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TMI Blog2024 (12) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... etitions reproduced below:- "Thus, the Income Tax Act has clearly spelt out the situations, where the income that has to be assessed tax under head "Income from Other Sources". The assumptions and presumptions of the AR in the submissions cannot be acceptable in view of the express provisions as laid out in the aforesaid section. The views given by the AR in the submissions are not borne out of facts or the law laid down in the Income Tax Act. The intention of legislature and the purpose for which the aforesaid law is enacted is very clear. The Central Government has been time and again taking various initiatives to curb the menace of black money circulation and there had been dramatic changes in the recent past in the income tax law in this regard. Action against black money is an on-going process. Such actions include policy-level initiatives, effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes. One of such initiatives taken by the Central Government is the introduction of Section 56(2)(vii)(b)(ii) to the Income Tax Act, 1961, via Finance Act, 2012. The objective of introducing Section 56(2)(vii)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 570/-) respectively. 6. The case of the petitioners was selected for limited scrutiny under CASS and the petitioners were called upon to attend the personal hearing pursuant to Notice dated 29.07.2016 issued under Section 143(2) of the IT Act. 7. During the course of the proceedings before the Assessing Officer, copy of the Sale Deed dated 30.06.2014 was produced. The Assessing Officer agreed for additions to be made. Thus, an Assessment Orders came to be passed on 30.11.2017, whereby, the difference between the value adopted by the respective petitioners in the Sale Deed dated 30.06.2014 and the guideline value was taxed in the hands of the respective petitioners by equally dividing the difference. 8. Thus, a sum of Rs. 12,84,500/- (Rs. 25,69,000 divided by 2) came to be added to the income of the respective petitioners. Details of the additions are as under: Guideline Value - Rs.97,69,000/- Sale Consideration - Rs.72,00,000/- Difference - Rs.25,69,000/- The amount of Rs. 97,69,000/- did not include the stamp duty and registration charges of Rs. 6,00,000/-. 9. In the Return of Income dated 01.09.2015 for the Assessment Year 2015-2016, they have declared the total con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the petitioners would draw attention to Section 56(2)(vii)(b)(ii) of the IT Act. Learned counsel also referred to Proviso to Section 56(2)(vii)(c) of the IT Act. 17. It is further submitted that the petitioners are individuals who have unnecessarily been exposed to tax liability which was totally unwarranted merely because the guidelines value of the property was shown as higher. 18. Learned counsel for the petitioners has drawn attention to the decision of the Division Bench of this Court referred in The Commissioner of Income Tax, Chennai Vs. Shri Vummudi Amarendran (T.C.A.No.329 of 2020 dated 28.09.2020), wherein, referring to the decision of the Hon'ble Supreme Court in R.Saibharathi Vs. J.Jayalalitha reported in 2004 (2) SCC 9, the Division Bench of this Court held as follows:- "7. Before we proceed to consider as to whether proviso inserted in Section 50C of the Act has to be read retrospective or prospective, we need to point out that the Assessing Officer did not doubt the bonafides of the transaction done by the assessee, since the Assessing Officer accepted the fact that the assessee had entered into an Agreement for Sale of the property in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the true market value of the properties in question to ascertain whether the transaction has resulted in any offense so as to give a pecuniary advantage to one party or other." 19. It is submitted that the Division Bench of this Court held that the Assessing Officer could not have based his conclusion solely based on the guideline value which has been held to be only a prima facie rate prevailing in the area to ascertain the true or correct market value and it is not the last word on the subject of market value but only a factor to be taken note of. 20. On the other hand, the learned Senior Standing Counsel for the respondents would submit that the impugned orders does not suffer from any irregularity or illegality warranting interference under Article 226 of the Constitution of India. 21. Specifically, the learned Senior Standing Counsel for the respondents would draw attention to the initiatives of the Government for inserting/introducing Section 56(2)(vii)(b)(ii) of the IT Act vide Finance Act, 2012. It is further submitted that the objective of inserting/introducing the aforesaid provision was to discourage the generation and use of unaccounted money done through transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement for transfer:] (Inserted by Finance Act (No.2), 2019 w.e.f. 01.04.2020) Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and ten per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. (Brought in by Finance Act, 2018 w.e.f. 01.04.2019) (2)Without prejudice to the provisions of subsection (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under subsection (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under subsection (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be the full value of the consideration received or accruing as a result of transfer. 31. Thus, the value adopted for the purposes of payment of stamp duty value shall be deemed to be the full value of the consideration received or accrued as a result of such transfer. 32. As per sub-section 2 to Section 50C of the IT Act where the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer and the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) to Section 50C of the IT Act has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or the High Court, the Assessing Officer as the case may be refer the valuation of the capital assets to a Valuation Officer. Where such a reference is made, the provisions of sub-section 2, sub-section 3, sub-section 4, sub-section 5, sub-section 6 of Section 16A, clause (i) of sub-section (1) and sub-sections (6) and sub-section 7 of Section 23A, subsection (5) of Section 24, Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections. Section 50C of the IT Act does not contain a ground for objecting the valuation by the seller of the immovable property. However, under the first proviso to Section 56(2)(vii)(c) of the IT Act, it is specified as a ground to make a reference to the Valuation Officer. Thus, there is ambiguity in Section 50C of the IT Act. 38. Section 56(2)(vii)(b)(ii) and Section 56(2)(vii)(c) of the IT Act are reproduced below:- 56. Income from other sources. (1) ..... (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely:- (i) ..... (ii) ..... (iii) ...... (iv) ..... (v) ..... (vi) ..... (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,- (b) any immovable property,- (i) without consideration, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st or institution registered under [Section 12AA or Section 12AB] or (h) by way of transaction not regarded as transfer under clause (vicb) or clause (vid) or clause (vii) of Section 47. 39. Sub-Clause (vii) to Section 56(2) of the IT Act was substituted by Finance (No.17) Act, 2013 w.e.f 01.04.2014. Since, the sale was registered on 30.06.2014, the above amendments are relevant. 40. In this case, admittedly, the value declared in the Sale Deed was Rs. 72,00,000/-. The value adopted by the SRO was Rs. 97,69,000/-. 41. Thus, the differential value exceeds Rs. 50,000/-. Therefore, the present case is covered by Section 56(2)(vii)(b)(ii) of the IT Act as extracted in the above tabular column. Thus, the value adopted for assessment of the stamp duty by the SRO at Rs. 97,69,000/- has to be adopted for the purpose of computation of Income of the petitioner. If the value is disputed on the grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of Section 50C and sub-section (15) of Section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative of the petitioner did not dispute the valuation. In fact, the Authorized Representative accepted to the addition which culminated in the Assessment Order dated 30.11.2017. 45. The case of the petitioners has to be looked at from the point of view of Section 56(2)(vii)(b) of the IT Act which has been extracted above. Since the guideline value of the property is more than the value adopted in the Sale Deed dated 30.06.2014, the petitioners herein would be entitled to take advantage of the first proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act read with Section 50C(2) of the IT Act. 46. The first proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act entitles the petitioner to raise a dispute regarding the valuation of the immovable property as in the case of a seller under subsection 2 to Section 50 of the IT Act, in which case, the Assessing Officer has to refer the valuation of such property viz., capital asset to the Valuation Officer. 47. Provisions of Section 50C & sub-section 15 to Section 155 of the IT Act are to apply in relation to the stamp duty value of such property for the purpose of sub-clause (vii)(b) to sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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