Income Tax Appellate Tribunal - Chandigarh
Sh. Navjiwan Kumar Goyal, Malerkotla vs Acit, Ludhiana on 11 April, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.867/Chd/2015
(Assessment Year : 2009-10)
Sh.Navjiwan Kumar Goyal, Vs. The A.C.I.T.,
Prop. M/s Rashim Tyres, Circle-IV,
College Road, Malerkotlal. Ludhiana.
PAN: ABKPG4544Q
(Appellant) (Respondent)
Appellant by : Shri S.K. Mukhi
Respondent by : Shri S.K. Mittal, DR
Date of hearing : 19.01.2017
Date of Pronouncement : 11.04.2017
O R D E R
PER ANNAPURNA GUPTA, A.M. :
Thi s appeal has been fi l ed by the assessee agai nst the order of CI T( Appeal s) -2, Ludhi ana dated 2.9.2015 rel ati ng to assessment year 2009-10.
2. Ground No.1 rai sed by the assessee reads as under:
"1. That the Learned Commissioner or income Tax (Appeals)-II, Ludhiana has erred in rejecting the Ground No.3 of Appeal of the appellant regarding the addition of Rs.300000/- made by the Ld. Assessing Officer u/s 68 of the Income Tax Act, 1961 on account of gift of Rs.125000/- received from Sh. Krishan Gopal and gift of Rs.175000/- received from Smt. 2 Anita Garg, by treating these gifts as ingenuine, whereas creditworthiness of donors were proved before the Ld. Assessing Officer as well as Ld. Commissioner of Income Tax (Appeals)-II, Ludhiana. Therefore, addition of Rs. 300000/- made by the Ld. Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals)-II, Ludhiana is Illegal, Unwarranted, uncalled for and needs to be deleted."
3. In the aforesai d ground the assessee has chal l enged the acti on of the Ld. CI T ( Appeal s) i n uphol di ng the addi ti on made by the Assessi ng Offi cer u/s 68 of the I ncome Ta x Act, 1961 ( i n short 't he Act') on accou nt of gi ft of Rs.1,25,000/- recei ved by the assessee from one Shri Kri shan Gopal and Rs.1,75,000/- from Smt.Ani ta Garg.
4. Bri ef facts rel evant to the i ssue are that during assessment proceedi ngs the Assessi ng Offi cer noted that the assessee had re cei ved Rs.1,25,000/- and Rs.1,7 5,000 /- as gi fts from Shri Kri shan Gopal and Smt.Ani ta Garg respecti vel y. On bei ng asked to furni sh the evi dence of thei r source and occasi on for maki ng the gi fts, the assessee contended that S mt.Ani ta Garg w ho was the si ste r-i n-l a w of the assessee had gi ven a draft of Rs.1,75,000/- as gi ft whi ch was made from her savi ng bank account No.00092010014940 wi th OBC, Pati al a. Si mi l arl y, Shri Kri shan Gopal , husband of Smt.Ani ta Garg was stated to have gi ven hi m a draft of Rs.1,25,000/- as gi ft whi ch was made from hi s savi ng bank account No.00092010014930 wi th the same bank. Copi es of 3 the donors pass book were furni shed by the ass essee. On bei ng asked to furni sh source of the gi fts th e assessee furni shed copi es of Bal ance Sheet, computati on of income and copi es of gi ft deed. Not being sati sfi ed wi th the same the Assessi ng Offi cer asked the assessee to produce the donors for e xam i nati on. The as sessee submi tted that the donors coul d not attend offi ce of the Assessi ng Offi cer for e xami nati on due to thei r bad heal th and that the y were under treatment at PGI , Chandi garh. The Assessi ng Offi cer after e xami ni ng the facts gi ven by the assessee hel d that the donors were not i n a posi ti on to earn any i ncome and i n fact, had to bear addi ti onal e xpenses of medi ci ne and treatment and th e y di d not attend the offi ce of the Assessi ng Offi cer for cross e xami nati on of the facts. The Assessi ng Offi cer further stated that the assessee had fai l ed to di scharge i ts onus u/s 68 of the Act and the expl anati on offered was not found to be s ati sfactor y. Th erefore, an addi ti on of Rs.3 lacs was made to the i ncome of the assessee u/s 68 of the Act.
