RAMAKRISHNAN PRABHU JYOTHI,,COIMBATORE vs. ACOT, NCC-5, , COIMBATORE

आदेश / O R D E R PER AMITABH SHUKLA, A.M :

2.0 Before proceeding further, it is necessary to examine the grounds of appeal raised by the appellant. The appellant had originally filed grounds of appeal which were out rightly descriptive and narrative in nature. The appellant, vide order dated 30.11.2023, was directed to file to file concise grounds of appeal. The assesse has filed a concise set of grounds of appeal on 21.02.2023. On perusal thereof it transpires that the same are also by and large descriptive in nature containing narration of case laws etc. Consequently, the grounds of appeal viz-a-viz issues found therein are adjudicated herein below. Aggrieved by the order dated 14.12.2023 of any Nefac the assesse has raised following grounds of appeal:- “…1. The order passed by the Learned CIT (Appeals) is contrary to provisions of law and facts. Time barred assessment

2. The Assessment Year in question is 2016-2017. By virtue of Section 153(1) as applicable to the said Assessment year, the assessment is to be completed within period of 21 months. The period of 21 months commencing from 01.04.2017 ends on 31.12.2018. Reference to Valuation was made by Assessing Officer on the eve of completion of period of assessment by Letter dated 28.12.2018. This Letter specifically seeks for completion of Valuation by 28.01.2019. There is no correspondence or direction extending the said period beyond 28.01.2019. The Valuation report under Section 142A(6) shall be submitted by Valuation Officer within 6 months from the end of the month in which a reference is made under Section 142A(1). In this case, Valuation report was not submitted in terms of Letter dated 28.12.2018 wherein the reference period ended on 28.01.2019. Therefore, Assessment should have been completed on or before 31.01.2019. The assessment was not completed by 31.01.2019. Therefore the Assessment order passed on 14.08.2019 is time barred assessment.

3. Assuming without admitting that the Valuation Officer was granted extension of time to complete the Valuation, it could not have been longer than 30.06.2019. The Valuation Officer submitted Valuation report on 09.08.2019 after the valuation reference period even under Section 142A(6) is exhausted. The Assessing Officer without any opportunity of being heard passed Assessment order on 14.08.2019 which assessment order is time barred. Under Section 153. the time period during which valuation is pending is the time period which is excluded in computing the period of imitation for purpose of completing assessment. In this case, the period of valuation is exhausted on 30.06.2019, the order of valuation is time barred and the order of assessment is also time barred. The reference to valuation was made

on 28.12.2018 and there were only 3 days left to complete the assessment. The order of' assessment passed on 14.08.2019 is time barred and well beyond the time prescribed for completion of assessment. On this ground the order of assessment and the impugned order need to be set aside. The dates are given below by way of table for ease of reference. Even on 12.12.2018 the Assessing Officer was very well aware that the property is not conveyed to the Assesse by way of Sale Deed. The Valuation Officer has not valued the property and has simply returned the file for valuation stating that the property is not owned by Assesse by way of Sale Deed. S.No Event Date Assessment year 2016-17. Timeline for 31.12.2018 1 completion of assessment under Section 143(1) 21 months Reference made to Valuation Officer under 28.12.2018 2 Section 142A Timeline by which Valuation Officer should have 28.01.2019 3 completed assessment in terms of Letter dated 28.12.2018 Statutory "Time line by which Valuation Officer 30.06.2019 4 should have completed assessment (Section 142A(6) Period excluded for purposes of computing From 5 limitation under Section 153 in terms of letter 28.12.2018 dated 28.12.2018 to 28.01.2019 Period from Period excluded for purposes of computing 28.12.2019 to limitation under Section 153 in case it is 30.06.2019 is 6 assumed that Valuation Officer is entitled to excluded submit report for period of 6 months

7 Valuation Report submitted (No valuation report 09.08.2019 submitted. Only comment submitted by Valuation officer) 8 Assessment Order. No opportunity of being 14.08,2019 heard given

