Pr. Commissioner Of Income Tax, Jaipur -Ii, Jaipur v. Shri Ashok Agarwal Huf

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 4/2021 Pr. Commissioner Of Income Tax, Jaipur -Ii, Jaipur. ----Appellant Versus Shri Ashok Agarwal Huf, 25, Dayal Nagar, Narayan Niwas,Gopalpura Bye Pass, Jaipur ----Respondent For Appellant(s) : Mr. Nikhil Simlote on behalf ofMr. R.B. Mathur HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANAOrder 16/11/2021 This appeal is filed by the Income Tax Department tochallenge the judgment of the Income Tax Appellate Tribunaldated 30.07.2020. Following question is presented for ourconsideration:- “I) Whether in the facts and in circumstances of law, theITAT was justified in confirming deletion of the additionof Rs. 3,15,70,809/- by CIT(A) under section 56(2) (vii)(b) (ii) of the Act without appreciating that during thecourse of Assessment proceedings AR of the assessee inhis defence only disputed the DLC rate applied by the AOand the plea that the lands were held as business assetwas never taken before AO and that the assessee hasalso shown land/plots as investments and there are nodevelopmental expenses as such debited/claimed in theyear.” The short question pertains to applicability of Section 56(2)(vii) of the Income Tax Act, 1961 in case of the respondent-assessee. The Assessing Officer with the aid of the said provisionhad made an addition of the sum of Rs.3,15,70,809/- as incomeof the assessee for the assessment year 2015-16. The assesseecarried the matter in appeal before the CIT (Appeals). The assessee sought permission to produce additional documents. Onthe basis of such additional documents, the assessee sought toraise a contention that the land which was transferred in favour ofthe assessee was a stock in trade and he was engaged in thebusiness of real estate development. The CIT (Appeals) called forthe remand report from the Assessing Officer and eventuallyaccepted the stand of the assessee and deleted the addition. TheRevenue thereupon approached the Tribunal. The Tribunal by theimpugned judgment upheld the order of the CIT (Appeals) uponwhich present appeal has been filed. As is well known Section 56 of the Act pertains to incomefrom other sources. As provided under sub-section (1) of Section56 income of every kind which is not excluded from the totalincome under the Act would be chargeable to income tax underthe head ‘income from other sources’ if it is not chargeable underany of the heads specified in Section 14, items A to E. Sub-section(2) of Section 56 provides that in particular and without prejudiceto the generality of the provisions of sub-section (1), the incomespecified in several sub-clauses contained in this section shall bechargeable to income tax as income from other sources. Therelevant portion of clause (vii) which is at the center of the issuereads as under:- “(vii) where an individual or a Hindu undivided familyreceives, in any previous year, from any person orpersons on or after the 1st day of October, 2009 [butbefore the 1st day of April, 2017],— (a) any sum of money, without consideration, theaggregate value of which exceeds fifty thousand rupees,the whole of the aggregate value of such sum; (b) any immovable property,— (i) without consideration, the stamp duty value of whichexceeds fifty thousand rupees, the stamp duty value ofsuch property; (ii) for a consideration which is less than the stamp dutyvalue of the property by an amount exceeding fiftythousand rupees, the stamp duty value of such propertyas exceeds such consideration: Provided that where the date of the agreement fixingthe amount of consideration for the transfer ofimmovable property and the date of registration are notthe same, the stamp duty value on the date of theagreement may be taken for the purposes of this sub-clause: (a) any sum of money, without consideration, theaggregate value of which exceeds fifty thousand rupees,the whole of the aggregate value of such sum; (b) any immovable property,— (i) without consideration, the stamp duty value of whichexceeds fifty thousand rupees, the stamp duty value ofsuch property; (ii) for a consideration which is less than the stamp dutyvalue of the property by an amount exceeding fiftythousand rupees, the stamp duty value of such propertyas exceeds such consideration: Provided that where the date of the agreement fixingthe amount of consideration for the transfer ofimmovable property and the date of registration are notthe same, the stamp duty value on the date of theagreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply onlyin a case where the amount of consideration referred totherein, or a part thereof, has been paid by any modeother than cash on or before the date of the agreementfor the transfer of such immovable property;” Even the Counsel for the Revenue did not argue that the saidprovisions would be applicable to a stock in trade of an assessee.In other words if it was found that assessee was actually in thebusiness of real estate development and the land in questionformed part of the stock in trade of the assessee, Section 56(2)(vii) would have no applicability. In this context, as noted above the CIT (Appeals) as well asthe Tribunal have concurrently come to a finding that the assesseehad shown the said property as stock in trade in its business ofreal estate development and that even otherwise there wassufficient independent evidence for such purpose. Merely becausethe assessee did not raise such a contention before the AssessingOfficer, as per settled law would not preclude the assessee fromraising such contention before the Appellate Authority. As notedthe assessee followed the proper procedure by filing applicationfor taking additional evidence on record which was allowed by theCommissioner of Appeals and taken into consideration after callingthe remand report from the Assessing Officer. No question of law arises. The appeal is dismissed. (REKHA BORANA),J(AKIL KURESHI),CJ Kamlesh Kumar/N.Gandhi/12