Gayatri Enterprise v. The Income Tax Officer Ward 1(2)(4

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 399 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE J.B.PARDIWALA andHONOURABLE MR.JUSTICE A.C. RAO ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?YES2 To be referred to the Reporter or not ?YES3 Whether their Lordships wish to see the fair copy of the judgment ?NO4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order NOmade thereunder ? ========================================================== GAYATRI ENTERPRISE Versus THE INCOME TAX OFFICER WARD 1(2)(4) ========================================================== Appearance:MR MANISH J SHAH(1320) for the Appellant(s) No. 1MR.VARUN K.PATEL(3802) for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAandHONOURABLE MR.JUSTICE A.C. RAO Date : 20/08/2019 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) (for short, 'the Act, 1961') is at the instance of an assessee and is directed against the order passed by the Income Tax Appellate Tribunal, 'C' Bench, Ahmedabad dated 28[th] February 2019 in the ITA No.825/Ahd/2016 for the assessment year 2011-12. 2The present Tax Appeal came to be admitted by this Court vide order dated 15[th] July 2019 on the following substantial question of law: “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in upholding that the order of the Principal CIT, which is based on the presumption that the difference between the stamp duty valuation and the actual purchase price is undisclosed investment in the hands of assessee purchaser, and therefore, the order of Assessing Officer not taxing the differences in hands of purchaser assessee is erroneous and prejudicial to the revenue?” 3The case of the appellant, in his own words as pleaded in the memorandum of the Tax Appeal, is as under: “1.1During the course of scrutiny assessment u/s. 143(3) for Asst. Year 2011-12, the Assessing Officer raised various queries, which were replied by the appellant. To one such query, in regard to investment in land of Rs.1,17,93,542/- as on 31.03.2011 by a notice dated 18.10.2013 u/s. 142(1), the Chartered Accountant of the appellant by a letter dated 19.11.2013 gave a detailed reply pointing out that the possession of the land was taken on 31.03.2008 and the appellant is already assessed in Asst. Year 2008-09 and annexed the assessment order for Asst. Year 2008-09 along with that reply. The Assessing Officer passed an order u/s. 143(3) dated 28.11.2013. Thereafter, the Principal Commissioner of Income Tax-1, Vadodara issued a notice u/s. 263 dated 12.01.2016 pointing out that the above assessment was erroneous in so far as it was prejudicial to the interest of Revenue on account of the following: “On verification of P&L account, balance sheet computation of Income & submissions in respect of construction business, it is revealed that investment of Rs.1,17,93,542/- is made in the land situated at Survey No.183 & 184 at village Tandalja. The break up of the said investment as shown in the books comprises of: “On verification of P&L account, balance sheet computation of Income & submissions in respect of construction business, it is revealed that investment of Rs.1,17,93,542/- is made in the land situated at Survey No.183 & 184 at village Tandalja. The break up of the said investment as shown in the books comprises of: From the registered document to this effect (bearing No.4153/2011 (BRA-3/ATA) dated 29.03.2011), it is noticed that against the consideration of Rs.45,61,000/- declared / shown, Rs.22,90,300/- is paid as stamp duty. The prevailing stamp duty rate in Gujarat is @4.90% ad-volrem on consideration or market value as per Jantri Rate. Accordingly, the value of the alleged property comes to Rs.4,67,816/- (22,90,300*100/4.90), as against Rs.45,51,000/- declared / shown. It may therefore be presumed that Rs.4,21,79,800/- (4,67,40,800-45,61,000) is undisclosed investment.” 1.2The Chartered Accountant of the Appellant gave a detailed reply dated 05.02.2016 pointing out amongst others that the investment was inquired into at the time of original assessment. Therefore, the notice is bad, and that the notice is also bad because the addition can be made u/s.69B not on the basis of presumed investment but actual investment. 1.3 The Principal Commissioner of Income Tax rejected all the contentions and held that the Assessing Officer has failed to make proper inquiries, and therefore, the assessment order is erroneous and prejudicial to the interest of revenue. 1.4 The Appellant preferred an appeal to the Income Tax Appellate Tribunal (hereinafter “the Tribunal’). The Tribunal upheld the action of the Principal Commissioner of Income Tax holding that the assessment order is erroneous and prejudicial. The Tribunal recorded in para 8 of their order; “While holding so, we are alive to the plea on behalf of the assessee that reasonable inquiry was made into various aspects concerning cost of land and also the purchase was made in the preceding years except for mere registration of the document in the current year.” ( i.e. Asst. Year 2011-12)........ “The purchase transaction culminated and stood consummated during the year under review. Therefore, the cause of action did exist in relation to the assessment order in question. ” and in the penultimate paragraph of the order, the Tribunal noted; “the assessment order is merely cancelled and set aside to the file of the AO for making relevant inquiries as specified for which objective material is available at the threshold. ” 2. Being aggrieved and dissatisfied with the order dated 26.02.2019, received by the appellant on 09.04.2019, passed by “C” Bench of the Tribunal in I.T.A. No.825/Ahd/2016 for Assessment Year 2010-11, the Appellant begs to prefer this appeal before this Hon’ble Court on the following amongst other grounds: (A) Both Principal CIT and the Tribunal failed to appreciate that their order is wrong because there is no presumption in law that the difference between the actual sale price and the stamp duty value is unaccounted investment by the purchaser assessee, and therefore, to be added u/s.69B as undisclosed income. (B) Both Principal CIT and the Tribunal missed two direct decisions of this Hon’ble Court (I) CIT vs. Sarjan Realties Ltd. (2014) 220 Taxman 112 (Guj), Wherein the question was of addition of the difference between the Stamp duty valuation and actual sale price paid as unexplained investment in the hands of the seller and was replied against the Department by holding hat section 50C applied to the seller only. In fact, this Court did not even admit the appeal and (ii) this decision was followed by this Court in the decision of Anand Banwarilal Adhukia vs. DCIT (2017) 244 Taxman 243. This Court, after having reproduced sections 69A and 69B regarding unexplained investment amongst others, stated as follows in para 8 of the judgment: (B) Both Principal CIT and the Tribunal missed two direct decisions of this Hon’ble Court (I) CIT vs. Sarjan Realties Ltd. (2014) 220 Taxman 112 (Guj), Wherein the question was of addition of the difference between the Stamp duty valuation and actual sale price paid as unexplained investment in the hands of the seller and was replied against the Department by holding hat section 50C applied to the seller only. In fact, this Court did not even admit the appeal and (ii) this decision was followed by this Court in the decision of Anand Banwarilal Adhukia vs. DCIT (2017) 244 Taxman 243. This Court, after having reproduced sections 69A and 69B regarding unexplained investment amongst others, stated as follows in para 8 of the judgment: “From the mere reading of aforesaid statutory provisions, it appears that section 50C of the Act which has been introduced is applied to a seller and not to the purchaser and therefore, ascertaining an amount of capital gain, it will be the tax in the hands of the seller on the basis of jantri price and making a reference and inquiring from the petitioner is of no avail and to this, learned counsel has rightly relied upon a decision of this Court in case of CI T v. Sarjan Realties Ltd. ” And in para 9 of decision of Anand Adhukia (supra), this Court further pointed out; “From the aforesaid decision, it is quite clear that provision of Section 50C would apply to a seller only and not the purchaser and therefore, to make reference casually in case of petitioner, who is purchaser, is not just and proper. ” (C) Both Principal CIT and the Tribunal failed to appreciate that the result of their approach will only increase the workload of the Departmental Officials because according to them every assessment order of the purchaser of immovable property, where there is a difference between the purchase price and the stamp valuation and no addition is made, is erroneous, and therefore, section 263 proceedings have to be taken. (D) The Tribunal failed to take into consideration the wisdom of the legislature in applying such a situation in the hands of the seller only by provision of section 50C and that clause (x) was inserted in sub-section (ii) of section 56 in respect of the purchaser only from 01.04.2017 and therein the proviso is added that if there is prior agreement to sell, the stamp duty value on the date of the agreement is to be considered.” 4Thus, it appears from the aforesaid pleadings that the appellant purchased a parcel of land during the financial year 2007-08 from one Jignesh Shivabhai Patel. Initially, an agreement of sale was executed by the original owner in favour of the appellant. The agreement of sale was registered on 31[st] August 2007. The total sale consideration was fixed at Rs.45,61,000/-. On 31[st] August 2007 i.e. on the date of the execution of the agreement of sale, an amount of Rs.10,25,000/- was paid towards earnest money and the possession of the land was also taken over. On 31[st] March 2008, the appellant, by way of cheques, paid the amount of Rs.35,36,000/-. Thereafter, the balance amount of Rs.99,000/- was paid to the original owner on 26[th] February 2011. The appellant – assessee tried to explain to the Assessing Officer