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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH
PER AMARJIT SINGH - AM:
The appeal filed by the Assessee for A.Y. 2013-14, arise from order of the CIT(A) –2, Vadodara dated 23.04.2018, in proceedings under Section 144 r.w.s. 147 of the Income Tax Act, 1961; in short “the Act” with the following grounds:- “
1. The learned Commissioner of Income Tax (Appeals) has erred in passing an ex-parte order without providing reasonable opportunity ob being heard to the appellant hence the same being against the principles of natural justice and law requires to be cancelled.
2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in passing ex-parte order u/s. 144 r.w.s. 147 of the I.T. Act, 1961 without providing reasonable opportunity of being heard which is against the law of natural justice hence the order passed should be cancelled.
3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in computing the total income of the Appellant at Rs. 21,76,500/- making addition of Rs. 20,74,830/- u/s. 50C of the I.T. Act, 1961 and disallowed of Rs. 1,01,666/- treating the payments of Stamp Duty as alleged unexplained expenditure.
Nilesh Ravjibhai Patel vs. ITO) A.Y. 2013-14 2
4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by the Assessing Officer in respect of capital gain on sale of land without granting any benefit of the cost of acquisition/cost of improvement of land.
5. The Appellant prays that the delay in filing of appeal may kindly be condoned. 6. The Appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.”
The facts of the case is that assessment under Section 144 r.w.s. 147 of the Income Tax Act was made on 18.11.2016. In the assessment order AO has stated that during the year under consideration assessee has sold land situated at Nadiad jointly owned with other two persons for Rs. 20 lacs and as per stamp duty paid the valuation of the property was determined at Rs. 62,24,489/-. During the course of assessment assessee has not made any compliance to the notices issued by the AO, therefore, the AO has taxed the whole part of deemed consideration of Rs. 20,74,830/- as income from capital gain under Section 50C of the Income Tax Act.
The assessee has preferred appeal before the Ld. CIT(A). However, the assessee has not made any compliance to the number of notices issued by the Ld. CIT(A), therefore, the Ld. CIT(A) has sustained the additions made by the AO.
Heard the Ld. DR and perused the material on record.
During the year assessee has sold immovable property jointly with two other co-owners for Rs. 20 lacs. The AO has determined the sale consideration on the basis of stamp duty paid at Rs. 62,24,489/- and treated the deemed 1/3rd share of the assessee of Rs. 20,74,830/- as income from capital gain since the assessee has not made any compliance during the course of assessment proceeding. The Ld. CIT(A) has sustained the impugned addition since the assessee has also failed to make compliance before the Ld. CIT(A).
We have gone through the provision of Section 50C of the Income Tax Act which provide that where the consideration declared to be received or accruing as a result of the transfer of land or building or both is less than the value adopted or Nilesh Ravjibhai Patel vs. ITO) A.Y. 2013-14 3 assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration and capital gain shall be computed accordingly under Section 48 of the Income Tax Act. Section 50C of the Income Tax Act by deeming fiction substituted the consideration received on sale of a capital asset by stamp duty valuation.
In the light of the above facts it is observed that in the case of the assessee the AO has treated the whole value of deemed sale consideration determined under Section 50C of the I. T. Act as the income from the capital gain. However, the AO is required to taxed the correct income from capital gain as per the mode of computation prescribed under the provision of Section 48 of the I. T. Act after deducting the cost of acquisition or other connected expenditure if any as prescribed in the provision of said section.
It is further observed that neither the AO nor the Ld. CIT(A) have initiated any action under Section 271(1)(b) or Section 131(1) of the Act to enforce the attendance of the assessee, since the basic material i.e. detail of cost of acquisition of the sold property was not on record, therefore, the Assessing Officer should have made efforts to enforce the compliance of the assessee as directed above in order to compute the income earned under the head capital gain. Looking to the above facts and circumstances we consider it appropriate to restore this case to the file of the AO for deciding the issue of addition under Section 50C of the Act Denovo as directed above. Therefore, this appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 27/10/2021