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Facts
The assessee purchased a vacant plot for Rs.70,00,000/-, while its stamp duty value was Rs.1,63,50,103/-, with stamp duty paid amounting to Rs.6,54,050/-. The Assessing Officer (AO) made an addition of Rs.70,00,000/- under section 69, which the CIT(A) deleted, noting the transaction pertained to AY 2013-14. However, the CIT(A) then sustained an addition of Rs.93,50,103/- (difference between stamp duty value and purchase price) and Rs.6,54,050/- (stamp duty paid) under section 56(2)(vii)(b)(ii) for AY 2014-15, also advising the AO to re-open assessment for AY 2013-14.
Held
The ITAT held that the property transaction, including substantial payment and possession, pertained to AY 2013-14, even though registration was completed in AY 2014-15. Since Section 56(2)(vii)(b)(ii) was amended effective from 01.04.2014 (AY 2014-15), it could not be invoked for a prior assessment year (AY 2013-14). Thus, the ITAT deleted the additions made by the CIT(A) under section 56(2)(vii)(b)(ii), clarifying that CIT(A)'s advice for re-opening assessment was merely advisory. The ground regarding the addition of stamp duty was dismissed as not pressed by the assessee.
Key Issues
1. Whether the CIT(A) had the power to change the section of addition from Section 69 to Section 56(2)(vii)(b)(ii) and shift the assessment year for such addition. 2. The applicability of Section 56(2)(vii)(b)(ii) for a property transaction where substantial obligation and possession occurred in AY 2013-14, but registration was completed in AY 2014-15, considering the section's effective date of amendment.
Sections Cited
143(1), 143(2), 142(1), 131, 69, 56(2)(vii)(b)(ii), 147, 148, 251(1), 251(1)(a), 245HA, 250, 142A, 69A, 69B, 69C, 50C
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Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
(Assessment Year: 2014-15) Bimla, vs. ITO, Ward 38 (5), H.No.143, Village Hamidpur, New Delhi. Delhi – 110 036. (PAN : BPDPB9344B) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Gautam Jain, Advocate Shri Ankit Kumar, Advocate REVENUE BY : Shri Kanv Bali, Sr. DR Date of Hearing : 18.09.2024 Date of Order : 26.11.2024 ORDER
PER S.RIFAUR RAHMAN,AM:
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax Appeals-13, New Delhi (hereinafter referred to ‘Ld. CIT (A)’) dated 23.07.2019 for Assessment Year 2014-15.
Brief facts of the case are, assessee filed return of income declaring total income of Rs.2,23,030/- on 14.08.2014. The return of income was processed under section 143 (1) of the Income-tax Act, 1961 (for short ‘the Act’). The case was selected for scrutiny through CASS and notices 143(2) and 142(1) were issued and served on the assessee. In response, ld. AR of the assessee attended and submitted the relevant information as called for. The Assessing Officer observed that during the year under consideration, assessee purchased a vacant plot measuring 1008 sq.yds. out of Khasra No.398/3 (1-00) situated in extended Lal Dora Abadi of village Hamidpur, Tehsil Alipur, Distt. North Delhi. The assessee claimed the cost of purchase at Rs.70,00,000/- whereas the stamp duty value of the property was Rs.1,63,50,103/- plus stamp duty paid for the same is Rs.6,54,050/-. The assessee was asked to submit the sources of the property and various claims and details of the properties held by the assessee. In response, assessee has not filed relevant information as called for by the Assessing Officer. The Assessing Officer issued summons u/s 131 of the Act to the assessee to submit documentary evidences of deduction claimed under Chapter –VIA, property papers against which advance received amounting to Rs.28,00,000/-, copy of agreement, sale purchase status of the property, source of payment of advance, bank statement agreement to sell in respect of abovesaid property and possession letter of property which was purchased by the assessee on 09.04.2013. In response, assessee vide letter dated 07.12.2016 submitted that the property was purchased for a value of Rs.70,00,000/- although stamp duty value is Rs.1,63,50,203/-. The assessee submitted different versions of arranging sources for the purchase of this property i.e. Rs.25,00,000/- received from assessee’s husband, Shri Raj Kumar, Rs.28,00,000/- received from Mr. Surander Kumar and Rs.21,00,000/- received from Shri Bijender Singh. Since the Assessing Officer was not convinced with different versions of sources and justification submitted by the assessee, he rejected various submissions of the assessee and proceeded to make the addition u/s 69 of the Act. Further he added stamp duty of Rs.6,54,050/-.