Interpretation and application of Section 54F 4. The CIT (Appeals) failed to take note of the fact that as per Section 54F of the Act the requirement is that the 'assesse shall utilize the sale consideration of long term capital asset towards purchase' of residential house property. The CIT (Appeals) interpreted purchase' of residential house property to mean the need for transfer under section 2(47) of the Act' which is contrary to the case law decided by Hon'ble Supreme Court and various High Courts. The term “purchase' is broad term and cannot be interpreted in the same parlance as ‘transfer', 5. The CIT (Appeals) and AO have incorrectly applied the principles of part performance of contract under Section 53A of the Act and the need for stamping and registration of sale deed in favour of the assesse to ascertain whether the assesse has made the purchase of residential house property or not. The requirement to be fulfilled for transaction amount to purchase is payment/investment of consideration for identified property. The CIT Appeals and AO have incorrectly applied test of ‘transfer’ under Section 2(47) of the Act to 'purchase` and the same cannot be applied to Section 54F.

8. The CIT (Appeals) and AO failed to take note of judgment in Smt. Shashi Varma Vs. CIT (1997) 224 ITR 106 (MP) wherein it was held if the substantial investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of section 54".

From para no. 19 of this judgment as reproduced above, it is noted by Hon’ble Apex Court in this case that the direction provided u/s. 53A is only a shield and can only be resorted to as a right of defence. In the same para, this is also noted by Hon'ble Apex Court that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. In this judgment, there is no reference on this aspect of the judgment of Hon'ble Delhi High Court that it is not essential for the purpose of section 54 of the IT Act that assesse should become owner of the property.

11. The CIT (Appeals) and AO do not dispute on the consideration received by assesse from sale of original asset viz. shares held on long- term basis in Shri Radhakrishna Mills Limited and also the investment made by the Assesse for Purchasing residential house within 1 year of the date of transfer of original asset. Therefore requirement of Section 54F with reference to purchase of residential house within 1 year of transfer of original asset is complied. The CIT (Appeals) and AO are now questioning the purchase of residential house based on subsequent events viz. sale made by Jeypore Sugar Company Limited without the knowledge of the Appellant, the fact that the Appellant was shareholder of the Company etc. The CIT (Appeals) and AO based on doubts and assumptions have denied benefit of Section 54F to Assesse despite the admitted fact that the Appellant has received consideration from sale of shares and this consideration has been paid towards purchase of residential house to Jeypore Sugar Company Limited pursuant to Memorandum of Understanding. The Appellant has been cheated in the entire transaction by the Company and the Company is now in liquidation. Wrong reliance on statement of Jeypore Sugar Company Limited 12 The Learned CT (Appeals) and AO have wrongly relied upon the statement by Ms Jevpore Sugar Co. Lid. that the amount received from Assesse was an advance amount when the Assesse showed payment of consideration and letter issued by M/s. Jeypore Sugar Co. Lid, confirming handing over of possession. 13 The Leaned CIT (Appeals) and AO have incorrectly held that Assesse had no intention to purchase the property when the Assesse has paid full consideration and was in possession of the new asset. 14 The Leaned CIT(Appeals) and AO has wrongly held the facts relating to fraudulent sale of new asset by Jeypore Sugar Co. Ltd. to Bashyam Constructions and non-execution of sale deed for original transfer to assesse against the assesse. This sale was without knowledge of the assesse and the Company is now in liquidation.

Property Mortgaged can be sold 15, The Learned CIT (Appeals) and AO have wrongly concluded that the property was mortgaged in favour of ICIC Bank and therefore could not be sold by Jeypore Sugar Co. Ltd. to the assesse as per clause in Mortgage Deed. The Learned CIT (Appeals) and AO ought to have considered that the property could be sold subject to mortgage and purchaser of such property being held liable for payment of mortgage due. Incorrect appreciation of facts 16. The CIT (Appeals) and AO incorrectly rely on the fact that the assesse is guarantor to the loan taken by Jeypore Sugar Mills Limited and therefore there is no intent on the part of the assesse to purchase the property. It is humbly submitted that there is no shred of evidence to suggest that assesse has no intent to purchase the property when the assesse has been in possession of the property. In fact assesse has paid full consideration and was in possession of new asset.

