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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A.MOHAN ALANKAMONY
आदेश / O R D E R Per A. Mohan Alankamony, AM:-
This appeal raised by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-5, Chennai dated 02.03.2018, in for the assessment year 2014-15 passed U/s.250(6) r.w.s. 143(3) of the Act.
The assessee has raised several grounds in his appeal however the crux of the issue is that the Ld.CIT(A) has erred in Ld.AO who had included the stamp value of the common pathway for making addition U/s.56(2)(vii)(b) of the Act.
The brief facts of the case are that the assessee is an individual deriving rental income and capital gains, filed his return of income for the assessment year 2014-15 belatedly on 13.05.2015, admitting total income of Rs.85,55,810/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS and notice U/s.143(2) & 142(1) of the Act was issued on 19.09.2016 & 20.10.2016 respectively. Finally assessment order was passed U/s.143(3) of the Act on 15.12.2016 wherein the Ld.AO made addition of Rs.21,48,000/- invoking the provisions of Section 56(2)(vii)(b) of the Act.
During the course of scrutiny assessment, it was observed by the Ld.AO that the assessee had purchased Plot No.81, Velachery Ganapathy Nagar jointly with two other persons for sale consideration of Rs.27 lakhs, however the stamp valuation of the property was Rs.1,45,44,000/-. Thus the stamp value of the assessee’s share of 1/3rd land acquired works out to of Rs.1,45,44,000/- viz., Rs.48,48,000/-. Since the stamp value of the property acquired by the (Rs.48,48,000/-) exceeds the purchase consideration (viz., Rs.27 lakhs), the Ld.AO invoked the provisions of Section 56(2)(vii)(b) of the Act and made addition of Rs.21,48,000/- (Rs.48,48,000 – Rs.27,00,000). While doing so, the Ld.AO rejected the submissions of the assessee that his share in the land was only 910 sq.ft., along with the right to use the path measuring 302 sq.ft., and therefore the stamp valuation of the entire portion of the land of 1212 sq.ft., (910 + 302) should not be taken into consideration for making addition U/s.56(2)(vii)(b) of the Act but only the stamp valuation of his share in the land of 910 sq.ft., should be considered. Accordingly the Ld.AO made addition for Rs.21,48,000/- by observing as under:- “5. The reply of the assessee was considered carefully. The main contention of the assessee is that the actual total size is only 910 sq.ft. whereas the total area considered by the Registrar for the purpose of stamp duty is 1212 sq.ft. and the pathway road measuring 302 sq.ft. is also valued for the stamp purpose.
In this regard, it is pertinent to mention here that as per the schedule of the property appearing in the registered documents the description of the property is “All that piece and parcel of the property being vacant land bearing Plot No.81, Velacherry Ganapthy Nagar Scheme, Velacherry Bye Pass Road, Chennai – 600 042 situated at Velecherry Village, Mambalam-Guindy Taluk, Comprised in R.S. No.123/1, measuring an extent of 901 sq.ft. along with right to use in Pathway leading from road measuring 302 sq.ft. totally 1212 sq.ft. being bounded on …..”
7. From the above, it becomes clear that what was purchased was the land measuring 910 sq.ft. alongwith the right to use in pathway leading from road measuring 302 totally 1212 sq.ft. Hence, the stamp duty valuation for the total area of 1212 sq.ft. has to be taken for the purpose of section 56(2)(vii)(b) of the Income Tax Act, 1961. The total stamp duty valuation amounts to Rs.1,45,44,000/-. The stamp duty valuation attributable to the assessee’s share of property is 1/3 X Rs.1,45,44,000/- =Rs.48,48,000/-. The stamp duty valuation exceeds the consideration paid by the assessee by Rs.21,48,000/- (ie Rs.48,48,000 –
Rs.27,00,000). Accordingly, a sum of Rs.21,48,000/- is hereby added u/s.56(2)(vii)(b) of the Income tax Act, 1961 to the total income shown by the assessee. Penalty proceedings u/s.271(1)(c) of the Income tax Act, 1961 are also initiated for furnishing inaccurate particulars of income.”
On appeal the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with his view.
6. Before us the Ld.AR reiterated the submissions made before the Ld.Revenue Authorities on the earlier occasions while as the Ld.DR argued in support of the orders passed by the Ld.Revenue Authorities.
We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it is evident that the stamp value of the assessee’s share in the land jointly acquired by them is Rs. 48.48,000/- which is 1/3rd of 1,45,44000/- being the stamp value of the total extend of land. However the actual purchase consideration declared by the assessee is only 27,00,000/-. Therefore the Ld. Revenue authorities are right in invoking the provisions of Section 56(2)(vii)(b) of the Act and making addition of Rs. 21,48,000/- which is nothing other than the excess of actual purchase consideration over stamp value of the property acquired by the assessee viz., 48,48,000 (-) 27,00,000/-. Therefore the appeal of the assessee is devoid of merits. Hence we hereby uphold the Orders of the Ld.Revenue Authorities.
In the result the appeal of the assessee is dismissed.
Order pronounced on the 07th December, 2018 at Chennai.