TMI Blog2021 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... n the parties vide Sale Agreement dated 8.3.1993 and possession of property has already been handed over on 24.10.1989. Therefore, transfer has taken place vide Sale Agreement dated 8.3.1993 and full value of consideration for the purpose of computing long term capital gain in the hands of the assessee has to be adopted on the basis of guidance value of this property as on the date of Sale Agreement only, not on the date of Sale Deed dated 9.3.2007. Accordingly we allow the grounds taken by the assessee as there was no applicability of section 50C in the year 2007-08. - ITA No.999/Bang/2019 - - - Dated:- 28-1-2021 - Shri Chandra Poojari, Accountant Member And Shri George George K., Judicial Member For the Appellant : Shri V. Srinivasan, Advocate For the Respondent : Shri Kannan Narayanan, Jt.CIT(DR)(ITAT), Bengaluru ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against the order dated 29.03.2019 of the CIT(Appeals), Bangalore-9, Bangalore in relation to assessment year 2007-08. 2. The assessee has raised the following grounds of appeal:- 1. The orders of the authorities below in so far as they are agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the site to Shri R.K. Sipani on 24/10/1989 for a consideration of ₹ 9,80,500. The assessee received amount of ₹ 9,79,455/- through various cheques and balance amount of ₹ 1,005/- was to be paid by the purchaser at the time of execution of sale deed. On 08.03.1993, a sale agreement (unregistered document) for the aforesaid site was made between the assessee and Shri R.K. Sipani to bring clarity on the nature of the transaction with respect to oral agreement. The assessee further executed a sale deed on 09.03.2007 in which the aforesaid site was sold to M/s. Suraj Properties (a proprietary concern of R.K. Sipani s wife) for a consideration of ₹ 9,80,500/- towards sale and ₹ 23,27,305/- towards purchase of stamp duty. 5. The guidance value of the above property as per the sale deed was ₹ 2,77,06,000/-. The Assessing Officer noticed that sale consideration was less than the guidance value. For the purpose of computation of capital gains, when the sale value is less than the guidance value calculated by stamp valuation authority, provisions of section 50C are attracted. As per section 50C, in such a case , the guidance value shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. The assessee submitted that the assessee gave possession of the property before enactment of section 50C of the Act itself and therefore, section 50C has no application. It was submission of the assessee that assuming section 50C is applicable, the document executed is with reference to a contract or transfer within the meaning of Income-tax Act prior to enactment of section 50C of the Act. Therefore, it was submitted that the provisions of section 50C are not applicable. However, the Assessing Officer stated that provisions of section 50C are applicable and held that transaction is taxable for the year 2007-08. The Assessing Officer thus treated ₹ 2,77,06,000/- as the sale consideration received by the assessee and calculated income from capital gains accordingly. 7. On appeal, the CIT(Appeals) confirmed the action of the AO in reopening the assessment and held that notice u/s. 148 was validly issued. On merits, he observed that the exact date of transfer has to be ascertained. Before the CIT(A), the assessee submitted that since the possession of the property was given long back, Shri R.K. Sipani had constructed the house for his own residential purpose, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the execution of sale deed when the property was legally transferred. Thus he observed that the assessee was trying to bypass the laws with the help of various agreements which is clearly an instance of tax avoidance. He referred to section 54 of the Transfer of Property Act which, according to him, clearly states that transfer in case of an immovable property of value more than ₹ 100 can only be made through a registered document. Section 54 of the Transfer of Property Act states as follows:- Sale defined, - Sale is a transfer of ownership in exchange for a price paid or promised or part paid and part promise. Sale how made Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such, person as he directs, in possession of the property. Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or of the part performance thereof.] Income Tax Act Section 2 Definitions In this Act, unless the context otherwise requires, (47) transfer , in relation to a capital asset, includes, (i) to (iv) xxx xxx (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. 45. Capital gains (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head Capital gains , and shall be deemed to be the income of the previous year in which the transfer took place. 48. Mode of computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. Section 17(1A) and Section 49 of the Registration Act, 1908 Act, as amended, read thus: 17(1A). The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then they shall have no effect for the purposes of the said Section 53A. 49. Effect of non-registration of documents required to be registered . No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no transfer can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question. 