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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 27/05/2016, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–32, Mumbai, [“learned CIT(A)”], for the assessment year 2012–13.
The present appeal has been listed for hearing before us pursuant to the order dated 10/08/2023, passed by the Co–ordinate Bench of the Tribunal in Hari Mittar Yadav v/s ITO, M.A. no.192/Mum./2023 (in ITA no.5104/Mum./ 2016, for the assessment year 2012-13), whereby, the earlier order dated
Hari Mittar Yadav ITA no.5104/Mum./2016 21/11/2022, passed under section 254(1) of the Act was recalled and the appeal was directed to be re-fixed for hearing.
The revised grounds of appeal filed by the assessee, vide letter dated 25/10/2019, are reproduced as under:-
“1. The Ld. Commissioner of Income Tax (Appeals) - 32, Mumbai [hereinafter referred to as the "Ld. CIT(A)"] erred in passing the order dated 27.05.2016 upholding the action of Ld. Income Tax Officer - 23(1)(5), Mumbai [hereinafter referred to as 'Ld. A.O."] in making addition of Rs.50,44,750/- invoking the provisions of section 50C of the Act without appreciating the facts and circumstances of the case. Thus, the order dated 27.05.2016 passed by Ld. CIT (A) is bad in law and the same may be quashed.
2. The Ld. CIT(A) failed to appreciate that the provisions of section 50C is not applicable in the facts of present case. Hence, the addition of Rs.50,44,750/- under section 50C of the Act is unjustified and the same may be deleted.
3. The Ld. Assessing Officer erred in levying interest under section 234A, 234B and 234C without appreciating the fact that the appellant denies his liability to the same.
The Appellant craves leave to add, alter, amend, delete, rescind or withdraw any of the grounds of appeal mentioned hereinabove.”
4. The issue arising in grounds no.1 and 2, raised in assessee‟s appeal, is pertaining to the addition of Rs. 50,44,750 under section 50C of the Act.
5. We have considered the submissions of both sides and perused the material available on record. The assessee is an individual and for the year under consideration filed his return of income on 29/01/2013, declaring a total income of Rs.6,89,500, under the head „Income from House Property‟ and „other sources”. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, on the basis of AIR information, it was observed that the assessee has transferred an immovable property for a consideration of Rs.12 lakh on Hari Mittar Yadav ITA no.5104/Mum./2016 18/01/2012. In order to verify the genuineness of the transaction, notice under section 133(6) of the Act was issued to the Registrar, Joint Sub- Registration Office. Vide letter dated 10/02/2015, the Joint Sub-Registrar confirmed that the sale agreement of an immovable property was registered by the assessee in his office on the above-mentioned date and also forwarded a copy of Index-II of property transferred by the assessee and the co-partner in support of the confirmation. On verification of Index-II, it was observed that the Stamp Duty authority has valued the property at Rs.1,00,89,500, for the purpose of computation of stamp duty on the transaction. It was further observed that both the transaction parties have accepted the valuation of the property and paid the stamp duty accordingly. Thus, the assessee was asked to show cause as to why the stamp duty value of the said property at Rs.1,00,89,500, should not be taken as full value consideration for calculating capital gain. In response thereto, the assessee submitted that the property was already transferred on 31/03/2005, which could be confirmed from the payment of Rs.12 lakh, received by the partners in the assessment year 2006- 07. The assessee further submitted that the transfer deed of Rs.12 lakh was a mere formality for getting a proper title to the transactions done in the assessment year 2006-07 and the deed specifically mentions the amount paid to the partners which was also evident from the bank statements as per the assessee. Therefore, it was submitted that the value adopted by the stamp duty authority in respect of the property at the time of execution of the transfer deed on 18/01/2012, cannot be taken as a sales consideration for the purpose of section 48 of the Act.
Hari Mittar Yadav ITA no.5104/Mum./2016 6. The Assessing Officer (“AO”) vide order dated 27/03/2015, passed under section 143(3) of the Act did not agree with the submissions of the assessee as being not a cogent explanation and not supported by any documentary evidence. The AO further held that the assessee has failed to provide any documentary evidence regarding the transfer of property during the assessment year 2006-07 except the sale deed registration proof and in the sale deed, it was mentioned that the transaction was materialised on 18/01/2012, and not in the financial year 2005-06 as claimed by the assessee. Accordingly, the AO by applying the provisions of section 50C of the Act computed the long-term capital gain of the assessee arising from the transfer of immovable property at Rs.50,44,750, being 50% of Rs.1,00,89,500, and added the same to the total income of the assessee.
The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and held that the assessee continued to own the property up to January 2012 and therefore he cannot take shelter under the so-called reconstituted partnership deed, as those deeds have no legal sanctity as they are not registered deed with the Sub-Registrar or with the Registrar of Firms and are standalone not finding mention in any property document whatsoever. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned AR submitted that the deed of transfer executed on 18/01/2012, was drafted like a sale deed without referring to the partnership takeover and settlement of amounts. It was further submitted that the rectification deed was registered on 29/04/2017, explaining the chain of events and registration of deed on 18/01/2012. Thus, from the facts and Hari Mittar Yadav ITA no.5104/Mum./2016 circumstances as noted above, it is evident that the date of transfer of the property is in dispute. On one hand, as per the Revenue, the property was transferred in the year under consideration and therefore the capital gains are to be computed as per the provisions of the Act as applicable in the year under consideration. However on the other hand, as per the assessee, the property was transferred pursuant to the deed of retirement and reconstitution of partnership in the assessment year 2006-07 and therefore the assessment year 2006-07 is the year in which the taxability of capital gains arising from transfer of the property can be determined. In view of the above, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The AO is directed to first examine the year in which the property was transferred and thereafter examine the applicability of section 50C for computing the capital gains in the hands of the assessee. With the above directions, we restore this issue to the file of the AO for de novo adjudication after necessary examination as per law. As a result, the impugned order passed by the learned CIT(A) on this issue is set aside and grounds no. 1 and 2 raised in assessee‟s appeal are allowed for statistical purposes.
The issue arising in ground no.3, is consequential in nature and therefore is allowed for statistical purposes.
In the result, appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 11/10/2023