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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI MANOJ KUMAR AGGARWAL
This appeal by the assessee is arising out of revision order passed by the Principal CIT, Coimbatore-1, u/s.263 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order C.No. ITBA/REV/F/REV1/2020-21/1031358744(1) dated 09.03.2021. The assessment was framed by the Assistant Commissioner of Income Tax, Non-Corporate Circle-2, Coimbatore, for the relevant assessment year 2016-17 u/s.143(3) of the Act vide order dated 23.10.2018.
The only issue in this appeal of the assessee is against order of the PCIT assuming jurisdiction u/s.263 of the Act and revising assessment framed by the Assessing Officer u/s.143(3) of the Act, wherein the Assessing Officer has considered the issue of sale consideration of immovable property sold within the scope of section 50C of the Act and hence, the assessment order is neither erroneous nor pre- judicial to the interests of the revenue. For this issue, the assessee has raised various grounds which are argumentative and exhaustive and hence need not be reproduced.
Brief facts are that the assessee, ( late Veerannah Subramaniam) an individual filed his return of income for the relevant assessment year 2016-17 on 25.11.2016. The assessee’s return was selected for scrutiny under CASS, under limited scrutiny scheme, by issuing notice u/s.143(2) of the Act dated 28.06.2017. During the course of scrutiny assessment proceedings, the assessee disclosed sale transaction of the property income, including computation of capital gains. The assessee during the financial year 2015-16 relevant to the assessment year 2016-17 sold four immovable properties vide document nos.382, 383, 385 and 386 of 2016 for land situated at S.F.No.560/1, 560/2, Alagesan Road, Coimbatore, for a total consideration as recorded in the sale deed at Rs.3,20,00,000/-. The Assessing Officer accepted the sale consideration and assessed long term capital gain accordingly.
Subsequently, the PCIT issued show-cause notice for revising the assessment order u/s.263 of the Act as to why assessment be not revised, the assessee having sold immovable property for total consideration as recorded in the sale deed, less than the value fixed by the stamp duty authorities in terms of section 50C of the Act. According to the PCIT, the assessment order is erroneous and pre-judicial to the interests of the revenue.
In response to the show-cause notice, on behalf of the assessee, explanation vide letter dated 06.03.2021 was filed stating that total fair market value of the property as per sale deed dated 25.04.2016 was Rs.3.20 crores i.e. Rs.80 lakhs
per document and purchasers of the respective property have paid stamp duty on the basis of purchase value mentioned in the sale deed and nothing over and above has been charged by the Sub-Registrar and has not over-valued the property, over and above what was declared in the sale deed at Rs.3.20 crores i.e., Rs.80 lakhs per document. But, the PCIT was not convinced and according to him, stamp valuation authority has determined value of the property at Rs.6.40 crores i.e, Rs.1.60 crores as against each sale deed, as against sale value adopted by the assessee at Rs.80 lakhs. The PCIT noted that as per section 50C of the Act, where consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both is less than the value adopted or assessed/assessable by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for the purpose of section 48 of the Act be deemed to be full value of the consideration received or accruing as a result of such transfer. The PCIT accordingly, held that assessment order passed by the Assessing Officer is erroneous and pre-judicial to the interests of the revenue.
Hence, he set aside the assessment and directed the Assessing Officer to frame fresh assessment after giving due opportunity to the assessee. Aggrieved, now, on behalf of the assessee appeal is filed before the Tribunal.
Before us, learned counsel for the assessee, first of all filed copy of sale deed executed by the assessee vide document No.382, 383, 384 & 385 of 2016, which are enclosed in the assessee’s paper book at pages 1 to 46, and each sale deed is executed for total consideration of Rs.80 lakhs i.e., total consideration received on sale of four properties at Rs.3.20 crores. The learned counsel for the assessee took us through page 13, wherein, fair market value of the property is accepted at Rs.3.20 crores i.e. Rs.80 lakhs for each of the property and as per that certificate u/s.42 of the Stamp Act was issued, where the assessee has paid a sum of Rs.1.00 lakhs as stamp duty and further a sum of Rs.4,60,000/- was paid on account of proper / deficit stamp duty, that means, the assessee has paid Rs.5,60,000/- as stamp duty on sale deed of Rs.80 lakhs.
Similarly, in respect to other three sale deeds, i.e. 383, 385 and 382 of 2016, stamp duty of Rs.5,60,000/- was paid for each and there was no deficit stamp duty, whereby the Registrar of Stamp has calculated more than Rs.80 lakhs per transaction.
Apart from this, the learned counsel for the assessee took us through certificate issued by stamp valuation authority and enclosed in assessee’s paper book at pages 4 to 30 and as per certificate issued by the Registration Department ‘TNREGINET’ and certificate issued on 10.02.2023. The fair market value in respect of registration deed registered at 382/2016 is Rs.80.00 lakhs and consideration mentioned is also Rs.80.00 lakhs.
