2020 (2) TMI 1177 - AT - Income Tax

Revision u/s 263 - difference in stamp duty value and consideration is taxable u/s 56(2)(vii)(b) which the AO has not taxed - amount of advances given to Ankur Orbit Enterprises which is received back by the appellant and used by the appellant to make payments of properties purchased by the appellant in 2009 as according to the Pr. GIT, the repayment is not clear and verifiable - HELD THAT - We find that there is no material whatsoever to indicate, leave aside establish, that the Assessing Officer had examined the application of Section 56(2)(vii)(b) at all. Learned counsel s plea that this provision to section 56(2)(vii)(b) comes into play, overlooks the fact that application of proviso is entirely a factual matter which has not been examined at all, and, in any event, it is a highly contentious issue whether an allotment letter issued by a private builder, even if that allotment be bonafide, can be equated with DDA allotments referred to in CBDT Circular no 471 dated 15.10.1986. It is not each and every allotment by a builder which can be equated with the allotment letter by the DDA; that aspect has to be examined on merits and it is to be seen whether the terms of the scheme of allotment and construction of flats/houses by the cooperative societies or institutions are similar to those mentioned in para 2 of Board Circular No. 471 as is stipulated in CBDT circular No. 672. Para 2 of the CBDT circular no. 471. Clearly, no exercise was carried out to even examine this aspect of the matter. This inertia on the part of the Assessing Officer renders the order erroneous and prejudicial to the interests of the revenue. Similar is the case with respect to the loan of ₹ 3.30 crores. No efforts were made to examine genuineness of the loan at all, and the mere fact that it has been paid back would not take the matter outside the ambit of scrutiny by the Assessing Officer. AO thus clearly remained passive on the facts which clearly called for some basic inquiries. As a matter of fact, so far as application of section 56(2)(vii)(b) AO did not examine the matter as all, and there was no occasion to examine whether the proviso to Section 56(2)(vii)(b) would come into play. The evidences being produced by the assessee now were never examined by the AO, and, even with these evidences, the matter cannot be concluded one way or the other. The matter needs to be examined in detail. As regards the borrowing of ₹ 3.30 crores from Ankur Orbit Enterprises, there is nothing before us to show that the matter was examined in reasonable detail by the Assessing Officer. In view of these discussions, as also bearing in mind entirety of the case, we uphold the impugned revision order passed by the learned PCIT, and decline to interfere in the matter. - Decided against assessee.

Summary

Issues Involved:
1. Invocation of Section 263 regarding the difference in stamp duty value and consideration taxable under Section 56(2)(vii)(b).
2. Invocation of Section 263 concerning the amount of advances given to Ankur Orbit Enterprises.
3. Determination of whether the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue.

Detailed Analysis:

Issue 1: Invocation of Section 263 regarding the difference in stamp duty value and consideration taxable under Section 56(2)(vii)(b)
The assessee challenged the Principal Commissioner of Income Tax (PCIT)'s order, which invoked Section 263 due to the difference in stamp duty value and the consideration paid for properties purchased. The PCIT noted that the assessee purchased properties for ?2,13,75,000 and ?1,42,00,000, whereas the stamp duty valuations were ?3,58,76,190 and ?2,42,33,000, respectively. According to Section 56(2)(vii)(b), the difference between the stamp duty value and the consideration is taxable as income from other sources. The assessee argued that the purchase was made in 2009, and only the registration occurred in 2013, making the 2009 stamp duty value relevant. However, the PCIT rejected this, stating that the provisions apply from the Finance Act 2013, and the registration date's stamp duty value is relevant.

Issue 2: Invocation of Section 263 concerning the amount of advances given to Ankur Orbit Enterprises
The PCIT also invoked Section 263 regarding a loan of ?3,30,00,000 taken from Ankur Orbit Enterprises, which the Assessing Officer (AO) did not verify for genuineness or the creditor's capacity. The assessee claimed to have repaid the loan, but the PCIT found the evidence insufficient, noting that the AO did not verify the transaction details or the lender's financial capacity. The PCIT emphasized the need for a detailed inquiry into the loan transaction, which the AO failed to conduct.

Issue 3: Determination of whether the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue
The PCIT concluded that the AO's order was erroneous and prejudicial to the revenue's interest due to the lack of proper inquiries and verification regarding both the stamp duty valuation difference and the loan transaction. The PCIT invoked Section 263, setting aside the AO's order and directing a fresh assessment with proper inquiries.

Conclusion:
The Tribunal upheld the PCIT's order, agreeing that the AO's failure to conduct necessary inquiries rendered the assessment order erroneous and prejudicial to the revenue's interest. The Tribunal dismissed the assessee's appeal, emphasizing the AO's duty to investigate the facts stated in the return when circumstances warrant further inquiry. The Tribunal found no evidence that the AO examined the application of Section 56(2)(vii)(b) or the genuineness of the loan transaction, thus supporting the PCIT's invocation of Section 263.