that he had taken over the possession of the land in the financial year 2007-08 and in view of the definition of the term “transfer” as defined under Section 2(47) of the Act, the land could be said to have been transferred in favour of the assessee in the financial year 2007-08. The assessee also pointed out that after taking over the possession of the land, he incurred various expenditures like erecting fencing, land levelling, construction of the compound wall, NA permission, electric connection, Rajja Chitti (building construction permission) and site office construction. Rs.35,36,000/-. Thereafter, the balance amount of Rs.99,000/- was paid to the original owner on 26[th] February 2011. The appellant – assessee tried to explain to the Assessing Officer that he had taken over the possession of the land in the financial year 2007-08 and in view of the definition of the term “transfer” as defined under Section 2(47) of the Act, the land could be said to have been transferred in favour of the assessee in the financial year 2007-08. The assessee also pointed out that after taking over the possession of the land, he incurred various expenditures like erecting fencing, land levelling, construction of the compound wall, NA permission, electric connection, Rajja Chitti (building construction permission) and site office construction. 5The explanation offered by the appellant – assessee was accepted by the Assistant Commissioner of Income Tax and the assessment order was, accordingly, passed on 20[th] December 2010. 6It appears that thereafter, a notice under Section 263(1) of the Act came to be issued by the Principal Commissioner of Income Tax dated 12[th] January 2016 calling upon the appellant to show cause as to why the assessment for the assessment year 2011-12 should not be enhanced or cancelled. The notice reads as under: “No.BRD/Pr.CIT-1/HQ/263/20/GE/2015-16 Date: 12.01.2015 (PAN : ) To,M/s. Gayatri Enteprises,2, Shilp Apartment,Mane Nagar, Munj MahudaAkota,Vadodara. Sir, NOTICE U/S. 263(1) OF THE IT ACT Sub : Proceedings u/s263 of the IT Act for A.Y. 2011-12. With reference to the assessment order u/s 143(3) of the IT Act, passed by the Assessing Officer on 28.11.2013 for A.Y. 2011-12, it is to be noted that the same was erroneous in so far as it was prejudicial to the interest of revenue an account of the following: On verification of P&L account, balance sheet computation of income & submission in respect of construction business, it is revealed that investment of Rs.1,17,93,542/- is made in the land situated at Survey No.183 & 184 at village Tandalja. The break-up of the said investment as shown in the books comprises of; From the registered document to this effect (bearing No.4153/2011 (BRA-3/ATA), dated 29.03.2011), it is noticed that against the consideration of Rs.45,61,000/- declared / shown, Rs.22,90,300/- is paid as tamp duty. The prevailing stamp duty rate in Gujarat is @ 4.90% ad-volem on consideration or market value as per Jantri Rate. Accordingly, the value of the alleged property comes to Rs.4,57,40,816/-(22,90,300*100/4.90)asagainst Rs.45,61,000/- declared/shown, it may therefore be presumed that Rs.4,21,79,800/- (4,67,800-45,61,000) is undisclosed investment. 2In view of above, you are being granted an opportunity of being heard and to show cause as to why the aforesaid assessment made by the assessing officer for A.Y. 2011-12 should not be enhanced with a direction to make fresh assessment in accordance with the provisions of law in this regard. For this purpose, you may appear before the undersigned in person or through your authorized representative or file written submission on 29.01.2015 at 11:00 A.M. / P.M. in case of non compliance, the matter will be decided on merits. 7The appellant – assessee gave a detailed reply to the aforesaid show cause notice. The reply is at page : 26 of the paper book at Anneuxre : 'I'. 8The Principal Commissioner was not convinced with the reply of the appellant – assessee dated 5[th] February 2016. The Principal Commissioner, ultimately, quashed and set aside the assessment in exercise of his powers under Section 263 of the Act with a direction to frame the assessment afresh. The relevant observations made by the Principal Commissioner, in his order dated 15[th] February 2016, are as under: 29.01.2015 at 11:00 A.M. / P.M. in case of non compliance, the matter will be decided on merits. 7The appellant – assessee gave a detailed reply to the aforesaid show cause notice. The reply is at page : 26 of the paper book at Anneuxre : 'I'. 