5. I n appel l ate proceedi ngs before the CI T ( Appeals) , the assessee made detai l ed wri tten submi ssi ons reproduced at para 4.2 of the CI T ( Appeal s) 's order. Bri efl y, stated the assessee contended that al l necessar y documents to di scharge i ts onus u/s 68 of the Act had been fil ed by the assessee and i n the absence of any defect found i n the documents the addi ti on made was unwarranted that too merel y because the donors were not produced. The Ld. CI T 4 ( Appeal s) after consi deri ng assessee's submi ssi ons uphel d the order of the Assessi ng Offi cer stati ng that the Assessi ng Offi cer had cl earl y brought out the fact that the donors were not credi t worthy and i n both the cases just before the advancement of the gi fts there were e xi stence of cash deposi ts wi thi n a week ti me, wh i ch the assessee coul d not furni sh detai l s of. Thus, the Ld.CI T( A) hel d that the assessee coul d not successful l y prove the genui neness and credi t worthi ness of the donors. The Ld. CI T ( Appeal s) further hel d that when the Assess i ng Offi cer tri ed to enqui re i ndependentl y from donors, the assessee di d not produce them before hi m for e xami nati on . He, therefore, hel d that the assessee had fai l ed to establ ish the genui neness of the gi ft and, therefore, uphel d the order of the Assessi ng Offi cer i n maki ng addi ti on on account of the same u/s 68 of the Act. The rel evant fi ndi ng of the CI T (Appeal s) at para 4.3 of the order i s as under:
"4.3 I have carefully considered the appellant's submission. I have also gone through the assessment order. It is seen that the appellant has completely failed to bring cogent evidence to prove the, creditworthiness of the person w.r.t whom, it has claimed to receive gifts during the assessment year. On the perusal of the assessment order as well as the submission filed by the appellant, it is gathered that the appellant had received gifts from Sh. Krishan Gopal of Rs 1,25,000/- and Rs.1,75,000 from Smt Anita Garg. The Assessing Officer has brought out the credit worthiness of the person from whom the appellant has claimed to received gifts during the assessment year. The Id. Assessing officer has clearly brought out this fact that in both cases just before the advancement of gifts, there have been incidents of cash deposits within a week's time. In the case of Sh. Krishan Gopal, while he has purchased a draft of Rs. 1,25,000 on 09.05.2008, out of his saving bank account of Oriental Bank of Commerce, Patiala, there has been deposits of cash on various dates from 30 April 2008 to 09 May 2008. Similarly, in the case of Smt Anita Garg, she purchased a draft for Rs. 1,75,000 on 09 May 2008 from of Oriental Bank of Commerce, Patiala, there has been incidents of cash deposits 5 of Rs. 1,79,000 on various dates from 29 April 2008 to 09 May 2008. When, the appellant was asked to furnish the details of evidence of pertaining to these cash deposits by the AO, the appellant could not successfully prove the genuineness and creditworthiness of these donors. When the assessing officer tried to enquire independently from donors and asked the appellant to produce them for examination, then the appellant did not produce both of the donors on the pretext of their getting treatment at the PGI.
The Assessing Officer with his detailed observation has made out w.r.t credit worthiness of these donors have been discussed. By merely filing the confirmation and copies of your bank account, it does not complete the duty of the appellant to prove the genuineness and creditworthiness of gifts advanced to the appellant. The appellant has failed miserably to prove creditworthiness of the donors even after giving so many opportunities by the AO. Accordingly, in my considered opinion, the appellant has failed to establish successfully the three limbs of genuineness of gift that is identity, genuineness and creditworthiness. In view of the facts as discussed above I am of the considered opinion that the AO has rightly added back gifts received by the appellant treating as nongenuine gifts. Accordingly this ground of appeal is dismissed."
6. Before us the Ld. counsel for the assessee rei terated the su bmi ssi ons made before the l o wer authori ti es and stated that i t had proved the genui neness of t he gi fts by vi rtue of the fol l o wi ng documents al so pl aced i n the Paper Book fi l ed before us:
i) Copi es of Balance Sheet, gift deeds, bank statements of the donors:
a) Smt.Anita Garg P a p e r Bo o k p ag e s 1 t o 2 0
b) S h r i K r i sh a n G o p al P a p e r Bo o k p ag e s 2 1 t o 2 9
7. The L d. counse l for the asses see stated that
havi ng di scharged i ts onus, the addi ti on coul d not have been made merel y because the donors had not been produce d for cross e xami nati on. The Ld. counsel for the assessee rel i ed 6 upon the fol l o w i ng case l a ws in support of hi s above contenti on:
i) Ja wahar Lal Vs. I TO ( 2014) I TR ( tri b.) 71( CHD) ii) CI T & Ors. Vs. Ja wahar Lal Os wal & Ors. I TA No.49 of 1999 ( P&H)
8. The L d. DR, on the other hand , rel i ed upon th e orders of the CI T ( Appeal s) and the Assessi ng Offi cer.
9. We have heard the contenti ons of both the parties, gone through t he orders of t he authori ti es bel o w and perused the documents pl aced before us.