Aggrieved assessee preferred an appeal before the ld. CIT (A)-13, New Delhi. Before ld. CIT (A), ld. AR for the assessee submitted that Rs.70,00,000/- was paid by the assessee in the following dates :- (i) On 25.12.2012 Rs.13,00,000/- in cash; (ii) On 12.01.2013 Rs.30,00,000/- vide cheque no.012344 of Allahabad Bank; and (iii) On 12.01.2022 Rs.27,00,000/- vide cheque no.012345 of Allahabad Bank. It was also submitted that physical possession of the property was taken on 17.01.2013. Ld. CIT (A), after perusing the documents and explanation submitted by the assessee, observed as under :- “1) The payment of Rs. 30 lacs & Rs. 27 lacs by cheque are being supported by Xerox copy of cheques, but they do not show the cheque no. i.e. 012344/012345 as stated in various places.
2) The appellant claims to have been given an amount of Rs. 25 lacs by her husband Sh. Raj Kumar. The source as per his confirmation states that he received Rs. 31,19,300/- on 14.01.2013 by sale of his property. But the entire payment for the property was made by the appellant uptill 12.01.2013. Hence, the source as claimed is not proved. The confirmatory letter is also dated 15.12.2012. Further, the bank statement of Sh. Raj Kumar A/c No. 20407724365 of Allahabad Bank shows a credit and Debit entry on 14.01.2013 to Justify-transfer-of money to the appellant. However, the particular extract of the bank statement in Allahabad Bank, produced during appellate proceedings does not reflect this entry. The Bank Statement is from 15.06.2013 to 31.03.2014 only.”
After observing certain discrepancies on the confirmation letter of Bijender Singh and details of PAN and ITR submitted to claim the genuine acceptable cash credit to claim identity, creditworthiness and genuineness of the transaction, ld. CIT (A) observed that the onus has not been satisfactorily discharged by the assessee. Similar observations were made relating to Surender Kumar. After considering the submissions of the assessee and observing the above discrepancies, finally ld. CIT (A) held that the purchase consideration was paid by the assessee during FY 2012-13 and possession was also taken in the same period i.e. relating to AY 2013-14. He held that addition of Rs.70,00,000/- to be made u/s 69 would be for AY 2013-14 and not for AY 2014-15, the impugned year under consideration. He deleted the addition proposed by the Assessing Officer in the current assessment year. Ld. CIT (A) advised the Assessing Officer to take appropriate action u/s 147/148 to reassess the income of the assessee for the AY 2013-14 after due application of mind independently 5. Ld. CIT (A) observed the purchase amount at Rs.1,63,50,103/- on the basis of circle rate on which stamp duty was paid in the light of section 56(2)(vii)(b)(ii) of the Act and directed the difference of amount between circle rate and actual amount paid by the assessee to be treated as Income from Other Sources. Since the difference amount is exceeding Rs.50,000/-, he sustained the addition u/s 56(2)(vii)(b)(ii) of the Act and not u/s 69 of the Act.
Further he sustained the addition of stamp duty paid by the assessee for registration of an amount of Rs.6,54,050/- since the assessee has not submitted any document or evidence and also income declared by the assessee is only Rs2,33,030/-. Further he allowed the deduction claimed by the assessee of Rs.55,600/- under Chapter-IVA of the Act.
