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TMI Blog2019 (9) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial questions of law: (a) Whether on the facts and circumstances of the case and in law was the Tribunal justified in holding that in the absence of any defect being pointed out in the records, the invocation of Section 145(3) of the Act was not proper ? (b) Whether on the facts and circumstances of the case and in law, the Tribunal is justified in deleting, without any valid and cogent material/ reasons against the findings of suppression of Sales by the CIT(A), the addition of Rs. 5,30,80,200/- made by the CIA(A) on account of understatement of sales? 3. The Respondent- assessee is engaged in the business of property development. A property named Joanna Villa at 28th Road, Bandra (West), Mumbai was owned by Ms.Roze Margaret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent sold two flats to its directors and six flats were sold to the outsiders, the new purchasers. 5. The Assessing Officer in the assessment order for the subject assessment year held that the income on the sale of flats is available to tax in the assessment year 2004-05 and not in the assessment year 2005-06. This on the basis that the project was completed in the previous year relevant to the assessment year 2004-05 and not assessment year 2005-06. However, the income offered by Respondent for the assessment year 2005-06 was assessed on protective basis. 6. In the order for assessment year 2004-05, the Assessing Officer found there was suppression of sales value in respect of six flats. Thus the Assessing Officer made an additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny defect in the books on account of being found. The Tribunal by the impugned order dated 4 January 2016 allowed the appeal deleting the enhancement of assessment of Rs. 5,30,80,200/-. 9. Mr.Sharma, the learned counsel appearing for the Appellant- Revenue contended that there is variance between the rate and value of the flats sold and the stamp duty valuation. It was contended that the rates on which the flats were sold were lower than the stamp duty valuation and the ready reckoner. Thus, the Revenue in absence of any satisfactory explanation by the assessee had correctly enhanced the assessment. Mr.Sharma relied upon the decision of this Court in the case of Commissioner of Income Tax v. Associated Builders (2001) 115 Taxman 19 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to him, the market rate nearest to that date is Rs. 8,992/- per sq.ft. and, thus, reassessed the sale of each of the twelve flats. This basis of the nearest market rate is not found in his order. Therefore, on this basis itself the assessment is bad. In any case, Mr. Sharma, the learned Counsel for the Revenue submits that the market rate is the stamp duty rate of registration. Therefore, the stamp duty rate is used as a means to consider proper sales value of transfer of the flats. At the relevant time i.e. for the assessment year 2005-06, the only provision for application of deemed value for consideration was found under Section 50C of the Act relating to capital assets. At the relevant time there was no provision in the Act for deemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (other than a capital asset) i.e. stock in trade. This view is further strengthened by the fact that section 43CA has been introduced into the Act w.e.f. 1st April, 2014 which governs taking of full value of consideration for transfer of assets other than capital assets on the basis of stamp duty valuation. This section 43CA of the Act finds a place as a part of Chapter IV-D - Profits and gains of business or profession. Therefore, with effect from 1st April, 2014 the stamp duty valuation of assets sold could be taken as value of consideration. Our above view that section 50C of the Act has no application to value stock in trade is also a view taken by Allahabad High Court in Commissioner of Income Tax v. Ken Construction and Colonizers (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions, stamp valuation of such stock would substitute the actual receipt thereof. In absence of any such statutory provisions, giving rise to the deeming fiction, the Revenue cannot tax any amount which has not been received by a seller of an immovable property at the time of sale." (emphasis supplied) No contrary decision is shown. 15. As regards the decision in the case of Associated Builders relied upon by the Appellant- Revenue, it arose in the context of valuation of assets including stock in trade on dissolution of a partnership firm. This Court was concerned with the issue whether, when the asset was valued on the basis of book value as provided in the contract between the parties, is it open to the Assessing Officer to ignore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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