10. The i ssue in the present ca se pertai ns to di sal l o wance made u/s 68 of the Act on account of gi fts recei ved from t w o persons Smt.A ni ta Garg of Rs. 1,75,000/-
and Shri Kri sha n Gopal of Rs.1, 25,000/-. The a ddi ti on, we fi nd, has been made for the reason that the credi tworthi ness of the donors w as not proved. The Ld. couns el for the assessee has contended that the bank statements of the donors had refl e cted the amount of gi ft made by vi rtue of bank drafts made from the aforesai d bank account thus provi ng the credit worthi ness of the donors. The Ld. DR, on the other hand, rel i ed upon the fi ndi ngs of the Assessi ng Offi cer and the CI T ( Appeal s) i n thi s regard that immedi ate cash deposi t before maki ng the gi ft, and evi dence of source of the cash deposi t coul d not be successful l y establ i shed by the assessee cl e arl y resul ted i n the genui neness of the gi ft not bei ng establ i shed.
7
11. We fi nd meri t in the contenti ons of the Ld. DR. The Ass essi ng O ffi cer, we fi nd, h as gi ven a cl ear fi ndi ng of fact that the don ors had no capa ci t y to make the i mpugned gi fts. At para 2 .1 of the order o f the Assessi ng Offi cer the same has been outl i ned as fol l o ws:
"2. 1 In re pl y, pho to co p ies of bank p ass books of Sh. Krish an Go p al and S mt. An i ta G arg h ave bee n f urnished. As per these, Sh. Kr ish an Go p al h as purch ased a dr af t of Rs. 1, 25, 000/- on 09. 05. 2008 ou t of h is s av in g b ank A/c No. 00092010014930 wi th Or ien tal Bank of Co mmerc e, P ati al a. T his dr af t is s tated to be g iven to the assessee as g if t.
Bef ore mak ing th is dr af t, to tal amo un t of Rs. 1, 36, 000/- was de pos i ted in c ash on v ar iou s d ates f ro m 30. 0 4. 2008 to 09. 05 . 2008. S i mil arl y ou t of her sav in g b ank A/c NO. 00092010014940 wi th the s ame b ank, S mt. An i ta G arg purch ased a dr af t of Rs. 1, 75,000/- on 09. 05. 2008. T his was g iven to the asse ssee as g if t. T his tr ans ac tion wa s al so precede d b y c ash de pos i ts of Rs. 1, 79, 000/- o n v ar ious d ates f rom 29. 04. 2008 to 09. 05. 2008. T he assessee was asked to f urnish the ev idence o f sources of the se c ash de pos i t. In res ponse conf ir mation f ro m don or, co p ies of the ir co mpu tation of in co me f or the A. Y. 2008-09, co p ies of bal ance shee t and c ap i tal a/c f or the A. Y. 2008- 09 and co p ies of g if t deeds we re f urnished. As per these S mt. An i ta G arg h ad to tal c ap i tal of Rs. 6, 74, 872/- wh ich incl uded c ash of Rs. 43, 304/- and l o ans and ad v ances of Rs. 2, 96, 500/-. Her to tal inco me f or the ye ar is Rs. 1, 37, 866/-. T he to tal c ap i tal of Sh. Krish an Go p al as o n 31. 03. 2008 wa s Rs. 3, 81, 117/- wh ich incl uded c ash of Rs. 67, 300/- and l o ans and adv ances of Rs.1, 98, 500/-. H is to tal inco me f or the ye ar is Rs. 1, 0 8, 238/-. It was 8 s tated dur ing d is cuss ion th at the source of amoun ts de pos ited in the b ank b y these persons is the above c ash in h and and re al iz ation of adv ances. As these we re no t suf f icien t to es tabl ish the sources of cash de pos it, the asse ssee we re asked, v ide order shee t en tr y d ated 29. 11. 2011, to produce the dono rs f or examin atio n on o ath. Dur ing proceed ings on 09. 12. 2011 it was s tated b y th e assessee th at the donors c ann o t co me as the i r me d ic al cond i tio n does no t war r an t tr avel l ing an d exer tion. T hey are undergo ing tr e atme n t at PG I, Ch and ig arh. "
