Gujarat High Court
Principal Commissioner Of Income Tax 3 vs Dharmaja Infrastructure on 8 April, 2019
Author: Harsha Devani
Bench: Harsha Devani, Bhargav D. Karia
C/TAXAP/1317/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 1317 of 2018
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PRINCIPAL COMMISSIONER OF INCOME TAX 3
Versus
DHARMAJA INFRASTRUCTURE
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Appearance:
MRS MAUNA M BHATT(174) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 08/04/2019
ORAL ORDER
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. By this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the appellant revenue has challenged the order dated 6.6.2018 made by the Income Tax Appellate Tribunal, Ahmedabad Bench "A" (hereinafter referred to as "the Tribunal"), in ITA No.1862/Ahd/2015 by proposing the following questions, stated to be substantial questions of law:-
"(A) Whether on the facts and circumstances of the case, the Appellate Tribunal has erred in upholding the stand taken by the CIT(A) in deleting the addition made by the Assessing Officer under section 69B of the Act?
(B) Whether on the facts and circumstances of the case, the Appellate Tribunal has erred in relying upon the Page 1 of 4 C/TAXAP/1317/2018 ORDER decision of the Appellate Tribunal, Ahmedabad Bench in the case of DCIT v. Virjibhai Kalyanbhai Kukadia though the facts of the said case were different from the present case?"
2. The assessment year is 2011-12. The respondent assessee had purchased two properties for a consideration of Rs.1,55,00,000/- and Rs.1,35,00,000/- respectively. However, the value adopted by the stamp duty authority as per the market rate was Rs.2,55,45,000/- and Rs.2,22,57,500/- respectively. According to the Assessing Officer, the assessee could not give any explanation with regard to the difference of amount of Rs.1,88,02,500/- and he, therefore, considered such amount to be income from undisclosed sources not reflected in the books of account and treated the same as unexplained investment under section 69B of the Act. The assessee carried the matter in appeal before the Commissioner (Appeals), who allowed the appeal by holding that the Assessing Officer had relied upon the jantri rate without bringing any material on record to prove that the assessee, in fact, had made investment over and above that recorded in the books of account. While doing so, the Commissioner (Appeals) placed reliance upon the decision of the Tribunal in DCIT v. Virjibhai Kalyanbhai Kukadia, 138 ITD 255, wherein it has been held that the provisions of section 50C of the Act cannot be applied for making addition under section 69B of the Income Tax Act. The revenue carried the matter in appeal before the Tribunal who upheld the order passed by the Commissioner (Appeals).
3. Mrs. Mauna Bhatt, learned senior standing counsel very fairly invited the attention of this court in the case of Page 2 of 4 C/TAXAP/1317/2018 ORDER Commissioner of Income-tax-IV v. Sarjan Realities Ltd., (2014) 220 Taxman 112 (Gujarat) wherein the court has held thus:-
"6. As is well known, section 50C of the Act makes special provision for full value of consideration in certain cases. Sub-section (1) thereof provides that 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 or assessable by any authority of a State Government for the purpose of stamp duty in respect of such transfer, such value shall for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
7. Clearly thus, section 50C of the Act by a deeming fiction substitutes the consideration received on sale of a capital asset by stamp duty valuation. Such deeming fiction, however, is applicable only in case of a seller for the purpose of section 48 of the Act."
4. As is evident from the facts as noted hereinabove, the Assessing Officer has sought to treat the difference between the market value assessed by the stamp authority and the purchase price as shown by the respondent assessee as an unexplained investment under section 69B of the Income Tax Act. This court in the above referred decision has held that section 50C of the Act by deeming fiction substitutes the consideration received on sale of a capital asset by stamp duty valuation. Such deeming fiction however, is applicable only in the case of a seller for the purpose of section 48 of the Act. In the facts of the present case, it is an admitted position that the respondent assessee is the purchaser and not the seller and hence, the valuation adopted by the Stamp authority could not have been made the basis from coming to the conclusion that Page 3 of 4 C/TAXAP/1317/2018 ORDER there is unexplained investment. Moreover, as observed by the Commissioner (Appeals), no material was brought on record by the Assessing Officer to prove that the assessee had in fact made investments over and above that recorded in the books in the year under consideration.
5. In the aforesaid premises, it is not possible to say that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law so as to warrant interference. The appeal, therefore, fails and is, accordingly, summarily dismissed.
(HARSHA DEVANI, J) (BHARGAV D. KARIA, J) Z.G. SHAIKH Page 4 of 4