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TMI Blog2021 (8) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue in cross-appeals is whether on the facts and circumstances of the case, Ld.CIT(A) was justified in restricting the additions made u/s 56(2)(vii)(b) of the Act to the extent of Rs. 7,06,720/- as against Rs. 1,83,87,700/- as made by Ld.AO while framing the assessment. 3. We have carefully heard the rival submissions and perused relevant material on record including documents as placed in the paper book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. It is the plea of Ld. AR that the provisions of Sec. 56(2)(vii)(b) would not be applicable to assessee's case as held in earlier order of Tribunal passed in assessee's appeal on 28/10/2020. The Ld. AR submitted that while adjudicating the issue, the bench had relied upon the decision of Ranchi Tribunal in Bajrang Lal Naredi V/s ITO (ITA No.327/Ran/2018 dated 20/01/2020) and held that the provisions of Sec. 56(2)(vii)(b) would not be applicable since agreements with respect to purchase of properties were entered into earlier years. The order was recalled only because of the fact that revenue's appeal against the same issue could not be brought to the notice of the bench. The Ld. DR, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions could not find favour with Ld. AO in view of the fact that summon was issued u/s 131 on 15/12/2016 to M/s. Perfect Constructions (builder) to produce copy of agreement for flat Nos.1101 and 1102. M/s. Perfect Constructions (builder) vide their reply dated 17/12/2016 did not submit copy of the agreement but merely confirmed that during financial year 2007-08, the assessee had shown interest in booking Flat Nos.1101 and 1102. However, after visiting the site, the assessee changed his mind and requested for change the location of flats to flat nos. 702 & 703. 4.5 The Ld. AO again issued one more summon u/s.131 to M/s. Perfect Constructions on 26/12/2016 to produce the receipt of payments against the sale of flats, copy of registration and allotment letter etc. In response to the said summons, M/s Perfect Constructions filed a letter dated 26/12/2016 confirming the transactions made with the assessee but did not file copies of agreement /allotment letter as demanded by Ld. AO. Thus, Ld. AO observed that the reply did not fulfil the requirements of the notice in full as the builder had not produced original receipts of payment against sale of flat and other documentary e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lat Nos.1101 and 1102, the assessee proceeded with flat Nos.702 & 703 in the very same building. For the same, the earlier payments made by the assessee for flat Nos.1101 & 1102 were adjusted by the builder and a separate letter of allotment was given by the builder in January, 2012. The allotment letter clearly specified the extent of the property attributable to assessee together with stamped receipts for all the payments made clearly mentioning the flat Nos.702 & 703. Once the full payments were made for flat Nos. 702 & 703 by the assessee to the builder and possession of the property was handed over by the builder, the properties were registered in the name of the assessee in A.Y.2014-15. Hence, the original proposal to buy the flat remained intact and the applicability of provisions of Section 56(2)(vii)(b) of the Act should be related back to the years 2007 & 2008 and not in the year of actual registration of the property. The assessee also placed reliance on the proviso to Section 56(2)(vii)(b) of the Act as introduced by the Finance Act, 2013 to argue that the said proviso needs to be construed as retrospective in operation, even if the provisions of Section 56(2)(vii)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration payable by the assessee and the fact of possession of property after receipt of full consideration. 5.6 The Ld. CIT(A) duly appreciated the fact that the proceedings of cross-verification with the builder was carried out by Ld. AO only at the fag-end of the assessment proceedings and because of that, the reply furnished by the builder in response to summons could not be considered by Ld. AO as the assessment was getting time barred by 31/12/2016 and that the very same contents of the letters, several annexures were sought to be verified by the Ld. AO in the remand proceedings at his behest. The same will not tantamount to filing of additional evidences by the assessee in terms of Rule 46A of the rules and that the remand report was sought from the Ld. AO only for better appreciation of the facts in the interest of justice. The Ld. CIT(A) also concurred that no mistake should be attributed to the assessee in this regard. 5.7 After going through the remand report, Ld. CIT(A) proceeded to examine the issue on his own and ultimately held as under: - (a) The assessee had booked the flats way back in F.Y.2007-08 relevant to A.Y.2008-09 itself for which initial payments were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed by the builder also in reply to summons issued by Ld. AO. 7. We are of the considered opinion that it was not a case of new booking but a case wherein the assessee had merely exchanged the flats at the same site to have better location. The area as well as sale consideration was the same and the new flats got substituted from the date of initial booking which is evident from the conduct of the parties. This being the case, the provisions of Sec. 56(2)(vii)(b) as applicable from 01/04/2014 could not have been applied by Ld. AO. Another aspect is that the proviso to this sub-section provides that where the date of agreement fixing the amount of consideration for the transfer of immoveable property and the date of registration are not the same then the stamp duty value prevailing on the date of agreement may be taken for the purpose of this sub-clause. The said proviso would, alternatively, be applicable to the fact of the case since the consideration has been paid by the assessee though banking channels in terms of requirements of second proviso. Nevertheless, since the provisions of Sec. 56(2)(vii)(b) has been held to be not applicable, the additions made by Ld. AO invokin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of such provision only where there is a total lack of consideration and does not cover a case of inadequacy in purchase consideration. 7. We find merit in such plea advanced on behalf of the assessee. It is not in dispute that purchase transactions of immovable property were carried out in FY 2011-12 for which full consideration was also parted with the seller. Mere registration at later date would not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom. The pre-amended provisions will thus apply and therefore the Revenue is debarred to cover the transactions where inadequacy in purchase consideration is alleged. We thus find merit in the issue raised on behalf of the assessee. The order of the CIT(A) is accordingly set aside and the AO is directed to delete the additions made under s. 56(2)(vii)(b) of the Act and restore the position claimed by the assessee." The ratio of above decision is squarely applicable to the facts of this case. No other contrary decision is on record. Therefore, the additions as made by Ld. AO could not be sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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