Income Tax Appellate Tribunal - Kolkata
G.C.S. Global (Pvt) Ltd., Siliguri vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL : "A" BENCH: KOLKATA
(Before Hon.Shri D.K.Tyagi, JM & Hon. Shri B.K. Haldar,AM)
ITA No. 2097/KoI/09 A.Y 2006-07
Deputy Commissioner of Income Tax -Vs- M/s. G.C.S Global Pvt. Ltd
Circle-1, Siliguri PAN: AAACG-7963P
(Appellant) (Respondent)
Appellant by: Smt. Jyoti Kumari
Respondent by: Shri R.K.Agarwal
ORDER
Per B.K.Haldar, A.M :-
This is an appeal filed by the revenue against the order of the Ld. CIT(A), Siliguri dated 04/09/2009 passed u/s.250 of the I.T.Act'61 for the assessment year 2006-07.
2. The revenue has taken following grounds of appeal:-
1. Whether on the facts and in the circumstances of the 'e the Ld C.I.T(A) was justified in deleting Rs.8,68,000/- on account of undisclosed investment u/s. 69B of the I. T Act, 1 as in this case the assessee is found to have purchased plots of land, the value of which has been shown as Rs.2,OO,OOO/- & Rs.1,00,000/- in the purchase deeds. The AO detected that the Addl. District Sub-
registrar determined the value of the said plots at Rs.6,68,000/- and Rs.5,00,000/- respectively.
2. Whether on the facts and in the circumstances of the case the Ld C.I.T(A) has erred in deleting the said addition made u/s.69B of the I.T.Act,1961. The AO has clearly stated in the order that the provision of section soc is not applicable in the case and the assessee has not disputed the Valuation made by the Registrar. The Hon 'ble High court of Rajasthan has upheld a similar addition made by the AO in the case of Smt. Amar Kumari Surana Vs. CIT, 226 ITR 344.
3. That the appellant may be allowed to add, amend or alter the grounds of appeal, if any.
ITA No.2097/Kol/09 13. The Assessing Officer during the assessment proceedings noticed that the assessee company purchased two plots of land as under :-
Sl.No. Name of Regn Dt. Of Deed Value Area of L.R
Vendor Sl.No. Sale Value Determined land Khatian
(Rs.) For Stamp Sold No./J.L
Duty No.
Purpose
(Rs.)
1. Gostha I-1650 23.8.05 200000 6,68,000 14 Kh.No.
Bihari Katha 143 &
Das & 13 ch 144
Nitya 23 sft J.L No.2
Gopal Das
2. Gostha I-1644 23.8.05 100000 5,00,000 5 Kh No.
Bihari Katha 143 &
Das & 144
Nitya J.L No.2
Gopal Das
3.1 As the fair market value determined by the Stamp Valuation Authority
[S.V.A I was more than the apparent consideration mentioned in the respective sale deeds, the Assessing Officer issued a show-cause notice to the assessee as to why the excess amount i.e. the difference between the fair market value determined by the S.V.A and the apparent consideration shown in the deed, should not be taken as undisclosed investment of the assessee u/s.69B of the 3.2 The assessee explained that the provision of section 50C of the Act is only applicable to the seller of the property and not to the purchaser of the property. 3.3 The above contention of the assessee was not accepted by the Assessing Officer on the following grounds:
a. When in the hand of the seller the fair market value [F.M.V] of the property is determined by the S. V.A, it follows that the purchaser has made the excess payment to the seller. Thus, provision of section 69B applies.ITA No.2097/Kol/09 2
b. When the F.M. V of the properties were determined by the S. V.A, the assessee did not dispute the stamp valuation of the properties. Thus, it can be inferred that the assessee has paid higher amounts than those shown in the sale deeds.
c. In the case of M/s. Cradle Computer (P) Ltd, Sevoke Road, Siliguri, there was a survey operation u/s.133A on 23-7-07. During the course of survey, it was noticed that the above company also purchased 7.5 kathas of land at Dabgram, Baikunthapur, P.S Bhaktinagar, Dist:JalpaigUri at a cost of Rs.43,87,500/- i.e @ Rs.5,85,000/- per katha, although the apparent consideration shown in the deed was Rs.3,00,000/-.
