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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per:Anikesh Banerjee, JM: The instant appeal of the assesseewas filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the ‘CIT (A)’],order passed u/s 250of the Income Tax Act 1961, [in brevity ‘the Act’] for A.Y. 2011-12. The impugned order was emanated from the order of the ld. Asstt.
Commissioner of Income Tax, Circle-3, Jalandhar,[in brevity ‘the AO’] order passed u/s 143(3)/147 of the Act.
The assessee has taken the following grounds: - “
1 That the Order of the CIT(A) faceless is against law and facts of the case.
2. That the CIT(A) faceless has erred in sustaining an addition of Rs. 42,29,500/- on insufficient and erroneous grounds.
3. That the CIT(A) faceless while sustaining the aforesaid addition has lost sight of the fact that no payment upto 31/03/2011 was made except Rs. 5,22,900/- (4,22,900/- + 1,00,000/-) which has been accepted by the CIT(A) and for which evidence was available on record and still sustaining addition of Rs. 42,29,500/-is not understood.
4. That the CIT(A) faceless too has erred in not appreciating the fact that the transferer and transferee both were real brothers and provisions of section 56(2)(vii) were not applicable to the facts of the case.
5. That in the case of S. Kuldip Singh (brother) who is transferor, whose case for the same assessment year was reopened u/s 148 for non-showing of Capital Gains in respect of same property and where the explanation of the assessee was duly accepted and proceedings filed and thus there could not be two yard sticks for the same reasons adjudicated by the Deptt. and which facts the Ld. CIT(A) faceless has chosen not to discuss even. 6 Without prejudice to Ground Nos. 1 to 5 above, if we go by the findings of the A.O. then the two other cheques of Rs. 4,70,000/- encashed next year which the A.O. didn’t bother to see the next page of Bank Statement were also required to be reduced from the addition made. 7. Such other grounds as may be urged on hearing.”
3. Brief fact of the case is that the assessee had purchased the property at Jalandhar, amount of Rs.Rs.52,80,000/- on 11.05.2010. The information was received through AIR and accordingly, the notice was issued u/s 133(6) of the Act by the ld. AO. On verification, it is found that the value of property Rs.52,80,000/- and the stamp duty valuation of Rs.4,22,400/- which works out total amount of Rs. 57,02,400/-. The assessment was initiated. During assessment, it is found that the assessee only paid Rs.9,50,000/- to Mr. Kuldeep Singh who is his real brother. For unpaid balance amount for purchasing the property the amount of Rs.47,52,400/- was added back with the total income of the assessee by the ld. AO U/s 56(2)(vii) of the Act. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) only allowed Rs.4,22,900/- as the stamp duty charges and Rs. 1,00,000/- cash payment which works out total amount to Rs. 5,22,900/-. The balance amount of Rs. 42,29,500/- is upheld U/s 56(2)(vii) of the Actand appeal is partly allowed.
The assessee had challenged the application of section 56(2)(vii) in case of transaction between real brother. But the ground of the assesseeis dismissed. Being aggrieved the assessee filed an appeal before us.
The ld. AR vehemently argued and first relied that on section 56(2)(vii)(b) the relevant Act is duly reproduced as below:-
“Income from other sources 56(1)……………………………… (2) In particular, and without prejudice to the generality of the provisions of sub- section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :— [(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, — (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. (c) any property, other than immovable property,— (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub- section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections : Provided further that this clause shall not apply to any sum of money, or any property received— (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer or donor, as the case may be; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under 63[ section 12AA or section 12AB]; 64[or] [(h) by way of transaction not regarded as transfer under clause (vicb) or clause (vid) or clause (vii) of section 47.]” The ld. AR further invited our attention in APB page 1 to 4 the copy of the 5. registered deed in Punjabi Language and the translated deed APB page nos. 5 to 8.As per this deed both assessee and purchaser have same father, Mr. S. Roshan Singh. Accordingly, it is clear that both are in relation viz. real brother. 5.1 The ld. AR further placed that due to the family settlement the rest amount was not paid to the seller. Although the assessee is not liable to pay tax u/s 56(2)(vii). The issue was already placed before both the revenue authorities. So, the ld. AR prayed for entire deletion of the addition.
The ld. DR vehemently argued and fully relied on the orders of revenue authorities. The ld. DR further invited our attention in assessment order paragraphs 4.1 to 4.3 which are reproduced as below: “4.1 In response to the purchase of land at Kadian Pind Jalandhar for Rs. 57,02,400/- the assessee filed his reply and submitted his statement of bank A/c No. 01020200000309 with Bank of Baroda reflecting entry of Rs. 4,80,000/- via Cheque No. 526303 dated 22.06.2011 and Rs. 4,70,000/- via Cheque NO. 526304. 4.2 Perusal of the registration deed reveals that the assessee has shown the sources of investment in property through cheques which were duly mentioned in the registration deed. During the course of assessment proceedings, the assessee has submitted in his reply that only two cheques were encashed and the balance cheques were not encashed because it was a matter between two brothers and question of consideration did not arise particularly keeping in view the issue of family settlement. The contention of the assessee is not acceptable as the assessee has not filed any documentary evidences in support of his claim that the family settlement have been made. But the evidences regarding mode of payment s for investment made in purchase of property has been cleanly mentioned in registration deed. In such a scenario it is not sustainable as to how the assessee
contends that it is “a gift and matter between two brothers”. The assessee has not given any satisfactory explanation sources of investment in the property. 4.3 In view of the above, for the purchase of land at Kadian Pind Jalandhar for Rs.57,02,400/-. Further, out of the above said transaction for purchase of property 9,50,000/- have been made throughcheques, but no satisfactory documentary evidences/ explanation have been furnished for balance payment of Rs. 47,52,400/- amount. Hence, it is held that the assessee has not been able to explain the sources of purchase of property at Kadian Pind Jalandhar and hence, out of the total amount 57,02,400/- amount to the tune of Rs. 47,52,400/- remains unexplained and is added back to the returned income of the assessee for the A.Y. 2011-12 u/s56(2) (vii) (6).”
We heard the rival submission and consider the documents availablein the record. The transaction of property was taken place in between the real brothers which covers by the definition of relative. Section 56 has clearly depicted the restriction of transactions of movable & immovable assets. Read the Provision of Section 56(2)( c) the application of section is restricted to ‘relative’. The brother of individual is covered in‘relative’ under Explanation (ii) of Section U/s 56(2)(vi) of the Act. The lower value of transaction is also covered for transaction in between the brothers. The revenue has not agitated the relationship between the buyer and seller. Rather the question of family settlement is asked for. But narrative of section 56 is directly applicable on assessee in relation to the transaction between real brothers. The ld. DR has not made any strong objection against the submission of the ld. AR. In our considered view, the application of section 56(2)(vii) of the Act is bad and the addition amount to Rs. 42,29,500/- is duly quashed. Accordingly, assessee’s Ground nos- 2,3&4 are allowed. The assessee’s Ground nos-1 & 7 are general in nature. The assessee’s Ground no-5 & 6 are remained for academic purpose only. In the result, the appeal of the assessee bearing 8. allowed.