2021 (7) TMI 765 - AT - Income Tax

Tribunal affirms tax authorities in Section 56(2)(vii)(b) land purchase case, dismisses appeal.

Vishnu Kumar Joshi Versus I.T.O., Ward 3 (5), Jaipur.

The tribunal upheld the CIT(A)'s order, confirming the applicability of Section 56(2)(vii)(b) on the purchase of agricultural land, additions under ... Addition u/s 56(2)(vii)(b) - assessee had purchased four immovable properties far below the value determined by the stamp valuation authorities for the purposes of charging stamp duty - difference between the stamp duty value and the actual purchase consideration - HELD THAT:- From perusal of Section 56(2)(vii)(b) of the Act, it reveals that the provision is applicable on purchase of immovable property, if the consideration is less than the stamp duty value of the property by an amount exceeding ₹ 50,000/-. It is also mentioned that in such cases, the difference between stamp duty valuation of the property and actual consideration shown will be treated as 'income from other sources'. The above conditions are squarely applicable in the case of the assessee. DVO has given due consideration for the location of the property and other relevant evidences produced before him by the assessee. The DVO is expert in valuation of the property and as the valuation is based on scientific method, the same cannot be doubted. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. - Decided against assessee. Addition u/s 68B - whether there are well explained sources of investigation made by the assessee - HELD THAT:- No details regarding earlier payments given to M/s Narsing Construction was provided either during assessment proceeding or appellate proceedings. The nature and source of earlier payment to M/s Narsingh Constructions remained unexplained. In the assessment order, the AO has specifically pointed out that an agreement was executed between the parties under the name 'agreement for receiving payment in lieu of cheque', which indicates that cash was received by Shri Banna Ram, the seller of the property, when the cheque issued was dishonored. As per this agreement, cash was paid to the seller by the assessee on 11.12.2013. Thus, there is no doubt that the payment in lieu of dishonored cheque was made in cash by the assessee on 12.11.2013. The claim of the assessee regarding payment through M/s Narsingh Constructions is not established. As far as remaining cash payment is concerned, the AO himself granted benefit to the extent on the basis of withdrawal from bank account. No new facts or circumstances have been brought before us by the AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Addition u/s 69C - assessee paid registration charges in respect of properties - HELD THAT:- AO examined the claim regarding source for payment of registration charges and correctly pointed out that the claim regarding cash received from M/s Shree PVJ Corporation is not correct. The assessee also accepted the above fact during the appellate proceedings before the ld. CIT(A). The assessee also failed to bring any explanation regarding source of making expenditure for registration expenses. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Appeal of the assessee is dismissed. Issues Involved:1. Applicability of Section 56(2)(vii)(b) on the purchase of agricultural land.2. Addition under Section 56(2)(vii)(b) due to litigation and restrictions by the Highway Authority.3. Addition under Section 69B for unexplained investment.4. Addition under Section 69C for unexplained expenditure on registration charges.Detailed Analysis:1. Applicability of Section 56(2)(vii)(b) on the Purchase of Agricultural Land:The assessee challenged the application of Section 56(2)(vii)(b) on the purchase of agricultural land, arguing that agricultural land does not fall under the definition of 'property' as per the section and is not a capital asset under Section 2(14) of the Act. The assessee provided details of the purchased agricultural lands, emphasizing that they are agricultural lands and thus should be excluded from the provisions of Section 56(2)(vii)(b). The tribunal noted that the CIT(A) had already dealt with this issue in detail, confirming that the properties were immovable and the difference between the stamp duty value and the actual consideration was liable to be taxed as income from other sources under Section 56(2)(vii)(b). The tribunal upheld the CIT(A)’s findings, stating that the conditions of Section 56(2)(vii)(b) were applicable to the case.2. Addition under Section 56(2)(vii)(b) Due to Litigation and Restrictions by the Highway Authority:The assessee argued that the properties were purchased below the fair market value due to pending litigation and restrictions on construction imposed by the Highway Authority. The tribunal observed that the CIT(A) had considered these arguments and referred the properties to the DVO for valuation. The DVO’s report confirmed the valuation, and the CIT(A) restricted the addition to Rs. 1,45,74,660 based on the DVO’s findings. The tribunal found no reason to interfere with the CIT(A)’s well-reasoned order, which had taken into account the location and other relevant factors affecting the property value.3. Addition under Section 69B for Unexplained Investment:The assessee claimed that the sources of investment were well explained during the proceedings, providing a detailed chart of the payments made for the properties. The AO had added Rs. 46,00,000 as unexplained investment, arguing that the agreements provided by the assessee were not legally binding and did not prove the payments were made in 1995. The CIT(A) upheld the AO’s findings, stating that the agreements were not between the seller and the assessee and lacked legal sanctity. The tribunal agreed with the CIT(A), noting that no new evidence was provided to counter the findings, and upheld the addition of Rs. 46,00,000 as unexplained investment.4. Addition under Section 69C for Unexplained Expenditure on Registration Charges:The assessee argued that the registration charges of Rs. 13,74,865 were paid from funds received from PVJ Corporation and family members. However, the AO noted that the registration payments were made before the receipt of funds from PVJ Corporation. The CIT(A) upheld the AO’s findings, stating that the assessee failed to provide evidence of the source of funds for the registration charges. The tribunal found no reason to deviate from the CIT(A)’s well-reasoned order and upheld the addition of Rs. 13,74,865 as unexplained expenditure.Conclusion:The tribunal dismissed the appeal, upholding the CIT(A)’s order in all respects. The additions under Sections 56(2)(vii)(b), 69B, and 69C were confirmed, and the assessee’s arguments were found to be unsubstantiated. The order was pronounced in the open court on 13th July 2021.