Jeypore Sugar Mills Ltd fraudulently sold the lend and that there was no sale deed executed in favour of assesse has been held wrongly against the assesse by CIT Appeals and AO which is baseless to conclude that the assesse did not purchase the residential property when assesse has paid the entire purchase consideration and the assesse was put in possession of the property. Reference under Section 142A is incorrect when specific provision of Section 55A available 19. The Learned CIT(Appeals) failed to appreciate that the AO wrongly referred the matter to District Valuation Officer when Assesse has submitted Valuation Report by Approved Valuer. The AO ought to have recorded satisfaction under Sec.55A and in the present case there is no recording of satisfaction by AO as per Sec.55A(2).

3.0 At the outset, it is noted that there has been delay of about 82 days in the filing of this appeal. The assesse has requested for condonation of delay within the meanings of order of Hon’ble Apex Court being suo moto writ petition(Civil) Nos.3/2020 dated 23.03.2020 mandating extension of timelines on account of contemporaneous Covid-19 pandemic. In respectful compliance to the order of Hon’ble Apex Court the delay is condoned and the appeal is adjudicated. 4.0 Before proceeding further, it is necessary to examine in brief factual matrix of the case, as noted from the order of the CIT(A) Supra. “…….2. The assesse an individual e-filed his R/l belatedly on 31.03.2018 admitting an income of Rs.14,69,64,500/-. The case was selected for limited scrutiny as he had claimed large deduction/exemption from capital gain. On a perusal of the R/I, it is seen that assessee had declared income from capital gains which is calculated as follows:- 1. Full value of consideration received - 153, 18, 36,856/- 2. Less: Cost acquisition with indexation - 24.15.68.338/- 3. Balance: - 129, 02, 68,523/- 4. Less: Deduction claimed u/s 54F - 118, 97, 50,905/- 5. Long term capital gain admitted - 10, 05, 17,620/-

Pvt Ltd by M/s Jeypore Sugar Company represented by Smt. Anitha Prabhu'. Based on the findings given by the valuation officer the assessing officer categorically held that there was no transfer or change of ownership of the property, and the claim of the assessee u/s 54F is not genuine. The assessee has thus avoided stamp duty payable to the state government also, running into crores….” . 5.0 The Ld. Counsel for the assesse has fiercely objected to the action of Ld. First Appellate Authority in confirming the action of the assessing officer in denying the assesse its claim of deduction u/s 54F. While doing so it has argued that the assessment order u/s 143(3) of the AO was time barred as it contravened the provisions of section 153 of the Act. It has been pleaded that the reference made by the AO u/s 142A was merely a ploy to extend the time limit of completing assessment ending on 31.12.2018. It is the case of the assesse that the AO ought to have made a reference to the DVO u/s 55A. It has simultaneously argued that absence of a registered sale deed would not deprive the assesse of its deduction u/s 54F as it had purchased the new asset by paying full amount of consideration and obtaining possession thereof. In support of its arguments the assesse has relied upon a catena of judicial pronouncements while submitting that those relied upon by Ld.AO and Ld. CIT(A) do not have any relevance with the facts of the present case.

