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2016 (3) TMI 648 - ITAT DELHI

2016 (3) TMI 648 - ITAT DELHI - TMI - Addition u/s 69 on account of unexplained investment - AO relied on the deeming provision of section 50C for drawing an inference that the property in question was transacted at the market value and the consideration received by the seller was based on such market value which was not shown in the sale deed for transfer of this property - Held that:- Section 50C creates a legal fiction for taxing capital gains in the hands of the seller and it cannot be exten .....

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assessment of the vendor and not buyer. Therefore, the reliance of the Assessing Officer on the deeming provisions of section 50C for his inference that the property was purchased for a consideration which is much lower than the market value is not justified when the purchase transactions are recorded on the sale deed which was executed before the Sub-Registrar and the identity of the vendor u/s 69 of the I.T. Act, 1961. The Hon’ble High Court of Gujarat in the case of CIT vs. Usha Kant W Patel .....

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cord any cogent evidence to establish that the purchase consideration shown in the registered sale deed is much lesser than the market value of the property. - Decided in favour of assessee - I.T.A .No.-156/Del/2013 - Dated:- 11-2-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For The Appellant : Smt. Rasmita Jha, Sr. DR For The Respondent : Shri Ved Jain, CA ORDER PER BEENA PILLAI, JUDICIAL MEMBER: The present appeal has been filed by the Revenue against the or .....

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by the Assessing Officer u/s 69 of the I.T. Act on account of unexplained cash payment. 3. The facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in accepting the plea of the assessee that payment of ₹ 5,00,000/- was made on 30.08.2008 without appreciating the fact that both the parties had admitted before the registrar that payment of ₹ 5,00,000/- in cash had been made by the assessee before the date of registry and this very fact was also mentioned .....

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was selected for scrutiny under CASS. Statutory notices u/s 143(2) and 142(1) were issued and served upon the appellant. In response to the same, the AR of the assessee, attended the assessment proceedings and filed the necessary details that were called for and after examining the same, the Assessing Officer passed an order u/s 143(3) on 1/12/201,1 assessing the taxable income at ₹ 30,03,065/-. The assessee during the year under consideration declared business income from job work of pla .....

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rnished the copy of the sale deed and also the total investment made in purchase of this flat amounting to ₹ 28,36,500/- (Rs. 25,00,000/- plus stamp duty of ₹ 3,36,500/-) on being asked about the sources of such an investment by the Assessing Officer, the assessee explained the sources as under: a. Cash ₹ 5,00,000/- b. PO dt. 23.8.08 drawn on Andhra Bank ₹ 13,00,000/- c. Housing loan raised from Andhra Bank Housing Finance ₹ 7,00,000/- d. Out of cash in hand of S .....

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e the arrangement of cash on 26.08.2008 as the cheques he deposited in bank cleared on 27.08.2008. So, on the specific request of the assessee and against two personal guarantees, the seller agreed to deed registered on 26.08.2008 and also agree to accept cash within 2-3 days. On 30.8.2008, the assessee has withdraw the cash from his bank account and handed over to the seller of the flat. 3. The ld. Assessing Officer made an addition of the difference of the amount of value adopted by stamp duty .....

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Officer the assessee filed an appeal before the ld. CIT(A). 4.1. The ld. CIT(A) after considering the submissions of the assessee, deleted the addition and held that the ld. AO was not justified in drawing up an inference that the property was purchased for a consideration which is much lower than the market value, when the purchase transaction are recorded on the sale deed which was executed before the sub-registrar and the identity of the vendor is disclosed. The ld.CIT(A) also held that the .....

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at. Page 7 of the PB is the reply dt. 24.11.2011 tendered by the assessee to the ld. AO in lieu of the notice dated 28.10.2011 issued by the ld. AO. The assessee herein has narrated the circumstances under which the cash payment has been made to the seller towards the purchase of the flat. 5.2. The ld.AR submitted that the agreement was registered on the last date being 26.8.08 as per the agreement and that he could not make arrangement of cash on 26.8.08 as the cheques he deposited in the bank .....

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observed that the ld. AO has not appreciated the circumstances under which the cash has been given to the seller by the assessee. 5.3. The ld.AR has placed his reliance on the decision of Hon ble Delhi High Court in the case of CIT Vs. Khoobsurat Resorts Pvt.Ltd. reported in 82 DTR 290, wherein the addition made on the basis of difference in the actual purchase consideration and the value adopted for the purpose of the stamp duty which was deleated by the Tribunal has been upheald. 5.4. On perus .....

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applicable only for computation of capital gains in real estate transactions in respect to seller only and not for the purchaser. 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 Authority is undisclosed income in the hands of the purchaser. It cannot be invoked for charging to tax an undisclosed investment in the hands of the transferee. It is al .....

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