12. I t i s evi dent from the above tha t Smt.Ani ta Gar g who had gi ven a gi ft of Rs.1,75,0 00/- had a total capi tal of Rs.6,74,872/- whi ch i ncl uded cash of Rs.43,304/- and l oans and advances of Rs.2,96,500/-. Her total i ncome for the year was Rs.1,37,866/- as refl ected i n her Bal ance Sheet. Si mi l arl y, Shri Kri shan Gopal the other donor had a total capi tal of Rs.3,81,117/- whi ch i ncl uded cash of R s.67,300/- and l oans and advances of Rs.1,98,500 and hi s total i ncome was Rs.1,08,238/- for the i mpugned year. Duri ng di scussi on the assessee had stated that the source of cash deposi ted i n the bank by these persons for the purpose of maki ng gi fts was thei r cash i n hand and real i zati on of advances but cl e arl y the same ar e not suffi ci ent e nough and it i s not probabl e thei r enti re advances and cash were deposi ted for m aki ng gi ft to a person who was of much hi gher means than the donors and that too for no rhyme reason or for any occasi on. Cl earl y, the refore, the credi t worthi ness of the donors h as not been esta bl ished i n 9 the present case. As poi nted out by the Assessi ng Offi cer i n para 2.2 of hi s order that i f the se persons had gi fted the amounts as men ti oned, i t woul d mean that the y had gi fted thei r enti re l i qui d resources to the assessee and keepi ng i n vi e w the fact that these donors were medi cal l y unfit, undergoi ng treatment at PGI i n whi ch the y had to i ncur e xpenses al so and were unabl e to earn any i ncome i n such condi ti on, i t seemed hi ghl y i mprobabl e that the y woul d gi ft thei r enti re l i qui d resources to the assessee. As ri ghtl y poi nted out by t he Assessi ng Offi cer , there was n o occasi on for maki ng these gi fts al so. Further when the assessee was asked to produce donors for cross e xami nati on, the assessee di d not do so stati ng that the y were undergoi ng treatment at PGI and thei r medi cal condi ti on di d not warrant travel l i ng and e xerti on I n these ci rcumstances, we hol d that the CI T ( Appeal s) has ri ghtl y uphel d the order of the Assessi ng Offi cer hol di ng t hat the genui nen ess and credi t wo rthi ness of the donors had not been establ i shed.
13. The rel i ance pl a ced by the asse ssee on vari ous judi ci al deci si ons are di sti ngui sh abl e on facts. I n the case of Ja wahar Lal ( s upra) rel i ed upo n by the Ld.Cou nsel for the assessee, the fac ts were that the assessee had e xp lai ned the source of the persons who had gi ven l oans as bei ng from profi t from tra di ng and comm odi t y busi ness whi ch was doubted upon by the Ass essi ng Offi cer. In such ci rcumstances i t was hel d by the I TAT that addi ti on shoul d have been made i n the hands of the donor and not the 10 assessee si nce vi s a vi s the l oan transacti on the donors had confi rmed the sa me and fi l ed al l rel evant documents. I n the present case th e facts are di ff erent as i n the Assessi ng Offi cer has ca tegori cal l y poi nted out the a bsence of credi t worthi ness of the donors and i t i s not mere suspi ci on of the Assessi ng Offi cer. I n the case of Ja waha r Lal os wal ( supra) , rel i ed upon by the Ld.C ounsel for the as sessee, the Hon'bl e Hi gh Court del eted the addi ti on made on account of gi fts recei ved by hol di ng that onc e onus i s di schar ged by the assessee of provi ng the genui nen ess of the trans acti on, the onus shi fts to t he Assessi ng Of fi cer who shoul d come up wi th credi bl e evi dence to di sbel i eve the e xpl anati on of the assessee, confront the same to the assessee and i n case the assessee fai l s to proffer credi bl e e xpl anati on onl y then addi ti on can be made i n the hands of the assessee. I n the present case w e fi nd that the documents prod uced by the assessee to prove the credi t worthi ness of the donors i tsel f sho wed that the y di d not have capaci t y to mak e the gi fts, thei r respecti ve capi tal and i ncome earned duri ng the year, as refl ected in thei r bal ance sheet sho wi ng i nsuffici ent funds. Even the e xpl anati on of the assessee that the y had l i qui dated thei r enti re advances gi ven to others to make the i mpugned gi fts does not appear to be credi bl e consideri ng that no prudent person woul d l i q ui date hi s enti re assets to gi ft i t to somebody when there was no occasi on to do so ei ther and al so consi deri ng the fact that the donors were i ll and requi red tre atment i n hospi t al s and on medi c ation. Thus even as per the deci si on rel i ed upon by the Ld.C ounsel i n 11 the case of Jawahar Lal Os wal , the addi ti on made is warranted si nce after the assessee di scharged i ts onus of provi ng the genui neness of the transacti on by fi l ing rel evant documents, the Assessi ng Offi cer poi nted out from the very same documents that the credi t worthi ness of the donors was not establ i shed, whi ch we fi nd the assessee has not been abl e to di spl ace si nce no credi bl e e xpl anati on was offered nor were the donors produced for cross e xami nati on when asked by the Assessi ng Offi cer to do so.
