Vinay Rawal vs Income Tax Officer

“1)

That on the basis of facts and the law governing the case, the Ld. AO is not justified in making addition on account of unexplained purchase of property amounting to Rs.13,00,000/- as no such transaction has been entered into by the assessee.

2)

That on the basis of facts and the law governing the case, the Ld AO and the Ld CIT(A) are notjustified in making any addition on account of undervaluation of purchase of property as the sales consideration was already paid through banking channels in 2003 and only the sale deed for the said property was executed in the relevant AY. As per the provisions of Section 50C r.w.s 56(2)(x) which are applicable in the said case, if the date of agreement fixing the amount of consideration and the date of registration of the transfer of the property are not the same, then the prevailing stamp value on the date of agreement shall be taken for the purpose of calculation of full value of transfer.

3)

That the aforesaid grounds of appeal are without prejudice to each other.

4)

That the assessee craves leave to add, modify and/ or alter any ground of appeal before or at the time of hearing of the appeal.”

“3.

Notice u/s 148A was received on 21/03/2022 alleging that the assessee has sold an immovable property i.e. G-15, Lajpat Nagar-ll, New Delhi, 110024 during the relevant assessment year for a total consideration of Rs.13,00,000/- including Rs 650,000/- in cash.

4.

The assessee submitted his reply to the above-mentioned notice stating as follows:

a. That the assessee has not purchased or sold any immovable property during the relevant assessment year.

b. That the assessee had purchased property bearing number G-15, First Floor, Lajpat Nagar-ll, New Delhi - 110024 (hereinafter referred to as ‘Said Property’) vide agreement to sell dated 02/09/2003 for a total consideration of Rs 425,000/. The entire consideration was paid through banking channels at the time of execution of the said agreement and possession of the property was taken over by the assessee.

c. The seller of the property also" executed General Power of Attorney and Special Power of Attorney authorizing the assessee to get the sale deed in respect of the above transaction registered with the jurisdictional sub-registrar at any time in the future.

d. The said agreement was registered as ‘Sale Deed’ before the jurisdictional sub-registrar on 05/07/2017 based on the original sales consideration of Rs.4,25,000/- and the prevailing circle rate/ stamp value of Rs.36,05,205/-. Stamp duty of Rs.2,22,000/- was paid at the time of registration of the Sale Deed.

e. It is pertinent to note that no additional consideration was paid by the assessee to the seller in respect of the said property.

f. Thereafter, the assessee executed a Gift Deed dated 28/02/2018 wherein he gifted the said property to his wife out of love and affection without any consideration. Stamp duty of Rs.1,48,000/- was paid on the registration of the said Gift Deed.

g. Apart from the above, the assessee has not entered into any sale/ purchase transfer transaction in respect of the said property during the relevant assessment year.

h. Specifically, the assessee has not sold any property for Rs.13,00,000/- as alleged in the notice u/s 148A.

i.

It was also requested that the assessee be provided details of the information relied upon for issuance of notice u/s 148A. However, the said information was not provided.

5.

The above-mentioned submissions were not accepted by the Ld. AO and proceedings u/s 147/148 were initiated.

6.

In response to the notice u/s 148, the assessee filed his return declaring income of Rs.754,660/- and reiterated the previous submissions. The Ld. AO was also requested to provide details of the information relied upon for issuance of notice u/s 148A/147/148.

7.

During the assessment proceedings, the Ld AO did not provide any information related to the alleged sale of property for a consideration of Rs.13,00,000/-, as mentioned in the notice u/s 148A. The submissions of the assessee were not accepted by the Ld. AO. Instead, it was held by the Ld AO that the assessee had purchased property amounting to Rs.13,00,000/- out of unexplained sources and the same was added to the assessee’s income u/s 69 r.w.s 115BBE.

8.

In addition, it was also held that the registration of the sale deed in 2017 based on the stamp value of Rs 36,05,205/- tantamounted to undervaluation of purchase u/s 56(2)(x) as the assessee had paid only Rs 425,000/- to the seller in 2003. Thus, the differential amount of Rs.31,80,205/- was also added to the assessee’s income.

9.

The assessee filed an appeal before the Ld. CIT(A) against the said assessment order and reiterated the earlier submissions.

10.

The Ld CIT(A) upheld the addition of Rs.13,00,000/- on account of alleged purchase of property out of unexplained sources. The addition on account of undervaluation of property at the time of registration of sale deed was also upheld. However, the addition on this account was reduced from Rs.31,80,205/- to Rs.23,05,205/-.”