The Director of the company admitted the said investment and offered to pay taxes. This would show that the value determined by the S. V.A is more authentic and reasonable than that shown in the sale deed. d. As the assessee has not disputed the fair market value [F.M. V] either before the' Stamp Valuation Authority or before the Assessing Officer , the ratio laid down by the Hoon 'ble Rajasthan High Court in the case of Smt. Amar Kumari Surana Vs. CIT, 226 ITR 344 is applicable in the facts of the case.
e. In the case of Smt. Amar Kumari Surana (supra) the Hon 'ble Rajasthan High Court held as under: "Even in spite of specific query, the assessee failed to point out any mistake / lacuna in ascertaining the value of the plot of land by the valuer. In these circumstances, the only reasonable inference that can be drawn is that the assessee has shown less amount in the account books and sale deed than the actual consideration paid. Considering the comparable cases and the facts of the case, we find no ground to interfere in the addition made u/s. 69B of the Act 1961."
3.4 Thus, the Assessing Officer added an amount of Rs.8,68,000/- u/s.69B of the I.T.Act'61.
4. Aggrieved the assessee filed appeal before the learned Commissioner of Income- tax (Appeals).
ITA No.2097/Kol/09 35. The submissions of the Learned Authorized Representative for the assessee before the Learned Commissioner of Income-tax(Appeals) has been summarised by the learned Commissioner of Income-tax(Appeals) as under:-
"The Ld AR submitted that the Ld AO has added a sum of Rs.8,68,000/- as unexplained investment u/s.69B. The assessee company have purchase two plots of land for Rs. 3,00,000/- on 23.08.2005 and the District Sub- registrar has assessed the value of the said property for Stamp duty purpose u/s.50C at Rs.11,68,000/-. The valuation made by the Registrar has nothing to do with the value of purchase paid by the assessee. There was no element of undisclosed investment. Memo of receipt attached with Deed of Registration clearly states which the vendor acknowledges that Rs.3,00,000/- has been paid for the value of the land. Neither the purchaser nor the vendor has acknowledged that they have paid or received more than the value of Rs. 3 lakh. Hence, the addition made u/s.69B is purely imaginary based on suspicion and should be deleted."
5.1 Considering the facts and circumstances of the case, the Learned Commissioner of Income-tax(Appeals) held that Rs.8,68,000/- could not be assessed in the hands of the assessee u/s.69B of the Act for the following reasons :-
a. The legal fiction created by section 50C of the Act cannot be extended to the purchaser for estimating the undisclosed investment in his/her hand. Reliance was placed on the case of Commissioner of Income-tax Vs. Mother India Refrigeration Industries P Ltd (1985) 48 CTR (SC) 176 and Commissioner of Income-tax vs. AmarchandN. Shroff (1963) 481TR 59(SC).
b. Reference made by the Assessing Officer to the case of Credle Computer P.Ltd has no relevance in the case of the assessee. The Assessing Officer could have made further investigation on the basis of the above evidence, which he failed to do. Thus, the Assessing Officer made the addition merely on suspicion and surmises.
c. The provisions of section 50C are applicable only in the case of seller and not to purchaser as held in ITO vs. Optec Disc Mfg. (2008) 11 DTR (Chd) (Trib) 264; ITO vs. Satya Narayan Agarwal (2007) 112 TTJ (Jd) 717.
ITA No.2097/Kol/09 4d. The decision in the case of Smt. Amar Kumari Surana (supra) is not applicable in the facts of the present case. The valuation report of the Departmental Valuation Officer ID VOl relied on by the Assessing Officer in that case was confronted to the assessee. Cost of adjacent property was much higher and the assessee failed to explain the difference between the two.
6. Aggrieved the revenue has filed appeal before the Tribunal.
7. Before us it was pointed out by the learned Departmental Representative that there is some defect in the appeal memo. However, as the learned Authorised Representative for the assessee did not have objection to proceed with the appeal, we proceeded to hear the case.
