2018 (12) TMI 1551

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....assessee Market value Share of your assessee Difference 00369/2014 18.1.2014 5,00,000/- 1,00,00 (1/5th) 15,28,586/- 3,05,717/- (1/5th) 2,05,717/- 00400/2014 5,00,000/- 1,00,000/- 15,28,586/- 3,05,717/- 2,05,717/- 18.1.2014   (1/5th)   (1/5th)   00401/2014 18.1.2014 7,80,000/- 1,30,000 (1/6th) 15,28,586/- 2,54,764/- (1/6th) 1,24,764/- 00404/2014 18.1.2014 7,800,000/- 1,30,000/- (1/6th) 15,28,586/- 2,54,764/- (1/6th) 1,24,764/-     4,60,000/-   11,20,962/- 6,60,962/- (the said working as per assessment order needs some clerical correction but total sum of addition is same) Sir, in brief, the provisions of the said section is deeming provision under which in case an individual or Hindu Undivided Family receives any immovable property for a consideration which is less than the stamp duty value over such consideration would be taxable as "income from other sources." Now, I would like to draw your kind attention towards history of the provisions of sec. 56(2)(v), sec. 56(2)(vi) & Sec. 56(2)(vii) of the Act which basi....

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....e, it is understood that it was completely intended to tax transfer of money immovable property under the guise of gift and not transfer of immovable property by executing conveyance deed duly registered by a competent authority. It is important to note that provision of section 56(2)(vii) applicable in case of transferee of immovable property covers only Individual or HUF, whereas provisions of section 50C/43CA applicable to the transferor of the property cover all the assessee. It implies that if the transferee of property is a person other than individual or HUF i.e. a Company, Firm, LLP etc., provision of section 56(2)(vii) shall not be applicable. Thus, if an immovable property is purchased by a person other than an individual or HUF for a consideration which is less than Stamp Duty Value / Circle Rate, there will not be any implication or attraction of the provision of this section. There is however nothing explicit as to why only individual and HUF have been brought into the ambit of this section and as to why other persons have been left out. The only broad rationale one can gesticulate & comprehend is that the origin of the provision of section 56(2)(vii) relates ....

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.... the value at Rs. 30.32 lacs which was assessed for the purpose of paying stamp duty and the difference \vas added to the total income as income from unexplained source. The Commissioner (Appeals) deleted this addition holding that section 50C of the Income Tax Act, 1961 was a deeming provision for the purpose of brining to tax the difference as capital gain and in the absence of any legally acceptable evidence, the valuation done for the purpose of section 50C would not represent the actual consideration passed on to the seller. The Tribunal also held hat valuation done by any state agency for the purpose of stamp duty would not ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence, and that the Assessing Officer was obliged to brig on record positive evidence supporting the price assessed by the State Government for the purpose of stamp duty. Upholding the decisions of CIT(Appeals) as well as Tribunal in justifying the correctness of recording the fact that the assessee had discharged the burden of proving the sale consideration as projected in the sale deed, the appeal having no question of....

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....ords there no positive material evidencing the making actual investment by the assessee over and above disclosed sum. Reliance is also place on Supreme Court decision in the case of K.P.Varghese v. ITO (1981) 131 ITR 597 (SC) 'in absence of any evidence brought on record to show that the assessee had invested more than the purchase consideration disclose addition made for unexplained investment could not be sustained.' Considering the above submission, we pray before your honour for natural justice and set right the mistake made by the learned AO while passing the assessment order. For such kind of act, your appellant shall be ever grateful to you." 4. The only ground raised by the appellant is in respect of addition of Rs. 6,60,962.00 u/s 56(2)(vii) being the difference between value mentioned in the Conveyance Deed and the stamp duty value of Immovable properties. The appellant has mainly challenged the validity of the addition on the ground that the provision of sec. 56(2)(vii) does not apply to transactions where consideration is involved and thereby that the said provision was applied for gift transactions only. Having gone through the appel....