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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. MADHUMITA ROY & SHRI B.M. BIYANI
Assessment Year: 2013-14 Sanwaria Infrastructure ACIT, 4(1) Ltd., Bhopal Bhopal Vs. (Appellant / Assessee) (Respondent/ Revenue) PAN: AAKCS 3471 J Assessee by Shri Anil Khabya, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 13.09.2022 Date of Pronouncement 19.09.2022 O R D E R Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 28.06.2022 passed by Ld. Commissioner of Income-Tax, National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 16.03.2016 passed by learned ACIT-4(1), Bhopal [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment Year [“AY”] 2013-14, the assessee has filed this appeal on following ground:
“That the Ld. CIT(A) erred in sustaining addition of Rs. 18,82,500/- on account of alleged unexplained investment in purchase of agriculture land u/s 69C.”
2. The sole grievance of assessee is such that the Ld. AO has made an addition of Rs. 18,82,500/- u/s 69C on account of alleged unexplained investment in purchase of agricultural land without any authority of law.
3. On perusal of assessment-order, it is observed that the Ld. AO has made addition by observing as under:
“5. Unexplained expenditure u/s 69C 5.1 It is seen from the Profit and Loss account of the assessee that the assessee has shown Purchase of Property (Agricultural Land) amounting to Rs. 49,89,500/-. The assessee was required to submit documentary evidence regarding the said claim as per order sheet entry dated 08.03.2016. The submissions made by the assessee in this regard dated 11.03.2016 have been placed on record and the same have been duly considered. As per the said submissions, the assessee states: “Copy of the registry of agriculture land are enclosed” 5.2 On going through the said document it is found that the stamp duty valuation of the said property is stated as Rs. 68,72,000/-. Hence the assessee has not declared the expenditure amounting to Rs. 18,82,500/- on the said property. The source of the same remains unexplained as the correct value has not been accounted for in the books of the assessee. Reliance is placed on the judgment of Hon’ble ITAT Delhi Bench (SMC-4) in the case of Arti Exports (P.) Ltd Vs. Income Tax Officer (2005) 146 Taxmann 89 (Delhi) (MAG) whereby the Hon’ble ITAT held that: “Assessee-company had incurred certain expenditure on account of stamp duty and registration charges for purchase of immovable property, but had not shown same in its books of account. Assessing Officer made addition of said expenditure and rejected assessee’s explanation that amount in question was spent by director from his personal fund - Whether assessee having neither recorded factum of having said amount in its books of account, its plea that amount in question was paid by director was not acceptable - Held yes” 5.3 Hence the undisclosed expenditure amounting to Rs. 18,82,500/- is treated as the deemed income of the assessee. The said amount is added to the total income of the assessee and is charged to tax u/s 69C of the Income Tax Act 1961.”
4. During first-appeal, Ld. CIT(A) has dealt with this issue as under: “4.1 Ground of appeal No.1:- Vide this ground of appeal the appellant has challenged the addition of Rs.18,82,500/- u/s 143(3) by invoking the provision of section 69C of the IT Act. The appellant has argued that action of the Assessing Officer
by treating of Rs.18,80,500/- as unexplained investment on account of purchase of agricultural land is arbitrary and wrong in the eyes of law. 4.2 I have carefully examined the facts of the case, assessment order u/s 143(3) and reply filed by the appellant during the appellant proceedings. From the perusal of the assessment order it is seen that Assessing Officer has made an addition of Rs.18,82,500/- on account of unexplained expenditure u/s 69 of the IT Act. It is noted that appellant has shown purchase of agriculture land amounting to Rs. 49,89,500/- in his P&L account. On examination of reply and documents filed by the appellant during assessment proceedings, the Assessing Officer has noticed the stamp duty valuation of the purchase property is Rs. 68,72,000/-. The Assessing Officer relying on the decision of Hon’ble ITAT Delhi Bench (SMC-4) in the case of Arti Export Pvt. Ltd. vs. ITO (2005) 146 Taxmann 89 (Delhi) (Mag) has made the addition of Rs.18,82,500/- (being the difference 68,72,000 - 49,89,500) u/s 69C of the IT Act as undisclosed expenditure. 4.3 The appellant has contested the addition of Rs.18,82,500/- made by the Assessing Officer in his reply and has argued that he has not made such expenditure and the Assessing Officer has no such proof for making such addition. He has also challenged the invocation of section 69C of the IT act by the Assessing Officer. I have gone through the reply of the appellant and do not find the force in the merit of his reply. It is the fact that stamp valuation of the property is at Rs.68,70,000/- but the appellant has declared only Rs.49,89,500/- in his return of income. The stamp valuation of the property reflected in the registered deed is most valid document. Hence, I am inclined to concur with the findings of the Assessing Officer in his assessment order. In view of the above I hereby confirm the addition of Rs.18,82,500/- made u/s 69C of the IT act. Therefore, this ground of appeal is dismissed.”
