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Income Tax Appellate Tribunal, AHMEDABAD “ D ” BENCH
Before: Smt Annapurna Gupta & Shri T.R. Senthil Kumar
ITA No: 268/Ahd/2023 Assessment Year: 2018-19 Manharbhai Natvarlal Patel The Pr.CIT-1 24, Manikamal Society-II Ahmedabad Surdhara Circle, Thaltej Vs Ahmedabad-380 059 PAN: ABXPP3710E (Appellant) (Respondent) Revenue Represented: Shri Karun K. Ojha, CIT-DR Shri Bandish Soparkar, AR & Assessee Represented: Shri Parin Shah, AR Date of hearing : 28-03-2024 Date of pronouncement : 24-04-2024 आदेश/ORDER
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER
This appeal is filed by the assessee as against the Revision order dated 27.03.2023 passed by the Principal Commissioner of Income-Tax, Ahmedabad-1 [hereinafter referred to as “PCIT” for short] arising out of the assessment order passed u/s.143(3) of the Income-Tax Act, 1961 [hereinafter referred to as "the Act" for short] relating to the Assessment Year (AY) 2018-19.
Brief fact of the case is that the assessee is an individual filed his Return of Income for AY 2018-19 on 30.10.2018 declaring total income of Rs.8,96,490/-. Scrutiny assessment was completed u/s.143(3) of the Act on 05.12.2020, and accepting the returned
Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 2 income. On perusal of the assessment records the Ld.PCIT found that the assessee had purchased an immovable property during the financial year and the purchase value of the property declared as Rs.3,80,27,000/- which was less than its stamp duty value of Rs.5,70,43,000/-. Thus, there was undervaluation of the property (land) to the tune of Rs.1,69,78,750/- and the assessee being 41% co-owner of the land, his share in undervaluation was to the extent of Rs.69,61,287/-, which should have been treated as “income from other sources” u/s.56(2)(x) of the Act. As the Assessing Officer had not properly verified this issue and also did not examined the applicability of section 56(2)(x) of the Act, therefore the assessment order passed by the Assessing Officer was found to be erroneous and prejudicial to the interests of the revenue. Hence, a show Notice was issued and after considering the reply filed by the assessee, the Ld.PCIT set aside the assessment order, with a direction to pass fresh assessment, after conducting proper enquiry and verification on the above issues.
3. Aggrieved against the Revision order the assessee is in appeal before us raising the following grounds of appeal:- “1. Ld. PCIT has erred in law and on facts in seeking to revise the assessment order u/s 263 in as much as the assessment order is neither erroneous nor prejudicial to the interest of the revenue.
2. Ld. PCIT has erred in law and on facts in seeking revise the assessment order u/s 263 in as much as during the original assessment the then Assessing Officer had thoroughly scrutinised the transaction of purchase of property and correctly did not make the addition u/s 56(2)(x). Revising the same on the grounds of lack of adequate inquiry is bad and illegal.
Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 3
3. Ld. PCIT has erred in law and on facts in seeking revise the assessment order u/s 263 in as much as the and assessing officer has correctly computed income and no addition u/s 56(2)(x) is called for.
4. Ld. PCIT has erred in law and on facts in seeking revise the original assessment framed in as much as he has no jurisdiction to substitute the value of the transaction u/s 56(2)(x) that is determined by the Collector of Stamps, Stamp Duty Valuation. 5. Ld.PCIT has erred in law and on facts in invoking explanation 2 to Section 263 in seeking to revise the original assessment framed in as much as the same is not applicable in the facts of the case.”
Shri Bandish Soparkar, Ld.Counsel appearing for the assessee submitted that the issue on which the assessment order was set aside by the Ld.Pr.CIT was examined by the Assessing Officer during the course of original assessment. In this regard, he has drawn our attention to the notices issued u/s.142(1) of the Act, whereby the Assessing Officer had made a specific enquiry on the issue and also to the replies filed by the assessee before the AO. Ld.Counsel further submitted that the Assessing Officer, after conducting the enquiry, had come to the conclusion that the stamp duty value of the immovable property was Rs.3,80,27,000/- as mentioned in the sale-deed, therefore, there was no scope of applicability of provisions of section 56(2)(x) of the Act. As the case was throughly examined by the Assessing Officer during the course of assessment proceedings, the Ld.PCIT was not correct in holding that the assessment order was erroneous and prejudicial to the interest of Revenue and the Revision order is liable to be quashed.
Per Contra, Ld.CIT-DR, Shri K.K Ojha appearing for the Revenue, supported the order passed by the Ld.PCIT and requested to uphold the same.
Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 4
We have heard rival submission and also perused the documents placed before us and carefully gone through the orders as well as the relevant provision of law on the issue raised before us. The Ld.PCIT has held that the assessment order dated 05.12.2020 passed by the Assessing Officer u/s.143(3) of the Act was erroneous and prejudicial to the interests of the Revenue, for the reason that no proper enquiry was conducted by the Assessing Officer on the issue of stamp duty value of the immovable property acquired during the year and the applicability of provisions of section 56(2)(x) of the Act was also not examined by the Assessing Officer. On the other hand, the assessee has contended that this issue was already examined by the Ld.AO in the course of original assessment proceedings. As per Explanation 2 to Section 263 of the Act, the assessment order passed by the AO shall be deemed to be erroneous and prejudicial to the interests of the Revenue, if the order is passed without making necessary enquiries or verifications which should have been made. Therefore, the moot question to be decided in this case is, whether the Assessing Officer had made enquiry in respect of stamp duty value of the land purchased by the assessee, during the course of the original assessment proceedings. A copy of the notice u/s.143(2) of the Act dated 28.09.2019 issued by the AO, has been placed at page Nos.20 to 24 of the paper-book filed by the assessee and it is found therefrom that the case was selected for limited scrutiny on the issue “Investment in Immovable Property”. It is seen from the notice u/s.142(1) of the Act dated 22.11.2019 that the Ld.AO had made the following enquiry in respect of stamp duty value of the property:
Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 5
“1. Please furnish evidentiary documents in support of following reason(s)/claim(s), for which your case has been selected for Limited Scrutiny, for the Assessment Year 2018-19: Purchase Value of Property less than the value as per Stamp authority (u/s 56(2) or any other relevant section) (Business ITR). With respect to investments made in property during the year, kindly provide the following details: i) Description of the property alongwith Copy of purchase deed. ii) Cost of purchase & Source of funds alongwith bank statement showing the same. iii) Stamp value of the property.”
6.1. Thereafter, another notice u/s.142(1) of the Act dated 02.09.2020 was issued by the Assessing Officer, wherein further enquiry in respect of stamp duty value of the property was made. A query was made in this regard, which is reproduced below:-
“2. In your earlier reply, with respect to purchase of immovable property on 26.05.2017 amounting to Rs.3,80,27,000/-, you have replied that, please issue a detailed questionnaire in this regard of purchase or sale of property during the year under consideration. In this connection, it is again conveyed that as per information received from the SUB REGISTAR AHMEDABAD 13, it is seen that, you have entered into a transaction regarding immovable property on 26.05.2017. For your ready reference, the available details as per said data are given as under:
Transaction Date 26.05.2017 Statement Number 2017/01 Property Address 24, Manikamal Society, V-1-2, Thaltej, Ahmedabad-380 059 Transaction Relation BUYER/TRANSFEREE Description Stamp Value Rs.5,70,43,000/- Transaction Value Rs.3,80,27,000/-
In this connection, it is requested to once again go through your record and after due verification, please kindly provide the Copy of said document
Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 6 registered on 26.05.2017, in respect of above referred transaction (whether Sale/purchase/lease / mortgage/rent/agreement/ any other transaction). 4. Further, with respect to above transaction during the year, kindly provide the following details: i) Description of the property. ii) Copy of said document.
As per mentioned above, as per information received from the SUB REGISTAR AHMEDABAD 13, it is seen that, you have registered documents on 26.05.2017, for transaction value of the property was at Rs.3,80,27, 000/-, whereas, the value as per Stamp authority of said property was Rs.5,70,43, 000 /-. In this connection, please clarify as to why difference in transaction value and value as per Stamp authority, which is workout at of Rs.1,90,16,000/-, should not be treated as your deemed income, for the year under consideration, in view of the provisions of Section 56(2)(x) of the Income Tax Act, 1961.” 6.2. It is, thus, found that the Assessing Officer had made repeated specific query in respect of stamp duty value of the property acquired during the year. Further, a question regarding applicability of provisions of section 56(2)(x) of the Act was also raised by the Assessing Officer in the notice dated 02.09.2020. In view of the specific queries made by the Assessing Officer, the contentions of the Ld.PCIT that no enquiry and verification were made by the Assessing Officer in the course of assessment proceedings in respect of Stamp Duty Value (SAV) of the property is not found to be correct. Therefore, Ld.PCIT’s finding that the assessment order was erroneous and prejudicial to the interests of the revenue for this reason, is also not correct.
It is further found from the e-Proceedings Response acknowledgement-sheet that the assessee had sent a reply to the Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 7 notice issued u/s.142(1) of the Act dated 02.09.2020 vide his letter dated 15.09.2020, wherein the difference in the transaction value and the value as per the stamp duty authority was explained. It was submitted that the Sub-Registrar office had issued a notice for payment of stamp duty by taking the value of the property at Rs.5,70,43,000/-, which was wrong as the said value was applicable to non-agricultural land. Since the land acquired by the assessee was agricultural land, the stamp duty value was correctly valued at Rs.3,80,27,000/-. It was clarified that based on the above submission of the assessee, Deputy Collector of Stamps had released the Sale-Deed, as the assessee paid the stamp duty was correctly and the stamp duty value mentioned in the sale-deed was Rs.3,80,27,000/- only. In view of this fact and the explanation of the assessee, the difference in the stamp duty value was treated as explained and no addition was made in the course of original assessment proceedings by the Assessing Officer.
It is, thus, found that the Assessing Officer has not only conducted enquiries and verifications in the course of assessment proceedings but also examined the non-applicability of provisions of section 56(2)(x) of the Act. Therefore, the finding of the Ld.PCIT that the matter was not examined and verified by the Assessing Officer is baseless. In view of the enquiries as made by the AO in the course of assessment proceedings, we are of the considered opinion that the assessment order dated 05.12.2020 passed u/s.143(3) of the Act was not erroneous and prejudicial to the interests of the Revenue. Therefore, the Revision order dated 05.12.2020 passed by the Manharbhai Natvarlal Patel vs. Pr.CIT-1 Asst.Year 2018-19 8 Ld.PCIT is against the provisions of Law and the same is hereby quashed.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 24-04-2024