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TMI Blog2021 (2) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... , if by virtue of the Order of the Government the value of the property for the purpose of registering the sale deed has been enhanced and has not been interfered by any Judicial/Executive Authority during the relevant period, then adopt the stamp duty value of the property purchased by the assessee for the purpose of assessing the income of the assessee invoking the provisions of section 56(2)(vii)(b) of the Act - Appeal of the assessee is partly allowed for statistical purposes - ITA No.265/Hyd/2019 - - - Dated:- 21-1-2021 - Smt. P. Madhavi Devi, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Assessee : Shri T. Chaitanya Kumar For the Revenue : Shri Rohit Mujumdar, DR ORDER PER A. MOHAN ALANKAMONY, AM.: This appeal is filed by the assessee against the order of the Ld. CIT(A)-7, Hyderabad in appeal No. 0299/CIT(A)-7/2017-18, dated 18/02/2019 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY: 2014-15. 2. The assessee has raised nine grounds in her appeal however, the crux of the issue is that the Ld. CIT (A) has erred in upholding the order of the Ld. AO who had invoked the provisions of section 56(2)(vii)(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that property and ready for auction. Mittapally Santharam alert and decided to sale that property immediately. After that I have purchased that property and paid cash of ₹ 20 lakhs as advance to Mittapally Santharam paid HDFC Bank loan instalment to avoid from bank auction. After I have paid ₹ 25 lakhs and ₹ 30 lakhs in the financial year 2011-12 and ₹ 15 lakhs in the year 2012-13 and remaining of ₹ 71 lakhs in the year 2013-14 and registered that property in the year 2013-14. At the time of purchase (agreement) the site registration value in the area ₹ 800/- per sq. yard only. But the government raised that value in the Financial Year 2013-14 from ₹ 800/- to 3,000/- at a time (proof also enclosed herewith). So, there is no way for me. And I have registered that property as per ₹ 3,000/- per yard. As per the above facts the section 56(2)(vii)(b) will not be applicable in my case. So kindly consider the above facts and not raise tax in my scrutiny assessment. I am herewith enclosing the copy of agreement of the assets purchased. 5. However, the ld. AO opined that the provisions of section 56(2)(vii)(b) would be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e HDFC Bank account of the Vendors during the year 2011 itself and the bank issued a no-objection Certificate (Page-5 of Paper Book) on 01/08/2013 stating that all the dues outstanding in the Vendor s account were settled. (vii) Therefore, the sale agreement was entered during the year 2011 and the entire sale consideration was remitted in the bank account of the assessee directly. Hence while invoking the provisions of Section 56(2)(vii)(b) of the Act the stamp duty value of the property during the year 2011 should be taken into consideration and since such value is less than the actual sale consideration provisions of Section 56(2)(vii)(b) of the Act cannot be invoked. (viii) When the sale transaction was known to all the other creditors of the vendor they agitated and caused harassment to the vendor and to the assessee. The Vendor s family was dislocated and therefore the sale deed could not be executed in the year 2011 itself though the entire sale consideration was paid. (ix) After facing several hardships and persuading the Vendors the assessee was able to assemble the vendors during the relevant Financial Year and finally the sale deed was executed on 14/11/2013. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Andhra Pradesh vide its Order in the Public Interest Litigation No. 274 of 2013 dated 23rd September, 2013. The Ld. AR once again submitted that even otherwise, the value of the property as per the Stamp Valuation Authority cannot be adopted more than ₹ 2,03,65,854/- because in the proceedings with respect to the vendors, the Ld. Revenue Authorities after due consideration had adopted the value at ₹ 2,03,65,854/- while invoking the provisions of section 50C of the Act in their case. The Ld. DR on the other hand vehemently argued in support of the orders of the Ld. Revenue Authorities and requested for confirming the same. 8. We have heard the rival submissions and carefully perused the materials on record. The contention of the assessee that she has paid the sale consideration during the AY 2011-12 in a mode other than cash is not acceptable because the assessee has paid only by cash for the purchase of the property even if it was remitted in the bank account of the Vendors directly. However, the arguments of the assessee that, (1) The Hon ble High Court of Andhra Pradesh has quashed the order of the Government for enhancing the valuation of the property and (2) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify whether by virtue of the order of the Hon ble High Court, the enhancement of the valuation of the property for the purpose of registering the sale deed has been struck down by the Hon ble High Court and if so, assess the income of the assessee without invoking the provisions of section 56(2)(vii)(b) of the Act. If found otherwise the Ld.AO shall proceed to assess the income of the assessee U/s. 56(2)(vii)(b) of the Act in the following manner. 