HEM RAJ JAIN,LUDHIANA vs. ITO, W-1(1), LUDHIANA

आदेश/Order PER ANNAPURNA GUPTA, A.M. : The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Ludhiana (in short CIT(A) dated 26.07.2017 passed u/s 250 (6) of the Income Tax At, 1961 (in short referred to as ‘Act’). 2. At the outset it was pointed out that this is the second round before I.T.A.T. and the sole issue relates to the computation of Long Term Capital Gain earned by the assessee on sale of property. Drawing our attention to the facts of the case, as reproduced at para 3 of the CIT(A)’s order, it was pointed out that the assessment had been framed on the assessee for the impugned year u/s 143(3) of the Act making addition on account of Long Term Capital

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Gain earned by the assessee on sale of property by adopting

the sale consideration of the property at Rs.45 lacs as

against sale consideration disclosed by the assessee at Rs.30

lacs. This was done for the reason that the A.O. found that

there was cutting in the sale deed and the figure original

typed at Rs.45 lacs had been changed to Rs.30 lacs manually

and the cutting had not been countersigned/attested by the

Registering Authority. The A.O. also found that stamp duty

had been paid on the amount of Rs.45 lacs and, therefore,

he was of the opinion that as per the provisions of section

50C of the Act, the sale consideration for the purpose of

computing Long Term Capital Gain on the sale of property

was to be adopted at Rs.45 lacs and not Rs.30 lacs as

submitted by the assessee .Accordingly addition was made to

the extent of long term capital so earned by the assessee on

sale of property. Aggrieved with this order the assessee filed

appeal before the CIT(A) who upheld the order of the A.O.

The matter was further carried in appeal to the I.T.A.T. who

in turn set aside the case to the file of the A.O. directing

him to verify the actual sale consideration received by the

assessee from the purchaser, by issuing summons to him

and also to verify the value of the sale declared for the

purpose of valuation under the Stamp Duty Act and

thereafter to adopt the value whichever is higher of the two,

as per the provisions of section 50C of the Act.

from the purchaser of the property, M/s Akme Projects Ltd.,

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u/s 133(6) of the Act, in response to which copy of the

account of the assessee as appearing in its books was

submitted showing payments of Rs.30 lacs through DD

issued by Canara Bank for the said purpose. The A.O. also

called for information from the Punjab National Bank (in

short ‘PNB’) with whom the original sale deed was kept by

the purchaser who supplied the same copy of the sale deed

as was submitted to the A.O. by the assessee. The A.O. also

obtained copy of the sale deed directly through Suvidha

Centre which was also the same. The A.O., however, again

adopted the sale consideration of the property at Rs.45 lacs

since as per the A.O. this was the value accepted by the

Stamp Value Authority, for the purpose of payment of stamp

duty, the purchaser having paid stamp duty on such value

and also for the reason that there were cuttings on the sale

deed which were not countersigned/attested by the

Registering Authority. Thus the A.O. in the set aside

proceedings reiterated the initial assessment framed on the

issue.

who upheld the order of the A.O. finding merit in the

findings of the A.O. in this regard. The relevant findings of

the CIT(A) at paras 5.2 and 5.3 are as under:

“5.2 I have considered the observations of the Assessing Officer as made by him in the set aside assessment order while adopting the sale consideration of the property at Rs.45,00,000/- and thereafter computing taxable value of the long term capital gain at Rs.17,52,961/-. I have also considered the written submissions filed by the assessee through his learned AR vide letter dated 24.07.2017 on the issue under reference. I have further considered order of the

