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Income Tax Officer, vs Sheoran Infrastructure Pvt. Ltd., Ward-8(2), GF 25A, Indraprakash, New Delhi. Barakhamba Road, New Delhi.-1100001
April, 15th 2014
                                      1
                                                              ITA No. 5523/Del/2013
                                                                 Asstt.Year: 2010-11

              IN THE INCOME TAX APPELLATE TRIBUNAL
                     DELHI BENCH `G' NEW DELHI

     BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
                           AND
          SHRI JOGINDER SINGH, JUDICIAL MEMBER

                         I.T.A.No.5523/Del/2013
                        Assessment Year : 2010-11

Income Tax Officer,        vs   Sheoran Infrastructure Pvt. Ltd.,
Ward-8(2),                      GF 25A, Indraprakash,
New Delhi.                      Barakhamba Road,
                                 New Delhi.-1100001
(Appellant)                              (Respondent)
                    Appellant by: Ms Y.S. Kakkar, Sr. Adv.
               Respondent by : Shri S.K. Chaturvedi, CA

                           ORDER

PER JOGINDER SINGH, J.M.

      This appeal has been preferred by the revenue against the order of

Commissioner of Income Tax(A)-XI, New Delhi dated 11.07.2013. The

first ground raised by the revenue pertains to deleting the addition of

Rs.10,95,000 made on account of difference between purchase consideration

and circle rate of the property. The crux of the argument on behalf of the

revenue advanced by Ms. Y.S. Kakkar, ld. Sr. DR is in support to the

assessment order by submitting that the addition was rightly made by the

AO. On the other hand, Shri S.K. Chaturvedi, ld. Counsel for the assessee

defended the conclusion drawn in the impugned order.
                                      2
                                                                ITA No. 5523/Del/2013
                                                                   Asstt.Year: 2010-11




2.    We have considered the rival submissions and perused the material

available on record. Before coming to any conclusion we are reproducing

hereunder the relevant portion from the impugned order:-


            "6.1 Ground No. 1 of appeal is against the addition of
            Rs. 10,95,000/- made by the A.O. The AO made the
            addition as it was found by him that the appellant
            company purchased the land at a value of Rs. 40 lac,
            which was less than the value of said land as per circle
            rates (Rs.50,95,OOO/-). The inquiry letter U/S 133(6) of
            the Act issued by the AO remained unserved due to the
            death of the seller, which was brought to his notice by the
            appellant. The A.O. made the addition merely on the
            ground that circle rate of the property was more than the
            amount shown in the sale deed. However, in his over-
            enthusiasm, the A.O. lost sight of the fact that provisions
            of section 50C of the Act are applicable on the seller only
            for computing the capital gains. Provisions of sec. 50C is
            a deeming provision which creates a legal fiction for a
            definite purpose and its onus should not be extended
            beyond the purpose for which it been created. In the case
            of the purchaser, it is the onus of the A.O. to establish
            through inquires that the purchaser had actually paid
            more than what is written in the sale deed. Merely
            writing an inquiry letter to the seller u/s 133(6) of the Act
            for confirmation of sale amount or asking the AR for
            approaching the legal heirs of the deceased seller to
            confirm the sale amount directly to the AO cannot be
            termed as any fruitful inquiry made by the AO. By doing
            such unilateral exercise, the AO did not find any adverse
            material to establish that the appellant company paid the
            amount as per circle rates and not the amount as
            mentioned in the sale deed. Further, it was not the
            liability of the assessee to obtain the confirmations from
            the legal heirs of the deceased seller, as the documentary
            evidence in the shape of sale deed was sufficient for the
                                      3
                                                               ITA No. 5523/Del/2013
                                                                  Asstt.Year: 2010-11

            purchaser as far as transaction amount was concerned.
            The appellant has relied upon various decisions,
            including that of Hon'ble jurisdictional Tribunal in
            support of its argument that the difference in the value as
            per actual cost and the value as per stamp authority
            cannot be taxed in the hands of the purchaser of the
            property in the absence of some adverse evidence
            available to prove and corroborate the difference.

            6.2. The appellant has further argued that the addition
            made by the AO cannot be justified as per provision of
            section 69 of the Act also. To invoke the provisions of
            section 69 of the Act, there must be some undisclosed
            investment for which the assessee cannot explain the
            source. The argument of the appellant has force since
            there was no dispute regarding the source of the amounts
            mentioned in the sale deed and there was no material
            evidence gathered by the AO, which could prove that the
            appellant had made any undisclosed investment in the
            purchase of the said property. The appellant has also
            relied upon the decision of jurisdictional High Court in
            support of its argument.