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :-
1. On the facts and circumstances of the case and in law, the Learned Commissioner (Appeals) has exceeded its authorities in issuing direction to re-open the assessment of earlier year when the cash credit has taken place.
2. Whether the CIT ( Appeals) was justified in bringing to tax Rs.93,50,103/- (Rs. 1,63,50,103/- - Rs. 70,00,0001- difference between circle rate and purchase consideration) u/s 56(2)(vii)(b )(ii)' of the IT Act particularly when the Ld AO order did not mention any thing about the addition u/s 56(2) and was empower to re-assess the case on the direction of seniors 3. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs.93,50,103/- (Rs.1,63,50,1031- - Rs. 70,00,0001-) u/s 56(2)(vii)(b )(ii) of the IT Act made by the assessing officer u/s 69 of the Act & the reasons given by CIT(A) for confirming the said additions are erroneous and not sustainable both on facts and in law and accordingly the addition of Rs.93,50,103/- is liable to be deleted.
4. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal) erred in law in ignoring the appellant submission that she has purchased the property in Rs.70,00,000/- only and in arbitrarily making the addition of Rs.93,50,103/- (Rs. 1,63,50,103/- - Rs. 70,00,000/-) u/s 56(2)(vii)(b)(ii) of the IT Act without compiling with the conditions laid down in clause (a) of sub section 2 of section 50C of the Act 5. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs.6,54,0501- paid by way of stamp duty at the time of registration of the property u/s 69 of the IT Act & the reasons given by CIT(A) for confirming the said additions are erroneous and not sustainable both on facts and in law and accordingly the addition of Rs.6,54,0501- is liable to be deleted.”
8. At the time of hearing, ld. AR of the assessee submitted that registration of the property was registered on 05.04.2013 which is not FY 2013-14. He brought to our notice page 1 of the assessment order wherein AO has recorded the same stamp duty value and actual cost of purchase. Therefore, the issue of section 50C was dealt by the AO and proceeded to make the addition of the property based on stamp duty valuation along with stamp duty paid by the assessee. He submitted that AO cannot make addition based on stamp duty when the assessee has made the submissions that the actual cost of purchase was only Rs.70,00,000/-.
9. Ld. AR for the assessee submitted that the assessee has paid Rs.70,00,000/- during FY 2012-13 and date of payment was already submitted before the ld. CIT (A) and also the assessee has taken possession of the property on 17.01.2013. After considering the actual facts on record, ld. CIT (A) deleted the addition made by the AO with the observation that the transaction under consideration is pertained to AY 2013-14 and not for AY 2014-15. He objected to the advice given by ld. CIT (A) to the AO to initiate the proceedings u/s 147/148 of the Act in AY 2014-15. He submitted that ld. CIT (A) has no jurisdiction to issue any such direction.
10. Further ld. AR brought to our notice para 5.6 of the appellate order and submitted that ld. CIT (A) has invoked the provisions of section 56(2)(vii)(b)(ii) of the Act to confirm the addition of Rs.93,50,103/- being the difference of circle rate and actual purchase price. In this regard, he brought to our notice pages 116 to 119 of the paper book. He submitted that section 56(2)(vii)(b)(ii) of the Act was amended to provide sub-clause (ii) of the Finance Act, 2013 w.e.f. 01.04.2014. He brought to Memorandum of Finance Bill reported in 351 ITR 164 (185). He submitted that the above amended section has no application for the present issue under consideration. Since ld. CIT (A) himself has given a finding that the present transaction belongs to AY 2013-14 and mere registration was made in the later date would not cover the transaction already exhibited in the earlier year where substantial obligation found already discharged. He relied on the case of Pr.CIT vs. Naina Saraf 142 taxman.com 147 (Rajasthan HC). He further submitted that date of registration i.e. 09.04.2013 shall relate back to the date of agreement to sale of property, which can also be an oral agreement or date of first payment which is evident not only from sale deed but also from findings of first appellate authority. He submitted that once the payment of consideration was made and possession of subject property was given leading to discharge of substantial obligation through AY 2013-14, mere registration in 2014-15 will not attract provisions of section 56(2)(vii)(b)(ii) of the Act effective from AY 2014-15, since the same shall be against the doctrine of relating back. In this regard, he relied on the decision of CIT vs. Glass Works Ltd. 25 ITR 529 (SC). Further he submitted that even otherwise also not only the addition made by the first appellate authority is without jurisdiction but also beyond his power granted under statue. He submitted that powers of ld. CIT (A) are contained in section 251(1) of the Act, which reads as under: “251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.