14. I n vi e w of the above, the addi ti on made of the gi fts u/s 68 of the A ct amounti ng to Rs.3,00,000/- i s therefore uphel d. Ground No.1 rai sed by the assessee i s, therefore, di smi ssed.
15. Ground No.2 rai sed by the assessee reads as under:
"2. That the Ld. Commissioner of Income Tax (Appeals)-II, Ludhiana has erred in rejecting the Ground No.4 of Appeal of the appellant regarding the addition of Rs. 28840/- on Long term Capital Gain by applying the section 50C of the Income Tax Act, 1961 without applying her mind and without considering the reply filed by the appellant, whereas section 50C is not applicable in this case. Therefore, addition of Rs. 28840/- made by the Ld, Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals)-II, Ludhiana is Illegal, Unwarranted, Uncalled for and needs to be deleted."12
16. The sai d ground i s agai nst the acti on of the CI T ( Appeal s) in uphol di ng the addi ti on of Rs.28,840/- on account of l ong term capi tal gai n by appl yi ng section 50C of the Act.
17. The facts rel ev a nt to the case ar e that duri ng th e i mpugned assess ment year the a ssessee had sol d a plot at Rai l wa y Road M al erkotl a for Rs. 7,20,000/- and had sho wn l ong term capi tal gai n of Rs.5,71,349/-. On bei ng asked to e xpl ai n as to why the di fference bet ween the stamp dut y val ue and sal e c onsi derati on not be brought to t a x as per secti on 50C of the Act, the assessee submi tted that the l ong term capi tal gai n had been refl ect ed i n the i mpugn ed year on the basi s of agreement for sal e entered i nto duri ng the i mpugned year i n pursuance of whi ch the enti re amount had been recei ved by the assessee and possessi on hand ed over to the buyer of the sai d l and. The assessee further contended that duri ng the f i nanci al year 20 08-09 the stamp dut y rates were much l o wer than at the ti me of actual regi strati on and consi deri ng the same no addi ti on u/s 50C of th e Act was warranted. The Assessi ng Offi cer accepted the contenti on of the assessee that the stamp duty rates from the i mpugned assessment year were to be taken i nto consi derati on but further noted that even on perusi ng of the stamp dut y rate of the i mpugned year wi th the sal e consi derati on r ecei ved by the assessee an addi ti on of Rs.26,840/- was warranted. The reasoni ng of the Assessi ng Offi cer was that the consi derati on recei ved by the as sessee i ncl uded the amount 13 recei ved for boundar y wal l and some constructi on on the l and. As per the records of the assessee the Assessi ng Offi cer found that the val ue of the boundary wal l and constructi on was Rs.46,400. Ex cl udi ng the sam e from the sal e consi derati on recei ved by the assessee the Assessi ng Offi cer cal cul ated the sal e consi derati on recei ved for the l and at Rs.6,73,600 ( Rs.7,20,000 - Rs.46,400) . Thereafter the Assessi ng Offi cer appl i ed the rate approved by the revenue authori ti es i n the i mpugned year at Rs.2600 per sq. yd. and arri ved at the val ue of the l and co mpri si ng of 269.4 sq. yd. at Rs.7,00,440/-. Thus the Assess i ng Offi cer concl uded that t he amount sho w n as per sal e con si derati on by the assessee for the i mpugned l and at Rs.6,73,600/- fel l short of the Re venue approved val ue at Rs.7,00 ,440/- by Rs.26,840/- and made addi ti on of the same u/s 50C of the Act. The Ld. CI T ( Appeal s) uphel d the addi ti on made.
