TMI Blog2012 (11) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... rector (of the assessee) and his proprietorship concern, was made available, even the Income Tax Returns concerned, were filed. The CIT (A) scrutinized this aspect in detail, and held that the assessee had discharged its onus of proving that the funds were received, and revealed particulars of the source. This court finds no unreasonableness in regard to such findings, as to call for interference under Section 260-A of the Act - in favour of the assessee. - ITA 776/2011 - - - Dated:- 5-11-2012 - MR. S. RAVINDRA BHAT AND MR. JUSTICE R.V. EASWAR JJ. Appellant: Sh. Sanjeev Sabharwal, Sr. Standing Counsel with Sh. Puneet Gupta, Jr. Standing Counsel and Ms. Gayatri, Advocate. Respondent: Sh. Vivek Kohli with Sh. Shwetank Tripathi, Advocates. MR. JUSTICE S.RAVINDRA BHAT By this appeal the Revenue challenges an order of the Income Tax Appellate Tribunal (ITAT) dated 12.11.2010 in ITA 3244/Del/2010. The question of law sought to be urged is the correctness of the impugned order in (i) upholding the deletion of Rs.12,22,000/-, which had been directed to be added back to the income of the assessee, by the A.O. on account of difference between the circle rate and the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing but copy of account of M/s. Bright Star International and Mr. Waseem Ahmad Khan in the books of M/s. Khoobsurat Resort Pvt. Ltd. respectively and did not prove the genuineness of sources of funds in respect of land purchase in Moradabad. To know the genuineness of sources of funds, the assessee was specifically asked to furnish copy of balance sheet and profit and loss account of M/s. Bright Star International but the assessee could not furnished the same. It will be worthwhile to mention that M/s. Bright Star International is a proprietorship concern of Mr. Waseem Ahmad Khan who is one of the directors of the assessee company and hence there was no hindrance to provide the copy of balance sheet and profit and loss account of M/s. Bright Star International. As the assessee had failed to prove the genuineness of sources of funds of M/s. Bright Star International amounting to Rs. 45,87,350/- in respect of land purchase of therefore this amount of Rs.45,87,350/- which has been paid by M/s. Bright Star International on behalf of the assessee is added to the income of the assessee. 4. Feeling aggrieved by the directions of the A.O. to add back the said two amounts, the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orized signatory has been filed by the appellant company before the AO. However, while the AO has not raised any objections with respect to the payments made by Shri Waseem Ahmad Khan by pay orders and cheques, he has chosen to disbelieve pay made by him in case. Thus, there is situation where the AO is trying to accept part of the transactions made by Shri Waseem Ahmad Khan on behalf of the appellant company and to ignore the remaining transactions merely because the same have been made in cash .. It was also held that: In my view, even if the cash payments made by Shri Waseem Ahmad Khan were to be held unexplained no addition was liable to be made in the hands of the appellant company in the present fact situation. If the AO had any intentions to find out the source of cash payments in the hands of Shri Waseem Ahmad Khan, he should have made due inquiries from him and taken necessary action against him as per law. Once the transactions have been confirmed by the creditor, Shri Waseem Ahmad Khan in this case and all supporting documents including the source of cash payments made for purchase of agriculture land have been filed by him, no addition was called for in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified. 10. Counsel for the assessee contended that the provision of Section 50-C was the only part of the Act, which enabled the income tax authorities to raise a presumption in the case of alleged cases of suppression of the true value of property. That provision applied in the case of valuation of capital gains; the deliberate and conscious omission to enact a similar presumption in the hands of a purchaser of the property, meant that the revenue was under a greater burden to show that actual suppression of the value, and concealment of income had taken place. Counsel also relied on the decision of the Madras High Court, in K.R.Palanisamy v. Union of India, [2008] 306 ITR 61 (Mad) as well as the judgment of the Supreme Court, in K.P. Varghese v Income-tax Officer [1981] 131 ITR 597 (SC). 11. As regards the second question, it was argued by the assesse, that all the necessary documents, such as PAN particulars, ledger extracts, income tax returns, etc, of the individual and his proprietary concern, who paid the cost of the properties, was disclosed. The AO was fully aware of this, despite which, without further investigation or attempting to show if and how that money belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer under subsection (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 of 1957). (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 on accruing as a result of the transfer. 13. It is apparent from the above provision that a presumption that the sale price is higher can be drawn, if the circumstances spelt out in Section 50-C are fulfilled. This provision was challenged before the Madras High Court, in K.R.Palanisamy v. Union of India, [2008] 306 ITR 61 (Mad). The Court repelled the challenge, but nevertheless held that: Sub-sections (2) and (3) of Section 50C provides further safeguard to the assessee, in the sense that if the assessee claims before the assessing officer that the value adopted by the stamp duty authorities exceeds the fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of burden of proof, for, the burden of establishing that there is an understatement of the consideration in respect of the transfer always rests on the revenue. The postulate underlying sub-section (2) is that the difference between one honest valuation and another may range up to 15% and that constitutes the class of marginal cases which are taken out of the purview of sub-section (2) in order to avoid hardship to the assessee. It is, therefore, clear that sub-section (2) cannot be invoked by the revenue unless there is understatement of the consideration in respect of the transfer and the burden of showing that there is such understatement is on the revenue. Once it is established by the revenue that the consideration for the transfer has been understated or, to put it differently, the consideration actually received by the assessee is more than what is declared or disclosed by him, sub-section (2) is immediately attracted, subject of course to the fulfilment of the condition of 15% or more difference, and the revenue is then not required to show what is the precise extent of the understatement or in other words, what is the consideration actually received by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard; that inquiry might extend to analyzing sale or transfer deeds executed in respect of similar or neighbouring properties, contemporaneously at the time of the transaction. Yet, the finding cannot start and conclude with the fact that such stamp duty value or basis is higher than the consideration mentioned in the deed. The compulsion for such higher value, is the mandate of the Stamp Act, and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objective fact or circumstances; consequently, the Court holds that there is no infirmity in the approach of the lower authorities and the Tribunal, granting relief to the assesse. This question is accordingly answered in favour of the assessee, and against the revenue. Question No. 2 16. As far as this question is concerned, the Court notices that the findings of the CIT(A) and the Tribunal are concurrent, and the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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