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Honorable ITAT, Chandigarh dated 07.11.2013 vide which certain directions were issued to the Assessing Officer which were to be followed by him before completing set aside assessment. I have again considered the other material placed by the learned AR of the assessee on record. On careful consideration of the rival contentions, it has been noticed that the purchaser has confirmed that the consideration paid by it to the assessee through demand draft was Rs.30,00,000/- but the stamp valuation authority has accepted the value for payment of stamp duty at Rs.45,00,000/-. As per directions of Honorable ITAT, the higher of value which has been paid by the4 purchaser or which has been accepted by the stamp valuation authority for payment of stamp duty is to be adopted for the purpose of computing long-term capital gain earned by the assessee on the sale of impugned property in this case. I am also of the opinion that the value to be adopted for the purpose of computing long-term capital gain on the sale of property will be Rs.45,00,000/- and not Rs.30,00,000/-. The plea of the assessee that the purchaser has inadvertently purchased stamp papers is an afterthought and cannot be accepted as no prudent person will do that. I also do not agree with the plea of the assessee that value for the purpose of payment of stamp duty is Rs.4,78,125/-. In fact, also cannot be said to be the fair market value as the assessee has himself sold property for Rs.30,00,000/-. Under such circumstances, the action of the Assessing Officer in adopting the sale consideration of the property for computing long-term capital gain at Rs.45,00,000/- in this case and thereafter computing the taxable value of the long term capital gain at Rs. 17,52,961- cannot be said to be unjustified. 5.3 In view of the above stated facts and in the circumstances of the case, I am of the opinion that the Assessing Officer is fully justified in adopting the sale consideration of the property for computing long-term capital gain at Rs.45,00,000/- in this case and thereafter computing the taxable value of the long term capital gain at Rs. 17,52,961/-. So, the addition of Rs. 17,52,961/- made by the Assessing Officer to the returned income of the assessee on account of long-term capital gain earned by the assessee on the sale of property in this case is, therefore, upheld. In the result grounds No. 1, 2, 3 and 4 of appeal taken by the assessee are dismissed.” 5. Aggrieved by the same, the assessee has come up in

appeal before us, raising following grounds:

1) That learned CIT Appeals-2 and A0 could not understand the directions of the lerned Income Tax Appellate Tribunal Chandigarh Beanches A. As per order dated 07.11.2013 para 13 @ page 7 of the order directions are clear , purchaser purchased the property @ Rs.3000000/- and not 4500000/- which the AO duly verified from the purchaser.

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for assessee reiterated the contentions made before the

lower authorities. Drawing our attention to the directions of

the I.T.A.T. in the first round, as reproduced in the order of

the A.O. at para 3.2, the Ld. counsel for assessee pointed

out that the directions were clearly and unambiguous

requiring the A.O. to verify the actual consideration

received by the assessee for the sale of the impugned

property by issuing summons to the purchaser and to verify

the stamp duty value of the property and thereafter adopt

the value whichever is higher of the two, for the purposes of

computing capital gains earned, as per the provisions of

section 50C of the Act. The Ld. counsel for assessee

thereafter pointed out that both necessary enquiries had

been carried out by the A.O. and the purchaser had verified

paying consideration of Rs.30 lacs for the sale of such

property and copy of the sale deed procured both from the

bank, with which the purchaser had kept the sale deed and

also from Suvidha Centre, had confirmed the fact that the

sale deed filed by the assessee was the correct sale deed.

Our attention was drawn to the relevant documents placed

in the Paper Book as under:

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1) Account of Hem Raj in the books of Akme Projects Ltd P.B. No.8

2) Letter from M/s PNB Housing Finance Limited P.B. No.9 3) Copy of Sale deed dt.19.10.2005 Vasika no.11612 received from PNB Housing Finance Ltd. P.B. No.10-26

4) Sale Deed dt.19.10.2005 P.B No.60-76

5) Translated copy of Sale Deed dt.19.10.2005 P.B. No.77-78

complied with the directions of the I.T.A.T. and finding no

infirmity in the contentions made by the assessee in the

first round, there was no reason to reiterate the addition

made. It was stated that the purchaser had verified paying

Rs.30 lacs for the property. It was contended that the copy

of the sale deed supplied by the purchaser from PNB and

procured by the A.O. from the Suvidha Centre also had the

same cuttings in it as was present in the sale deed

submitted by the assessee to the A.O. confirming the

authenticity of the sale deed originally submitted by the

assessee and proving bonafides of the assessee that actual

consideration received was Rs.30 lacs and the stamp duty

had been inadvertently paid on a value of Rs.45 lacs by the

purchaser.

of the A.O. and the CIT(A) pointing out the fact that the

stamp duty had been paid on the consideration mentioned

of Rs.45 lacs and the cuttings in the deed replacing the

figure of consideration with Rs.30 lacs was not

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countersigned/attested by the Registering Authority and

hence the version of the assessee could not be believed.

orders of the authorities below and also gone through the

documents to which our attention was drawn. The issue

before us relates to the computation of capital gains earned

on the sale of property,which the assessee had returned by

taking sale consideration of Rs. 30 lacs,while the Revenue

contended that the figure to be adopted was Rs. 45 lacs .

