BEWARE! BEFORE YOU PAY STAMP DUTY AS PER
READY RECKONER
By
Bankimchandra P. Khona, Solicitor
1)
It
is common knowledge that the market
value mentioned in
ready reckoner in most of the cases
is much more higher than the actual
market value of the properties. As Registration Authorities
refuse to accept the conveyance
or Agreement to Purchase land or property or flat
parties are forced to pay higher stamp duty as the market value
as per the ready reckoner which is
much higher than the actual consideration paid by the Purchaser
to the
Vendor.
2)
Practically
in all cases
and specially in
purchase of
flat parties
cannot afford
financially and
time wise to
contest the claim of stamp authorities and registration authority
as to the market value of
the property. People have no such
time to take legal
proceedings to challenge the
valuation. People financially do not find it appropriate to contest
market value because unless and until their document is registered
they do not get any
title. Therefore, in most of
the cases and
specially in Mumbai people pay
stamp duty at higher
market value than actual consideration
under the
document, they do so with a view to buy a peace.
The question
arises do they really buying peace?
3)
Very
interesting incident arose in one
case before the Punjab & Haryana High Court. It was the
case where price shown in Regd. Deed and the price shown for the
purpose of stamp duty were different.
Price shown in the Registration deed was lower than the price
calculated for the purpose of stamp duty. Question
arose was is it not a case that the Income Tax Officer has
reason to believe that there is omission or failure on the part of the
assesses to make true and full disclosure of all material facts
necessary for assessment with regard to the said transaction ? Is it
not a case whenever a part of its income, profits or
gains chargeable to
income tax has escaped assessment
? In the said case
Assessing Officer had
initiated action under
Section 148 of the Income Tax
Act for the
earlier assessment because
though the price of
the property shown in the Registered
Deed was
Rs.3.00 lakhs
but for purpose of stamp duty, the said premises was valued at
Rs.4.60 Lakhs. This was an incident of an
offence to suppress correct information
about its income.
The Hon'ble High Court of
Punjab &
Haryana held that this
alone could be constituted a
valid ground for forming a prima facie
information that
the assessee's income has escaped
assessment warranting
initiation of
proceedings under Section 148 of the Income Tax Act.
(
VED PRAKASH NAGORI Vs. INCOME TAX. )
4)
Considering
the said Judgment
now it may be
open for Income
Tax Officers to issue Notice or content
in a case of assessee that even though he has
shown consideration received
as `X' but he has
valued the property for the
purpose of stamp duty X
+ Y then
the `Y' is
Conceal Income. He has not fully
disclosed all
material facts necessary for his
assessment. Therefore, all the
citizens who for the purpose
of stamp duty in view of the ready
reckoner, value
the property for more than the actual
consideration than for a difference it
will be open for
Income Tax Officer to content that
there is a concealment of income being
the difference
between market value calculated for the purpose of stamp
duty ( which is the valued according to
the ready reckoner)
and the
actual consideration
received or
shown in the document.
Same will apply
in the case of the Purchaser
that he has paid
difference between the
market value as per ready
reckoner according to which he has paid stamp duty
and the payment
shown in the document, by what we
popularly call “On
Money” or unaccounted
funds 'and that he
has concealed the said difference
from Income Tax Authority
as his income in
same or earlier
years. Therefore, every time
when a citizen
buys property and mentions price
but to get
his document registered shows more
valuation for the
purpose of stamp duty and
gets the document
registered is running a risk to face
the inquiry from his or her ITO and also
facing risk of
paying Income Tax
and penalty for the said
difference between
value as per the ready reckoner and the actual amount shown in the document.
5)
For
an illustration we can
take an example. If a Purchaser purchases
a flat for Rs.10
lakhs and
shows Rs.10 lakhs
as amount as consideration in his document, but because the market value as per ready reckoner
is Rs.12 lakhs, then to
get his document registered he, for the purpose of stamp duty values
property at Rs.12 lakhs and not
Rs.10 lakhs and pays the stamp duty
accordingly. In a
such a case it will be open for ITO to content that
the difference between
two namely
Rs.2 lakhs
is concealing income
in the case of both i.e.
the Purchaser as
well as the Vendor
and may
ultimately assess
both of them accordingly and one
will become liable to pay income tax and penalty on said sum of Rs.2
lakhs. Each one of them, the Vendor
and the Purchaser will be liable to pay Income Tax and penalty for the
said sum of Rs.2 lakhs. This can affect practically majority
of the Vendors and Purchasers
as the market
value as per the
ready reckoner seems to
be much more higher in majority of the cases
than actual price
or consideration
for buying
or selling property,
flats, shops and
offices in Mumbai.
Updated on 6th September 2005