8The Principal Commissioner was not convinced with the reply of the appellant – assessee dated 5[th] February 2016. The Principal Commissioner, ultimately, quashed and set aside the assessment in exercise of his powers under Section 263 of the Act with a direction to frame the assessment afresh. The relevant observations made by the Principal Commissioner, in his order dated 15[th] February 2016, are as under: “4.2.5 Assessee has contended that even if the Stamp duty valuation is to be considered, the same has to be examined in A.Y. 2008-09 and not current year, I.e. the year in which the land is purchased. In this regard, it is held that these contentions made by assessee are based on the document of agreement to sale (Banakhat), dated 31.08.2007, which has no validity in the eye of law, being unregistered. Registration Act, 1908 by Amendment Act 48 of 2001 has made the provision that documents containing contract of transfer for consideration (Sale agreement) relating to any immovable property should be registered. Section 54 of the Transfer of Property Act, 1882 defines that any property of more than 100 Rupees value can be transferred by a Registered deed only. Section 53A of Transfer of Property Act, 1882 speaks about the part performance of the written, contract where seller has handed over the possession of property to buyer but the deed is not registered then the possession holder can enjoy the limited rights of the property but however, any immovable property for the purpose of Section 53 A of Transfer of Property Act shall be registered otherwise such document if executed after 2001 shall have no effect for the purpose of part performance secured under section 53A of TP act. Reliance is placed upon Hon’ble Supreme Court decision in the case of Suraj Lamp & Industries (P) Ltd., [2011], 14 taxmann. Com 103 (SC), wherein Hon’ble Apex Court has held that any immovable property can be legally and lawfully transferred / conveyed only by a registered deed of conveyance; 4.2.6 Without prejudice to the above, it is worthwhile to take & note of para 7 of the aforesaid agreement to sale (Banakhat), where it is clearly stated that the liability of the stamp duty to be paid at the prevailing rates at the’ time when the sale deed to this effect is registered, would be of the purchaser, I.e., assessee. Therefore, the . contention of assessee with regard to the period, as mentioned in the preceding para has no merits. 4.3 Considering the totality of facts, I am of the view that the A.O. Has failed to make proper enquiries, examine the records and appreciate the facts and the law while deciding the issue. Failure on the part of the A.O. With regard to examination / verification of the vital issue, as discussed in Para 4.1 to 4.13 herein above has rendered the assessment erroneous, in so far as, it is prejudicial to the interest of revenue. Therefore in exercise of the powers conferred by the Section 263 of the Income-tax Act, 1961, the assessment is set-aside with the directions that the assessment should be framed afresh by A.O. After proper & discreet enquiries / verification on the aforementioned issue, examining the accounts and records of the assessee, gathering all the supporting evidences as encapsulated by Section 69B of the IT Act and after allowing reasonable opportunity of bearing heard to the assessee.” 9The appellant – assessee, being dissatisfied with the aforesaid order passed by the Principal Commissioner went in appeal before Income Tax Appellant Tribunal, 'C' Bench, Ahmedabad. While dismissing the appeal, the Appellate Tribunal observed as under: 9The appellant – assessee, being dissatisfied with the aforesaid order passed by the Principal Commissioner went in appeal before Income Tax Appellant Tribunal, 'C' Bench, Ahmedabad. While dismissing the appeal, the Appellate Tribunal observed as under: “6The learned AR for the assessee submitted at the outset that the necessary background for exercise of revisional power of Pr.CIT does not exist. The learned AR referred to & notice issued by the AO under s.142(1) of the Act dated 18.10.2013 to submit that the AO had initiated inquiry on investments of Rs.1.17 crore as appearing in the balance sheet on 31.03.2011 with source thereof. The learned AR thereafter referred to MOU (memorandum of understanding) / Banakhat dated 31.08.2007 to point out that the agreement for purchase of land made way back in August 2007. A formal agreement for purchase of the land was ultimately made on 29[th] March, 2011 to give effect earlier Banakhat. It was submitted that the land was originally agricultural land which was converted into non-agricultural land’by the assessee and thereafter the actual registration was carried out in the FY 2010-11 concerning AY 2011-12 in question. The learned AR further emphasized that the payment qf sale consideration of Rs.45,61,000/- was made in FY 2007-08 and possession of the land was taken. Only remaining amount of Rs.99,000/- was paid to the seller in FY 2010-11 (AY 2011-12) on 26.02.2011. In these circumstances, it was contended that the transaction do not relate to FY 2010-11 in question and therefore, the application of provision of Section 69B of the Act in AY 2011-12 is farfetched and cannot be subject matter of review under s.263 of the Act. The learned AR also pointed out that no material was found by the Pr.CIT to enable him to allege any element of undisclosed investment in the land purchased. The learned AR accordingly submitted that the Pr.CIT has overreached its power of review and consequent order passed under s.263 of the Act is bad in law. To support its contention towards non applicability of Section 263 of the Act, the learned AR for the assessee referred to the and relied upon and the decision of the coordinate bench in Dilshad Trading Co. (P) Ltd. vs. ITO (1994) 49 ITD 348 (Bam.) and CIT vs. Amit Corporation (2012) 21 taxmann.com 64 . (Guj); CIT vs. Arvind Jewellers (2003) 259 ITR 502 (Guj) & (2015) CIT vs. Fine Jewellery (India) Ltd. (2015) 372 ITR 303 (Bam). 