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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI
Assessee by Shri Akhilesh Aggarwal, Adv. & Shri Gobind Aggarwal, CA Respondent by Shri Om Prakash, Sr. DR Date of Hearing 14/05/2024 Date of Pronouncement 22/05/2024 ORDER
PER S.RIFAUR RAHMAN, AM:
This appeal has been filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short], dated 27/09/2023 for Assessment Year 2012-13.
Alliance Propmart Private Limited vs. ITO
The brief facts of the case are, an AIR information was received from ITO-Ward-2(2), Noida and as per AIR information, a registration of property was made by the assessee to purchase an immovable property valued at Rs.30,00,000/- on 05/11/2011 with the stamp duty paid of Rs.3,90,300/-. The stamp duty was valued based on the circle rate of Rs.78,050,000/-. Based on the above information, the Assessing Officer observed that the above property was purchased by the assessee from Sh. Daljit Singh and on perusal of the Balance Sheet of assessee, it was noticed that the property was disclosed in the balance sheet as inventories.
3. Based on the above information, the case was reopened by issue of notice u/s 148 of the Act (‘the Act’ for short) and served on the assessee. In response, the assessee filed its submission dated 16/10/2019, with the prayer to treat the return filed on 22/09/2012 as a return filed against the notice u/s 148 of the Act. Accordingly, statutory notice u/s 143(2) & 142(1) were issued and served on assessee. In response, the assessee filed the reply vide letter dated 07/11/2019, for the sake of clarity, it is reproduced below.
Alliance Propmart Private Limited vs. ITO “1."That the company has already filed its Return of Income on 22.09.2012 vide acknowledgement no. 491814191220912. You are requested to please treat the return already filed as the return filed against you notice u/s 148.
2. That the copy of Registered purchase deed of shop at Greater Noida is being attached.
That the break up cost of inventory held by the company as at 31.03.2019:- Particulars Amount (Rs.) Cost of the Shop 3700000/- Stamp Duty 390300/- Registration Fee 10050/- Advocate Fees 2500/- Right Transfer Charges paid to Greater 99540/- Noida Authority Processing charges paid to Greater 1000/- Noida Authority Total 42,03,390/- 4. That since the market rate of above property was less than the Circle rate, the actual price was lower than the Value as per Stamp Duty.
Section 56(2)(vii) (b) of I.T. Act has been brought into effect with effect from 01 April 2014 i.e. Assessment Year 2014-15 pertaining to fiscal year (FY) 2013-14 whereas the company has bought the abovementioned shop on 11.05.2011 which pertains to fiscal year 2011-12. Further, as per Para (d) of Explanation to Section 56(2)(vii) of the I.T. Act, Property means 'The Capital Asset of the Assessee while in the case of company, the shop purchased was lying as its inventory.
Further, the assessee was asked to submit the relevant proof of payment to Greator Noida Authority (GNA), Advocate Fee and Registration Fee etc. In response, the assessee filed the relevant information as called for.
Alliance Propmart Private Limited vs. ITO
After considering the submissions of the assessee, the Assessing Officer came to the conclusion that the assessee has purchased property at Rs.81,95,300/- i.e. purchase price as per circle rate 78,05,000 plus Stamp Duty paid of Rs.390300/- but the assessee has disclosed the costs of the property at Rs. 37,00,000/, Stamp duty paid of Rs.3,90,300/- and Right Transfer Charges paid to Greater Noida Authority and the total comes to 41,88,310/-. He treated the difference of Rs.40,06,990/- (8195300 – 4188310) as undisclosed payment made by the assessee through non banking channels or in kind which are not reflected in the books of account maintained by the assessee.
