2024 (11) TMI 1258 - AT - Income Tax

Addition u/s 69 - year of assessment - addition u/s 69 would be for AY 2013-14 or AY 2014-15 - assessee submitted different versions of arranging sources for the purchase of this property received from assessee s husband and relatives - Assessing Officer was not convinced with different versions of sources and justification submitted by the assessee - HELD THAT - We observed that the assessee has entered into agreement of sale in AY 2013- 14 and made the substantial payment and taken the possession of the property also in AY 2013-14. Ld. CIT (A) has rightly decided that the transaction pertained to AY 2013-14. AO was directed to delete the addition in AY 2014-15. However, he gave an advice to AO to proceed with the reopening of the assessment for AY 2013-14 as per law. AR objected to the above advice. After considering the finding of ld. CIT (A), we observed that the advice given by him has only advisory value and cannot be treated as direction, therefore, even the ld. CIT (A) has advised so but it has no value for persuasion and it does not partake the value of direction. Invoking of section 56(2)(vii)(b)(ii) - CIT (A) in AY 2014-15 even though after giving proper finding that the transaction under consideration is pertained to AY 2013-14 merely because the registration of the transaction was made in AY 2014-15 it does not change the character of the transaction and it belongs/pertains to AY 2013-14 only. The provisions of section 56(2)(vii)(b)(ii) of the Act was amended w.e.f. 01.04.2014. The ld. CIT (A) cannot invoke the provisions of section 56(2)(vii)(b)(ii) of the Act on the transactions pertaining to previous assessment year, as held in the case of M. Syamala Rao 1998 (4) TMI 113 - ANDHRA PRADESH HIGH COURT Therefore, in our considered view, transaction under consideration pertained to AY 2013-14 and ld. CIT (A) cannot treat this transaction as pertains to AY 2014-15 and also cannot invoke provisions of section 56(2)(vii)(b)(ii) of the Act which was amended w.e.f. 01.04.2014 effective from AY 2014-15. Accordingly, we delete the additions made by ld. CIT (A) by invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.

Issues Involved:

1. Jurisdiction of the CIT (A) to issue directions for reopening assessment for a previous year.
2. Applicability of Section 56(2)(vii)(b)(ii) of the Income-tax Act, 1961, for the difference between circle rate and purchase consideration.
3. Legitimacy of the addition under Section 69 of the Income-tax Act, 1961, for unexplained investment.
4. Validity of the addition of stamp duty paid by the assessee.
5. Authority of the CIT (A) to change the provision of law under which an addition is made.

Issue-wise Detailed Analysis:

1. Jurisdiction of the CIT (A) to Issue Directions for Reopening Assessment:

The CIT (A) advised the Assessing Officer to take appropriate action under Sections 147/148 to reassess the income for AY 2013-14. The appellant contested this advice, arguing that the CIT (A) exceeded its authority. The Tribunal observed that the advice given by the CIT (A) was merely advisory and not a directive, thus holding no binding value. The Tribunal emphasized that such advice cannot be treated as a direction and does not carry persuasive value.

2. Applicability of Section 56(2)(vii)(b)(ii) for Difference Between Circle Rate and Purchase Consideration:

The CIT (A) applied Section 56(2)(vii)(b)(ii) to tax the difference between the circle rate and the actual purchase price as 'Income from Other Sources.' The appellant argued that the provision was not applicable as the transaction pertained to AY 2013-14, while the section was effective from AY 2014-15. The Tribunal agreed with the appellant, noting that the substantial obligations related to the transaction were discharged in AY 2013-14, and mere registration in AY 2014-15 does not alter the transaction's assessment year. Consequently, the Tribunal deleted the addition made under Section 56(2)(vii)(b)(ii).

3. Legitimacy of the Addition Under Section 69 for Unexplained Investment:

The Assessing Officer made an addition under Section 69 for unexplained investment, which was deleted by the CIT (A) for AY 2014-15, suggesting it pertained to AY 2013-14. The Tribunal upheld the deletion for AY 2014-15, agreeing that the transaction belonged to the earlier assessment year, and thus, the addition under Section 69 was not applicable for AY 2014-15.

4. Validity of the Addition of Stamp Duty Paid by the Assessee:

The CIT (A) sustained the addition of stamp duty paid by the assessee, amounting to Rs. 6,54,050/-, as the assessee failed to provide supporting documents. The appellant chose not to press this ground. Consequently, the Tribunal dismissed this ground as not pressed, leaving the addition of stamp duty intact.

5. Authority of the CIT (A) to Change the Provision of Law Under Which an Addition is Made:

The appellant challenged the CIT (A)'s authority to change the provision of law from Section 69 to Section 56(2)(vii)(b)(ii). The Tribunal found that the CIT (A) does not have the power to alter the provision of law under which an addition is made without providing notice to the assessee. Citing relevant case law, the Tribunal concluded that the CIT (A)'s action to change the provision was beyond its jurisdiction and thus unsustainable.

Conclusion:

The Tribunal partly allowed the appeal, deleting the addition under Section 56(2)(vii)(b)(ii) for AY 2014-15 and dismissing the ground related to stamp duty as not pressed. The Tribunal upheld the CIT (A)'s decision to delete the addition under Section 69 for AY 2014-15, recognizing the transaction as pertaining to AY 2013-14.

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