PCIT that the guideline value of the property was only Rs.1,487/- till 31.03.2012. It was submitted that the guideline value had been increased to unrealistic level during 2012 by revision of Stamp Duty Valuation.
It was submitted that if the guideline value as revised in 2017 was considered, the guideline value of the property purchased came to only Rs.1,28,64,000/-. It was submitted that the PCIT did not accept the contentions of the assessee and applying the provisions of section 56(2)(vii) of the Act, ld.PCIT directed the Assessing Officer to assess the differential amount of Rs.24,00,000/- and pass a fresh assessment order. It was a submission that the fact that the Tamil Nadu Government had reduced the rates itself showed that the guideline value as prescribed in 2012 with effect from 01.04.2012 by the State Government was excessive. It was a prayer that the addition as made by the PCIT be deleted.
In reply, the ld.DR vehemently supported the order of PCIT.
It was a submission that the provisions of section 56(2)(vii) of the Act provided for the addition to be made and the Assessing Officer having not considered the same, the assessment order was erroneous and prejudicial to the interests of the Revenue and the addition was liable to be made. It was a submission that as on the date of registration, the guideline value as fixed by the Government was figure that is liable to be adopted.
We have heard the rival contentions and perused the material available on record. A perusal of the facts in the present case shows that the sale consideration actually paid by the assessee in respect of purchase of the property is of Rs.1,44,00,000/- and the figure of Rs.1,68,00,000/- is a hypothetical one on which the assessee is bound to pay the stamp duty as required by the State Government, if the assessee desires to have the property registered in the assessee’s name. Without paying the stamp duty as prescribed at the rate fixed by the Government, assessee would not be able to get the property registered in his name. The alternate would be, to go through the process of appeal in respect of valuation of the property which is also a long drawn process. Obviously, the difference between sale consideration actually paid and the guideline value fixed by the Government in the present case being only Rs.24/- lakhs, the stamp duty variation would be only in the range of Rs.2.4 lakhs. Where the assessee has already spent Rs.1,44,00,000/- and registration cost of nearly Rs.14.4 lakhs and additional Rs.2.4 lakhs admittedly would not be challenged by the assessee, especially when considering the rigmarole in respect of filing the appeal for reduction of the stamp duty valuation. But that cannot be the ground for making a direct addition in respect of the provisions of section 56(2)(vii) of the Act. Further, the fact is very clear that the Government of Tamil Nadu has found that the guideline value fixed earlier with effect from 01.04.2012 was very much on the higher side and it consequently reduced the same in 2017, which clearly shows that the assessee should be given the benefit of the revised valuation. Once the revised valuation is taken into consideration, the guideline value in respect of the property would be lower than the actual consideration paid by the assessee. This is also not the case where any evidence of on-money payment has been found. This being so, we are of the view that the addition as directed by the ld.PCIT in his order u/s.263 of the Act is unsustainable, when the guideline value as prescribed by the Government of Tamil Nadu with effect from June,2017 is taken into consideration. In these circumstances, the order passed by the Principal Commissioner of Income-tax-5, Chennai is quashed.
In the result, the appeal of the assessee is allowed Order pronounced in the open court after conclusion of hearing on 05th September, 2019, at Chennai.