5. Aggrieved with the above order, the assessee preferred an appeal before Ld. CIT(A) and filed detailed submissions. After considering the detailed submissions of the assessee, the Ld. CIT(A) sustained the additions made by the Assessing Officer by observing as under:
“ 5. I have carefully considered the facts of the case, e-response made by the appellant. The appellant quoted the provisions of section 56 and remained silent on the issue of difference in purchase price as per market rate and that mentioned in the deed. When asked about reasons for payment of higher stamp duty, the appellant has stated that since the market value of above property was less than circle rate, the actual price
Alliance Propmart Private Limited vs. ITO was lower than the value as per stamp duty. The appellant didn't even furnish any reply from the Noida Development Authority to ascertain if the value was lower than the circle rate. The appellant has accepted the stamp duty valuation and paid the stamp duty accordingly. So, it is not suspicion. The value was determined by the Development Authority. In view of the above, the property at the circle rate was purchased and the difference of the payment between Circle Rate and actual price was paid by the appellant to the seller of the property through non-banking channels in cash or in kind which was not reflected in its books of account for the period under consideration. Hence, the addition on account of difference in price has been rightly made and is upheld.”
Aggrieved with the above, the assessee is in appeal before us, raising the following grounds of appeal:
“1. That on the low and in the facts and circumstances of the case, the Ld. CIT (Appeals) grossly erred in making an baseless and arbitrary addition on account of suppression of purchase price of commercial shop in the hands of the appellant.
2. That on the law and in the facts and circumstances of the case, the Ld. CIT (Appeals). grossly erred in not considering the submissions made by the appellant that the said purchase is stock-in-trade and is not a capital asset and has dismissed the arguments of the assessee without even bothering to look at the statutory provisions relating to capital gain and income from other sources.
3. That the Ld. CIT (Appeals) wrongly added the income under the head Long Term Capital Gain and has not anywhere in the assessment order explained the charging section wherein the addition has been made.
4. That without prejudice to above, it is prayed that the above baseless and arbitrary addition of Rs.40,06,990 made by the Ld. CIT(Appeals) is very excessive and the same may please be deleted.
5. That the appellant craves leave to add or alter any or more ground or grounds of Appeal as may be deemed fit at the time of hearing of appeal.
At the time of hearing, the Ld. AR submitted that the Assessing Officer treated the purchase of the property by mistake
Alliance Propmart Private Limited vs. ITO as the properties sold by the assessee and the Assessing Officer has not brought on record on what basis the addition was proposed in first place and the assessee is in a Real Estate Business and he purchased the property and treated the same as stock in trade, therefore, the asset is only stock in trade and not capital asset. The Ld. AR prayed that the addition proposed by the lower authorities are excessive and the addition made by the authorities are not based on any charging section, it deserves to be deleted.
On the other hand, the Ld. DR objected the submissions of the Ld. AR and relied on the findings of the lower authorities.
Considered the rival submissions and material placed on record, we observed that the Assessing Officer noticed that assessee has purchased the property and paid the stamp duty more than the purchase value registered in the documents. The stamp duty paid was based at the circle rate value of Rs.78,05,000/-. After considering the submissions of the assessee, the Assessing Officer presumed that the assessee had paid the difference value through non-banking channels or in any other
Alliance Propmart Private Limited vs. ITO kind. It is relevant to note that the Assessment Year under consideration is Assessment Year 2012-13. We observed that there are several developments and amendments made in the Income Tax Act to bring on record and tax the undisclosed benefit or income earned by the assessee on presumptive basis u/s 56 of the Act. These developments were happened subsequently, there is no binding section available in the impugned Assessment Year under consideration to make such addition by adopting the presumptions. In the given case, the Assessing Officer has collected information from the assessee and he presumed that the difference of value of circle valuation and the value declared in registered document as additional payments made by the assessee outside the books of account. Without bringing on record any cogent material to support his conclusion, in our view, the Assessing Officer could have made further investigation in the hands of the seller and brought on record relevant material to support that assessee has actually paid the additional consideration outside the books. No such investigation was made by the Assessing Officer.
Alliance Propmart Private Limited vs. ITO
In our view, the concept of presumption can also be made in the hands of the seller not merely in the case of the purchaser, therefore, in our considered view, the addition proposed by the Assessing Officer is without any cogent material, merely on the basis of presumption and also there is no deeming provision existed in Assessment Year 2012-13 and the developments were happened, subsequently, with effect from 01/04/2017. The other arguments proposed by the Ld. AR are not relevant, therefore, the addition proposed by the Assessing Officer is not justified in this case and, accordingly, the same are deleted and decided in favour of the assessee.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 22nd May, 2024.