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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-12, Ahmedabad (in short ‘the CIT(A)), dated 14.07.2023 for the Assessment Year 2015- 16.
[DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 2 – 2. There was a delay of 57 days in filing of this appeal. The assessee has filed an affidavit explaining that the delay was caused due to pre-occupation of his Accountant Shri Mehul Jayantilal Shah who was busy in finalization of accounts and filing tax returns. Further, the assessee was also not available and was out of country for a considerable period of time due to which he could not monitor the timely filing of the appeal. An affidavit of Shri Mehul Jayantilal Shah, the Accountant of the assesse, has also been filed. Considering the explanation of the assessee, the delay in filing of the appeal is condoned.
The brief facts of the case are that the assessee had filed his return of income for A.Y. 2015-16 on 30.03.2016 declaring total income of Rs.45,46,760/-. The case was selected for limited scrutiny under CASS. The assessee had purchased a land during the year vide sale deed dated 10.03.2015 for a consideration of Rs.10,28,28,600/-. In the course of assessment, the AO found that at the time of registration of the property the assessee had paid additional stamp duty. It transpired that the matter was referred to the Deputy Collector for valuation of the property, who had valued the property at Rs.12,79,67,530/- and accordingly the assessee had paid additional stamp duty as per the revised valuation. The AO, thus, noted that the stamp duty value of the property was Rs.12,79,67,530/-, whereas the consideration paid as per sale deed was Rs.10,28,24,000/- only. The AO, therefore, added the difference amount of Rs.2,51,39,530/- as income of the assessee under the provision of Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 (in short ‘the Act’).
[DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 3 – 4. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which has been decided vide the impugned order. The Ld. CIT(A) has allowed part relief to the assessee and the addition u/s. 56(2)(vii)(b)(ii) of the Act was restricted to Rs.1,28,54,000/- on the basis of the report of the DVO.
Now, the assesse is in second appeal before us. The following grounds have been taken in this appeal:
“1. That the ld. CIT(A) has erred in upholding addition to the tune of Rs.1,28,54,000/- being difference in purchase price of the land and value of land as per valuation officer. That the ld. CIT(A) should adopt value of land as per registered sale deed in view of the special facts that land was in green belt. Therefore the addition for Rs.1,28,54,000/- as confirmed by Ld. CIT(A) be deleted.
The appellant craves leave to add, alter or amend any of the grounds of appeal before final hearing of appeal.”
6. Shri Hardik Vora, Ld. AR appearing for the assessee submitted that the land was originally taken possession by Dayalbaug Co-op. Housing Society on the basis of Banakhat dated 15.07.1964 executed by one Sh. Laxmichand Rugnath Patel and on payment of Rs.1,41,600/-. However, the land was in green belt and hence, it was not possible to convert the land in NA. Therefore, the society could not have purchased the above land as only an agriculturist can buy the agricultural land. Due to this reason, Dayalbaug Co-op. Housing Society had signed the sale deed as a confirming party. As regarding merits of the addition, the Ld. AR submitted that the assessee had objected to the proposed addition by the AO on the ground that the stamp duty [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 4 – value was higher than the fair market value of the property. The AO, on the basis of the objection of the assessee, had referred the matter to the DVO. However, since the report of the DVO was not received at the time of passing of assessment order, the AO had made the addition. Thereafter, the Ld. CIT(A) had allowed certain relief on the basis of DVO’s report, which was received during the pendency of appeal proceedings before the Ld. CIT(A).
The Ld. AR submitted that the assessee had also raised objection to the valuation as made by the DVO, which was not considered by the Ld. CIT(A) in the right perspective. The Ld. AR further submitted that the assessee had actually acquired land area of 4674 sq.mtr. only out of total plot area of 7790 sq.mtr. as the balance area was acquired by the Government authority for general public utility. The DVO had not considered the objection of the assessee that the jantri rate should be applied only to the actual area of 4674 sq.mtr. acquired by the assessee and not to the total plot area of 7790 sq.mtr. According to the Ld. AR, the valuation should be considered only for the actual area which was acquired by the assessee pursuant to the sale deed. He further submitted that the comparable cases as considered by the DVO were actually not comparable taking into account their area and location. He further submitted that the difference in valuation between price as per sale deed and the valuation as made by the DVO was only 12.5%, which should have been ignored.