7.1 The learned DR relied on the order of the Assessing Officer. It was submitted by her that the Assessing Officer did not rely on provision of section 50C of the Act for making the impugned addition. It was prayed that the departmental appeal b-e allowed.
8. The Learned Authorized Representative for the assessee, on the other hand, relied on the order of the learned Commissioner of Income Tax(A). It was submitted by him that if on the basis of section 50C such addition could be made, there was no need to make the amendment w.e.f. 1-10-2009, wherein section 56(1)(vii)(b) was inserted. It was also submitted by him that there was no material before the Assessing Officer to make the impugned addition. Reliance was placed on the order dtd. 23-12-2009of the Hon'ble ITAT Kolkata Bench in the case of DCIT, Cir-2, Siliguri vs. Dr.R.K.Agarwal, Siliguri in IT(SS) A No.30/Kol/2009 for the A.Y 2006-07.
9. We have heard the parties and perused the record. We have also gone through the case laws cited by both the parties. Before deciding the issue at hand we would like to reproduce the relevant provisions of the Income-tax ct, 1961:-
69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, ,the ITA No.2097/Kol/09 5 excess amount maybe deemed to be the income of the assessee for such financial year. [with effect from 01.04.1965].
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 23A, sub-
section(5) of -section 24, section 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.
Explanation.--For the purposes of this section, "Valuation Officer"
shall have the same meaning as in clause (r) of section 2 of the Wealth- tax Act, 1957 (27 of1957).
(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. [with effect from 01.04.2003] Section 56(2) In particular, and without prejudice to the generality of the provisions of subsection (1), the following incomes, shall be chargeable to income- tax under the head "income from other sources ", namely:
(vii) where an individual or hindu undivided family receives, in any previous year, from any person or persons on or after the 1 day of October, 2009,-
(b) any immovable property, -
(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;ITA No.2097/Kol/09 6
(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; [with effect from 01.10.2009].
142A. (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him.
(2) The Valuation Officer to whom a reference is made under sub-section (1) shall, for the purposes of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957).
(3) On receipt of the report from the Valuation Officer, the Assessing Officer may, after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment:
Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A.
Explanation.--In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957) .1 [with effect from 15.11.1972] Section 48: The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :--
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement thereto.- [with effect from 01.04.1993] Section 52.: Consideration for transfer in cases of understatement.-
[(1)] Where the person who acquires a capital asset from an assessee is directly or indirectly connected with the assessee and the Income-tax Officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 45, the full value of the consideration for the transfer shall, with the previous approval of the Inspecting Assistant ITA No.2097/Kol/09 7 Commissioner, be taken to be the fair market value of the capital asset on the date of the transfer.
(2) Without prejudice to the provisions of sub--section (1), f' in the opinion of the Income-tax Officer the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the full value of the consideration declared by the assessee in respect of the transfer of such capital asset by an amount of not less than fifteen percent of the previous approval of the Inspecting Assistant Commissioner, be taken to be its fair market value on the date of its transfer:
Provided that this sub-section shall not apply in any case -
(a) where the capital asset is transferred to the Government, or
(b) where the full value of the consideration for transfer of the capital asset is determined or approved by the Central Government or the Reserve Bank of India. [with effect from 01-04-1988.] 9.1 It could be seen from the relevant sections of the I.T Act'61 reproduced herein above, that for the purpose of determination of capital gain in the hand of the seller of the property, the Assessing Officer has to ascertain the "full value of consideration received or accruing as a result of transfer of capital asset". The Courts have held that there is a difference between the above expression and the expression "fair market value" of the capital asset. What the seller receives for transfer of capital asset, according to the Courts, may be bargain same as the "fair market value of the property". Thus, merely on the basis of fair market value of the capital asset the Assessing Officer cannot come to the conclusion that the "full value of consideration" is the same as that of the "fair market value".
