Pr. Commissioner Of Income Tax vs Shri Ashok Agarwal Huf
2021 Latest Caselaw 6554 Raj/2

       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 of Mr. R.B. Mathur

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANA Order 16/11/2021

This appeal is filed by the Income Tax Department to

challenge the judgment of the Income Tax Appellate Tribunal

dated 30.07.2020. Following question is presented for our

consideration:-

"I) Whether in the facts and in circumstances of law, the ITAT was justified in confirming deletion of the addition of Rs. 3,15,70,809/- by CIT(A) under section 56(2) (vii)

(b) (ii) of the Act without appreciating that during the course of Assessment proceedings AR of the assessee in his defence only disputed the DLC rate applied by the AO and the plea that the lands were held as business asset was never taken before AO and that the assessee has also shown land/plots as investments and there are no developmental expenses as such debited/claimed in the year."

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 provision

had made an addition of the sum of Rs.3,15,70,809/- as income

of the assessee for the assessment year 2015-16. The assessee

carried the matter in appeal before the CIT (Appeals). The

(2 of 4) [ITA-4/2021]

assessee sought permission to produce additional documents. On

the basis of such additional documents, the assessee sought to

raise a contention that the land which was transferred in favour of

the assessee was a stock in trade and he was engaged in the

business of real estate development. The CIT (Appeals) called for

the remand report from the Assessing Officer and eventually

accepted the stand of the assessee and deleted the addition. The

Revenue thereupon approached the Tribunal. The Tribunal by the

impugned judgment upheld the order of the CIT (Appeals) upon

which present appeal has been filed.

As is well known Section 56 of the Act pertains to income

from other sources. As provided under sub-section (1) of Section

56 income of every kind which is not excluded from the total

income under the Act would be chargeable to income tax under

the head 'income from other sources' if it is not chargeable under

any of the heads specified in Section 14, items A to E. Sub-section

(2) of Section 56 provides that in particular and without prejudice

to the generality of the provisions of sub-section (1), the income

specified in several sub-clauses contained in this section shall be

chargeable to income tax as income from other sources. The

relevant portion of clause (vii) which is at the center of the issue

reads as under:-

"(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 [but before the 1st day of April, 2017],--

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,--

(3 of 4) [ITA-4/2021]

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:

Provided that where the date of the 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 the agreement may be taken for the purposes of this sub- clause:

Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;"

Even the Counsel for the Revenue did not argue that the said

provisions would be applicable to a stock in trade of an assessee.

In other words if it was found that assessee was actually in the

business of real estate development and the land in question

formed 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 as

the Tribunal have concurrently come to a finding that the assessee

had shown the said property as stock in trade in its business of

real estate development and that even otherwise there was

sufficient independent evidence for such purpose. Merely because

the assessee did not raise such a contention before the Assessing

Officer, as per settled law would not preclude the assessee from

raising such contention before the Appellate Authority. As noted

the assessee followed the proper procedure by filing application

for taking additional evidence on record which was allowed by the

Commissioner of Appeals and taken into consideration after calling

the remand report from the Assessing Officer.

(4 of 4) [ITA-4/2021]

No question of law arises. The appeal is dismissed.

                                    (REKHA BORANA),J                                                       (AKIL KURESHI),CJ
                                   Kamlesh Kumar/N.Gandhi/12









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