7. The learned CIT-DR, on the other hand, supported the revisional order of the Pr.CIT and submitted that the Pr.CIT was well within its power to exercise supervisory jurisdiction of review against the palpably wrong order passed by the AO without considering a glaring and obvious payment of stamp duty totally disproportionate qua the cost of purchase of land as declared by the assessee. It was submitted that the AO has not made any inquiry into claim of the assessee towards bonafides of cost of purchase declared and assessment order has been passed in a cryptic & non-descript manner. The agreement has been registered and therefore the Stamp duty was paid during the year. Therefore, it was thus contended that the cause of action against the assessee did arise in the FY 2010-11 to the concerning AY 201112. The learned CIT-DR referred to the judgment of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) to contend that the Pr.CIT was entitled to cancel the order of the AO where the Revenue is loosing its lawful share of taxes owing to an apparently erroneous order passed by the AO. The learned DR contended that owing to lack of inquiry on the vital aspect of cost of purchase declared vis-à-vis notified jantri rate (as revealed from the stamp duty paid by the assessee) without demur, the assessment order suffered from error which was pre-judicial to interest of Revenue. The learned CIT-DR submitted that the Pr.CIT has merely set aside the order of the AO for making requisite inquiry on the distinct possibility of revenue leakage in the backdrop of the fact that onus is squarely on the assessee to justify the correctness of declared cost of purchase on the face of substantially higher jantri value. The learned DR accordingly submitted that no interference with the order of the Pr.CIT is called for in the peculiar facts and the circumstances of the case. peculiar facts and the circumstances of the case. 8. We have examined the issue and perused the revisional order of the Pr. CIT passed under 3. 263 of the Act as well as the case laws cited. From the amount of stamp duty paid (Rs. 22. 90 Lakh) and cost of land declared at the rate of (Rs. 45. 61 Lakhs), the Pr. CIT found it self-evident that the value declared towards the consideration of purchase is abysmally low. The Pr.CIT re-computed the jantri value of the land at Rs.467.40 Lakhs as against Rs.45.6l Lakhs declared by the assessee. On these facts, the Pr.CIT was of the prima facie view that element of undisclosed income overtly exists in the purchase of land. The question that arises is whether the Pr.CIT was justified in setting aside the assessment order where the cost of purchase of land has been accepted summarily without any tangible inquiry in this regard on the fact of such documents. A perusal of the questionnaires issued and reply made by the assessee thereon clear]…no relevant meaningful inquiry was conducted in respect to correctness of the cost of purchase of land. What was inquired was source of cost of purchase declared. The issue raised by the Pr.CIT is altogether different and quite valid for that matter. A bare look at the assessment order also gives the infallible impression that the assessment order was passed in a routine and perfunctory manner without any discussion on any aspect of the assessment whatsoever. The preponderance of evidence clearly indicates unrealistically lower costs of purchases declared formally which would warrant an inquiry with the competent registering authority as well as with other comparable cases and by other realistic means. The Pr.CIT in discharge of its solemn duty under s.263 of the Act could not remain oblivious of the facts objectively drawn. There is an apparent plausibility in the action of the Pr.CIT by resorting to powers under S.263 of the Act which is of wide amplitude. The circumstances clearly exist which demands inquiry which was not done by the AO while discharging of statutory function. Thus, armed with fairly extensive powers, the Pr.CIT, in our view, has taken action compatible with circumstances. While holding so, we are alive to the plea on behalf of the assessee that reasonable inquiry was made into˙ various aspects concerning cost of land and also the purchase was made in the preceding years except for mere registration of the document in the current year. We are not impressed by such line of arguments when tested on the touch stone of Section 263 of the Act. The purchase transaction culminated and stood consummated during the year under review. Therefore, the cause of action did exist in relation to the assessment order in question. Hence, the Pr.CIT was fully justified in invoking its power under s.263 of the Act to set aside the assessment framed without any application of mind on the crucial aspect which is self-revealing from the stamp duty payment itself. 