Per contra, Shri Prasad Rao Waghe Annasaheb, Ld. Sr. DR submitted that the DVO had considered all the objections as [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 5 – raised by the assessee and thereafter, determined the value of the property. At the time of inspection by the DVO, the representatives of the assessee were also present and, their objection as well as feedback was taken into account by the DVO. The Ld. DR further submitted that the difference in value as determined by the DVO was in excess of 10% than the value as per sale deed, which could not have been ignored as per the provisions of the Act. The Ld. SR. DR submitted that the Ld. CIT(A) had duly considered the report of the DVO and allowed relief to the assessee. He, therefore, strongly supported the orders of the AO and CIT(A).
We have carefully considered the rival submissions. There is no dispute to the fact that the value of the property as per sale deed was Rs.10,28,28,000/-. One of the contention of the assessee is that it had acquired agricultural land of 4674 sq.mtr. only and not 7790 sq.mtr. The property described in the schedule to the sale deed is as under:
“At Registration District Ahmedabad Sub District Ahmedabad-13 (City) of Ahmedabad city Western Taluka of Village Mouje Vastrapur sim, bearing Revenue Survey No. 197 of Hec. Are. Sq. Mt. 0-77-90 means 7790 sq. mt. shape Rs. 5.44 palki, which was included in Town Planning Scheme no. 31 (University Campus), its final plot no. 101/1, 101/2 of 4674 sq. mt. old tenure agriculture land, whose surrounding boundaries are as under. [Emphasis supplied] East : Nala road and Revenue survey no. 202 West : Survey no. 198 North : Survey no. 196 and 203 South : Survey no. 199 [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 6 – As per final plot no. 101/1 surround boundaries details East : 9 meter propose T. P. road West : 18 meter propose T. P. road North : 9 meter propose T. P. road South : leaving 9 meter propose T. P. road G.M.D.C. Tower. As per final plot no. 101/2 surround boundaries details East : 18 meter propose T. P. road West : Final plot no. 100 North : Final plot no. 105 South : Final Plot no. 103 That way surrounded center land, in it lying all trees, leaf, bid, shed, wall fallen leafs with it all.”
It is evident from the above schedule that the total area of the plot was 7790 sq. mtr. and the final plot nos. 101/1, 101/2 had area of 4674 sq. mtr. The consideration as per sale deed was in respect of this area only. Be that as it may, what is relevant is not actual area of the plot as mentioned in the sale deed but the stamp duty value of the property purchased. The fact that the stamp duty value of the property was Rs.12,79,67,530/- has not been disputed. This stamp duty value was determined considering the fact that out of total plot area of 7790 sq. mtr., the final plot area was 4647 sq. mtr. only. On the other hand, the consideration mentioned in the sale deed was Rs.10,28,28,000/-. Therefore, the AO had added the difference of Rs.2,51,39,530/- u/s. 56(2)(vii)(b)(ii) of the Act. The proviso to the said Section stipulates that if the assessee contends that the stamp duty value of the property was higher than the FMV of the property or [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 7 – disputes the stamp duty value, then the AO may refer the matter to the Valuation Officer to determine the FMV the property. In the present case also, the assessee had disputed the stamp duty value of Rs.12,79,67,530/- and on the objection of the assessee the matter was referred to the DVO. The Ld. CIT(A) has already allowed relief to the assessee on the basis of the report of the DVO.
