Income Tax Appellate Tribunal - AhmedabadAmar Arvindkumar Rawal, Surat vs Assessee on 21 July, 2010IN THE INCOME TAX APPELLATE TRIBUNAL
                 AHMEDABAD BENCH " A "

Before Shri MUKUL Kr. SHRAWAT, JUDICIAL MEMBER and
        Shri A.N. PAHUJA, ACCOUNTANT MEMBER

Date of hearing : 21 07/2010    Drafted on: 21/07/2010
                      ITA No.1947/AHD/2008
                    Assessment Year : 2005-06

 Amar Arvindkumar       Vs. The Income Tax Officer
 Rawal                        Ward-3 (2)
 308, Chapriya Street         Surat
 Adajan Gam, Surat
               PAN/GIR No. : AATPR 2732 D
      (APPELLANT)       ..          (RESPONDENT)

                    Appellant by :      Shri Nimish Vayawala, A.R.
                    Respondent by:       Shri Rajeev Agarwal, D.R.

                                 ORDER

PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :This is an appeal at the behest of the Assessee which has emanated
from the order of Learned CIT(Appeals)-II dated 29/03/2008 passed for
Assessment Year 2005-06.2.      There are three grounds revolving around a single issue of an
addition made by invoking the provisions ofsection 69of the I.T. Act,
1961.        However, for the sake of clarity, all the three grounds are
reproduced below:-1.     The Learned CIT(A) has erred in confirming the addition of
               Rs.21,87,041u/s.69.ITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                       Asst.Year - 2005-06-2-2.   The Learned CIT(A) ought to have appreciated that in view of
           various judicial pronounce makes addition U/s.69 cannot be
           confirmed simply on the basis of value determined for stamp duty
           purposed. He also ought to have appreciated that legal fiction
           created bySec.50Cis only for the purpose of capital gains & not
           for the purpose ofSec.69. the addition ought to be deleted.3.   The Learned CIT(A) ought to have given a specific opportunity to
           the assessee before sustaining the addition in view ofSec.50C&
           ought to have decided the matter after hearing the assessee on that
           aspect of the matter.2.    Briefly stated facts of the case as emerged from the corresponding
assessment order passedu/s.143(3)of the I.T. Act, 1961                dated
28/12/2007    were that the assessee has purchased an agricultural land
for a consideration of Rs.11,47,859/-. On verification of the documents,
it was noticed by the Assessing Officer that the "Stamp Duty
Authorities" have assessed the value at Rs.33,34,900/-. The objection of
the Assessing Officer was that the difference of the two was nothing but
an unexplained investment of the assessee.         In compliance of show-
cause notice, the assessee has furnished the following reply:"The undersigned purchased agricultural land at Rs.11,47,859/-.
      The documents evidencing the payment of consideration is already
      filed during the course of assessment proceedings. The stamp duty
      authorities have considered the Jantri value for the purpose of
      levying the stamp duty. It may be noted thatsection 69/69A/69Cetc., of theI.T. Act, 1961are actual consideration paid for
      acquiring the asset. Only if there is under hand consideration
      which is not recorded, than onlysection 69/69Bcomes into play.
      Mark th4e words inSection 69/69A/69C, etc., of theIncome-Tax
      Act, 1961. "A.O. finds that the amount expenses on making such
      investments ...... excess the amount recorded in the books".Therefore, the A.O. has to show -ITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                      Asst.Year - 2005-06-3-"That the assessee actually paid more than the amount recorded in
       books and is unable to explain the same".This is not the case here.Further as far as theStamp Actis concerned, the stamp duty is
       paid on the 'Market Value' unlikeSection 50 Cfor capital gains
       there is no such provision to consider market value for 69/69B etc.