6.0 The Ld. DR would, inter-alia, make us believe that the order of Ld. First Appellate Authority in confirming the action of the assessing officer in denying the assesse its claim of deduction u/s 54F, is based upon correct understating of the facts of the case and appreciation of contemporaneous law. It was emphatically argued that the assessment order passed by the Ld.AO is within the mandate prescribed u/s 153 and that the decision to make a reference to DVO u/s 142A does not suffer any legal infirmities. 7.0 We heard rival submissions in the light of material placed on records, inter-alia including judicial pronouncements relied upon. Upon perusal of the grounds of appeal raised by the assesse, the first issue which emerges is the plea of the assesse that the assessment order dated 14.08.2019 of the Ld.AO for the AY-2016-17 is barred by limitation. It is the case of the assesse that within meanings of section 153(1) stipulating completion of assessment within 21 months, the time limit ended on 31.12.2018. It has been argued that assuming validity of 142A(1), the AO vide its reference letter dated 28.12.2018 had given one month’s time to DVO which ended on 28.01.2019. As the assessment was not concluded till 31.01.2019 it has got time barred. Alternatively, it has been argued that the six months statutory period available with the DVO to submit its report ended on 30.06.2019 and hence as its report was submitted on 09.08.2019 the assessment completed on 14.08.2019 stands time barred. The arguments of the assesse have been considered. The original statutory time limit u/s 153(1) available to the AO to complete the assessment was upto 31.12.2018. However, a reference to DVO was made u/s 142A by the assessing officer on 28.12.2018. Clause(v) of explanation 1 to section 153 postulates that “…the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub- section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer…”. is to be excluded for the time barring period. In the instant case, the DVO’s report was received on 09.08.2019 and the assessment was completed on 14.08.2019 well within the available statutory timelines. The argument that the AO had given only one month time to the DVO till 28.01.2019 and hence ought to have completed order by 31.01.2019 is bereft of any merit. The DVO u/s 142A (6) lawfully gets six months from the end of the month in which reference is made and hence AO’s routine grant of initial one month would not deprive him of his statutory entitlements. Therefore, non- submission of report by DVO in compliance to AO’s requests would not fail the assessment. The other argument that the DVO had submitted the report after the eligible six months period and therefore the assessment order passed by the AO again becomes bad in law is also not legally plausible. The time limit available to DVO u/s 142A(6) and to AO u/s 153 act on different plains. There is no inter-connection between them. Section 142A(6) entitles the DVO six months time to submit his report when a reference is made by an AO and Section153 provides AO the timelines to complete an assessment, inter-alia, including qua cases where reference has been made to DVO. The two timelines work separately. An assessment passed within the timelines permitted by law u/s 153 would not attain nullity merely because the DVO did not comply with the timelines available to him. The argument of the assesse therefore fails. Another plea raised by the assesse is that the DVO did not submit any report to the AO except stating that there was no registration of the impugned property – a fact which was itself admitted by the assesse, and hence since there was no DVO’s report the AO would not get the timeline extension provided u/s 153. The report of the DVO indicates that he has merely conveyed that no such sale / purchase transaction between the assesse, and M/s.JeyPore Sugar Company (JSC) had taken place and that the impugned property was actually sold to one M/s.Bashyam Construction Pvt. Ltd. on 16.08.2018. In his reference u/s142A made by AO to the DVO, the former had clearly communicated the reported fact of the case that the assesse has claimed to have purchased a property from JSC and accordingly a request was made to ascertain the fair market value of the said property. In this background the action of the DVO was found to be in order because he can always ascertain the fair market value of the said property only if a sale / purchase transaction had taken place between the buyer and the seller. Since the DVO did not found any such sale, purchase transaction between the assesse and JSC, he rightly could not submit any valuation report. The assessment order therefore cannot be held as invalid. Accordingly, the grounds of appeal raised by the assesse qua the assessment order having been time barred are therefore dismissed. 8.0 Another issue raised by the assesse is that the assessing officer did not had any justified ground for making a reference to the DVO u/s 142A and that the same was merely done on fag end of the time barring period so as to buy time to complete the assessment. It has also been argued that the assessing officer ought to have made a reference u/s 55A which is a part of bunch of sections dealing with capital gains. The assesse has argued that there was no material with the AO to make the impugned reference u/s 142A. It is considered necessary to briefly examine the statutory provisions of section 55A and section 142A

Section 142A 142A(1) - The AO may, for purposes of assessment or re-assessment, make a reference to a valuation officer to estimate the value, including