Further he submitted that where appeal lies before Commissioner of Income Tax (A) against an order of assessment, he can exercise the powers as enumerated u/s 251(1)(a) of the Act i.e. the ld. CIT (A) can confirm, reduce, enhance or annul the assessment but he cannot change the substance of addition. He further submitted that it is pertinent to note that addition of Rs.1,63,50,103 has been made by Assessing Officer invoking provisions of section 69 of the Act, of which addition to the extent of Rs. 70,00,000/- was deleted by first appellate authority (Although issued direction for assessment in different year), further the addition of Rs.93,50,103/- (Rs.1,63,50,103 - Rs. 70,00,000) is made by first appellate authority invoking section 56(2)(vii)(b )(ii) of the Act. Ld. AR relied on the order of ITAT Delhi 'SMC' Bench in the case of M/s Toffee Agricultural Farms Ltd in dated 18.04.2022 (Page 34-41 of paper book) wherein it has been held that the CIT(A) could not change the provision of law qua the item of which assessment is made, relevant portion from the order is extracted hereunder :- “6. Now coming to the question regarding action of the learned CIT(Appeals) to treat the reference u/s 142 for the purpose of Section 69B, I find merit into the contention of the assessee that there is no power conferred upon the learned CIT(Appeals) to assess a particular item under different provision of the Act what the Assessing Officer had done without giving a specific notice to the assessee regarding such action. The Revenue has not brought any material to suggest that the assessee was put to notice by the learned CIT(Appeals) before taking such action. I am of the considered view that law does not permit for such change of provision of law. As per Section 250 of the Act, the learned CIT(Appeals) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the learned CIT(Appeals). As per Section 251(1)(a), in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that learned CIT(Appeals) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made u/s 69C as the addition made u/s 69B and the same is contrary to the spirit of the Act. Reliance placed by the learned counsel for the assessee on the judgment of the Hon'ble Delhi high Court, rendered in the case of CIT Vs. Aar Pee Apartments (P) Ltd. (supra), has held that from the reading of sub-section (1) of Section 142A, it is clear that legislature referred to the provisions of Section 69, 69A and 69B but specifically excluded 69C. The principle of casus omissus becomes applicable in a situation like this. What is not included by legislature and rather specifically excluded, cannot be interpreted by the Court through the process of interpretation. The only remedy is to amend the provision. It is not the function of the Court to legislate or to plug the loopholes in the law. In the light of the above binding precedent the action of the learned CIT(Appeals) in treating the addition made by the Assessing Officer u/s 69C as have been made u/s 69B is contrary to the law laid down by the Hon'ble Jurisdictional High Court. I, therefore, respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Aar Pee Apartments (P) Ltd. (supra), the impugned order is therefore set aside. The addition made u/s 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted. Hence, impugned addition is hereby deleted. Grounds of appeal taken by the assessee are allowed accordingly.”