       We have already provided the names and addresses of the seller
       through various documents submitted during the course of
       assessment proceedings. Unless any inquiry is made with him for
       arriving at true consideration, the actual consideration, paid by
       the undersigned should not be doubted.In view of the above, no addition should be made undersection
       69/69Betc., because there is no such deeming provision to take
       Jantry Value for the purpose of 69/69B".2.1.   However, the Assessing Officer was not convinced and held that
the "Jantri Rates" are being fixed on certain factors, such as, road
facilities, development of the area, amenities available, etc. According to
him, those factors determine the market rates of that area. Therefore,
treating the difference as an unexplained investmentu/s.69of the I.T.
Act, 1961 an addition of Rs.21,87,041/- was made.        The said addition
was challenged.3.     The Learned CIT(Appeals) was of the view that in such a situation,
the provisions ofsection 50Cof the I.T. Act, 1961 were applicable.
Rejecting all the pleas of the assessee that the provisions ofsection 50Cof the I.T. Act, 1961 were applicable in respect of the seller of the
property, however, the assessee happened to be a purchaser, therefore,ITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                     Asst.Year - 2005-06-4-could not be applied on the facts of the case, the Learned CIT(Appeals)
has affirmed the action of the Assessing Officer.4.    With this background, we have heard both the sides.              It is
pertinent to mention that apart from the "Jantri Rates" there was nothing
in the possession of the Assessing Officer to demonstrate that the
assessee had made investment towards purchase of the impugned
agricultural land more than the consideration as reflected in the
documents. The Assessing Officer has built up the case only on the basis
of the "Jantri Rates" determined by the registration authorities for the
purposes of collection of stamp duty. The provisions of I.T.Act which
cover the unexplained investment or unexplained expenditure have said
that if the Assessing Officer finds that the amount expended or in any
Financial Year he has found that an expenditure has been incurred by an
assessee, then such an amount if not disclosed be held as an unexplained
money invested or expended by the assessee.         Contrary to this, in the
present case, there is no supporting evidence or cogent material in
possession of the Revenue to demonstrate that this assessee has
actually expended the amount towards purchase of agricultural land
more than what was documented. The next issue is, as raised by the
Learned CIT(Appeals), that the provisions ofsection 50Cof the I.T. Act,
1961 could have been applied by the Assessing Officer because of the
said special provision now inserted in the Statute.     Even this approach
of Learned CIT(Appeals) cannot be approved because these special
provisions as prescribedu/s.50Cof the I.T. Act, 1961 are in respect of
transfer by an assessee where consideration received was found less than
the value assessed by any authority of a State Government, viz. StampITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                     Asst.Year - 2005-06-5-Valuation Authority for the purpose of payment of stamp duty. The first
appellate authority has not marked this distinction that the assessee in
question is not the seller of the property and he has not received any
consideration but contrary to this, he was a purchaser of the property and
paid the consideration. This distinction has elaborately been made in the
case of CIT vs. Fitwell Logic System (P) Ltd. reported as (2010) 01
ITR (Trib) 286 (Del) and therein it was mentioned as under:-"C. Apart from the abovementioned judgments, I also reply upon
      the following pronouncements which have held that additions for
      unexplained investment cannot be sustained merely on the basis of
      valuations, unless there is independent evidences that the actual
      consideration was more than what was reported by the purchaser
      of the property.Ashok Soni vs. ITO(2006) 102 TTJ (Del) 964;Navneet Kumar Thakkar vs. ITO(2007) 112 TTJ (Jd) 76:((2008) 298 ITR 42 (Jd)(AT);CIT vs. Kishan Kumar(2008) 215 CTR (Raj) 181:(2008) 3 DTR (Raj) 142 : (2009) 315 ITR 204 (Raj.)

      The facts of the present case as elaborated by the AO only
      indicate that there was a difference in the evaluation of the stamp
      duty authority and the amount shown by the purchaser in the
      purchase deed. Apart from this difference, no other evidence was
      available to establish that the actual consideration paid by the
      purchaser was higher than what was declared. In view of the
      circumstances, the appellant is the purchaser of the property and
      is not attracted bys. 50Cof the Act. Further, there is no evidence
      for applyings. 69Bwhich has been done by the AO. Also relying
      upon the plethora of judgments discussed above, I am of the
      opinion that there is no justification to sustain the addition made
      by the AO on this account. As a result, the ground of appeal is
      allowed."ITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                      Asst.Year - 2005-06-6-4.1.This question has again been answered in an unreported decision
of ITAT Ahmedabad "SMC-A" Bench in the case of M/s.Jalaram &Co.
vs. ITO Navsaribearing ITA No.3964/Ahd/2008 for Assessment Year
2005-06, dated 24/07/2009, wherein vide paragraph No.7 it was held as
under:-"In the present case,section 50Ccreates a legal fiction for taxing
       capital gains in the hands of the seller and it cannot be extended
       for taxing the difference between apparent consideration and
       valuation done by Stamp Valuation Authorities as undisclosed
       investmentu/s.69. In fact,section 69itself is a legal fiction
       whereby investment into an asset is treated as income if it is not
       disclosed in the regular books of account. No further legal fiction
       from elsewhere in the statue can be borrowed to extend the field ofsection 69.   It is for the legislature to introduce legal fiction to
       overcome difficulty in taxing certain receipts or expenditure which
       otherwise was not possible under normal provisions of the Act. It
       is with this purpose that when it was found difficult to prevent tax
       evasion by understating apparent sale consideration as compared
       to the valuation made by Stamp Valuation Authorities for the
       purposes of levying stamp duty then it was thought necessary to
       introducesection 50Cfor substituting apparent sale consideration
       by valuation done by Stamp Valuation Authorities. This fiction
       cannot be extended any further and, therefore, cannot be invoked
       by Assessing Officer to tax the difference in the hands of the
       purchaser."ITA No.1947/Ahd/2008Amar Arvindkumar Rawal vs. ITO
                                                       Asst.Year - 2005-06-7-5.     Following these decisions as well as the provisions of the law, we
find no justification in Learned CIT(Appeals)'s view of confirming the
addition on both the counts. Therefore, we hereby reverse those findings
of the Learned CIT(Appeals) and allow the grounds of the Assessee.6.     In the result, the appeal of the Assessee is allowed.Order signed, dated and pronounced in the Court on   23/ 07 /2010.Sd/-                                     Sd/-
   ( A.N. PAHUJA )                        ( MUKUL Kr. SHRAWAT )
ACCOUNTANT MEMBER                           JUDICIAL MEMBER

Ahmedabad;          Dated    23 / 07 /2010

T.C. NAIR, Sr. PS

Copy of the Order forwarded to :
1. The Assessee.
2. The Department.
3. The CIT Concerned
4. The ld. CIT(Appeals)-II, Surat
5. The DR, Ahmedabad Bench
6. The Guard File.
                                                               BY ORDER,
              स×याǒपत ूित //True Copy//
                                 (Dy./Asstt.Registrar), ITAT, Ahmedabad