Income Tax Appellate Tribunal - Chandigarh
Sh. Vijay Kumar, Shimla vs Assessee on 21 November, 2011
IN THE INCOME TAX APPELL ATE TRIBUNAL
CHANDIG ARH BENCH 'B', CHANDIG ARH
BEFORE SHRI T.R. SOOD, A.M AND Ms. SUSHM A CHOWL A, JM
IT A No. 07/Chd/2012
Assessment Year : 2007-08
Vijay Kumar Vs. A.C.I.T. Circle
Mukerji Ki kothi Shimla
Chakkar
Shimla
ADXPK 8348 M
(Appellant) (Respondent)
Appellant by Shri D.N. Vaidya
Respondent by: Shri Akhilesh Gupta
Date of hearing 19.8.2013
Date of Pronouncement 3.9.2013
O R D E R
PE R T.R.SOOD, A.M This appeal is directed against the order dated 21.11.2011 of the ld. CIT(A), Shimla.
2 In this appeal the assessee has raised following ground:
"The ld. CIT(A) has erred in law a nd facts of the case by confirming the addition of Rs. 12,98,000/- made by A.C.I.T. Circle 1, Shimla."
3. After hearing both the parties we find that during assessment proceedings it was noticed that the assessee sold land at Manali and Nalagarh. The land at Manali was sold to Smt. Archna Mohi w/o Shri D.S. Mohi for a total consideration of Rs. 60 lakhs. However, as per the copy of sale deed market value of the land was f ixed at Rs. 85,96,000/-. The assessee was issued a show cause notice that this 2 value should not be adopted as per Section 50C(1) of the Act. In response by letter dated 27.11.2009 it was submitted as under:
'The assessee had sold land in Manali vide agreement to sell dated 22nd Dec 2005 for total con of Rs. 60 lakhs and the valuation of the said land as per revenue records on the date of sale is to be calculated at Rs. 28,156/- per biswa. Total value of the land for purpose of stamp duty as such was 144 biswas X Rs. 28,156/- which comes to Rs. 40,54,464/-.
As per the agreements to sell the land was to be registered on or before 31.3.2007 and the stamp duty etc. to be borne by the buyer. The stamp papers had to be purchased by the buyer as per valuation prevailing on date of registry. Copy of duty notarized agreement to sell along w ith copy of jama bandi and valuation for stamp purposes on date of agreement to sell is attached."
The Assessing Officer did not accept the submissions because there was no evidence to show that agreement to sell was genuine document because same was only attested from Notary. Accordingly he adopted the sale consideration of this land a t Rs. 85,96,000/-. Since the assessee was 50% share holder in this property, capital gain was as under:
Half share of the assessee out Rs. 42,98,000/-
of total consideration of Rs.
85,96,000/-
Less: Purchae value (1/2) Rs. 17,00,000/- Short term capital gain Rs. 25,98,000/- 4 On appeal similar submissions were reiterated. The ld. CIT(A) did
not find force in the same and dismissed the appeal. 3 5 Before us, the ld. counsel of the assessee reiterated the submissions made before the lower authorities and referred to page 6 & 7 of the paper book which is a copy of the agreement to sell. The Bench posed a query that this agreement to sell does not show any consideration. He replied that it is not necessary to receive the consideration at the time of entering into agreement to sell. He further submitted that in any case the Assessing Officer has not referred the case to the valuation cell.
6 On the other hand, the ld. D R for the revenue strongly supported the orders of Assessing Officer and the ld. CIT(A). 7 After considering the rival submissions we are unable to agree with the submissions of the ld. counsel of the assessee. No person would agree to sell his property in 2005 without receiving single penny till 2007. The land prices keep on increasing in the long run particularly after the year 2005, the property prices increased sharply all over India, therefore, this agreement to sell seems to be an after thought because normally nobody would sell his property after two years without receiving single penny at the time of entering into an agreement to sell. In any case the agreement has no sanctity in the eyes of law because such agreement cannot be enforced by either party in the absence of consideration. Under the Contract Act, 1872 an agreement becomes enforceable in the law and then is called "Contact"
if the following conditions are satisfied:
(i) there should be valid offer and valid acceptance
(ii) there should be some consideration 4
(iii) there should be capacity to enter the contract i.e. contract cannot be entered by a minor or a person who is of not a sound mind.
(iv) contract can not be against law or public policy.
There are some other conditions also but they are not relevant for the present purpose. Thus an agreement without consideration is not a valid agreement in the eyes of law. Thus it is clear that it is an after thought and therefore, we agree with the views of Assessing Officer and the ld. CIT(A) that this agreement cannot be reckoned. As far as the submission that the issue has not been referred to the Valuation Cell is concerned, we find no force in the same because Section 50C clearly provides that the assessee is required to raise objections before the Assessing Officer regarding valuation. No such objection has been raised, therefore, the Assessing Officer has correctly adopted the valuation determined by Stamp Authorities for the purpose of registration of sale deed. In these circumstances, we find nothing wrong with the order of the ld. CIT(A) and confirm the same. 8 In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 3.9.2013 Sd/- Sd/-
(SUSHM A CHOWL A) (T.R. SOOD)
JUDICIAL MEMBER ACCOUNT ANT MEMBER
Dated : 3.9.2013
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR 5