FMV, of any asset, property or investment and submit a copy of report to him. 142A(2) - The AO may make a reference to the valuation officer under sub section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assesse. Section 55A "55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer- (a) in a case where the value of the asset as claimed by the assesse is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is at variance with its fair market value: (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assesse by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf: or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, 9.0 It is seen that the twin sections 55A and 142A operate differently. The former figuring in Chapter-IV, is a part of bunch of sections governing determination of capital gains accruing to a tax payer and section 142A figuring in Chapter-XIV prescribes for the procedure of assessment. 55A operates in certain given situations. It provides authority to an AO to make a reference for valuation in the event of AO holding an opinion that there is a difference between FMV of the property and the value adopted by the assesse. On the other hand reference u/s 142A is required to be made if AO wants to know the value including fair market value of the property for the purposes of making an assessment of income. It is pertinent to note that there is no need for any a specific satisfaction and / or rejection of books of accounts of the assesse before making the impugned reference. The law has provided the AO an authority to make reference if he holds an opinion to do so and the same is a discretion awarded to him. There exists a catena of judgements mandating that an AO’s discretion cannot be challenged. The AO was well within his powers, therefore to have invoked provision of Section 142A. It is seen that Chapter-IV of the Act containing sections 49 to 55A prescribe a specific code for assessment of income arising under the head income from capital gains. Section 55A is a part of charging section. It cannot override the procedure of assessment defined in Chapter-XIV of which 142A is an integral part. It is to be understood that the heads of income which bound a taxpayer to pay his taxes are different then the procedure which an AO is bound to follow during the assessment proceedings. It is further seen that section 55A of the Act has a limited operative value as compared to 142A. Section 55A merely mandates an AO to make a reference to the DVO only in the event of a specific facts or conditions precedent in a case which have been explicitly defined in sub- clauses (a) and (b) of the said statute. Thus, if the conditions prescribed therein do not exist, then the AO would not have any discretion to make a reference to DVO by invoking section 55A. On the contrary, section 142A has wide potential and larger ramifications as far as assessment of income is concerned. For one, it is not dependent upon any precedent conditions save the condition that a reference can be made only during the pendency of an assessment proceedings. 10.0 The AO chose to refer valuation u/s 142A because in his opinion conditions prescribed u/s 55A were not operative in this case and same is supported by facts on records. Further, the law mandates that an AO make a reference u/s 142A any time during the pendency of assessment proceedings. Facts on record indicate that on 28.12.2018, assessment proceedings against the assesse u/s 143(3) were pending. Consequently, the reference made was squarely within the statutory prescription and cannot therefore be questioned. In the light of these discussions, the argument of the assesse that reference was made by the AO at the fag end merely to buy time or to extend the time barring line is therefore not supported by facts on records. The assesse has also argued that the Ld.AO did not afford the opportunity of examining the report of the DVO before meeting the impugned addition. In this regard, it is seen that section 153 of the Act extending the timeline of assessment nowhere prescribed that the AO shall give any further opportunity of being heard to the assesse. Further section 142A(4) mandates the valuation officer to given an opportunity of being heard to the assesse before making his valuation. Further the facts of the case clearly stipulates that the DVO had not submitted any report qua FMV of the property and hence there was no requirement on the part of the AO to have confronted the assesse. The Ld.AO’s accountability to have confronted the assesse would have arisen only if there had been a report qua variation in the FMV of the property viz-a-viz the value hitherto disclosed. The arguments of the assesse therefore fails. The corresponding grounds of appeal consequently stands dismissed.

