ASITAVA BHATTACHARYA,HOWRAH vs ACIT, CIR,. 46, KOLKATA

Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA

Before: Dr. Manish Borad

Asitava Bhattacharya …. Appellant (PAN: ADWPR9533G) Vs. Asstt. Commissioner of Income-tax .… Respondent Circle-46, Kolkata. Appearances by: Smt. Sonam Bajoria, FCA appeared for Appellant. Shri P. P. Barman, Addl. CIT, DR appeared for Respondent. Date of concluding the hearing : 16.07.2024 Date of pronouncing the order : 29.08.2024 ORDER This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2015-16 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by Ld. Commissioner of Income-tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi [in short Ld. “CIT(A)”] dated 25.08.2022 arising out of the assessment order u/s 143(3) of the Act by ACIT, Circle-46, Kolkata dated 05.12.2017.

As reported by the Registry, this appeal of the assessee is time barred by 555 days and a condonation petition is filed by the assessee contents of which read as under:

Though Ld. DR opposed the condonation of delay, I, however, considering the reasonable cause and also considering the judgment of Hon’ble Apex Court in the case of Collector of Land Acquisition, Anantanag Vs. Mst. Katiji & Ors. 167 ITR 471 (SC) dated 19.02.1987 take a linient, pragmatic and liberal approach and condone the delay of 555 days in filing the instant appeal and admit the appeal for adjudication.

Grounds of appeal raised by the assessee are reproduced as under:

“1. That, the order passed by the Ld. CIT(A),NF AC, Delhi dated 25.08.2022 for the A.Y. 2015-16 to the extent it is prejudicial to the interests of the appellant is arbitrary, erroneous, without proper reasons, invalid and bad in law .

Page 4 of 9 Asitava Bhattacharya, AY : 2015-16 2. That, the Ld. CIT(A), NFAC erred on facts and in law in holding that though the agreement for purchase of the property on full and final settlement was duly registered on 15.11.2012 (FY 2012-13) and the actual transfer took place during the F.Y. 2014-15, therefore, amended provisions of sec. 56(2)(vii) of the Act w.e.f. 01.04.2014 would apply in spite of the fact that clause (b) of the said section was substituted w.e.f. 01.04.2014 and the existing provision during F.Y. 2012-13 did not cover a situation where immovable property has been received for inadequate consideration.

3. That, the Ld. CIT(A) while holding that the amended provisions of sec.56(2)(vii) of the Act would apply to the differential amount between the stamp duty value and the actual consideration further omitted to consider that as per the first proviso to the said section where the date of agreement fixing the sale consideration and the date of registration are not the same, the stamp duty value on the date of agreement and not the value on the date of registration would be taken for the purpose of sec. 56(2)(vii)(b) of the Act.

4. That, therefore, as the amendment brought in sec.56(2)(vii)(b) of the Act was not applicable or effective to the purchase of the immovable property having been registered during the F.Y. 2012-13 on full and final payment/settlement, direction to the Ld. A.O. to refer the matter to the DVO for determination of FMV of the said property was beyond the sanction of law applicable at the relevant time and the addition of Rs.8,22,890/- made in the assessment should have been directed to be deleted. 5 That, therefore, as the order of the Ld. CIT(A) on the above issues suffers from illegality and hence not sustainable in law, the same should be quashed and the relief as prayed for in the impugned appeal may kindly be allowed. 6 That, the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds.”