18. Before us the Ld. counsel for the assessee contended that secti on 50C was not appl i cabl e in the sai d case at al l si nce for the purpose of secti on 50C the stamp dut y val ue assessed for the purpose of pa yment of stamp dut y i s deemed t o be the ful l val ue of consi derati on recei ved or accrui ng as a resul t of such t ransacti on. I n the present case si nce the capi tal gai n has been computed on the basi s of agreement to sel l no stamp d ut y val ue was a ssessed for the i mpugned l and. Ld Counsel for the assessee rel ied upon the deci si on of Navneet Kumar Thakkar vs. Income Tax Offi cer( I TA No.679/ JU/2006) i n thi s regard. 14
19. The L d. DR on the other hand,, rel i ed upon the order of the CI T ( Appeal s) .
20. We have consi dered the ri val submi ssi ons. It is not di sputed th at the assessee had decl ared l ong term capi tal gai n of R s.5,71,349/- i n the return of i nc ome. It is al so not di sputed that the capi tal gai n i n the sai d case had been computed on the basi s of transfer of pl ot by vi rtue of an agreement to sel l entered on 1 5.4.2008. The a ddi ti on i n the i mpugned c ase we fi nd ha s been made b y appl yi ng provi si ons of secti on 50C of the Act. The assess ment year under appeal i s 2009-10 and the rel evant provi si ons of secti on 50C appl i cabl e to the sai d assessment year are reproduced as under:
50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
(2) Without prejudice to the provisions of sub-section (1), where--
(a ) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;
(b ) the value so adopted or assessed by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 15 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.
3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.
21. As per the sai d secti on the consi derati on recei ved or accrui ng as a resul t of transfer of a capi tal asset bei ng l and or bui l di ng i s substi tuted by the val ue of "adopted or assessed" by the stamp val uati on authori t y for th e purpose of pa yment of stamp dut y i n respect of such transfer i f the sai d val ue e xc eeds the sal e consi derati on re cei ved or accrui ng. I n the present case si nce the transfer took pl ace under an agreement to sel l whi ch i s not regi stered, there was no questi on of i ts val ue bei ng assessed by the stamp val uati on authori t y and, therefore, the provi si ons of secti on 50C of the Act i n the present ca se, we hol d, doe s not come i nto pl a y at al l . The I . T.A. T. Jod hpur Bench i n t he case of Navneet Kumar Thakkar Vs. I TO ( 2008) 110 I TD 525 has hel d that secti on 50C does not ap pl y to the cases where the transfer of propert y i s not subject matter of the regi strati on and questi on of val uati on for s tamp dut y purp oses is not ari si ng. The Ho n'bl e Madras Hi g h Court i n the c ase of CI T Vs. R. Sugantha Revi ndran ( 2013) 352 I TR 488 has al so hel d that the scope of secti on 50C as prevai l i ng pr i or to the amendment made w.e.f. 1.10.2009 di d not i ncl ude the transacti ons whi ch were not regi stered wi th the stamp 16 val uati on authori t y and e xecuted through agreement to sell or po wer of attorne y. The Hon'bl e Hi gh Court hel d has under:
6. The issue involved in this case is as to whether the assessing officer is entitled to take the value of the property assessable by the authority of the State Government for the purpose of payment of stamp duty in respect of said transfer or not.
Admittedly, in this case, no registration of sale deed had taken place. lt is the case of the Revenue that only in pursuance of the agreement of sale, the assessee had transferred the property and received the sale consideration. In such circumstances, whether Section 50C of the Act would be made applicable even in respect of cases where the registration had not taken place, is the only issue to be decided in this case.
7. Learned counsel for the assessee placed a circular in Circular No.5/2010/(F.No.142/13/2010- SO(TPL)) dated 03.06.2010 issued by the Board and submitted that as per the circular, it is made clear that the amendment made by the Finance (No.2) Act,2009 is only prospective in nature and cannot be applied retrospectively.