9.2 The Hon'ble Apex Court in the case of K.P Varghese Vs. ITO & Anr ,131 ITR 597(SC) interpreted the provision of section 52(2) of the Act. Taking note of the legislative intent of this provision, it was held by the Hon'ble Supreme Court that the provision cannot be literally interpreted. The Hon'ble Apex Court, therefore, read down the provision and held that unless the following twin conditions i.e i) Fair Market Value of Capital Asset on the date of transfer exceeds the full value of consideration by not less than 15% & (ii) Full Value of Consideration is shown at a lesser figure than that actually received by the assessee are satisfied, the provision of section 52(2) will not be attracted. Thus, the proposition that arise from the above judgment of the Hon'ble Apex Court is that "full value of consideration cannot be equated with "fair market value".
9.3 It is to be seen as to whether the above judgment of the Hon'ble Apex Court has any application in a case where section 69B is applied. In section 69B the expression used is "the assessee has made investments". The Assessing Officer has to find "that the amount expended on ITA No.2097/Kol/09 8 making such investments" is more than the amount recorded in the books of a/c maintained by the assessee for making the said investment. Thus, the Assessing Officer has to come to a conclusion of fact that the assessee had made investment which exceeds the amount recorded in the books of a/c of the assessee. It is not always possible that there will be direct and uncontrovertible evidence available on record to come to such conclusion. There could be certain circumstantial evidence on the basis of which the Assessing Officer can come to the above conclusion. In case of conclusion of fact the principle that is required to be applied is that of human probability and not possibility. A conclusion which is most probable should be considered as the correct conclusion of fact. As such the above principle has been upheld by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. Commissioner of Income-tax 214 ITR 801 (SC). We are, therefore, of the considered opinion that the controversy of "full value of consideration" and "fair market value" has no relevance in deciding the issue at hand. Section 48 and Section 69B cannot be said to be parimateria. What is to be decided is as to whether there is enough evidence on record on the basis of which a factual conclusion can be drawn, based on test of human probability, that the assessee had made investments, value of which exceeds that recorded in the books of a/c maintained by the assessee.
9.4 We note that section 142A was inserted by Finance Act, 2004 with retrospective effect from 15.11.1972. The above provision is applicable for the assessment year under consideration. It is clearly mentioned in the section that where an estimate of value of an investment referred to in section 69B is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value. Combined reading of section 69B and section 142A would make it clear that the value shown in any document need not be accepted as the value of investment made by the assessee. As per sub-section (3) of section 142A, the Assessing Officer would give the assessee an opportunity of being heard and may make such assessment The word used is "may". This would mean that the report of the Valuation Officer would only be an evidence on record which the Assessing Officer would consider together with the objection and other evidence produced by the assessee to dispute su.ili valuation report and would come to a conclusion of fact with reference to value of investment made by the assessee. 9.5 In the present case no such reference was made by the Assessing Officer. However, the valuation made by the Stamp Valuation Authority was available with the Assessing Officer and the Assessing Officer gave an opportunity to the assessee to ITA No.2097/Kol/09 9 repudiate the valuation made by the Stamp Valuation Authority. It is, therefore, to be seen as to whether the valuation made by the Stamp jft4-uation Authority is an evidence which the Assessing Officer could have considered for deciding the value of investment made by the assessee in terms of section 69B of the Act.
9.6 For the above relevant provisions of the Indian Stamp Act, 1899 and the amendment as made by the State of West Bengal together with the West Bengal Stamp( Prevention of Undervaluation of Instruments) Rules, 2001 are required to be examined. The relevant provisions of Indian Stamp Act, 1899 as amended by the State of West Bengal is Section 47A which is reproduced below :-
"WEST BENGAL AMENDMENT For existing section 47A, which was earlier inserted by section 7 of the Indian Stamp (West Bengal Amendment) Act, 1990 (West Ben. Act XVII of 1990) (w.e.f. 31 .1 .1994), please substitute the following sections:
"47A. Instruments of conveyance, etc., under-valued, how to be dealt with.-- ( 1) Where the registering officer appointed under the Registration Act, 1908 (16 of 1908), has, while registering any instrument of--
(a) agreement or memorandum of an agreement relating to a sale or lease-cum- sale of immovable property,
(b) conveyance,
(c) exchange of property,
(d) gift,
(e) partition,
(f) power-of-attorney--
(i) when given for consideration to sell any immovable property, or
(ii) in such other cases referred to in article 48 of Schedule IA, where proper stamp duty is payable on the basis of market value,
(g) settlement,
(h) transfer of lease by way of assignment, reason to believe that the market value of the property which is the subject- matter of any such instrument has not been truly set forth in the instrument presented for registration, he may, after receiving such instrument, ascertain the market value of the property which is the subject-matter of such instrument in the manner prescribed and compute the proper stamp duty chargeable on the market value so ascertained and thereafter he shall, notwithstanding anything to the contrary contained in the Registration Act, 1908, in so far as it relates to registration, keep registration of such instrument in abeyance till the condition referred to in sub-
section (2) or sub-section (7), as the case may be, is fulfilled by the concerned person.