The contention of the assessee is that the DVO had not correctly considered the objections as raised by the assessee. It is found that all the objections of the assessee were properly dealt by the Ld. CIT(A) in his order. The relevant portion of his order is reproduced below:
“6.3 I have considered the submission by the appellant. The issue here is that what is the valuation of the land property purchased by the appellant, viz. RS No.197, Vastrapur. Ahmedabad. The AO had ascertained the Stamp Duty valuation of the property based on the total stamp duty paid by the appellant which is at a fixed rate as per law by the State Government. The appellant is trying to explain it from the copy of the letter stating jantri rate and area of the land purchased. It has not explained why it has paid more amount of stamp duty, if the jantri rate was Rs 22,000/- and the area of land is taken at Rs 4674 sqm and purchase was at jantri rate. Clearly the valuation of the land as per the stamp duty valuation rate was higher that is why the Registrar charged higher rates. Based on the back calculation, the Stamp Duty value of the property was correctly calculated as Rs 12,79,67,530/- by the AO and this was not controverted by the appellant. However, he objected to this valuation as being higher due to certain specific conditions and the AO rightly referred the matter to the DVO as per law. The expert, i.e. DVO after inspection of the property, in the presence of the appellant's representative, measuring the total area and bringing on record comparable sale cases, estimated the value of the property at Rs 11,56,82,000/-. He also granted opportunity to the appellant after preliminary valuation and considered the objection before arriving at the final estimated FMV. The appellant has not objected to the comparable sale instances used by the DVO. The consideration paid for purchase by the appellant as per registered deed is Rs 10,28,28,000/- which is much lower than the fair market [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 8 – estimate by DVO. The objections raised by the appellant were duly dealt with by the DVO while making the estimate. 6.3.1 It is added that the total land purchased by the appellant, as per the registered deed is 7790 sqm. 40% of the same is acquired by the government for general public usages/utilities as per law. The area sold and accounted for as 4674 sqm is clearly mentioned as the two plots 101/1/& 101/2 carved out of the total area that are the two be used by the appellant. But purchaser has to pay the price as well as the stamp duty for the entire parcel of the land i.e. 7790 sqm and not 4674 sqm. Hence in contrast to the claim, the DVO has correctly made the valuation of full piece of land of 7790 sq m. The appellant claiming that the sale consideration was fixed by applying 4674 sq m @ Rs 22,000/- is extraneous to the matter. It is between him and the sellers and that what the amount of consideration they want to record in documents. The Act clearly creates a deeming provision, as an anti-abuse measure, to thwart black money transactions in such transfer of immovable property, by ensuring that the valuation of the property that is sold is as per the fair market value which is determined in terms of the valuation fixed by State Government for stamp duty purposes and if that valuation is objected to, then the valuation as arrived at by the DVO. Here stamp duty valuation of the property is found to be Rs.12,79,67,530/-; The appellant objected to this amount. The DVO ascertained it to be Rs 11,56,82,000/-. This exceeded the price at which the property was shown to have been purchased as recorded in the registered deed. The provision of law as per section 56(2)(vii)(b)(ii) kicks in and was rightly applied by the AO subject to revision as valued by DVO. 6.3.2 The appellant also submitted that the difference in DVO valuation and Registered deed price is 12.5%. It claimed that as per section 50C of the Act, if the difference in valuation is less than 15%, then the same has to be ignored. It is submitted that the provision of sec 56(2)(vii)(b) was extant till AY 2016-17. The same is reproduced as under: - “….. (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 [but before the 1st day of April, 2017],- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum, (b) any immovable property- [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 9 – (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration. Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property......... There was no provision to ignore the variation. Therefore, for the year in appeal, i. e. AY 2015-16, such plea has no basis and is rejected. 6.4 As the DVO has fixed the fair market valuation of the property at Rs 11,56,82,000/- as against the AO calculating the same at Rs 12,79,67,530/-; value as per the DVO report is to be adopted. The alternate plea by the appellant that the value should be taken as per the valuation report of the valuation officer succeeds. Therefore the addition of amount of Rs 1,28,54,000/- by the AO is confirmed as the income from the other sources of the appellant as per the deeming provision of section 56(2)(vii)(b)(ii) of the Act. Balance amount of Rs. 1,22,85,530/- is directed to be deleted. Ground of appeal 1 is partly allowed.”
12. It is, thus, found that the Ld. CIT(A) had dealt with all the objections raised by the assessee and given a categorical finding. The objections of the assessee is also found properly dealt in the valuation report of the DVO. In fact, the assessee had not submitted any other Registered Valuer’s report before the DVO. The comparable cases considered by the DVO were also not objected by the assessee. The Ld. CIT(A) has also dealt with the objection of the assessee in respect of difference in valuation [DCIT vs. Tejas C. Joshi] A.Y. 2015-16 - 10 – being less than 15% of the sale price. The FMV determined by the DVO was adopted only on the basis of objection of the assessee to the stamp duty value, with a request to refer the matter to the DVO. The Ld. CIT(A) has given a categorical finding that the value as per report of DVO was taken as per alternate plea of the assessee only. Under the circumstances, we don’t find any merit in the ground as raised by the assessee. The assessee has been unable to bring any material on record to controvert the findings of the Ld. CIT(A). We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A). The provision of section 56(2)(vii)(b)(ii) of the Act is found to be squarely applicable to the facts and circumstances of the case. Accordingly, the addition of Rs.1,28,54,000/- as confirmed by the Ld. CIT(A) u/s. 56(2)(vii)(b)(ii) of the Act, is upheld.
In the result, the appeal of the assessee is dismissed.
This Order pronounced on 05/12/2024
Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 05/12/2024 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. 3. संबं�धत आयकर आयु�त / Concerned CIT आयकर आयु�त(अपील) / The CIT(A)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,