9. The judicial precedents relied upon on behalf of the assessee are not found to be of any assistance. The decisions referred too are broadly based on the circumstances where either relevant material was not found or where it was found is a matter of fact that there was no failure on the part of the AO is to make inquiries. Needless to say, the scope of Section 263 of the Act is quite different. In order to invoke Section 263 of the Act, the competent authority is required to find that order sought to be revised is erroneous and caused prejudice to the Revenue. A lack of inquiry on a pertinent point which demonstrates possible revenue leakage of staggering amount would definitely tantamount to the order being both erroneous as well as prejudicial to the interest of the Revenue. Consequent upon the action of Pr.CIT, the assessment order is merely cancelled and set aside to the file of the AO for making relevant inquiries as specified for which objective material is available at the threshold. The assessee has not estopped in any manner from dealing with the inquiry as specified to the AO and to rebut the perception that the prima facie belief on error in the original order is not correct. The assessee is not prevented from supporting its case in any manner before the AO in the proceedings pursuant to Section 263 of the Act. We thus do not see any justifiable reason to interfere with the revisional action of the Pr.CIT.” 10Being dissatisfied with the order passed by the Appellate Tribunal, the appellant is here before this Court with the present Tax Appeal. 11The principal contention raised by Mr. J.P. Shah, the learned senior counsel appearing on behalf of the appellant is that there cannot be any presumption in law that the difference between the actual sale price and the stamp duty value would be unaccounted investment by the purchaser assessee and the same can be added under Section 69B of the Act as the undisclosed income. Mr. Shah submitted that Section 50C of the Act is applicable only to the seller and not to the purchaser. Mr. Shah submitted that the issue is directly covered by two decisions : (1) CIT vs. Sarjan Realities Ltd [(2014) 220 Taxman 112 (Guj)] and (2) Anand Banwarilal Adhukia vs. DCIT [(2017) 244 Taxman 243]. 12In such circumstances referred to above, Mr. Shah, the learned senior counsel appearing for the appellant prays that there being merit in this appeal, the same be allowed and the substantial question of law may be answered in favour of the appellant – assessee and against the Revenue. 13On the other hand, this appeal has been vehemently opposed by Mr. Varun Patel, the learned standing counsel appearing for the respondents. Mr. Patel submitted that no error, not to to speak of any error of law could be said to have been committed by the Appellate Tribunal in passing the impugned order. Mr. Varun Patel laid much stress on the fact that there is no explanation worth the name at the end of the appellant as to why he had to pay stamp duty of Rs.22,90,300/- on the total sale consideration of Rs.45,61,000/-. According to Mr. Patel, this fact is sufficient for the purpose of raising a presumption under Section 69B of the Act that the sale consideration of more than Rs.44,61,000/- must have been paid by the appellant to the original owner. According to Mr. Patel, the stamp duty of Rs.22,90,300/- would be liable to be paid if the sale consideration is of more than Rs.4 Crore. 14Mr. Patel, in support of his submissions, has placed reliance on the following four decisions: [1] Commissioner of Income-tax, Mumbai vs. Amitabh Bachchan [384 ITR 200] [2] Malabar Industrial Co. Ltd vs. Commissioner of Income-tax [243 ITR 83] [3] K.A. Ramaswamy Chettiar vs. Commissioner of Income-tax [220 ITR 657] [4] Swarup Vegetable Products vs. Commissioner of Income-tax [187 ITR 412] 15In such circumstances referred to above, Mr. Patel prays that there being no merit in this appeal, the same may be dismissed. 14Mr. Patel, in support of his submissions, has placed reliance on the following four decisions: [1] Commissioner of Income-tax, Mumbai vs. Amitabh Bachchan [384 ITR 200] [2] Malabar Industrial Co. Ltd vs. Commissioner of Income-tax [243 ITR 83] [3] K.A. Ramaswamy Chettiar vs. Commissioner of Income-tax [220 ITR 657] [4] Swarup Vegetable Products vs. Commissioner of Income-tax [187 ITR 412] 15In such circumstances referred to above, Mr. Patel prays that there being no merit in this appeal, the same may be dismissed. 16A lot has been argued on Section 50C of the Act. Although we have something else in our mind so far as the applicability of Section 50C of the Act is concerned, yet, we may look into the provisions closely. 