2002-VIL-192-ITAT-JDP

Equivalent Citation: TTJ 079, 178, [2004] 2 SOT 847 (JODH.)

Income Tax Appellate Tribunal JODHPUR

IT APPEAL NO. 2226 (JODH.) OF 1996

Date: 08.11.2002

JAI MARWAR CO. (P) LTD.

Vs

ASSISTANT COMMISSIONER OF INCOME TAX.

BENCH

Member(s)  : S. R. CHAUHAN., B. L. KHATRI.

JUDGMENT

This is an appeal by the assessee against the order of the learned CIT(A), Jodhpur, for the asst. yr. 1985-86.

2. The appellant agitated on the following grounds:

Ground No. 1: Validity of notice issued under s. 148

3. The appellant agitated on the ground that the learned CIT(A) erred in upholding the validity of notice issued by the learned AO under s. 148 and consequent order passed under s. 143(3)/148 as (a) there was no fresh material on record to justify the action of the AO, (b) there is no failure on the part of the assessee to disclose the necessary facts; and (c) the alleged statement of Shri Kundanlal given at the back of assessee is inadmissible as the same was never brought to the notice of the assessee.

4. The brief facts of the case are that the appellant had not filed the income-tax return in this case. The AO, therefore, issued notice under s. 148, dt. 4th Aug., 1986, in response to which the assessee filed return on 9th Feb., 1987, showing loss of Rs. 5,16,258. The assessment was made on a positive income of Rs. 11,24,540 by the then AO, Dy. CIT (Asstt.), Special Range, Jodhpur. The matter came up in appeal before the learned CIT(A) who, vide his order in appeal No. 161/1990-91, dt. 24th Oct., 1990, set aside the case. The AO remade the assessment on 26th March, 1993. The appeal against the same was dismissed by the learned CIT(A) vide his order dt. 1st Feb., 1994. In the meanwhile, the AO got information that the Registrar of Documents had enhanced the sale consideration in the transfer deed from Rs. 24,45,452 to Rs. 25,25,452 i.e., by Rs. 1,00,000. The AO, therefore, again issued notice under s. 148, dt. 15th March, 1993. The appellant raised objections regarding legality of notice.

5. The CIT(A) at p. 3 of his order has mentioned that the AO had given detailed reasons for issuing notice under s. 148 on the basis of information received from Collector/Registrar that the sale consideration had been enhanced for the purpose of stamp duty. Therefore, the learned CIT(A) upheld the validity of notice issued by the AO under s. 148 of the IT Act.

6. The learned authorised representative contended that the proceedings initiated under s. 147/148 are void ab initio as whatever information now Department claimed to be in its possession was already there on record at the time of passing of the order and as such the notice issued under s. 148 was invalid.

7. The learned Departmental Representative supported the orders of authorities below.

8. We have heard the rival submission. In this case, the AO had issued notice under s. 148 for the reason that the Registrar has enhanced the value of sale consideration by Rs. 1,00,000 for the purpose of levy of stamp duty. In this case the assessment had been completed under s. 143(3) r/w s. 148. The AO had contended that there was failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment of this year. On the other hand, the learned authorised representative has contended that this information was already on record. In this case last assessment was completed on 24th Oct., 1990. The date of enhancement of sale consideration for the purpose of levy of stamp duty had neither been mentioned by the authorised representative nor by the AO and actual date of receipt of information is also not known. Therefore, the AO is directed to verify from the record these facts. If the information was already on record before the date of last completion of assessment i.e., 24th Oct., 1990, the issue of notice under s. 148 is held to be invalid. If the information was received subsequent to the date of completion of assessment, i.e., 24th Oct., 1990, the notice issued under s. 148 should be considered as valid.

9. Ground No. 2: Actual year of assessment of profit/gain

The appellant agitated on the ground that the learned CIT(A) erred in upholding the taxability of profit in the year under appeal. The sale deed was executed on 1st Feb., 1982, and as such the profit/loss from the transaction does not fall for consideration in the asst. yr. 1985-86 is erroneous and liable to be quashed.

10. We have heard the rival submissions. We have also perused the record. In this case, the assessment was made on the basis of date of registration of sale deed i.e., 26th July, 1984, for the asst. yr. 1985-86 whereas the learned authorised representative contended that the assessment was to be made for asst. yr. 1982-83 as the date of execution of sale deed is 1st Feb., 1982. He relied on s. 47 of the Indian Registration Act. Sec. 47 of the Indian Registration Act provides that the registered document operates from the date of its execution, and not from the date of its registration. We find that in this case the document was executed on 1st Feb., 1982, on proper stamps and as such the capital gain arises out of the transfer of the land in question falls for consideration in the asst. yr. 1982-83 and no assessment can be made for the asst. yr. 1985-86. Therefore, the assessment order passed by the AO for asst. yr. 1985-86 is invalid in the eye of law. Therefore, the addition made by the AO is hereby deleted.

11. Ground No. 3: Sustenance of addition on the basis of order of stamp duty.

The appellant agitated on the ground that the learned CIT(A) erred in sustaining the addition of Rs. 1,00,000 on the basis of the order passed in stamp duty case, particularly when there is no evidence of any payment over and above shown in the sale deed.

12. We have heard the rival parties. We have also perused the facts of the case. The brief facts of the case are that in this case the sale deed was executed for a sum of Rs. 24,45,452. Ultimately the assessee paid additional stamp duty for consideration of Rs. 1,00,000. Therefore, the learned CIT(A) confirmed the addition made by the AO on the ground that on the basis of sale consideration determined by the Registrar and shown by the appellant there was difference of Rs. 1,00,000.

13. The learned authorised representative contended that the valuation done by the Registrar is only for the purpose of collecting stamp duty and, therefore, it cannot form foundation to determine the market value. He relied upon the following judgments:

1. U.P. Jal Nigam, Lucknow vs. Kalra Properties (P) Ltd. AIR 1996 SC 1170;

2. CIT vs. Raja Narendra 123 Taxation 639 (Raj);

3. (a) Rawat Ram Mittal, Jodhpur Bench;

(b) Paras Bai, Jodhpur; and

(c) Sohan Lal, Jodhpur.

14. We have perused the above judgments on the subject. The Hon’ble Supreme Court in the case of U.P. Jal Nigam held that the rate fixed for the collection of stamp duty cannot be relied upon to determine the market value and the valuation is only for the purpose of collecting stamp duty and it cannot form foundation for determination of market value. It was held by the Rajasthan High Court in the case of CIT vs. Raja Narendra that the burden of evidence is on the Revenue to show that the assessee received more consideration than the amount disclosed in the sale deed. The Tribunal, Jodhpur Bench, and Tribunal, Jaipur Bench, had also taken similar views in the cases cited by the learned authorised representative. We hold that the Department has not been able to discharge the burden of evidence cast upon it to show that the assessee had understated sale consideration. Therefore, the addition of Rs. 1,00,000 made by the AO and sustained by the learned CIT(A) is hereby deleted.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.