11. In case, the order of the Government enhancing the valuation of the property is in vogue then, the finding of the Revenue in the case of the Vendor would be relevant. During the assessment proceedings of the vendor viz., Sri Mittapalli Naveen, Khammam the Ld. AO, Ward-1, Khammam for the AY 2014-15 in his order dated 29/12/2018 has extracted the report of the IT Inspector who was assigned to find the facts of the case. The relevant portion is reproduced herein below for reference: - 7. As directed by the Income Tax Officer, Ward-1, Khammam, I have visited D. No. 2-3-309, Near Sunder Talkies, Khammam on 26/09/2018 regarding the sale consideration and complete details of the assessee. As told by Sri Mittapalli Santharam, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of registration are different, then the date of agreement is to be considered for the purpose of Market value. But he 2nd Proviso to sect5ion 56(2)(vii)(b) stipulates a condition that the above said 1st Proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of agreement for the transfer of such immovable property. 9.1. In the instant case, though the agreement was made on 01/04/2011, the sale deed was executed on 14/11/2013. The assessee could not produce any proof that any part payment of the entire consideration was paid by way of Cheque / DD / RTGS etc. Therefore, in the absence of such proof, the assessee / AR was asked as to why the provisions of section 50C should not be applied w.r.t Section 56(2)(vii)(b)(ii). The Ld. AR argued that though the entire transaction was made in cash, the instalment payments made by the purchaser was immediately deposited in the HDFC bank against the loan account. The assessee made a claim that the payments to the bank may be considered as transaction other than cash . The plea of the assessee/A.R is not acceptable as the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the Registered Valuer for Income Tax Department one Mr. V. Sreedhar, Vide his registration No. C-1/33/CCIT-III/XX/Reg. Val/56/03-04 is submitted before the Addl. CIT. As per the Valuation Report the land value was determined @ 1000/- per sq. yd as against the Stamp Duty value. However, the valuer did not determine any value for the structure. The Addl. CIT, Khammam Range vide his letter in F.No.144A/Addl. CIT/Kmm/2018-19, dated 06-12-2018 directed as under: The valuation report submitted has been perused. In view of the above, you are directed to verify the contents of the report and adopt the valuation determined by the registered valuer based on facts and adhering to the provisions of the Income Tax Act, 1961. 12.1. The report of the Registered Valuer for Income Tax Department one Mr. V. Sreedhar, Chartered Engineer (India) Membership No. M/121750/4 vide his registration No.C-1/33/CCIT-III/XX/Reg. Val/56/03-04 narrated that the land is situated at the outskirts of Khammam at about 7 Km to 8 Km and is in the vicinity of Tribal community who are manufacturing illicit liquor / arrack and certain Meat and Chiken shops also exist. Therefore, no person would be wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. SRO Rates. The sub registrar rates are increased keeping in view getting revenue to government by registering properties. The SR values are also calculated entire area compromising the all properties facing internal roads and also main road (well developed and undeveloped areas in vicinity). The stamp duty value will not be applicable to this property as mentioned above. LAND VALUE: 11,128 sq. yards @ ₹ 1000/- sq. yard ₹ 1,11,28,600.00 (or say Rupees ( one crore eleven lakhs twenty eight thousands and six hundred only) Sd/xxx V. Sreedhar 13. Since the case on hand is not appeared to be a case of section 50C, I do not find any uncertainty in the contention of the assessee that the stamp duty was only paid in excess as per the Land Registration Act and the actual consideration was paid as per the agreement dated 1/4/2011. Hence, there is no necessity to ascertain the Fair Market Value of the capital asset afresh by referring the same to Valuation Officer U/s. 55A of the Act. Therefore, following the directions of the Addl. CIT U/s. 144a and keeping in view of the provisions of Income Tax, the Land value as determined by the Regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted income by way of understatement of the actual sale consideration by the seller of the immovable property. In such transactions, the excess sale consideration other than what is mentioned in the sale deed are received by cash by the seller of the immovable property thereby escaping tax and generating black money. Thereafter in the Finance Act 2013, w.e.f 01-04-2014 section 56(2)(vii)(b) was introduced to discourage and wean out such transactions by the purchaser of the property as well. However, considering the facts of the case before us, it appears that no such on-money transactions are involved in the purchase of the property. The arguments advanced by the Ld.AR recorded in para 6(viii) 6(ix) hereinabove is also not disputed by the Revenue, but rather accepted by the Revenue after due verification in the case of the vendor Sri Mittapalli Naveen. The Revenue having considered these facts, in the case of the seller of the property, had adopted the sale consideration at ₹ 2,03,65,854/- as against the stamp duty value of the property of ₹ 4,39,23,056/- while invoking the provisions of Section 50C of the Act in the assessment Order dated 29/12/2018. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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