ITA No.2097/Kol/09 10(2) Where the market value of the property which is the subject- matter of an instrument has been ascertained and the proper duty chargeable thereon has been computed under sub-section (1), the registering officer shall, in the manner prescribed, send to the concerned person a notice calling upon him to make payment of the deficit amount of stamp duty within such time as may be prescribed, and if such person makes payment of such deficit amount of stamp duty in the prescribed manner, the registering officer shall register the instrument. (3) Where the concerned person does not make payment of the stamp duty as required under sub-section (2) within the time specified in the notice issued under that sub-section, the registering authority shall refer the matter to such authority and in such manner as may be prescribed for determination of the market value of the property which is the subject-matter of such instrument and the proper stamp duty payable thereon:
Provided that if the concerned person, before receipt of any communication from such authority intimating him the market value of the property which is the subject-matter of the instrument and the proper stamp duty payable thereon determined by such authority, makes payment of the deficit amount of stamp duty as ascertained by the registering officer, such registering officer shall accept such payment, register the instrument and intimate the matter to such authority in the manner prescribed.
(4) After the registering officer issues a notice under sub-section (2) in respect of any instrument referred to in clause (b), clause (c), clause (d), clause (e), or clause (g) of sub-section (1), which has been presented before him for registration prior to the coming into force of the Indian Stamp (West Bengal Amendment) Act, 1998, and if the concerned person makes payment of the deficit amount of stamp duty within the time specified in such notice, he shall register such instrument:
Provided that where such instrument has been so registered under this sub- section, any reference that has been made to the authority referred to in sub- section (3) in respect of determination of the market value of the property which is the subject-matter of the instrument shall be deemed to have been withdrawn and the registering officer shall intimate the matter to such authority in such manner as may be prescribed.
(5) On receipt of a reference under sub-section (3), the authority specified under that sub-section shall, after giving the parties concerned in respect of the instrument referred to in sub-section (1) a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed, determine the market value of the property which is the subject-matter of the instrument and the proper stamp duty payable thereon, and shall thereafter issue a notice in the manner prescribed directing the concerned person to make payment of such deficit amount of stamp duty within such time as may be prescribed.
(6) Where the concerned person does not make payment of the deficit amount of stamp duty within the time specified in the notice issued under subsection (5), such person shall be liable to pay an interest at the rate of two per centum for each British Calendar month of default from the first day of such ITA No.2097/Kol/09 11 month following the month in which such person was required to make payment of such deficit amount of stamp duty under sub-section (5) up to the month preceding the month of full payment of such duty.
(7) Where the concerned person makes payment, in the manner prescribed, of the deficit amount of stamp duty determined under subsection(5) together with the interest, if any, charged under sub-section (6), the ;registering officer shall, upon furnishing by the concerned person a copy of receipted challan or bank draft in proof of such payment, register the instrument within such time as may be prescribed.
(8) (a) The authority referred to in sub-section (3) may, on receipt of any information or otherwise, suo motu within five years from the date of registration of any instrument, where such instrument was registered on the basis of the market value which was set forth in the instrument or which was ascertained by the registering officer referred to in sub-section (1), call for and examine any such instrument and any other document relating thereto for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject- matter of such instrument and which was set forth in the instrument or which was ascertained under sub-section (2) and the stamp duty payable thereon.
