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TMI Blog2017 (6) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not been able to displace since no credible explanation was offered nor were the donors produced for cross examination when asked by the Assessing Officer to do so.- Decided against assessee. Addition on Long term Capital Gain by applying the section 50C - Held that:- In the case of the assessee transfer had taken place by virtue of agreement to sell only. Therefore, in the said case since no value has been assessed by the stamp duty value, therefore, provisions of section 50C of the Act would not apply in the case of the assessee. The word ‘assessable’ inserted u/s 50C of the Act w.e.f. 1.10.2009 would not apply to the assessment year under appeal i.e. assessment year 2009-10. Thus we are of the view that section 50C is not applicable in the present case and the addition made by the Assessing Officer by applying such provisions is, therefore, deleted. - Decided in favour of assessee. - ITA No.867/Chd/2015 - - - Dated:- 11-4-2017 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER, AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri S.K. Mukhi For The Respondent : Shri S.K. Mittal , DR ORDER PER ANNAPURNA GUPTA, A.M. : This app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted that the donors could not attend office of the Assessing Officer for examination due to their bad health and that they were under treatment at PGI, Chandigarh. The Assessing Officer after examining the facts given by the assessee held that the donors were not in a position to earn any income and in fact, had to bear additional expenses of medicine and treatment and they did not attend the office of the Assessing Officer for cross examination of the facts. The Assessing Officer further stated that the assessee had failed to discharge its onus u/s 68 of the Act and the explanation offered was not found to be satisfactory. Therefore, an addition of ₹ 3 lacs was made to the income of the assessee u/s 68 of the Act. 5. In appellate proceedings before the CIT (Appeals), the assessee made detailed written submissions reproduced at para 4.2 of the CIT (Appeals) s order. Briefly, stated the assessee contended that all necessary documents to discharge its onus u/s 68 of the Act had been filed by the assessee and in the absence of any defect found in the documents the addition made was unwarranted that too merely because the donors were not produced. The Ld. CIT (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence of pertaining to these cash deposits by the AO, the appellant could not successfully prove the genuineness and creditworthiness of these donors. When the assessing officer tried to enquire independently from donors and asked the appellant to produce them for examination, then the appellant did not produce both of the donors on the pretext of their getting treatment at the PGI. The Assessing Officer with his detailed observation has made out w.r.t credit worthiness of these donors have been discussed. By merely filing the confirmation and copies of your bank account, it does not complete the duty of the appellant to prove the genuineness and creditworthiness of gifts advanced to the appellant. The appellant has failed miserably to prove creditworthiness of the donors even after giving so many opportunities by the AO. Accordingly, in my considered opinion, the appellant has failed to establish successfully the three limbs of genuineness of gift that is identity, genuineness and creditworthiness. In view of the facts as discussed above I am of the considered opinion that the AO has rightly added back gifts received by the appellant treating as nongenuine gifts. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been outlined as follows: 2.1 In reply, photo copies of bank pass books of Sh.Krishan Gopal and Smt.Anita Garg have been furnished. As per these, Sh.Krishan Gopal has purchased a draft of ₹ 1,25,000/- on 09.05.2008 out of his saving bank A/c No.00092010014930 with Oriental Bank of Commerce, Patiala. This draft is stated to be given to the assessee as gift. Before making this draft, total amount of ₹ 1,36,000/- was deposited in cash on various dates from 30.04.2008 to 09.05.2008. Similarly out of her saving bank A/c NO. 00092010014940 with the same bank, Smt.Anita Garg purchased a draft of ₹ 1,75,000/- on 09.05.2008. This was given to the assessee as gift. This transaction was also preceded by cash deposits of ₹ 1,79,000/- on various dates from 29.04.2008 to 09.05.2008. The assessee was asked to furnish the evidence of sources of these cash deposit. In response confirmation from donor, copies of their computation of income for the A.Y. 2008-09, copies of balance sheet and capital a/c for the A.Y. 200809 and copies of gift deeds were furnished. As per these Smt.Anita Garg had total capital of ₹ 6,74,872/- which included cash of ₹ 43,304 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their entire liquid resources to the assessee. As rightly pointed out by the Assessing Officer , there was no occasion for making these gifts also. Further when the assessee was asked to produce donors for cross examination, the assessee did not do so stating that they were undergoing treatment at PGI and their medical condition did not warrant travelling and exertion In these circumstances, we hold that the CIT (Appeals) has rightly upheld the order of the Assessing Officer holding that the genuineness and creditworthiness of the donors had not been established. 