13. The CIT(A) concluded that the sale agreement dated 08.03.1993 is an unregistered document and no legal transfer has happened through that. The CIT(A) observed that the transfer can only be effected by the execution of a sale deed which happ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj Properties, Proprietrix, Smt. Suraj Sipani on 23/08/2011. It is stated that in course of the aforesaid survey proceedings, certain documents viz., sale deeds/agreements to sell were found and impounded. Perusal of these documents revealed that the assessee had sold the land acquired from BDA to M/s. Suraj Properties under the sale deed dated 09.03.2007 registered as document No. BHM 04162-2009-2010 in Book I, stored in CD No., BMHD 385 in the office of Sub-registrar, Bommanahalli, Bangalore for a consideration of ₹ 9,80,500/- towards sale and ₹ 23,27,305/- towards purchase of stamp duty. The guidance value of the property as seen from the sale deed is ₹ 2.7 crores. As the sale consideration is much less than the guidance value, the provisions of Sec. 50C of the Act is attracted in the hands of M/s. Prakash Chand Bethala and Sons [HUF]. Thus, the assessee is liable to pay capital gains tax. On the above basis, the AO was of the view after verification of the seized materials that it was found that the assessee has evaded the capital gains tax on the above sale of property for the aforesaid assessment year 20078-08. Hence, the learned A.O. has derived a reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken in this case AO for the year under appeal. A notice u/s. 148 of the Income-tax Act, 1961 [the Act] was issued to the assessee on 15/12/2012 calling upon to file his return of income. In response to the notice, the ld. counsel for the assessee submitted on 22/01/2013 requesting that the return of income filed originally on 31/03/2008 be treated as return filed in response to the notice issued u/s 148 of the Act. In the said reply, the reasons recorded for issuing the notice u/s. 148 of the Act was also sought. 21. In our opinion, at the time of issue of notice u/s. 148 of the Act, the AO should have reason to believe that income has escaped assessment and it is not imperative that the AO should actually disclose the escapement of particular item of income. In other words, at the time of issue of notice u/s. 148, there need not be conclusive proof that there was escapement of income. The AO shall prima facie certify that there is escapement of income. In the present case, at the time of issue of notice u/s.148, there is a reason to believe that income has escaped assessment in the AY 2007-08. Even further discovery of the fact cannot invalidate the notice u/s. 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the copy of Sale Deed was placed on record which was not considered by the Assessing Officer. The Ld. AR submitted that on 09/03/2007, Shri R.K. Sipani got the assessee to execute a sale deed in respect of the aforesaid site in favour of his nominee viz., M/s. Suraj Properties, which is a proprietary concern of Shri R.K. Sipani s wife. Thus, it was submitted that the title of the property stood in favour of assessee in the records of Sub-Registrar since no registered sale agreement/document was executed between the parties. Therefore, Shri R.K. Sipani requested the assessee to execute the sale deed as vendor which was readily accepted by the assessee since he had received the entire sale consideration of ₹ 9,80,500/- and M/s. KPCBPPL was made a confirming party as the super structure belonged to it. 24. The Ld. AR submitted that the difference between the guideline value of the sale deed being 09/03/2007 and the actual consideration agreed between the two parties became the subject matter of and the AO concluded the assessment proceedings, determining the total income of the assessee at ₹ 2,70,31,932/- by making a solitary addition of ₹ 2,68,25,802/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his property has been mentioned as address of R.K. Sipani as evident from Form 32 filed by Sipani Automobiles Ltd. before ROC on 17.12.1996. Further Katha of said property has been transferred on 9.2.2000 in the name of M/s. KPCBPPL. Thus, the major payment of ₹ 9,79,455 was received by the assessee vide Sale Agreement dated 8.3.1993 which was much before the Sale Deed executed on 9.3.2007. As observed earlier, section 50C provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, if less than value adopted or assed by any authority for the purpose of stamp duty in respect of such transfer, the value adopted or assessed shall for the purpose of section 48 be deemed to be the full value of consideration. The question before us is, what could be the full value of such consideration i.e., whether value on which stamp duty was paid at the time of Sale Deed or the value declared in the Sale Agreement? 29. In the present case, the assessee has entered into sale agreement on 8.3.1993 and major portion of the consideration has been received by the assessee mentioned in the Sale Agreement thr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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