TMI Blog2010 (7) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the absence of any evidence regarding any unexplained or unrecorded investment, there is no case of any hypothetical addition in terms of provisions of section 69C of the Income-tax Act. (iv) That this is a case of purchase of property and deeming provisions of section 50C which is in the context of computation of capital gain u/s 45 of the Income-tax Act on sale of an asset are not applicable for the purpose of sec. 69 and as such whole basis of any addition is illegal and invalid. 2. Before us, the ld. counsel for the assessee referred to the findings of the ld. CIT(Appeals), which read as under:- After going through the findings of the Assessing Officer, submissions of the AR of the appellant and the facts of the case, this ground is being disposed of after making the following observations:- (i) The Assessing Officer has made the addition of Rs. 35,90,000/- u/s 69B of the Income-tax Act by relying upon the report of the approved valuer from SIDBI, which was for the purpose of grant of loan. This valuation was also not provided to the appellant for his comments or for analyzing the manner in which the valuation had been prepared. It has further been contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the industrial plot. On the basis of the documents and the circle rate the value of the plot would be higher than the amount shown by the appellant. The Assessing Officer at best would be justified in making a fair estimation of the actual investment by relying upon the circle rate for the area instead of relying upon the valuation report prepared for SIDBI. As per the appellant s own contentions the valuation of the industrial plot as per the circle rate would come to Rs. 15,00,000/- against the declared value of Rs. 10,00,000/-. Further other charges of Rs. 4,90,000/- have also been spent by the appellant in respect of transfer fee etc. In view of the circle rate for the area, in my opinion, the Assessing Officer would be justified in arriving at the actual amount of investment on the basis of this circle rate and the same has been computed by the appellant at Rs 15,00,000/-. The Assessing Officer is directed to verify the actual investment based on the circle rates claimed to be at Rs. 15,00,000/- by the appellant. Further, the other charges of Rs. 4,90,000/- may also be verified. The Assessing Officer is directed to consider this amount as a total investment and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consideration and capital gains shall be computed, accordingly, under section 48of the Act. In case the value adopted or assessed for stamp duty purposes is revised in any appeal, revision or reference, the assessment made shall be amended to re-compute the capital gains by taking the revised value as the full value of consideration. Accordingly, we are of the view that the provisions of section 50C are applicable only for the computation of capital gains in real estate transaction in respect to seller only and not for the purchaser. We find from section 50C of the Act that it creates a legal fiction thereby apparent consideration is substituted by valuation done by Stamp Valuation Authorities and capital gains are calculated, accordingly. Legal fiction cannot be extended any further and has to be limited to the area for which it is created. Hon ble Andhra Pradesh High Court in the case of Addl. CIT Vs. Durgamma [1987] 166 ITR 776 held that it is not possible to extend the fiction beyond the field legitimately intended by the statute. The Hon ble Court was dealing with the provisions section 171(1) of the Income-tax Act in the context of which it was held that joint family shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed investment under section 69. In fact, section 69 itself is a legal fiction whereby investment into an asset is treated as income if it is not disclosed in the regular books of account. No further legal fiction from elsewhere in the statute can be borrowed to extend the field of section 69. It is for the Legislature to introduce legal fiction to overcome difficulty in taxing certain receipts or expenditure which otherwise was not possible under normal provisions of the Act. It is with this purpose that when it was found difficult to prevent tax evasion by understanding apparent sale consideration as compared to the valuation made by Stamp Valuation Authorities for the purposes of levying stamp duty then it was thought necessary to introduce section 50C for substituting apparent sale consideration by valuation done by Stamp Valuation Authorities. This faction cannot be extended any further and, therefore, cannot be invoked by Assessing Officer to tax the difference in the hands of the purchaser. Hon ble Madras High court in CGT vs. R. Damodaran [2001] 247 ITR 698 held that stamp valuation authorities have their own method of evaluating the property. Merely because for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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