13. The reliance placed by the assessee on various judicial decisions are distinguishable on facts. In the case of Jawahar Lal (supra) relied upon by the Ld.Counsel for the assessee, the facts were that the assessee had explained the source of the persons who had given loans as being from profit from trading and commodity business which was doubted upon by the Assessing Officer. In such circumstances it was held by the ITAT that addition should have been made in the hands of the donor and not the assessee since vis a vis the loan transaction the donors had confirmed the same and filed all relevant documents. In the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant regarding the addition of ₹ 28840/- on Long term Capital Gain by applying the section 50C of the Income Tax Act, 1961 without applying her mind and without considering the reply filed by the appellant, whereas section 50C is not applicable in this case. Therefore, addition of ₹ 28840/- made by the Ld, Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals)-II, Ludhiana is Illegal, Unwarranted, Uncalled for and needs to be deleted. 16. The said ground is against the action of the CIT (Appeals) in upholding the addition of ₹ 28,840/- on account of long term capital gain by applying section 50C of the Act. 17. The facts relevant to the case are that during the impugned assessment year the assessee had sold a plot at Railway Road Malerkotla for ₹ 7,20,000/- and had shown long term capital gain of ₹ 5,71,349/-. On being asked to explain as to why the difference between the stamp duty value and sale consideration not be brought to tax as per section 50C of the Act, the assessee submitted that the long term capital gain had been reflected in the impugned year on the basis of agreement for sale entered into duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. DR on the other hand,, relied upon the order of the CIT (Appeals). 20. We have considered the rival submissions. It is not disputed that the assessee had declared long term capital gain of ₹ 5,71,349/- in the return of income. It is also not disputed that the capital gain in the said case had been computed on the basis of transfer of plot by virtue of an agreement to sell entered on 15.4.2008. The addition in the impugned case we find has been made by applying provisions of section 50C of the Act. The assessment year under appeal is 2009-10 and the relevant provisions of section 50C applicable to the said assessment year are reproduced as under: 50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of valuation for stamp duty purposes is not arising. The Hon'ble Madras High Court in the case of CIT Vs. R. Sugantha Revindran (2013) 352 ITR 488 has also held that the scope of section 50C as prevailing prior to the amendment made w.e.f. 1.10.2009 did not include the transactions which were not registered with the stamp valuation authority and executed through agreement to sell or power of attorney. The Hon'ble High Court held has under: 6. The issue involved in this case is as to whether the assessing officer is entitled to take the value of the property assessable by the authority of the State Government for the purpose of payment of stamp duty in respect of said transfer or not. Admittedly, in this case, no registration of sale deed had taken place. lt is the case of the Revenue that only in pursuance of the agreement of sale, the assessee had transferred the property and received the sale consideration. In such circumstances, whether Section 50C of the Act would be made applicable even in respect of cases where the registration had not taken place, is the only issue to be decided in this case. 7. Learned counsel for the assessee placed a circular i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. 22. In Paper Products Ltd. Vs. Commissioner of Central Excise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), while interpreting Section 37B of the Central Excise Act, 1944, which is in pari materia with Section 28A of the TNGST Act, this Court had held that the circulars issued by the Central Board of Excise and Customs are binding on the Department and the Department is precluded from challenging the correctness of the said circulars, even on the ground of the same being inconsistent with the statutory provision. It was further held that the Department is precluded from the right to file an appeal against the correctness of the binding nature of the circulars and the Department's action has to be consistent with the circular which is in force at the relevant point of time. 10. Even otherwise, we are of the firm view that the insertion of words or assessable by amending Section 50C with effect from 1.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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