11.0 The next issue which the assesse has raised is regarding the availability of capital gains in its hand in spite of the fact that no registered sale deed was existing and that the assesse was merely claiming purchase of the impugned property from the JSC on the strength of MoU. It is the case of the assesse that it had made full payment of about Rs.141 Crores app. to JSC and possession was taken by it, therefore as it has fulfilled the provisions of Section 53A of the transfer of the property Act, it is entitled for benefits of capital gains. It is also the case that the property was fraudulently transferred / sold by JSC to Bashyam Properties through an agreement dated 16.08.2018 of which the assesse had no knowledge. The assesse has also argued extensively on the concept of “purchase” and “transfer” of capital assets. The assesse has argued that it had purchased the new asset within the timelines prescribed u/s 54F and therefore was entitled for claim of deduction. It has been submitted that controversy of registered sale deed is only related to “transfer” of the capital asset. The assesse would like to make us believe that as it had purchased the new asset for which evidences were adduced, it becomes legally entitled to deduction u/s 54F. The arguments putforth by Ld.AR are not supported by statutory provisions governing the matter. Section 54F of the Act postulates availability of deduction to a taxpayer who earns capital gains arising from “transfer” of long term capital asset provided the assesse has “purchased” / or constructed a residential house within a specified period. Thus the concept of “purchase” and “transfer” of capital assets has been categorically and vividly defined and there is no scope for any confusion or controversy therein. Law postulates that both the conditions deserve to be complied. It is to be understood that legal compliances to requirement of a valid “transfer” qua and immovable property are permanently engrained in every sale / purchase transaction of an immovable property. The word “purchase” defined in section 54F cannot be held or is to be understood in Silos but to be applied in its complete contextual relevance. Every “purchase” prescribed in 54F must therefore meet requirement of transfer as in section 53A of transfer of property Act along with prescriptions contained in provisions of IT Act. For every “Purchase” there is a corresponding “sale” and an element of “transfer” is always embedded therein. Undoubtedly the assesse has transferred its long capital assets comprising shares and therefore earned capital gains. The second limb of the statute e.i “purchase” has not been fulfilled. The assesse is consistently harping on the issue that as it has purchased the impugned immovable property from Jeypore Sugar Company Limited(JSC) and has paid the whole amount of consideration amounting to Rs.141 Crores app. and has obtained the possession, there may not be any doubt of assesse not having purchased the property. Consequently, the assesse holds the view that it is eligible for allowance of deduction u/s 54F of the Act. It is trite law that bonafide and lawful sale / purchase of an immovable property is only deemed complete when there exists a registered sale deed in support of the claimed transaction. Evidence available on records indicate that the assesse claims to have purchased the impugned immovable property from JSC by way of an unregistered MoU.

12.0 The argument of the assesse that it had paid full payment and hence can be deemed to have purchased the impugned property is defeated by letter dated 03.07.2019 of JSC which states that it had received only an advance of Rs.141.25 Crores towards the sale of the asset. Again on Page-13 of the paper book the assesse has placed a Board Resolution containing extracts from the minutes of the meeting of the Board of Directors held on 10.08.2015 which authorised Smt.Rajeswary Ramakrishnan the then MD to execute MoU and other documents to consummate transaction proceedings for sale of property in favour of the assesse e.i. Shri R.Prabhu. For one, this board resolution dated 10.08.2015 has been passed after the reported unregistered MoU between the assesse and JSC and hence falls in the mischief of post dated document thus loosing its credibility. It is noted that this document clearly states that “..The Chairman informed the board that the Company has received Rs.141.25 Crores from Shri R.Prabhu towards advance payment against purpose of above property…”. The assesse’s plea that JSC has fraudulently and without its knowledge sold the impugned property to Bashyam Constructions is also bereft of any merit for the reason that the assesse, as

per records, holds 9.38% of share capital in JSC and Anitha Prabhu who had represented JSC for sale of said property to Bashyam Constructions is closely connected to the assesse. The paper book filed by the assesse on Page-39 contains a resolution of JSC dated 11.06.2018 wherein the directors of the company have resolved to sell the impugned property and authorised Ms.Anitha Prabhu wife of the assesse to execute sale documents. The consent and concurrence of the assesse to the said company resolution is clearly evidenced by his thumb impression contained on the bottom left corner of the impugned documents. The argument of the assesse of JSC selling the property fraudulently and without its knowledge, thus fails. The agreement between JSC and Bashyam Constructions dated 16.08.2018 clearly mentions on its 3rd page that the possession of the property was always vested with JSC. As per the agreement, the property was sold by JSC for a total consideration of 66 crores. Para (a) on Page-4 states that “…the VENDOR alone are sole and absolute owners of the schedule property ……. and that none else have any right, title, interest or share therein…. and is free from encumbrances and claims including all claims by way of sale, exchange….”