(c) If, after such examination, the authority referred to in clause (a) has reasons to believe that the market value of the property which is the subject-
matter of such instrument has not been truly set forth in the instrument or correctly ascertained under sub-section (2), he may, after giving the parties concerned in the instrument a reasonable opportunity of being heard, determine the market value of the property which is the subject-matter of such instrument and the amount of stamp duty chargeable thereon in the manner referred to in sub- section (5), and the difference in the amount of stamp duty, if any, between the stamp duty so determined by him and the stamp duty already paid by the concerned person shall be required to be paid by him in the prescribed manner:
Provided that nothing in this sub-section shall apply to--
(a)any instrument referred to in clause (b) clause (c ) clause (d) clause (e) or clause (g) of sub-section (1) registered before the 31st day of January, 1994, or
(b) any instrument referred to in clause (a), clause (f), or clause (h), of sub-section (1) registered before the coming into force of the Indian / Stamp (West Bengal Amendment) Act, 1998.
(9) Notwithstanding anything contained elsewhere in this section or section 47B, no interest shall be payable in such cases, under such circumstances, and subject to such conditions, if any, as may be prescribed.
Explanation.--For the purposes of this section, section 47B and section 47C, "concerned person" shall mean the person who is liable to bear the stamp duty under section 29."
9.7 The relevant rule is Rule 4 of West Bengal Stamp (Prevention of Undervaluation of Instruments) Rules, 2001, which is reproduced hereunder:-
ITA No.2097/Kol/09 12"4. Reference to be made to the Collector for determination of market value of property.--( 1) If the person by whom the stamp duty is payable under section 29 does not within the period specified in the notice referred to in sub-rule (8) of rule 3, offer to pay the deficit amount of stamp duty to make up the amount with which the instrument referred to in sub-rule (2) of rule 3, would, in the opinion of the registering officer, have been chargeable, the registering officer shall make a reference under sub-section (3) of section 47A to the Collector for determination of the market value of the property which is the subject matter of such instrument, and the proper amount of duty payable thereon, and the registering officer shall record the particulars of such reference in a register as maintained in Form VI.
(2) The registering officer shall, while making a reference under sub-rule (1), furnish to the Collector one copy of the statement in Form I, Form II, Form III or Form IV, as the case maybe, together with the order referred to in sub-rule (8) of rule 3, and the extracts of report or record on the basis of which order referred to in sub-rule (8) of rule 3 has been made.
(3) If the person, by whom stamp duty is payable under section 29 before receipt of any communication from the Collector intimating to him the market value of the property which is the subject matter of the instrument referred to in sub-rule (2) of rule 3, and the proper stamp duty payable thereon as determined by the Collector, makes payment of the deficit amount of stamp duty as ascertained by the registering officer in the same manner as referred to in sub-rule (9) of rule 3, such registering officer shall accept such payment and register the instrument.
The reference made under sub-rule (1) of rule 4 in respect of such shall be deemed to have been withdrawn. The registering officer shall intimate such registration to the Collector in Form VIIA.
(4) The provision of sub-rule(3) shall apply, mutatis mutandis, in respect of any instrument referred to in sub-section(4) of section 47A:
Provided that the registering officer of such instrument shall intimate the withdrawal of reference under sub-rule (3) of rule 4 in Form VIIB."
9.8 It is also seen that as per section 47B of Indian Stamp Act, 1899 as amended by the State of West Bengal, further appeals to various appellate authorities lie. As such, while upholding the constitutional validity of section 47A of Indian Stamp Act, 1899 as modified by various States, it has been held by the Courts that the guideline provided by the State would only serve as prima facie material available to the registering authority to alert him regarding the value of the impugned property. It is common knowledge that the value of the property varies from place to place or even from locality to locality in the same place. No absolute higher or minimum value can be pre-determined. It would depend on the prevailing prices in the locality in which the land covered by the instrument is situated. The Stamp Valuing Authority has to have an objective satisfaction to form a reasonable believe that the instrument relating to the transfer of property has not been fully set for or evaluated or consideration mentioned is not correct ITA No.2097/Kol/09 13 when it is presented for registration. Thus, the property is evaluated by the Stamp Duty Authority at a higher figure than that mentioned in the document only when he has reasons to believe that the consideration amount mentioned in the Deed does not reflect the true value of the property i.e. the amount mentioned in the instrument under-values the property. If the party is not satisfied with such valuation, there is right to appeal.