17Section 50C was introduced in the Income-tax Act, 1961 by the Finance Act, 2002 with effect from 1[st] April 2003 for substituting the valuation done for the Stamp Valuation purposes as full value of the consideration in place of the apparent consideration shown by the transferor of the capital asset, being land or building and, accordingly, calculating the capital gains under Section 48. (1) Section 50C is a special provision for determining the full value of consideration in cases of transfer of immovable property, being land or building or both; (2) Section 50C provides that where the consideration declared to be received or accruing as a result of transfer of land or building or both is less than the value adopted or assessed by the Stamp Valuation Authorities for the purpose of payment of stamp duty in respect of transfer, then value so adopted or assessed by them shall be deemed to be the full value of consideration; (3) It is also provided that where the assessee claims that the value adopted or assessed for stamp duty purposes is more than the fair market value of the property as on the date of transfer and he has not disputed this value before the appellate authorities or the Court under the Stamp Duty Act then the Assessing Officer may refer the valuation of such property under transfer to the Valuation Officer in accordance with Section 55A of the Income-tax Act, 1961. If the fair market value so determined by the Valuation Officer is less than the value adopted for stamp duty purposes the Assessing Officer may take such fair market value to be the full value of consideration. On the other hand, if the fair market value determined by the Valuation Officer is more than the value adopted or assessed for stamp duty purposes the Assessing Officer shall adopt such fair market value determined by the Stamp Valuation Authorities as full value of consideration and he shall not adopt the valuation done by the Valuation Officer as full value consideration; (4) The insertion of Section 50C is made effective from 1-4-2003 and, accordingly, would be applicable for the assessment year 2003-04 and the subsequent years. Earlier there used to be a provision in Section 52 of the Income-tax Act, 1961 which enabled the Assessing Officer to refer the property under transfer to the Valuation Officer for determining the market value. However, in K.P. Varghese vs. ITO reported in (1981) 131 ITR 597 (Supreme Court), it was held that Section 52(2) cannot be applied to genuine transaction unless there are evidences to show that the consideration declared in the sale deed is understated. In other words unless the revenue was able to show that something over and above the sale consideration had passed hands between the transferee and the transferor, Section 52(2) could not be invoked. It became almost a herculean task for the Assessing Officer to collect evidence to show the exchange of additional money for consideration was other than the apparent sale consideration. Accordingly, it was considered to insert a deeming provision by way of Section 50C for substituting the apparent sale consideration by valuation done by SVA subject to certain conditions. sale consideration had passed hands between the transferee and the transferor, Section 52(2) could not be invoked. It became almost a herculean task for the Assessing Officer to collect evidence to show the exchange of additional money for consideration was other than the apparent sale consideration. Accordingly, it was considered to insert a deeming provision by way of Section 50C for substituting the apparent sale consideration by valuation done by SVA subject to certain conditions. ●SECTION 50C OF THE INCOME TAX ACT: Section 50C. Special provision for full value of consideration in certain cases: (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer : ●Certain Amendments were made to this section by the FinanceAct, 2016. Two provisos were added to subsection (1) whichare as follows: Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. ●Further this section was amended by Finance Act Finance Act, 2018. Third proviso was added to subsection (1) which is : Provided alsothat where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. 2) Without prejudice to the provisions of sub-section (1), where— (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation 1.—For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth Tax Act, 1957(27 of 1957). the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation 1.—For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth Tax Act, 1957(27 of 1957). Explanation 2.