He relied on the following case law :- (i) Hari Mohan Sharma vs. ACIT 179 ITD 310; (ii) CIT vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443; (iii) CIT vs. Union Tyres 240 ITR 556; (iv) CIT vs. Sardari Lal & Co. 251 ITR 864; (v) CIT vs. B.P. Sherafudin 399 ITR 524 (Ker); (vi) Nababharat Shiksha Parishad vs. DCIT in dated 11 October 2017; (vii) Naresh Sunderlal Chug vs. ITO 171 ITD 116; (viii) Tulsi Tracom (P) Ltd. vs. CIT6 86 taxmann.com 35; (ix) Cairn India Ltd. vs. DIT (IT) 87 taxmann.com 310 (Madras); (x) J.T. (India) Exports and Anr. Vs. UOI 262 ITR 269 (FB) (Del.).
With regard to addition of stamp duty, ld. AR submitted that assessee prefers not to press this ground.
On the other hand, ld. DR for the Revenue submitted that ld. CIT (A) has right to dispose of the issue under dispute as per section 251 Explanation, therefore, ld. CIT(A) can modify the section to sustain the addition which is within his powers. He submitted that section 56(2)(vii)(b)(ii) of the Act is applicable w.e.f. 01.04.2014, therefore, the registration was completed by making the payment of stamp duty on 05.04.2013. Ld. CIT (A) has already deleted the addition, however stamp duty is paid in AY 2014-15, therefore provisions of section 56 are applicable. He submitted that the transfer was actually completed in AY 2014-15 and the provision of section 56(2)(vii)(b)(ii) of the Act is very much applicable to AY 2014-15. In this regard, he relied and supported the findings of ld. CIT (A) for invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.
Considered the rival submissions and material placed on record. We observed that the assessee has entered into agreement of sale in AY 2013- 14 and made the substantial payment and taken the possession of the property also in AY 2013-14. Ld. CIT (A) has rightly decided that the transaction pertained to AY 2013-14. The AO was directed to delete the addition of Rs.70,00,000/- in AY 2014-15. However, he gave an advice to AO to proceed with the reopening of the assessment for AY 2013-14 as per law. However, ld. AR objected to the above advice. After considering the finding of ld. CIT (A), we observed that the advice given by him has only advisory value and cannot be treated as direction, therefore, even the ld. CIT (A) has advised so but it has no value for persuasion and it does not partake the value of direction.
16. The assessee is in appeal before us for invoking of section 56(2)(vii)(b)(ii) of the Act by the ld. CIT (A) in AY 2014-15 even though after giving proper finding that the transaction under consideration is pertained to AY 2013-14 merely because the registration of the transaction was made in AY 2014-15 it does not change the character of the transaction and it belongs/pertains to AY 2013-14 only. The provisions of section 56(2)(vii)(b)(ii) of the Act was amended w.e.f. 01.04.2014. The ld. CIT (A) cannot invoke the provisions of section 56(2)(vii)(b)(ii) of the Act on the transactions pertaining to previous assessment year, as held in the case of M. Syamala Rao vs. CIT 234 ITR 140 (AP). The Hon’ble AP High Court held as under :- “A perusal of the document makes it clear that the agreement of sale was executed in 1962 and possession was delivered to the assessee on the said date and the sale consideration was also paid by the assessee to the owner of the property. However, the document was registered on June 8, 1979. The registration of the document relates back to the date on which the agreement of sale was executed in favour of the assessee by the owner. Therefore, the assessee is deemed to be the owner of the property with effect from May 1, 1962. If the assessee is the owner of the property with effect from May 1, 1962, the capital gains cannot be said to be short-term capital gains as the assessee has already held the property for more than thirty-six (36) months. In our view, therefore, the view expressed by the In the light of the above, we answer the question in the negative and in favour of the assessee. The referred case is accordingly answered. No costs.”
Therefore, in our considered view, transaction under consideration pertained to AY 2013-14 and ld. CIT (A) cannot treat this transaction as pertains to AY 2014-15 and also cannot invoke provisions of section 56(2)(vii)(b)(ii) of the Act which was amended w.e.f. 01.04.2014 effective from AY 2014-15. Accordingly, we delete the additions made by ld. CIT (A) by invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.