2023 (1) TMI 476 - AT - Income Tax

Tribunal Upholds Income Tax Addition for Incomplete Transaction

Vishal Jeswani Versus Income Tax Officer, Ward 2 (1), Jabalpur.

Vishal Jeswani Versus Income Tax Officer, Ward 2 (1), Jabalpur. - TMI Issues Involved:1. Applicability of Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961.2. Determination of the date of transfer for the immovable property.3. Genuineness of the transaction.4. Relevance and applicability of the decision in Rakhi Agrawal's case.Detailed Analysis:1. Applicability of Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961:The primary issue in the appeal was whether the addition of Rs. 38.78 lacs under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 was justified. The assessee contended that the provision was not applicable as the sale deed was presented for registration on 30/3/2013, prior to the enactment of the provision. However, the Tribunal noted that the major portion of the payment was made in FY 2013-14, and the final registration occurred on 07/6/2013, making the provision applicable. The Tribunal upheld the addition, stating that the transaction was completed in FY 2013-14, and thus, Section 56(2)(vii)(b)(ii) was rightly invoked.2. Determination of the Date of Transfer for the Immovable Property:The Tribunal examined whether the transfer of property could be considered to have occurred in FY 2012-13 or FY 2013-14. The assessee argued that the transaction was closed on 30/3/2013, but the Tribunal found that only 20% of the consideration was paid by that date, with the remaining 80% paid in FY 2013-14. The Tribunal emphasized that the date of registration (07/6/2013) is crucial for legal purposes, and thus, the transfer was deemed to have occurred in FY 2013-14.3. Genuineness of the Transaction:The Tribunal questioned the genuineness of the transaction due to several factors:- Only 20% of the sale consideration was paid initially.- No sale agreement was produced.- The sale deed was not registered on the initial presentation due to insufficient stamp duty.- The Tribunal found it implausible that a seller would transfer possession without receiving the full consideration.These factors led the Tribunal to doubt the authenticity of the transaction, further justifying the addition under Section 56(2)(vii)(b)(ii).4. Relevance and Applicability of the Decision in Rakhi Agrawal's Case:The assessee relied on the decision in Rakhi Agrawal's case to argue that the transaction was complete on 30/3/2013. However, the Tribunal distinguished the two cases, noting that in Rakhi Agrawal, the full consideration was paid, and the only issue was the registration delay due to stamp duty shortfall. In contrast, in the present case, only a fraction of the consideration was paid initially, and the transaction's genuineness was in doubt. Thus, the Tribunal concluded that the decision in Rakhi Agrawal was not applicable.Conclusion:The Tribunal upheld the addition of Rs. 38.78 lacs under Section 56(2)(vii)(b)(ii), finding that the transaction was completed in FY 2013-14, making the provision applicable. The Tribunal also questioned the genuineness of the transaction due to the payment structure and lack of supporting documents. The reliance on Rakhi Agrawal's case was deemed misplaced as the facts were materially different. Consequently, the assessee's appeal was dismissed.