This High Court dismissed the Revenue's appeal challenging an ITAT order deleting an addition under Section 69B regarding a land exchange. The Court held no substantial question of law arose as Revenue failed to prove understatement of consideration.
Appeal dismissed; no orders as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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PRINCIPAL COMMISSIONER OF INCOME TAX-4 ..... Appellant Through: Sanjay Kumar, Advocate for Mr Rahul Chaudhary, Senior Standing Counsel
versus
HI-ENERGY REALTORS PVT. LTD. ..... Respondent Through: Mr S. Krishnan and Mr Gaurav Goel, Advocates
CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH
O R D E R % 09.10.2017
“A. Whether on facts and in the circumstances of the case ITAT was correct in law in deleting the addition of Rs. 15,77,59,691/- made by the AO u/s 69B of the Act?
B. Whether on facts and in the circumstances of the case ITAT was correct in law in not appreciating the benefit in question in any case covered under the head “Profits and gains of business or profession” in view of Section 28 (iv) of the Act?”
ITA 778/2017 Page 1 of 6
ITA 778/2017 Page 2 of 6
“(h) Except relying on stated comparable transactions in a group company's case (which has been refuted by the appellant by citing comparable independent transaction showing a much lesser value), the A0 does not bring in evidences to support his case under statement within the meaning of section 69B of the Act. The appellant relies on K P Varghese Vs IT0 13 1 ITR 397 (SC) . There it has been held that burden lies on the Revenue to show that there is under statement of consideration. It has been further held that to throw the burden of showing that there is no understatement of the consideration on the appellant would be to case an impossible burden on him to establish a negative, namely, that he did not receive any consideration beyond that declared by him. A similar view has been taken in CIT Vs Sivhakant Co. Pvt. Ltd. 159 ITR 71 . The sum and substance of the citations is that the consideration declared by be appellant has to be accepted by the Revenue as true unless it is proved to be wrongly declared, and the burden of proof is upon the Revenue to establish that the appellant has understand such sale consideration. In CIT Vs Harpal Sing 169 Taxman 90 (P & H) , it was held that since there was no material or evidence before the A0 to conclude that the assessee has paid a consideration over and above the documented price as per sale deed, the addition u/s 69B is without any basis. In CIT Vs Naresh Khdtar (HUF) 130 Tax Man 15 (Del) , it was held that material not being present to counter the figure of actual investment as per books, no addition under Section 69B could have been made. In CIT Vs Lalit Bhasin 147 Taxman 619 (Del) , when the purchase was not verified from the stock exchange or from the seller, it was held that addition without evidence in support of that, would be an addition on the basis of conjecture and nothing else. In Shankarlal Nebhulal (HUF) Vs DCIT (2004) 2 SOT 671 (Ahd) , it was held that there could be no addition u/s 69B, if there is no evidence of payment of on-money for purchase of immovable property. In the case under appeal, no evidence being on record or substantiate a view that the appellant has paid more than what was recorded in the books, the AO could not have invoked the
ITA 778/2017 Page 3 of 6
provisions of section 69B.”
“(h) The crux of the issue is whether the appellant receive more in exchange, which could have been taxable u/s 28(iv) and whether the excess was funded from outside the books. Facts show that 16.16 acres of land at Badsahpur was exchanged for 17.8 1 acres of land Behrampur/Ullawas. It means receipt of 1.1 acres for every one acre exchanged. As to why 0.1 acres in excess for every one acre of exchange was agreed upon to be delivered to the appellant is that the appellant's landholding was contiguous, has locational advantage, where as the counter parties was dispersed and suffered on the aspect of locational advantage. These factors are vital for determining the terms of exchange. Secondly, the stamp valuation authorities do not value the land at Behrampur at any sale different from that of Badshahpur. Since the stamp valuation authorities would not have determined the value of any land without factoring in demand and supply, locational advantage, proximity to public facilities, infrastructure, the determination of fair value by the appellant of land at Behrampur and Ullawas at the same rate 9after adjustment for locational advantage and dispersed nature of holding) could not have been faulted. Parity in the market rates and the rate determined by the stamp valuation authorities at the two locations is given more so when evidences are not on record to indicate that the appellant paid more as against the documented price as part of the exchange.
Per reasoning above, I hold that, there being no surplus in value of land transferred to the appellant, and there being no basis or evidences to invoke the provisions of section 69B, the impugned addition is without merits. The grounds answered on merits, the appellants arguments that the
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additions have been made without affording opportunity to rebut and that the additions have been made without a show cause either for invoking the provisions of section 69B or for relying on comparable transactions, become redundant and hence not adjudicated.”
“22. In the present case, shares were not exchange and there was exchanges of Land in the same locality and the duration of purchase of land and its exchange i.e. four-five months was very short. Furthermore, land rates are never uniform as in the share market and the A0 has not brought on record . - any allegation, material, evidence or document on record supported by proof of any rate variation resulting in a profit and addition has been made purely on the estimate basis and the stand of the A0 taken in the case of Golden View Builders Pvt. Ltd. (supra), which has dismissed by the tribunal order (Supra). In absence of any material or evidence or documents to establish that the assessee has made investment and amount expended on making such investments or acquiring land exceeds the amount recorded in this behalf in the books of accounts, which has been properly audited and accepted by the department.”
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CIT (A), concurred with by the ITAT, suffers from perversity.
S. MURALIDHAR, J.
PRATHIBA M. SINGH, J.
OCTOBER 09, 2017 rd
ITA 778/2017 Page 6 of 6
2 issues framed by the court
Whether the ITAT was correct in deleting the addition made under Section 69B for undisclosed purchase of land.
Whether the differential value in a land exchange should be taxable under Section 28(iv) of the Act.
Colour shows how this judgement treated each authority
K P Varghese Vs IT0Explained¶21
K P Varghese Vs IT0 13 1 ITR 397 (SC)
CIT Vs Sivhakant Co. Pvt. Ltd.Explained¶21
CIT Vs Sivhakant Co. Pvt. Ltd. 159 ITR 71
CIT Vs Harpal SingExplained¶21
CIT Vs Harpal Sing 169 Taxman 90 (P & H)
CIT Vs Naresh Khdtar (HUF)Explained¶21
CIT Vs Naresh Khdtar (HUF) 130 Tax Man 15 (Del)
CIT Vs Lalit BhasinExplained¶21
CIT Vs Lalit Bhasin 147 Taxman 619 (Del)
Shankarlal Nebhulal (HUF) Vs DCITExplained¶21
Shankarlal Nebhulal (HUF) Vs DCIT (2004) 2 SOT 671 (Ahd)
3 provisions across 1 enactments
PRINCIPAL COMMISSIONER OF INCOME TAX-4
HI-ENERGY REALTORS PVT. LTD.
S. MURALIDHAR
PRATHIBA M. SINGH
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