—For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. ●BASIC INGREDIENTS OF THE PROVISIONS i) There should be a transfer of capital asset, being land or building or both; ii) There should be a transfer of such capital asset by way of registration with the Stamp Duty Authorities; iii) Stamp duty is sought to be imposed by the Stamp Valuation Authorities at certain value of the capital asset which is different than the sale consideration shown in the documents of transfer sought to be registered; iv) Where valuation done by the Stamp Valuation Authorities for levying Stamp duty is less than the sale consideration shown by the assessee in the sale deed Section 50C cannot be invoked; v) Where valuation done by the Stamp Valuation Authorities for levying stamp duty is more than the sale consideration shown by the transferor in the sale deed then such higher valuation will be considered as full value of consideration and, accordingly, such full value of consideration being valuation done by the Stamp Valuation Authorities will be substituted for apparent consideration; vi) The capital gains under Section 48 shall be computed accordingly on the basis of such higher full value of consideration and not on the basis of apparent consideration shown in the sale deed; vii) If the assessee, being transferor, claims before the Assessing Officer that fair market value of the property under transfer is less than the valuation done by the Stamp Valuation Authorities then the Assessing Officer may refer the property to the Valuation Officer for determining its fair market value as on the date of the transfer; viii) Such reference would be made in accordance with Section 55A; ix) On receipt of valuation report from the Valuation Officer, the Assessing Officer has to compare the fair market value as determined by the Valuation Officer with the valuation done by the Stamp Valuation Authorities under the Stamp Duty Act and with the apparent sale consideration shown by the assessee in the sale deed; vii) If the assessee, being transferor, claims before the Assessing Officer that fair market value of the property under transfer is less than the valuation done by the Stamp Valuation Authorities then the Assessing Officer may refer the property to the Valuation Officer for determining its fair market value as on the date of the transfer; viii) Such reference would be made in accordance with Section 55A; ix) On receipt of valuation report from the Valuation Officer, the Assessing Officer has to compare the fair market value as determined by the Valuation Officer with the valuation done by the Stamp Valuation Authorities under the Stamp Duty Act and with the apparent sale consideration shown by the assessee in the sale deed; x) Where valuation done by the Valuation Officer is more than the valuation done by the Stamp Valuation Authorities (SVA) then valuation done by the SVA would be taken as full value of consideration and capital gains will be calculated accordingly;xi) If valuation done by the Valuation Officer is less than the valuation done by the SVA then valuation done by the Valuation Officer would be adopted as full value of consideration as against the apparent consideration shown by the assessee or the valuation done by the SVA and capital gains be calculated accordingly; xii) If valuation done by the Valuation Officer is less than the valuation done by the SVA as well as sale consideration shown by the assessee in the sale deed then apparent consideration shown in the sale deed would alone be accepted as full value of consideration and capital gains be calculated accordingly, i.e. as shown by the assessee; xiii) With effect from 1.10.2009, applicable for the assessment year 2010-11 the Finance Act, 2009 (No.2) has enabled the assessing officer to find out Stamp Duty Value assessable by the SVA in cases where agreements to sale were executed, consideration changed hands and possession of the property was handed over to the buyer but without getting the transfer registered with the SVA. In such situation the stamp duty valuation assessable would also be treated as full value of consideration; xiv) Use of the word ‘shall’ in Section 50C makes it mandatory for the assessing Officer to adopt the valuation done by the SVA in place of apparent consideration, if necessary conditions under Section 50C are satisfied. The Assessing Officer has no discretion. ●WHAT IS ‘FULL VALUE’ The phrase ‘full value’ has been explained by the Hon’ble Supreme Court in CIT vs. George Anderson & Co. Ltd. (CIT v. George Anderson & Co. Ltd. [1967] 66 ITR 622 (SC)). It is held therein that full value of consideration is the full sale price actually paid. The expression ‘full value’ means the whole price without any reduction whatsoever and it cannot be referred to the adequacy or inadequacy of the price bargained. It also does not have the reference to the market value of the capital asset which is the subject-matter of the transfer. However, Section 50C creates a fiction and, therefore, it is a departure from the established principles. SECTION 50C IS CONSTITUTIONALLY VALID : It has been held that classification for preventing evasion of tax and undervaluation of transaction by substituting apparent sale consideration are neither unreasonable nor discriminatory. Section 50C pertains to a class of capital asset being land or building and its object is to bring the income arising from the capital gains. The charge of income is levied by virtue of Sections 4 & 5 and not by Section SOC. Therefore, insertion of Section 50C is within the legislative competence an