8. We have perused the above circular. It is stated therein that the scope of the provisions does not include transaction which are not registered with stamp duty valuation authority and executed through agreement to sell or power of attorney. Consequently, it is made clear therein that the amendments have been made applicable with effect from 01.10.2009 and therefore, they will apply only in relation to transaction undertaken on or after such date. The relevant portion of the circular is extracted hereunder:
"23.4. Applicability:- These amendments have been made applicable with effect from 1st October, 2009 and will accordingly, apply in relation to transactions undertaken on or after such date."17
9. Learned counsel for the Revenue is not disputing about the existence of such circular issued by the Board. If the Board has issued a circular clarifying the applicability of Section 50C in pursuance of the amendment made by Amendment Act 2 of 2009, we fail to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. Certainly, the Revenue is bound by the circular issued by the Board. At this juncture, it is pertinent to note that in a decision made in the case of State of Tamil Nadu and another Vs. India Cements Ltd. and another reported in (2011) 40 VST 225 (SC), the Honourable Supreme Court has held that the circulars issued by the Revenue are binding on the Department and therefore, they cannot repudiate that they are inconsistent with the statutory provisions. Relevant paragraphs 21 and 22 are extracted hereunder:
"21. It is manifest from the highlighted portion of the circular that as per the clarification issued by the Commissioner of Commercial Taxes, in exercise of the power conferred on him under Section 28A of the TNGST Act, the benefit of the sales tax deferral scheme would be available to a dealer from the date of reaching of BPV or BSV, whichever is earlier, as is pleaded on behalf of the first respondent. It is trite law that circulars issued by the Revenue are binding on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law.
22. In Paper Products Ltd. Vs. Commissioner of Central Excise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), while interpreting Section 37B of the Central Excise Act, 1944, which is in pari materia with Section 28A of the TNGST Act, this Court had held that the circulars issued by the Central Board of Excise and Customs are binding on the Department and the Department is precluded from challenging the correctness of the said circulars, 18 even on the ground of the same being inconsistent with the statutory provision. It was further held that the Department is precluded from the right to file an appeal against the correctness of the binding nature of the circulars and the Department's action has to be consistent with the circular which is in force at the relevant point of time."
10. Even otherwise, we are of the firm view that the insertion of words "or assessable" by amending Section 50C with effect from 1.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions namely the transfers of properties without or before registration. Before introducing the said amendment, only the transfers of properties where the value adopted or assessed by the stamp valuation authority were subjected to Section 50C application. However after introduction of the words "or assessable" after the words "adopted or assessed", such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of Section 50C. Thus such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence the assessee's transfer admittedly made earlier to such amendment cannot be brought under Section 50C.
Applying the above said decision of the
Honourable Apex Court to the facts and circumstances of
the case as well as by considering the scope of Section 50C, we hold that the Revenue is not entitled to canvass the correctness of the order passed by the Tribunal, more particularly in the light of the circular issued by the Board. Accordingly, the Tax Case Appeal is dismissed and the substantial question of law is answered against the Revenue. No costs."
22. Consi deri ng the f acts of the case i n the l i ght of the provi si ons contai ned u/s 50C of the Act, i t i s cl ear that i n 19 the case of the assessee transfer had taken pl ace by vi rtue of agreement to sel l onl y. Theref ore, i n the sai d case si nce no val ue has b een assessed by the stamp d ut y val ue, therefore, provi si ons of secti on 50C of the Act woul d not appl y i n the case of the assessee. The word 'assessabl e' i nserted u/s 50C of the Act w.e.f. 1.10.2009 woul d not appl y to the assessment year under appeal i .e. assessment year 2009-10. Consi deri ng the above di scussi on and i n the l i ght of rel evant provi si ons and case l a ws referred to above, we are of the vi e w t hat secti on 50C of the Act i s not appl i cabl e i n the present case and the addi ti on made by the Assessi ng Offi cer by appl yi ng such provi si ons amounti ng to Rs.28,840/- i s, therefore, del eted. Ground of a ppeal No.2 rai sed by the assessee i s, therefore, al l o wed.
23. I n the resul t, the appeal of the assessee i s partl y al l o wed.
Order pronounced in the open court.
Sd/- Sd/-
(BHAVNESH SAINI) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 11 t h April, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh