2023 (4) TMI 178 - AT - Income Tax

Addition u/s 56(2)(vii)(b) - Assessee argument that they had not actually received any exclusive right or title or domain over the land in question - statutory compensation of the land as cquired by the National Highways Authority of India NHAI - HELD THAT - Learned counsel could not dispute in light of the clinching provisions that once the three taxpayers before us had received the statutory compensation of the land strictly to the extent of their respective share acquired by the National Highways Authority of India NHAI as per the above statute, they can very well be presumed to have also received the corresponding right or title in the land itself so as to attract sec.56(2)(vii)(b) of the Act. Mr. Joshi could not throw any light as to how these assessees could receive compensation qua their exact share of 12% and 11% (supra) despite the alleged revenue entries having gone against them. Nor has he placed on record the assessee s corresponding compensation applications / petitions filed by all these assessees before the land acquisition authorities. This act only gives rise to our adverse inference against them. We thus are of the view that the mere fact that some stray revenue entries have gone against the assessees or no sale deed had been executed in their favour would not amount to them having not actually received the land in issue once they have received the corresponding exact compensation of their respective shares under the land acquisition law. Faced with the situation, we find merit in the Revenue s contentions that the Assessing Officer had rightly invoked sec.56(2)(vii)(b) of the Act in the given facts and circumstances before us. The CIT(A) s findings treating the agreement dt 12.08.1997 in absence of any corroborative evidence stand reversed. Applicability of first and second proviso to sec.56(2)(vii)(b) of the Act that in case the dates of sale deed and date of agreement are not the same, stamp value as on the date of latter s day may be adopted under this sub-clause provided that whole or part thereof had been paid by any mode other than cash on or before the date of agreement - We find part merit in learned counsel s arguments at the same time that these assessees has indeed made payment of the alleged additional compensation as well as sale price on 04.10.2014 which has not been found to have been factually disputed even on 09.09.2015 (Bharna Pavati) as well as 06.02.2016 registration of the alleged agreement dated 12.08.1997 , respectively. This is also not the Revenue s case that these assessees or their co-vendees had not made the said payments as on 04.10.2014 by way of compensation of Rs.42 lakhs by prescribed mode. Faced with the situation, we direct the AO to adopt stamp price of the land in issue in S.No.883/1/1, Nashik as on 04.10.2014 as the actual sale price in light of sec.56(2)(vii)(b) read with 1st and 2nd proviso therein than taking the fair market value as per the ready reckoner in issue (supra) as on 06.02.2016 and calculate the impugned addition as per these assessees respective share of 12% and 11% each (supra) is assessee s case, respectively. Assessing Officer may thereafter re-compute the impugned addition after referring the issue to the DVO u/s 56(2)(vii) 3rd proviso as per law preferably within three effective opportunities of hearing. Department has not made any addition in other co-vendees hands u/s.56(2)(vii)(b) - We find no merit in the instant last half-hearted argument once it has been found as per our preceding detailed adjudication that the impugned statutory provision is indeed applicable in the given facts and circumstances of the case(s) (supra). Faced with the situation, we partly accept all these three assessees and Revenue s six cross-appeals for statistical purposes and direct the learned Assessing Officer to adjudicate the instant sole issue afresh in light of our foregoing specific directions. Appeal partly allowed.

Summary

Issues involved:
Assessment year 2016-17, correctness of CIT(A)'s action upholding sec.56(2)(vii)(b) addition, applicability of sec.56(2)(vii)(b) in six cross-appeals, interpretation of agreement dated 12.08.1997, application of first and second proviso to sec.56(2)(vii)(b), receipt of immovable property, land acquisition law implications, determination of actual sale price, absence of exclusive right or possession, burden of proof on assessees, payment modes, statutory compensation under land acquisition law, role of Stamp Collector, judicial precedents' relevance.

Detailed Analysis:
1. The judgment pertains to six cross-appeals for the assessment year 2016-17 involving three assessees. The main issue across these appeals is the correctness of the CIT(A)'s action in partly upholding the Assessing Officer's findings regarding sec.56(2)(vii)(b) additions made. The appeals revolve around the interpretation of the agreement dated 12.08.1997 and its implications on the tax liability of the assessees.

2. The primary contention raised during the hearing was whether the assessees had actually "received" any immovable property as per the provisions of sec.56(2)(vii)(b). The assessees argued that they did not acquire exclusive right or possession over the land in question during the relevant year, citing the absence of conclusive evidence supporting the receipt of the property. However, the Revenue contended that the assessees should be held liable for the addition under sec.56(2)(vii)(b) based on the Assessing Officer's findings.

3. The Tribunal analyzed the arguments presented by both parties and scrutinized the details of the agreement, possession receipts, compensation payments, and stamp duty regulations. It was observed that the assessees' claims lacked substantial evidence to prove the actual receipt of the land. The Tribunal emphasized the burden of proof on the assessees to establish their case and highlighted the significance of documentary evidence in tax proceedings.

4. Furthermore, the Tribunal delved into the applicability of the first and second provisos to sec.56(2)(vii)(b) concerning the dates of the agreement and sale deed, and the modes of payment. The assessees' arguments regarding payment modes and the date of agreement were examined, leading to a decision to calculate the impugned addition based on the actual sale price as of a specific date, rather than the fair market value determined later.

5. Additionally, the Tribunal considered the implications of the land acquisition law on the assessees' tax liability, particularly in relation to the receipt of statutory compensation. The assessees' failure to provide conclusive evidence of payment modes and possession raised doubts regarding the actual receipt of the property, leading to a decision in favor of the Revenue's contentions.

6. The Tribunal concluded that the statutory provisions of sec.56(2)(vii)(b) were applicable in the case, and directed the Assessing Officer to recompute the addition based on the specific directions provided in the judgment. The cross-appeals were partly allowed for statistical purposes, emphasizing the need for a thorough reassessment of the issue at hand.

7. In summary, the judgment highlights the importance of substantiating claims with concrete evidence in tax proceedings, the burden of proof on taxpayers, and the meticulous examination of legal provisions and agreements to determine tax liability accurately. The decision underscores the significance of adhering to statutory requirements and providing comprehensive documentation to support claims in tax disputes.