Further para (b) on Page-4 clearly provides “….that the VENDOR have not entered into any agreement or arrangement for sale of the Schedule Property with anyone else and have not executed any Power of Attorney to deal with the Schedule Property…” . Again Para (5) on page-8 states that “..VENDOR is the absolute and undisputed owner in exclusive position and enjoyment of the schedule mentioned property with absolute right of alienation….”. Again Para 16 on Page-11 states that “..VENDOR have also this day put the purchaser in vacant peaceful possession of the schedule property…”.

13.0 The plea of the appellant having made full payment for the property, been in possession of the impugned property, or JSC fraudulently selling the property to Bashyam Constructions without its knowledge etc. miserably fails. Accordingly, all the grounds of appeal raised by the assesse in respect of above issues stands dismissed.

14.0 In support of its contentions the appellant has relied upon of a plethora of judgements passed by Hon’ble Apex Court, High Courts as well as Tribunals. The same have been perused and found to be not connected with the peculiar facts of the present case. To begin with the decisions relied upon by the Ld. AR are prior to the ratio laid down by Hon’ble Apex Court in the case of Suraj Lamp & Industries (P) Ld.Tr.Dir vs State Of Haryana & Anr dated 11 October, 2011. It has been clearly ruled the Apex Court that the issue of requirement to have a registered sale deed for a valid transfer of an immovable property has been necessitated on account of amendments made in the Registration and Other Related laws (Amendment) Act, 2001). Thus the position of law has changed since then. For the purposes of clarity the relevant extract of the said judgement order are reproduced hereunder:

“….In this background, we will examine the validity and legality of SA/GPA/WILL transactions. We have heard learned Mr. Gopal Subramanian, Amicus Curiae and noted the views of the Government of NCT of Delhi, Government of Haryana, Government of Punjab and Government of Uttar Pradesh who have filed their submissions in the form of affidavits.

Relevant Legal Provisions

7. Section 5 of the Transfer of Property Act, 1882 (`TP Act' for short) defines `transfer of property' as under:

"5. Transfer of Property defined : In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself [or to himself] and one or more other living persons; and "to transfer property" is to perform such act." xxx xxx Section 54 of the TP Act defines `sales' thus: "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property."

Section 53A of the TP Act defines `part performance' thus :

Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.

9. Section 17 of the Registration Act, 1908 which makes a deed of conveyance compulsorily registrable. We extract below the relevant portions of section 17.

"Section 17 - Documents of which registration is compulsory- (1) The following documents shall be registered, namely:-- xxxxx (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property. xxxxx (1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.

Advantages of Registration

10. In the earlier order dated 15.5.2009, the objects and benefits of registration were explained and we extract them for ready reference :

"The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs. 100 and upwards to or in immovable property. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified."

Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent.

Scope of an Agreement of sale

(1977) 3 SCC 247, observed:

A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Transfer of Property Act. See Rambaran Prosad v. Ram Mohit Hazra [1967]1 SCR 293. The fiduciary character of the personal obligation created by a contract for sale is recognized in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein."

In India, the word `transfer' is defined with reference to the word `convey'. The word `conveys' in section 5 of Transfer of Property Act is used in the wider sense of conveying ownership... ...that only on execution of conveyance ownership passes from one party to another...."

In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held:

Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party.

It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred....”.