            6.3. In view of the above discussion, it is held that the AO
            was not justified in making addition of Rs. 10,95,000/-
            i.e. the difference between the value of the property as
            per circle rate and the purchase price shown as per sale
            ,deed in the hands of the purchaser company. The same
            is directed to be deleted. The ground of appeal No. 1 is
            allowed."



3.    If the conclusion drawn in the impugned order, observation made in

the assessment order, assertion made by the ld. Counsel and the material

available on record are kept in juxtaposition and analyzed, we find that the
                                      4
                                                               ITA No. 5523/Del/2013
                                                                  Asstt.Year: 2010-11

ld. AO made the addition on the ground that there was difference between

the circle rate and the amount shown in the sale deed. The facts in brief are

that the assessee purchased agricultural land from Shri Raghu Nath on a total

consideration of Rs.40 lakh and also spent Rs.3,61,840 on the registration of

the same. The details of payment were filed by the assessee. The ld. AO

was of the view that the circle rate of the land was Rs.50,95,000 and thus, he

made addition of differential amount of Rs.10,95,000. The ld.AO sent the

notice to the seller of the land but due to his death, the same could not be

served. The assessee filed the death certificate of the seller. Admittedly, no

adverse material was brought on record by the AO. Now the question arises

whether addition u/s 50C can be made under the facts narrated hereinabove.

We are of the considered opinion that the provisions of section 50C of the

Act are applicable on the seller for the purposes of computing capital gains.

Section 50C is a deeming provision which creates legal fiction for a definite

purpose and the onus should not be extended beyond the limit/purpose for

which it was created. In the case of the purchaser, a heavy burden is cast

upon the AO that the assessee actually paid more than mentioned on the sale

deed. Under the facts available on record, no adverse material has been

brought to our notice on the basis of which it can be established that any

underhand money transacted hands between the seller and the purchaser.
                                       5
                                                                 ITA No. 5523/Del/2013
                                                                    Asstt.Year: 2010-11

The assessee has discharged its onus by producing the copy of the sale deed

and the source of the money which was utilized for purchasing the property

and further no underhand transaction was made.            Even otherwise for

invoking section 69 of the Act, there must be some undisclosed investment

for which the assessee is unable to disclose the source. Except the amount

mentioned in the sale deed, no adverse material was brought on record to

prove that the assessee in fact made undisclosed investment for purchasing

the property. In view of this factual finding recorded by the ld. CIT(A), we

find no infirmity in the same as the same has not been controverted by the

revenue with the help of any corroborative material. On this ground, the

stand of the ld. CIT(A) is affirmed, resulting into dismissal of this ground.

4.    The last ground raised by the revenue pertains to deleting the addition

of Rs.1 lakh made on account of interest. The grievance of the revenue is

that the AO was not directed to carry out further investigation. The ld. Sr.

DR defended the addition whereas the ld. Counsel for the assessee supported

the conclusion drawn in the impugned order. On perusal of record and after

hearing the rival submissions, we note that the addition was made by the AO

as notional interest on advance of Rs. 1 crore to Shri Deepak Ansal on the

plea that the assessee advanced the amount to him for purchasing the

property. In the absence of any purchase/sale agreement, the AO opined that
                                      6
                                                                  ITA No. 5523/Del/2013
                                                                     Asstt.Year: 2010-11




the amount of Rs. 1 crore was interest bearing loan and he made addition of

Rs. 1 lakh on account of interest for one month. The claim of the assessee is

that the amount of Rs. 1 crore was made to Shri Deepak Ansal against

property no. 1201C, Antariksh Bhavan, Delhi as advance money.                 To

substantiate its claim, the assessee filed the details of bank account, ITR and

confirmation. The assessee further claimed that it was out of interest free

capital of the assessee and not out of interest bearing funds. No evidence

was gathered by the AO to establish whether any interest bearing funds were

paid to Shri Deepak Ansal. In view of this fact, we find no substance in

making the addition and thus, affirm the stand of the ld. CIT(A).

Consequently, we find no substance in the appeal of the revenue.

      Finally, the appeal of the revenue is having no merit, therefore

dismissed.

      This order was pronounced in the open court at the conclusion of the

hearing on 9th April, 2014.

      Sd/-                                                 Sd/-

(S.V. MEHROTRA)                                     (JOGINDER SINGH)
ACCOUNTANT MEMBER                                  JUDICIAL MEMBER

DT.     APRIL 2014
`GS'
Copy forwarded to-
                  7
                                 ITA No. 5523/Del/2013
                                    Asstt.Year: 2010-11

1.   Appellant
2.   Respondent
3.   CIT(A)
4.   CIT 5. DR

                      By Order


                      Asstt. Registrar

 
 
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