TaxTMI 
TaxTMI 
2023 (6) TMI 1416
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....cheques in the relevant years. 2) The learned PCIT ought to have held that the possession of the property was taken in the earlier years and the entire payments were also made and, therefore, effective transfer had taken place in the earlier year hence, provisions of section 56 (2) are not applicable. 3) The appellant reserve right to odd, alter and withdraw any grounds of appeal." 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual and had filed his return of income for the A.Y. 2018- 19, on 10/09/2018, declaring total income at Rs.23,07,440/-. Subsequently, the assessee`s case was selected for Limited scrutiny through CASS for examination of following issue: (1) Investment in immovable Properly (Purchase Value of Property less than the value as per stamp authority [u/s 56(2) or any other relevant section] (Business ITR). The Scrutiny assessment under section 143(3) r.w.s. 143(3A) & 143(3B) of the I.T. Act, 1961 was finalized in assessee's case on 30.07.2020, accepting the Return Income i.e. Rs.23,07,440/-. 4. Later, Learned Principal Commissioner of Income Tax (in short 'Ld. PCIT'), Surat-1, exercised his jurisdictio....
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....ssued by the Ld. PCIT, the assessee submitted the written submission before the Ld. PCIT, which is reproduced below: "It is submitted that I had purchased the above said plot catted Plot No. 270 at Village Dumas in F. Y, 2003-04 by making full payment by account payee cheques for Rs.2.50/- lacs and possession was also taken F, Y. 2003-04, The said plot was purchased jointly with Ankin S. Zaveri and accordingly I had 1/2 share in the said property. The document was executed on 13.03.2008. The details of payments are as under: 16.04.2002 Surat People's Bank 55824 50,000 24.04.2003 Surat People's Bank 55837 50,000 29.04.2003 Syndicate Bank 655928 1,00,000 19.08.2003 Syndicate Bank 655934 50,000 Total 2,50,000 b) the possession of the property was taken as soon as the full payment was made. This fact is evident from the para 5 of the purchase deed dated 13.03.2008. English version para 5 of the purchase deed dated 13.03.2008/registration no.3373 (c )On payment of the entire sale consideration, we hand over the possession of the plot as prescribed in below mentioned....
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....ly viz 270 of village Dumas and therefore question of application of section 56(2)(x) does not arise. It is further submitted that one needs to look into the proviso of section 56(2)(x) which is reproduced for ready reference: Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of the clause. The above said proviso is applicable only when the payment was made by account payee cheques on or before the date of agreement for transfer of such immovable properly) In the present case, the original document was executed in F.Y.2007-08 and the payment was made by account payee cheques in F.Y. 2003-04 and, therefore, the stomp duty value of F.Y.2003-04 ought to be taken. As per the original document, no additional stamp duty was viable on the base of payment in F.Y.2003-04 when the document was registered in FY.2007-08. In view of the above, the value of Rs.2,50,000/- ought to be considered as the value for stamp duty purpose as the payment was made by account pay....
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....cation of section 56(2)(x) does not arise. It is further submitted that, one needs to look into the proviso of section 56(2)(x) which is reproduced for ready reference. Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of this clause. The abovesaid proviso is applicable only when the payment was made by account payee cheques on or before the date of agreement for transfer of such immovable property, in the present case, the original document was executed in F.Y. 2010-11 and the payment was made by account payee cheques in F.Y.2010-11. As per the original document, no additional stamp duty was leviable on the base of payment in F.Y.2010-11. In view of the above, the value of Rs.24,30,000/- ought to be considered as the value for stamp duty purpose as the payment was made by account payee cheques. For the sake of repetition, I further submit that, since the possession was already taken on full payment by account payee cheques in F.Y. 2010-11, the property was deem....