15.0 Thus the case laws cited by the Ld. AR have been distinguished. On the subject matter Ld.CIT(A) has placed reliance upon the decision of Hon’ble Apex Court in the case of Balbir Singh Maini (SC 398 ITR 531) affirming that post 2001 registration of a property is must if recourse is to be made to section 53A of transfer of property Act and section 2(47)(v) is to be applied. Thus the legal position as it stand on date is clear in as much as sale / transfer of an immovable asset having value exceeding Rs.100 can only take place by way of a registered sale deed and not otherwise. As in the instant case absence of a registered sale deed is a fact of records, the assesse cannot claim benefit of section 54F of the Act. Naturally if sale / transfer of immovable property cannot be deemed to have taken place in the absence of a registered sale deed, the corresponding purchase transaction would also loose its legal credibility and admissibility.

16.0 It is further seen that it is trite law that while applying income tax statute, benevolence is to be always kept, as far as possible, the statute is to be interpreted benevolently so that a tax payer is not unnecessarily aggrieved. It is also been pronounced several times that when two interpretations of a statute are available then one favouring the tax payer is to be adopted. The case laws cited by the tax payer also run through the spirit of benevolence to the tax payer. It would however be seen the act of benevolence would be available only to an honest tax payer who approaches the court with clean hands. The benevolence would not be available to a tax payer whose affairs are clouded in mystery and / or are not clear, correct and complete. Material available on records indicates that given peculiar facts of the case alluding towards distorted, incomplete and incorrect facts / material placed on records in support of claim of 54F deductions, the “benevolent “ would not be available to the assesse.

17.0 On this matter we place reliance upon the decision of Hon’ble Supreme Court in the case of MacDowell and Company Limited vs The Commercial Tax Officer 1986 AIR 649 wherein the Hon’ble Apex held that tax planning may be legitimate provided it is within the frame work of law, colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. We deem it necessary to extract the views of Hon’ble Apex Court on the matter “……..We think that time has come for us to depart from the Westminister principle as emphatically as the British Courts have done and to dissociate ourselves from the observations of Shah, J. and similar observations made elsewhere. The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a welfare state like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of blackmoney, directly causing inflation. Then there is “the large hidden loss” to the community (as pointed out by Master Sheatcraft in 18 Modern Law Review 209) by some of the best brains in the country being involved in the perpetual war waged between the tax-avoider and his expert team of advisers, lawyers and accountants on one side and the tax-gatherer and his perhaps not so skilful, advisers on the other side. Then again there is the ‘sense of injustice and inequality which tax avoidance arouses in the breasts of those who are unwilling or unable to profit by it’. Last but not the least is the ethics (to be precise, the lack of it) of transferring the burden of tax liability to the shoulders of the guideless good citizens from those of the ‘artful dodgers’. It may, indeed, be difficult for lesser mortals to attain the state of mind of Mr. Justice Holmes, who said, “Taxes are what we pay for civilized society. I like to pay taxes. With them I buy civilization.” But, surely, it is high time for tho judiciary in India too to part its ways from the principle of Westminister and the alluring logic of tax avoidance. We now live In a welfare state whose financial needs, if backed by the law, have to be respected and met. We must recognise that there is behind taxation laws as much moral sanction as behind any other welfare legislation and it is a pretence to say that avoidance of taxation is not unethical and that It stands on no less moral plane than honest payment of taxation. In our view, the proper way to construe a taking statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally, or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. v. Bengal Hotels Limited(1) where the learned judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax.

It is neither fair nor desirable to expect the legislature to intervene and take care of every device and scheme to avoid taxation. It is upto the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of ‘emerging’ techniques of interpretation as was done in Ramsay, Burma Oil and Dawson, to expose the devices for what they really are and to refuse to give judicial benediction….”.

41 -: 18.0 To conclude we hold that no case is made out in favour of assesse qua its claim of deduction u/s 54F of the Act. Accordingly, we do not find any need to interfere with the order of the Ld.CIT(A) confirming the order of the Ld.AO passed u/s 143(3) dated 14.08.2019 denying the assesse the claim of deduction u/s 54F to the tune of Rs.118.97 Crores. The order of the Ld. First appellate authority is therefore confirmed and all the grounds of appeal raised by the assesse stands dismissed.