The directions of the I.T.A.T. in first round, while restoring

the issue to the AO, was to conduct inquiries for

determining the actual sale consideration received by the

assessee and the value of the property adopted for stamp

duty purposes ,for the purpose of adopting the higher of

the two values as per the provisions of section 50C of the

Act. The reason for the same was that the copy of the sale

deed submitted by the assessee in the first round had

cuttings with the figure of sale consideration of Rs.45 lacs

being cut and replaced with Rs. 30 lacs. The sale deed had

such cuttings at various pages, at page No.1 of the

registration deed there was a cutting on Rs.45 lacs and

amount after cutting was Rs.30 lacs. On page No.2, instead

of bank draft there was pay order mentioned and again on

the number of pay order there was a change. Similarly, on

page 3 the amount of Rs.30,00,000/- had been mentioned

after cutting. On page 11 there was cutting on amount of

Rs.30,00,000/- and in words there was a cutting on Rs.

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Thirty lakhs. Similarly, there was cutting on Rs.22,50,000/-

to Rs.15,00,000/- and in words there was cutting of

Rs.Fifteen lakhs. All the cuttings were signed by the

purchaser and buyer . All the aforesaid are admitted facts

which find mention in the written submissions filed by the

Ld.Counsel for the assessee before the CIT(A), and which

are reproduced at para 5.1 of his order.The cuttings

however were not countersigned/attested by the Registering

Authority.Also stamp duty was found to have been paid at

the value of Rs. 45 lacs,which the assessee claimed to have

paid inadvertently. In view of the said discrepancies ,which

rendered the determination of the actual sale consideration

and also the stamp duty value of the property difficult ,the

aforestated direction was given by the ITAT.

second round have not delivered the desired information as

directed by the ITAT in the first round. In the second round

also the copies of the same sale deed were filed before the

AO ,both by the purchaser of the property,M/s Akme

Projects Limited and the bank where the purchaser had

kept the sale deed. These sale deeds also had the same

unauthenticated cuttings in them and were on stamp paper

of value which corroborated with the sale consideration of

Rs. 45 lacs. The cuttings on the copy of sale deeds not

authenticated by the registering authority supplemented

with the fact that stamp duty was paid on the higher sale

consideration of Rs. 45 lacs, casts doubts on the

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authenticity of the document.The fact that the deed was

submitted by the purchaser or the bank where the copy was

kept by the purchaser makes no difference and does not

make the document authentic. The said facts also do not

lend any credibility to the explanation of the assessee that

the higher stamp duty was paid inadvertently.

authenticity of the document is clearly not established and

it is difficult to believe the version of the assessee that the

document submitted was an authentic sale deed duly

registered with the Land Revenue Authorities.In the absence

of an authenticate sale deed, the determination of the

actual sale consideration of the property and the value

adopted for stamp duty purposes, as directed by the ITAT in

the first round, cannot be legitimately made. It is therefore

necessary to obtain the authentic /original sale deed by

directly from the Registering authorities, calling for the

necessary records maintained in this regard. We find that

the AO had directed the assessee to procure a copy of the

sale deed from the registering authorities but ,we note from

the assessment order that the assessee had failed to do so.

We therefore set aside the matter back to the CIT(A) to

obtain the copy of the sale deed from the concerned

Revenue/Registering authorities and thereafter

determine the actual sale consideration and value adopted

for stamp duty purposes . The issue may thereafter be

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decided in accordance with law. We may add that the assessee be given due opportunity of hearing in this regard.

Order pronounced in the Open Court.

Sd/- Sd/- �दवा �संह अ�नपणा� ग�ता (ANNAPURNA GUPTA) (DIVA SINGH) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member �दनांक /Dated: 1st November, 2018 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :

आदेशानसार / By order, सहायक पंजीकार/ Assistant Registrar