9.9 In the present case, it is an admitted fact that no appeals in terms of relevant provisions of the Indian Stamp Act, 1899, has been filed by the party who is to bear the cost of registration. It is also noted that the cost of registration is to be borne by the party as mentioned in section 29 of the Indian Stamp Act, 1899. The parties i.e. seller and purchaser can vary the same as per contract i.e. as per the terms of instrument of sale/purchase. In the case under consideration, the instruments which were registered have not been furnished before us. As such, there is no mention in the order of the Assessing Officer and the ld.CIT(A), as to the party who is to bear the cost of stamp for registering the impugned instruments. According to us, the above information is required for coming to a conclusion as to what extent the Stamp Duty Valuation of the property under consideration can be considered to be relevant evidence for the purpose of section 69B of the Act.
9.10 In view of the above, we are of the considered opinion that valuation by the stamp valuation authority is a prima facie evidence which the Assessing Officer can utilize for determining the value of the investment made by the assessee in the present case. This would put the onus back to the assessee to repudiate the same. It appears that this shifting of onus had not been understood by the assessee who has merely relied on the proposition that Section 50C is not applicable to the purchaser of the property.
9.11 The Ld. CIT(A) has held that the case of Smt. Amar Kumari Surana (supra) was not applicable to the facts of the case as no valuation report of DVO was available with the Assessing Officer and as the cost of adjacent property was also not brought on record by the Assessing Officer. However, we find that in the orders of the authorities below, there is no mention of locality of the impugned properties. The Assessing Officer has relied on the value of property purchased by Credle Computers Pvt. Ltd. The Ld. CIT(A) has held that the same has no relevance. However, in absence of the locality of the impugned properties, it is not possible for us to ascertain the relevance or otherwise of the property purchased by Credle Computers Pvt.Ltd. for ascertaining the value of the properties under consideration.
9.12 We also note that the Ld. CIT(A) has proceeded on the footing that section 50C of the Act is not applicable to the case in hand. This proposition is also accepted by the revenue. However, the revenue's claim is that the valuation made by the Stamp Valuation Authority is a relevant evidence which gets further fortified by the instrument of purchase in the case of Credle Computers Pvt. Ltd. The Ld. CIT(A) has not met out the above claim of the revenue. As discussed by us hereinabove, we are of the considered opinion that the Stamp Duty Valuation of the property is a relevant evidence for ascertaining the investment made by the assessee in the impugned property.
ITA No.2097/Kol/09 149.13 The argument of the learned authorized representative of the assessee with regard to insertion of section 56(2)(vii)(b) h no relevance for deciding the issue at hand as the same is only with reference to head of income and not assessibility of income. The case laws relating to the applicability or otherwise of section 50C are also not relevant for deciding the issue as to whether the valuation of property by the stump valuation authority is a relevant evidence for the purpose of determining the value of investment made by the assessee in terms of section 69B. 9.14 In view of the above, we set aside the orders of the authorities below on the impugned issue and restore the matter back to the file of the Assessing Officer with the direction that relevant facts as discussed by us hereinabove should be ascertained and the assessee should be given adequate opportunity to produce/furnish any evidence in support of it's case. Thereafter, a fresh order should be passed as per law. We direct accordingly.
10. In the result, the appeal of the revenue is allowed for statistical purpose.
Order pronounced in the Court on. 28.5.10
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(D.K. Tyagi ] (B.K.Haldar)
Judicial Member Accountant Member
Dated 28th May 2010
Copy forwarded to:-
1. Deputy Commissioner of Income-tax, Circle-1, Siliguri
2. M/s. G.C.S Global Pvt. Ltd Sevoke Road, Siliguri
3. Commissioner of Income-tax(A)-XXXII, Kolkata
4. Commissioner of Income-tax (WB)
5. D.R,ITAT, Kolkata *PP [True copy] By order Deputy Registrar ITAT, Kolkata.
FIT FOR PUBLICATION
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[ J.M ] [ A.M]
ITA No.2097/Kol/09 15