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....he stamp duty value of F.Y.2003-04 ought to be taken. As per the original document, no additional stamp duty was liable on the basis of payment in F.Y.2003-04 when the document was registered in FY.2007-08. Therefore the value of Rs.2,50,000/- ought to be considered as the value for stamp duty purpose . The ld Counsel stated that payment of stamp duty was made by account payee cheques and since the possession was already taken on full payment by account payee cheques in F.Y.2003-04, hence the property was deemed to be transferred by virtues of section 2(47) of the Act in F.Y.2003-04. Later on there was correction in the purchase deed, therefore correction in purchase deed and payment of additional duty on the occasion of correction does not attract the capital gain as the transaction was materialized in F.Y.2003-04. 12. The ld Counsel also argued that provisions of section 56(2)(x) of the Act are applicable from 01.04.2017, hence the same is not applicable to the assessee, as the payment of cheques was made in F.Y. 2003-04 and the possession was also taken in F.Y. 2003-04. Besides, the assessing officer made adequate enquiry during the assessment proceedings in respect to the sa....
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.... on, to correct the defect in the title of the property, the assessee has deposited additional stamp duty. Just to correct the defect in the title of the property does not mean that assessee has purchased new property in the year under consideration. Thus, we note that order passed by the assessing officer should not be erroneous. 15. We note that the transfer of property as per the provisions of section 2 (47) of the Act (Purchase of property) had already taken place in the A.Y. 2004-05 by way of full payments by cheques as well as possession thereof. Since the property was already transferred in earlier year, the provisions of section 56(2)(x) of the Act were not invoked by assessing officer while passing order u/s 143(3) of the Act. We also note that assessing officer conducted sufficient enquiry during the assessment proceedings about the issue raised by ld PCIT, by way of issuing notices to the assessee. The assessing officer had information regarding purchase of balance share of the said plot and the issue was raised during assessment proceedings, regarding application of provisions of section 56(2)(x) of the Act, however, after considering the reply of the assessee dated ....
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....ng the claim of exemption under section 54EC of the Act, the AO as well as the CIT(A) proceeded on the presumption that 16.03.2005 is the date of transfer and reckoned from that date the investment is to be made within six months and hence the investment made in December, 2005 cannot be considered for the purpose of seeking benefit under section 54EC of the Act. It is equally important to notice that the AO seeks to tax the income on sale of the property in the year under consideration on protective basis by observing that "consequently the substantive addition may be made in A.Y. 2005-06 as per the law". The expression "may be made" in itself indicates that the AO is not sure as to whether the transfer took place in A.Y. 2005-06 or not and in fact his subsequent action/inaction of not initiating any proceeding in respect of A.Y. 2005-06 speaks volumes about the conduct of the AO. In fact it is a matter of serious concern. 12. Article 265 of the Constitution of India postulates that there cannot be levy of tax without authority of law. It is not in dispute that capital gains tax can be levied only in the year when the transfer of immovable property takes place. If the AO i....
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.... as a whole and by specially taking note of the fact that in the guise of agreement of sale a development agreement was contemplated whereby the developer was held to have taken possession on account of the irrevocable licence granted to him to enter upon the property whereas in the instant case no such finding was given by the tax authorities. In fact the learned CIT(A) opined that the date of handing over of possession in the instant case was 20.09.2005, and based on this factual premise it has to be held that the transfer had taken place in the previous year relevant to A.Y. 2006-07. Reckoned from the date of possession, i.e., 20.09.2005, the assessee having invested the money within six months in long term specified asset, the benefit of exemption under section 54EC deserves to be extended to the assessee in the instant case. In substance, we hold that the assessee is entitled to exemption under section 54EC of the Act in the year under consideration and we direct the AO accordingly. This disposes of ground No. 1, 2 & 3 set, out in the Revised Grounds of Appeal" 19. Now, let us take the guidance of judicial precedents laid down by the Hon'ble Apex Court in Malabar Industries....
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....vation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. In fact, the assessing officer has conducted sufficient enquiry during the assessment proceedings. In the conclusion, we are of the view that none of the reasons set out by the CIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the CIT has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the AO ought to have made in the given facts and circumstances of the case. We accordingly quash the order u/s. 263 of the Act and allow the appeal of the assessee. 21. In the result, appeal filed by assessee is allowed. Order pronounced on 06/06/2023 in the open court. ============= Document 1 Sr. No. 1 2 Revised document for purchase of property 07.02.2018 17.02.2018 Purchase Stamp duty value value 2,50,000 24,10,000 2,14,10,560 ....