I have heard both the parties and perused the material available on record. Brief facts of the case are that the assessee is an individual and she furnished her return of income on 29.03.2017 declaring income of Rs.5,66,430/-. The case selected for limited scrutiny through CASS followed by issuing and serving notices u/s. 143(2) and 143(1) of the Act dated 19.09.2017 and 21.09.2017 respectively. The Ld. AO noticed that the assessee had purchased a property jointly with her wife but Page 5 of 9 Asitava Bhattacharya, AY : 2015-16 share of the assessee is 100% and only for better succession spouse’s name was added in the agreement. The value of the purchase consideration is Rs.49,42,870/-. Fair market value of the property as per the office of the Registrar, DSR-III, South 24 Parganas is Rs.68,14,980/-. Ld. AO invoked the provisions of section 56(2)(vii) had arrived at a differential amount of Rs.18,72,110/- as deemed income. Thereafter, for calculating fair market value, assessee filed a letter on 27.11.2017 and furnished copy of registered sale deed of a flat on the same road and in the same vicinity registered during the FY 2011-12 reflecting the value of Rs.3,200/- per sq. ft.. The Ld. AO accepted the submission and after adding 10% inflation recomputed the fair market value of the flat measuring 1638 sft. at Rs.57,65,960/- and proceeded to make the addition at Rs.8,22,890/-. Though the assessee was given opportunity but assessee stated to have no objection for the proposed addition. Ld. AO, accordingly, made addition u/s. 56(2)(vii) of the Act at Rs.8,22,890/- and assessed the income accordingly. I further notice that when the assessee carried the matter before Ld. CIT(A), he on observing that the assessee is disputing stamp duty value of the property, directed the AO to make a reference to the DVO for determination of the fair market value. Before me, Ld. Counsel for the assessee submitted that the agreement to sale was entered during FY 2012-13 and the provisions of section 56(2)(vii) of the Act came into force from AY 2014-15 and, therefore, the Ld. AO erred in applying section 56(2)(vii) of the Act on the transfer and purchase of property. On perusal of the agreement to sale, I observe that though the same was entered Page 6 of 9 Asitava Bhattacharya, AY : 2015-16 during the FY 2012-13 but except a part consideration of Rs. 2 lakh in cash remaining consideration has been given during FY 2013-14 relevant to AY 2014-15. Further, the conveyance deed i.e. registration of the property in the name of assessee has taken place on 03.07.2014, the payment details are placed at page 28 of the conveyance deed and the same provides that Rs. 1 lac cash each was given on 10.08.2012 and 03.11.2012 respectively and the remaining amount of consideration through cheque issued from HSBC Bank/Uco Bank/Indian Overseas Bank amounting to Rs.47,42,870/- are during FY 2013-14.

Now, facts remain undisputed at the end of the Ld. DR that the purchase deed through which the assessee has entered into the purchase agreement was on the terms and conditions agreed in the agreement entered into between the assessee and the seller during FY 2012-13 and even the part consideration was also passed to the buyer. However, the Ld. AO has invoked the provisions of section 56(2)(vii)(b) of the Act on the basis of his observation that purchase transaction has been entered into during FY 2014-15. We, however, do not find any merit in this action of the AO because the transaction was entered during FY 2012-13 and at that point of time section 56(2)(vii) of the Act was applicable only in case if an individual or a HUF received an immovable property without consideration and that the stamp duty value of which exceeds Rs. 50,000/-. But in the instant case, the purchase has been made against a consideration of Rs.49,42,870/- and, therefore, Ld. AO erred in invoking the Page 7 of 9 Asitava Bhattacharya, AY : 2015-16 provisions of section 56(2)(vii)(b) of the Act of the transaction in question before us.

As regards that the valuation done by the DVO is concerned, the same are based on the fair market value applicable for FY 2014-15. But when the transaction was actually entered into during FY 2012-13 the per sq. Ft. rate was approx Rs.3200/- and applying the same on the flat measuring 1638 sq. ft. the stamp duty value comes to Rs.52,41,600/-. The difference between the stamp duty value of the property and the actual purchase consideration only remains at Rs.2,98,730/- which is approx 5% of the fair market value and considering the proviso to sec. 50C of the Act which provides that in case value assessed by the Stamp Valuation Authority does not exceed 105% (upto 31.03.2021) and 110% (w.e.f. 01.04.2021) of the actual consideration sec. 50C of the Act will have no application, in our considered view no addition is called for in the present case for the excess of fair market value over purchase consideration. Finding of Ld. CIT(A) is set aside and effective grounds of appeal

raised by the assessee are allowed.

8. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 29th August, 2024.

ASITAVA BHATTACHARYA,HOWRAH vs. ACIT, CIR,. 46, KOLKATA