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TMI Blog2023 (6) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... T ought to have held that the possession of the property was taken in the earlier years and the entire payments were also made and, therefore, effective transfer had taken place in the earlier year hence, provisions of section 56 (2) are not applicable. 3) The appellant reserve right to odd, alter and withdraw any grounds of appeal." 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual and had filed his return of income for the A.Y. 2018- 19, on 10/09/2018, declaring total income at Rs.23,07,440/-. Subsequently, the assessee`s case was selected for Limited scrutiny through CASS for examination of following issue: (1) Investment in immovable Properly (Purchase Value of Property less than the value as per stamp authority [u/s 56(2) or any other relevant section] (Business ITR). The Scrutiny assessment under section 143(3) r.w.s. 143(3A) & 143(3B) of the I.T. Act, 1961 was finalized in assessee's case on 30.07.2020, accepting the Return Income i.e. Rs.23,07,440/-. 4. Later, Learned Principal Commissioner of Income Tax (in short 'Ld. PCIT'), Surat-1, exercised his jurisdiction under section 263 of the Income Tax Act, 1961. On verification of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed below: "It is submitted that I had purchased the above said plot catted Plot No. 270 at Village Dumas in F. Y, 2003-04 by making full payment by account payee cheques for Rs.2.50/- lacs and possession was also taken F, Y. 2003-04, The said plot was purchased jointly with Ankin S. Zaveri and accordingly I had 1/2 share in the said property. The document was executed on 13.03.2008. The details of payments are as under: 16.04.2002 Surat People's Bank 55824 50,000 24.04.2003 Surat People's Bank 55837 50,000 29.04.2003 Syndicate Bank 655928 1,00,000 19.08.2003 Syndicate Bank 655934 50,000 Total 2,50,000 b) the possession of the property was taken as soon as the full payment was made. This fact is evident from the para 5 of the purchase deed dated 13.03.2008. English version para 5 of the purchase deed dated 13.03.2008/registration no.3373 (c )On payment of the entire sale consideration, we hand over the possession of the plot as prescribed in below mentioned annexure as a member of the society thereof. Thus, since the possession is given to you, we the seller or our legal heirs shall not take back the possession and shall not raise any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ready reference: Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of the clause. The above said proviso is applicable only when the payment was made by account payee cheques on or before the date of agreement for transfer of such immovable properly) In the present case, the original document was executed in F.Y.2007-08 and the payment was made by account payee cheques in F.Y. 2003-04 and, therefore, the stomp duty value of F.Y.2003-04 ought to be taken. As per the original document, no additional stamp duty was viable on the base of payment in F.Y.2003-04 when the document was registered in FY.2007-08. In view of the above, the value of Rs.2,50,000/- ought to be considered as the value for stamp duty purpose as the payment was made by account payee cheques for the sake of repetition. I further submit that, since the possession was already taken on full payment by account payee cheques in F.Y.2003-04, the property was deemed to be transferred by virtues of section 2(47) of the Act in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of this clause. The abovesaid proviso is applicable only when the payment was made by account payee cheques on or before the date of agreement for transfer of such immovable property, in the present case, the original document was executed in F.Y. 2010-11 and the payment was made by account payee cheques in F.Y.2010-11. As per the original document, no additional stamp duty was leviable on the base of payment in F.Y.2010-11. In view of the above, the value of Rs.24,30,000/- ought to be considered as the value for stamp duty purpose as the payment was made by account payee cheques. For the sake of repetition, I further submit that, since the possession was already taken on full payment by account payee cheques in F.Y. 2010-11, the property was deemed to be transferred by virtue of section 2(47) of the Act in that year, it is submitted that provisions of section 56(2)(x) are applicable from 01.04.2017, the same is not applicable as the payment of cheques was made in F.Y. 2010-11 and the possession was also taken in that year. The assessee relies on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f stamp duty was made by account payee cheques and since the possession was already taken on full payment by account payee cheques in F.Y.2003-04, hence the property was deemed to be transferred by virtues of section 2(47) of the Act in F.Y.2003-04. Later on there was correction in the purchase deed, therefore correction in purchase deed and payment of additional duty on the occasion of correction does not attract the capital gain as the transaction was materialized in F.Y.2003-04. 12. The ld Counsel also argued that provisions of section 56(2)(x) of the Act are applicable from 01.04.2017, hence the same is not applicable to the assessee, as the payment of cheques was made in F.Y. 2003-04 and the possession was also taken in F.Y. 2003-04. Besides, the assessing officer made adequate enquiry during the assessment proceedings in respect to the said issue and assessee has replied to the assessing officer, hence it is not a case of inadequate enquiry. Therefore, ld Counsel contended that order passed by the ld PCIT may be quashed. 13. On the other hand, Ld. CIT(DR) for the Revenue submitted that during the assessment stage, the Assessing Officer has not conducted any enquiry and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the transfer of property as per the provisions of section 2 (47) of the Act (Purchase of property) had already taken place in the A.Y. 2004-05 by way of full payments by cheques as well as possession thereof. Since the property was already transferred in earlier year, the provisions of section 56(2)(x) of the Act were not invoked by assessing officer while passing order u/s 143(3) of the Act. We also note that assessing officer conducted sufficient enquiry during the assessment proceedings about the issue raised by ld PCIT, by way of issuing notices to the assessee. The assessing officer had information regarding purchase of balance share of the said plot and the issue was raised during assessment proceedings, regarding application of provisions of section 56(2)(x) of the Act, however, after considering the reply of the assessee dated 24.06.2020 (page no. 207 & 208 of the paper book), no addition was made by the assessing officer. Therefore assessment order is not erroneous, as the provisions of section 56(2)(x) were duly considered for the balance 1/2 share of property. So far as the original 1/2 share of the property is concerned, the payment was made by cheques in the A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s equally important to notice that the AO seeks to tax the income on sale of the property in the year under consideration on protective basis by observing that "consequently the substantive addition may be made in A.Y. 2005-06 as per the law". The expression "may be made" in itself indicates that the AO is not sure as to whether the transfer took place in A.Y. 2005-06 or not and in fact his subsequent action/inaction of not initiating any proceeding in respect of A.Y. 2005-06 speaks volumes about the conduct of the AO. In fact it is a matter of serious concern. 12. Article 265 of the Constitution of India postulates that there cannot be levy of tax without authority of law. It is not in dispute that capital gains tax can be levied only in the year when the transfer of immovable property takes place. If the AO is of the firm view that the transfer had taken place on 16.03.2005, for capital gains tax purpose, then it is mandatory to bring to tax, the said income, in A.Y. 2005-06 in which event he ought to have excluded the income offered to tax in A.Y. 2006-07, having observed that reckoned from the date of transfer the assessee has not invested, within six months, the sale proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that the date of handing over of possession in the instant case was 20.09.2005, and based on this factual premise it has to be held that the transfer had taken place in the previous year relevant to A.Y. 2006-07. Reckoned from the date of possession, i.e., 20.09.2005, the assessee having invested the money within six months in long term specified asset, the benefit of exemption under section 54EC deserves to be extended to the assessee in the instant case. In substance, we hold that the assessee is entitled to exemption under section 54EC of the Act in the year under consideration and we direct the AO accordingly. This disposes of ground No. 1, 2 & 3 set, out in the Revised Grounds of Appeal" 19. Now, let us take the guidance of judicial precedents laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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