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Income Tax Appellate Tribunal, CIRCUIT ‘SMC’ BENCH, VARANASI
Before: SHRI.VIJAY PAL RAO
SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 23.10.2018 of CIT(A) for the assessment year 2011-12. The assessee has raised the following grounds:- “1. That the order of the Ld. CIT(A), Gorakhpur is against the law and fact. 2. That the value of the land should not be treated as income of the organization. 3. That the order passed by the Ld. AO is erroneous and addition of Rs. 6,70,245/- on account of purchase of land is needed to be deleted.
During the assessment proceedings, the AO noted that the assessee trust had purchased a land for a consideration of Rs. 6,59,020/- which were not disclosed in the balance sheet of the assessee trust. Accordingly, the AO made an addition of the said amount under section 69 of the Income Tax Act as an unexplained investment for purchase of land. The assessee challenged the action of the AO before the CIT(A) and contended that there was no exchange of purchase consideration as the land in question was transferred by the trustee/manager of the assessee trust without any consideration. However, the
ITA No.79/VNS/2019 Sh. Harishankar Singh & Smt. Saroj Devi Charitable Trust
consideration mentioned in the sale deed was only for Stamp Duty purpose. Thus the assessee contended that when there was no exchange of consideration in respect of the transfer of the present land which was transferred in favour of the trust by the trustee/manager himself then the question of showing the consideration in the books does not arise. The CIT(A) did not accept the contention of the assessee and upheld the addition made by the AO by considering the sale deed whereby the land in question was transferred by the trustee/manager in favour of the trust. 3. Before the Tribunal, the learned AR of the assessee has submitted that there was no sale consideration paid by the assessee trust or received by the seller as this land was transferred by the trust in favour of the trust without any consideration. He has filed a copy of the sale deed dated 6.7.2010 and submitted that the sale consideration shown in the sale deed is the same as the property was valued for Stamp Duty purpose at Rs. 6,18,000/-. The learned AR has also filed an affidavit of the trustee/manager Sh. Harishankar Singh who has transferred the land in question as well as affidavit of the President of the assessee trust wherein both the parties have confirmed the transfer of the land in question without sale consideration. Thus he has pleaded that the addition made by the AO and sustained by the CIT(A) may be deleted. 4. On the other hand, the learned DR has submitted that the sale deed is a material evidence to show that there was a sale consideration for transfer of this land to the tune of Rs. 6,18,000/- and the assessee also incurred expenditure on Stamp Duty as well as registration fees of Rs. 31,000/- and Rs. 10,020/- total amounting to Rs. 41,020/-. Therefore, the AO has rightly taken the cost of purchase of the land in question at Rs. 6,59,020/-. He has relied upon the orders of the authorities below.
ITA No.79/VNS/2019 Sh. Harishankar Singh & Smt. Saroj Devi Charitable Trust
I have considered the rival submissions as well as relevant material on record. There is no dispute so far as the execution of the sale deed dated 6.7.2010 by Sh. Harishankar Singh who was also trustee/manager of the assessee trust in favour of the trust whereby the land in question was transferred in favour of the trust. 6. In the sale deed, the sale consideration for transfer of the property in question is shown at Rs. 6,18,000/- which is also the Stamp Duty valuation determined by the Stamp Duty authority. The assessee contended before the authorities below that there was no financial transaction in transfer of the land in question and it was only in the nature of donation by Sh. Harishankar Singh to the assessee trust. Neither the AO nor the CIT(A) has conducted any enquiry to verify this fact of exchange of sale consideration between the assessee trust and the seller but both have made the addition on the basis of the sale deed wherein the sale consideration was stated at Rs. 6,18,000/-. It is pertinent to note that when the assessee trust has claimed that this land was transferred by the manager of the trust as a donation without any consideration then this fact was required to be verified by conducting a proper enquiry. The possibility of no sale consideration involved in the transaction cannot be ruled out because it was a transaction between the manager of the trust and the charitable trust itself. Further, the assessee has now filed the affidavit of Sh. Harishankar Singh, the vendor who has transferred the land in favour of the trust as well as one Sh. Pratap Narayan Singh, the President of the trust in support of their claim that no consideration was paid or received in respect of the transfer of the land in question. These affidavits filed by the assessee at this stage are required to be responded by the AO and further the AO can also bring any fact on record to counter these affidavits filed by the assessee by conducting a proper verification and enquiry. Accordingly, in the facts and circumstances of the case, the matter is set aside to the record of the AO for conducting a proper enquiry and also to 3
ITA No.79/VNS/2019 Sh. Harishankar Singh & Smt. Saroj Devi Charitable Trust
consider the affidavits filed by the assessee before deciding the matter afresh. The AO is at liberty to examine the parties involved in the transaction of transfer of land. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27.05.2022.
Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 27/05/2022 Varanasi Sh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A),Varanasi 4. CIT 5. DR By order Sr. P.S.
ITA No.79/VNS/2019 Sh. Harishankar Singh & Smt. Saroj Devi Charitable Trust