TMI Blog2012 (10) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 for the assessment year 2006-07. 2. The Revenue has raised following grounds: "1. The Ld. CIT (A)-V, Surat has erred in facts and in law in deleting the addition made by the A.O. at Rs. 2,56,26,205/- u/s. 69B despite the fact that all evidences collected by the A.O. proved unaccounted investment by the assessee." 2. The Ld. CIT (A) has erred in facts and in law in deleting the addition made by the A.O. Rs. 2,56,25,205/- u/s. 69B despite the fact that comparable sale instances by a state body like SUDDA (Surat Urban Development Authority) also showed rates higher than that paid by the assessee." 3. Since ground No.1 and 2 are interconnected the same are disoposed of together for the sake of convenience. 4. Assessee is an individual engaged in the business of diamond manufacturing and its import and export. The assessee filed his return of income on 26-2-2007 declaring total income of Rs.77,63,910/-.The case was selected for scrutiny. During the course of assessment from the particulars furnished by the assessee the A.O. noticed that assessee had acquired following properties: Property Name Area Value Rs. Rate per Sq. Mtr Rs.. Rate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed investment at Rs. 2,56,26,205/-. Aggrieved by the action of the A.O., the assessee carried the matter before CIT(A). 4.1 Before CIT(A) it was submitted by the assessee that the deeming provisions as contained in section 50C cannot be applied while invoking Sec. 69B. It was further submitted the addition u/s. 50C can only be made in the hands of the seller and no provisions of the Act permits the A.O. to estimate transaction price and add the difference in the hands of purchaser. CIT(A) agreed with the contentions of the assessee and deleted the addition by holding as under: "10. I have carefully considered the assessment order and submission made by the A.R. and case laws before me. I have gone through the paper book produced before me. The short issue is regarding invoking of section 69B with regard to investments made by the assessee in purchase of land. Section 69B provides: "Where in any financial year the assessee has made investments or is found to be owner of any bullion, jewellery or other valuable articles and [assessing] office finds that the amount expended on making such investment or acquiring such bullion, jewellery or other valuable article exceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken is section 50C. There is no other section in the Act which authorities the Assessing Officer to take any action particularly under section 69B by placing reliance on the value adopted by the State Valuation authority commonly known as jantry price. Here also, section 50C is very specific and contains a deeming provision whereunder the value as per jantry price is treated as full value of consideration for the purpose of computing capital gain under section 48. This provision is applicable in the case of a seller of property and cannot be invoked in the case of purchaser of property for the purpose of section 69B. This has been held by the Ahmedabad Bench of ITAT in ITA No.1749/Ahd/2008 dated 29-8-2008 in the case of Bharatkumar N. Patel. In view of this and in the absence of fulfilling the basic requirements of section 69B I am inclined not to agree with the addition made by the Assessing Officer. The Assessing Officer, is therefore directed to delete Rs. 2,56,26,205/- made under section 69B of the Act." 5. Aggrieved by the action of CIT(A), the Revenue is now in appeal before us. 6. Before us the Ld. D.R. submitted that the assessee had not submitted any documentary evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not, in the opinion of the A.O., satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year." When we examine the provisions of Sec.69B, we find that section 69B is a deeming fiction. It is provided that addition can be made by the A.O. when the following three conditions are satisfied: (1) If it is found that the assessee has made investment or the assessee is found to be the owner of any bullion, jewellery or other valuable article, and (2) If it is found that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in that behalf in the books of account maintained by the assessee, and (3) Either the assessee offers no explanation about such extra amount or the explanation offered by him is not satisfactory. 9. The above conditions are cumulative. If all these circumstances exist, the excess amount may be deemed to be the income of the assessee for the financial year in which the said investment was made or the assessee became the owner of bullion etc. 10. The factual position is that during the year the assessee had acquired land. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been held that provisions of Sec.50C are applicable only for computation of capital gains in real estate transaction in respect of seller only and not for the purchaser. Legal fiction cannot be extended any further and has to be limited to the area for which it is created. Section 50C creates 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 investment u/s. 69. 15. In view of the totality of aforesaid facts and relying on the decisions of the Hon'ble High Courts and of the co-ordinate Bench, we are of the view that provisions of Sec.50C cannot be applied for making addition u/s. 69B. In the present case, since the A.O. has relied on the jantry rates without bringing any material on record to prove that assessee has in fact made investments over and above than that recorded in the books, no addition can be made in the present case and therefore no interference is called for to the order of CIT(A). We thus uphold the order of CIT(A). In the result the appeal of the Revenue is dismissed 16. In the result, appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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