TMI Blog2015 (3) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ance in A.Y. 1992-93, no cost of acquisition was disclosed in his books of accounts, therefore by deeming provisions of sec 69C the same is deemed to be unexplained expenditure of the assessee on which proviso to sec 69C of the Act has overriding effect. Assessee audacious claim may be right that nothing can be brought to tax as assessments for those years are now time barred, but the proviso expressly debars allowance of any benefit in this behalf. Having accepted this proposition, the ld. CIT(A)'s order deserves to be upheld as the benefits of such unrecorded expenditure cannot be claimed by the assessee in any year by this overriding proviso. As already mentioned apropos alternate contention of allowing the amount of ₹ 77,726/- and ₹ 39,400/-, we have already rejected the assessee's claim being without any basis and it digress from the issue. Sec. 4 of THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 was introduced as an overriding law as mentioned in sec. 3 to curb the pernicious practices of Benami Transaction and denying the benefits of enjoyment of Benami property to real owner. Sec. 4(1) clearly forbids any claim or action from real owner in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 29,051- Total ₹ 2,97311/- (a) F.Y. 1991-92 ₹ 2,97,311/-. This is evident from zerox copy of deed of purchase of plot, copy whereof has been furnished by me vide annexure A of letter dated 02-06-2008. In my said letter it has been very categorically mentioned by me that it is from my undisclosed income. I submit if at all it is taxable it is in A.Y. 1992-93 which is time barred. 1.1 Apropos applicability of Section 50C, the assessee gave an ambivalent reply as under: Letter dated 25-07- 2008 - It is true that stamp duty authorities is consonance to provision of Section 54 have estimated market value of property for determination of stamp duty at ₹ 14,89,520/- and therefore, provision of Section 50C of I.T. Act, 1961 are applicable on me. However, I submit that as this property was in name of my sister Manju Dhanuka who was my benami and as I was worrying that she or her relations may trouble me and therefore, I had sold the property in whatever price I could get under these circumstances I submit provisions of Section 50C may not be attracted. I may also sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under. While considering device to avoid tax, it is not to ask whether the provision should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. It is up to the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and to consider whether the situation created by the devices could be related to the existing legislation with the aid of emergence techniques of interpretation to expose the devices for what they really are and to refuse to give judicial benediction . The Courts in such a case should not lay undue emphasis on the language of each individual document as that is not determinative of the controversy. What is really necessary to be considered in such cases is the true nature and effect of the transaction. 1.5 In conclusion ld. AO held that stamp / circle rate value of the property i.e. ₹ 14,89,520/- was income from other sources which accordingly was added to the income of the assessee. 2. Aggrieved, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boundary wall. Accordingly out of ₹ 27,937/- details in relation to ₹ 60,349/- were contradictory and cannot be accepted. Out of remaining expenses, there was no evidence in relation to expenses of ₹ 17,496/-. The remaining expenditure cannot be treated as spent for purchase of plot, this expenditure comes to ₹ 2,19,466/- As per Section 48, this expenditure is allowable as cost of acquisition. However, the Assessing Officer did not allow the expenses as entire expenses were admittedly undisclosed. In my opinion, in such cases Section 69C is directly applicable. For ready reference, the same is reproduced below:- Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part [Assessing] officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be deemed to be the income of the assessee for such financial year; Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty. Therefore, the issue about the assessee being Benami owner of the property in question is not in dispute. 3.2 Section 69C of the Act reads as under. 69C Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source4 of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be deemed to be the income of the assessee for such financial year:] [Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income.] The ld. Counsel for the assessee contends that once section 50C is held to be applicable and the transaction is held to be long term capital gain, a finding which is not challenged by the revenue: in this eventuality the provisions of section 48 will be automatically applicable with necessary consequences are provided by sec 48. 3.3 It is contended that where in any financial year an assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith both lower authorities. Besides, it is further supported with capital account for assessment year 2006-07 also. Moreover, once expenses are proved with evidence even if it is not from explained source the same is to be deducted. 3.5 The ld. Counsel for the assessee contends that once section 50C is to be held applicable and the asset and sale thereof is held to be long term capital gains, the provision of section 48 will be automatically applicable as necessary consequences are provided as under:- 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; 3.6 It is pleaded that what is important from the point of view of section 48 is the cost of acquisition and not, whether it was disclosed in the books of account or not. Therefore, having held the assessee as owner of the property, the cost of acquisition and consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. Thus the story is fabricated by the assessee as an afterthought to evade maximum tax by such unfounded claims. The assessee has acted in a very indiscreet manner by not disclosing the Benami property and without making any investment in the books of account towards improvement of this property. Assessee as is obvious is a clever person well versed with the intricacies of law. It is unbelievable that he will dare to show expenditure of improvement for the property which is originally not disclosed in his earlier books at all. 4.3 It is contended that in empirical terms this is a fit case where the assessee's entire income in this behalf shall be treated as income from other sources. The materials available on record shows that the assessee has audacity to claim that though he has evaded taxes in past by not disclosing the cost of acquisition, nevertheless allow me all claims and no harm can be done by the Revenue for past years as assessments are by now time barred. It is further pleaded that if such types of assessee's are allowed to go scot free, it will amount to travesty of justice. It will send totally a wrong message to the tax evaders. The order of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988. Sec. 4 thereof reads as under: 4. Prohibition of the right to recover property held benami- (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be real owner of such property. (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. This law was introduced as an overriding law as mentioned in sec. 3 to curb the pernicious practices of Benami Transaction and denying the benefits of enjoyment of Benami property to real owner. Sec. 4(1) clearly forbids any claim or action from real owner in respect of any Benami property. Thus assessee's claim for benefits u/s 48 are also denied by this specific and overriding law which is fully applicable to this case. Consequently the order of Ld. CIT(A) is upheld in toto. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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