5. During hearing before us, Ld. AR representing the assessee assailed the orders of lower authorities. Ld. AR submitted that the assessee purchased the impugned property for Rs. 49,89,500/-, whose value assessed by Stamps Authority was Rs. 68,70,000/- and the Ld. AO has made addition of Rs. 18,82,500/-, which is basically the difference of “actual purchase price” and the “value adopted by the stamps authority for stamps act”. Ld. AR submitted that the lower authorities have invoked section 69C to make / sustain this addition but the section 69C does not contain any provision for treating the difference of “actual purchase price” and “stamps authority valuation” as income. Ld. AR submitted that a bare reading of section 69C makes it clear that the said section is applicable only if the assessee has incurred any expenditure but offers no explanation about the source. Ld. AR submitted that in the present case, the assessee has incurred expenditure of Rs. 49,89,500/- only and the same is disclosed in the books of account, hence source is clearly explained. Ld. AR submitted that the sum of Rs. 68,70,000/- considered by the authorities, is just a value determined by stamps authority but the assessee has not expended the sum of Rs. 68,70,000/-. Ld. AR submitted that the lower authorities have notionally computed the difference of Rs. 49,89,500/- and Rs. 68,70,000/- and made addition of Rs. 18,82,500/- under the shelter of section 69C, but section 69C does not contain any provision to tax such difference. Therefore, the action of lower authorities is patently wrong. Ld. AR gainfully referred to the decision of Hon’ble Supreme Court in Bharat Sanchar Nigam Limited Vs. M/s Nemichand Damodardas & Anr., Civil Appeal No. 3478 of 2022, dated 11.07.2022, which was although rendered in the context of determination of compensation payable on compulsory acquisition of assets, yet it is a clear pointer to indicate that the valuation of stamps authority does not represent a fair value:
11. Thus, there may be various factors, which are required to be considered for determining the market value of the land. The market value of the land depends upon the location of the land; area of the land; whether the land is in a developed area or not; whether the acquisition is of a small plot of land or a big chunk of land and number of other advantageous and disadvantageous factors are required to be considered. Therefore, there cannot be the same market value for the different lands while determining the compensation for the lands acquired under the Land Acquisition Act. Therefore, the rates mentioned in the Ready Reckoner, which are basically for the purpose of collection of stamp duty and as observed hereinabove, which are the uniform rates for all the lands in the area, cannot be the basis for determination of the compensation for the lands acquired under the Land Acquisition Act. Therefore, the High Court has committed a serious error in enhancing the amount of compensation by 800% from Rs. 21/- per sq. ft. to Rs. 174/- per sq. ft. relying upon and/or considering the rates mentioned in the Ready Reckoner.
Ld. AR submitted that the Parliament too realised that section 69C cannot tax the difference of “actual purchase price” and “stamps valuation authority” and that is why, introduced a newer provision by way of section 56(2)(x) from 01.04.2017 for bringing such differences into tax-net, but the newer provision is not applicable to AY 2013-14 involved in present appeal.
With these submissions, Ld. AR argued that the addition made by lower authorities is baseless as well as beyond the authority of law. Hence the same deserves to be deleted.
Per contra, Ld. DR supported the orders of lower authorities and argued that the addition made by Ld. AO is based on the valuation done by stamps authority, hence the same ought to be upheld.
We have considered submissions of both sides and perused the material held on record in the light of provisions of law. We observe that the lower authorities have made addition on the basis of difference in “actual purchase price” and “valuation made by stamps authority”. We observe that except this, there is no evidence or basis available to the lower authorities for making this addition. On a careful reading of section 69C, we observe that the said section empowers the assessing authority to make addition where unexplained expenditure is found but then the unexplained expenditure has to be real and not notional. Had there been any evidence in the possession of revenue authorities which could establish that the assessee has actually expended a sum of Rs. 68,70,000/- on purchase of the property, the authorities would have been within power to treat the difference as income of assessee but this is not so in present case. The authorities do not have any evidence whatsoever by which it can be said that the assessee has expended a sum of Rs. 68,70,000/- on purchase of the impugned property. We observe from the decision of Hon’ble Supreme Court in Bharat Sanchar Nigam Limited (supra) that the value determined by stamps authority is merely for collection of stamps duty. We also find merit in the submission of Ld. AR that the realising the absence of provision, the Parliament has introduced newer section 56(2)(x) but that section does not support revenue’s case for AY 2013-14. With this discussion, we do not hesitate in concluding that the revenue authorities are not justified in making addition of Rs. 18,82,500/- u/s 69C in this case. We are therefore inclined to delete the addition. According, the ground raised by assessee is allowed.
In the result, this appeal of assessee is allowed.
Order pronounced in open court on 19/09/2022.
Sd/- Sd/- (Madhumita Roy) (B.M. Biyani) Judicial Member Accountant Member Indore Dated : 19.09.2022 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order COPY
Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation 14.9.22
Date of typing & draft order placed before the Dictating Member 14.9.22
Date on which the approved draft comes to the Sr. P.S./P.S.
Date on which the fair order is placed before the Dictating Member for pronouncement
Date on which the file goes to the Bench Clerk
6. Date on which the file goes to the Head Clerk