Similarly, in respect of document Nos.383/2016, 384/2016 and 385/2016, market value and consideration value is identical i.e.Rs.80 lakhs. The learned counsel for the assessee also took us through another certificate of encumbrance on the subject property generated by the assessee on 09.03.2023 from the Registration Department - TNREGINET, which is enclosed in assessee’s paper book at pages 22 to 29, which also suggest that sale deed registered vide document nos.382 to 385 of 2016, the consideration value and market value of the property is exactly identical i.e., Rs.80 lakhs of each instrument and thus, total consideration comes to Rs.3.20 crores. Now, the learned counsel for the assessee submitted another copy of certificate of encumbrance, whereby the Department alleged that market value as per registration department is Rs.1.60 crores, as against consideration value at Rs.80 lakhs in regard to all these four transactions i.e., each of the transaction. According to the counsel, he is not aware and these documents generated on 22.01.2020, whereas latest documents generated by the assessee are of 09.03.2023 and 10.02.2023 and this is certified by the assessee and taken print out from website of Govt. of Tamil Nadu Registration department. Apart from ambiguity, the learned counsel for the assessee stated that provision of law is very clear that provisions of section 50C has to be interpreted in the cases of sale consideration noted and which is accepted by the Sub- Registrar. Once, the Sub-Registrar accepts value and registered document provisions of section 50C will not come into play and value as registered by the Sub-Registrar has to be accepted as sacrosanct for the purpose of section 50C of the Act. Apart from this, the learned counsel for the assessee also relied on the judgement of the Hon'ble Madras High Court in the case of CIT Vs. Smt.Padmavathi in T.C.A No.350 of 2020 vide order dated 06.10.2020.
On the other hand, the ld.CIT DR stated that once there is ambiguity and certificate of encumbrance on the subjected property generated by the department on 22.01.2020 and basis of revision is the same document, the Assessing Officer should have verified the same and according to the certificate of encumbrance produced by the Revenue or PCIT clearly shows order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. In term of above, he asked the Bench to uphold order of the revision and direct the Assessing Officer to verify all these aspects.
We have heard rival contentions and gone through facts and circumstances of the case. Admittedly, it is not any one’s case that value registered in the sale deed at Rs.80 lakhs against each of the transactions or immovable property is accepted by the Sub-Registrar and registration charges as well as stamp duty charges are paid based on the value determined Sub-Registrar at Rs.80 lakhs. The assessee has computed stamp duty and paid Rs.5,60,000/- on the basis of each of the documents. There is no computation of deficit stamp duty and this is accepted by Sub-Registrar. Now, we have to go through provisions of section 50C of the Act, and the relevant provisions of section 50C reads as under:-
“50C (1) - Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed (or assessable) shall, for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of transfer.”
The mandate of provisions of section 50C is very clear and states that value adopted or assessed by the stamp valuation authority is to be deemed, for and from assessment year 2003-04 is to be full value of consideration u/s.50C of the Act. Sub-section (1) of section 50C of the Act, envisages a situation where consideration received or accruing as a result of transfer by the assessee of capital asset , being land, building or both is less than value adopted or assessed by any authority of State Government i.e stamp valuation authority has referred to any section 50C of the Act for the purpose of payment of stamp duty in respect of such transfer. In such a situation, the value so adopted or assessed shall for the purpose of section 50C of the Act, to be deemed to be full value of consideration or accruing, as result of such transfer. Here, under this provision there is no scope for ambiguity that once, stamp valuation authority adopts value that has to be taken as final for the purpose of computation of long term capital gain and for taking fair market value as on date of sale as assessed by stamp valuation authority. In the present case before us, the stamp valuation authority has assessed and registered the sale deed for proper consideration at Rs. 80 lakhs each (for four properties) considering value at Rs.3.20 crores and not Rs.6.40 crores as alleged by the Revenue. This fact is clear from the evidences placed before us. In the case of revision, on identical circumstances the Hon’ble Madras High Court in the case of CIT Vs. Smt.Padmavathi in T.C.A No.350 of 2020 vide order dated 06.10.2020 has considered this aspect and held as under:-
“15. The substantial question nos.1 and 2 are interconnected namely, the power of the PCIT under Section 263 of Act and whether he could have set aside the assessment on the ground that the assessing officer did not invoke Section 56(2)(vii)b(ii). The reading of the assessment order shows that the case was selected for limited scrutiny only on this aspect regarding the sale consideration paid by the assessee for purchase of the immovable property and the source of funds. The assessing officer has noted that the sale consideration paid by the assessee was Rs.41,50,000/- and she has paid stamp duty and other expenses of Rs.5,75,000/-. The source of funds was verified and the assessing officer was satisfied with the same. The PCIT while invoking his power under Section 263 of Act, faults the assessing officer on the ground that he did not make proper enquiry. It is not clear as to what in the opinion of the PCIT is 'proper enquiry'. By using such expression, it presupposes that the assessing officer did conduct an enquiry. However, in the opinion of the PCIT, the enquiry was not proper in absence of not clearly stating as to why in the opinion of PCIT, the enquiry was not proper, we have to necessarily hold that the invocation of the power under Section 263 of the Act was not justified.
The only reason for setting aside the scrutiny assessment was on the ground that the guide line value of the property, at the relevant time, was higher than the sale consideration reflected in the registered document. The question would be as to what is the effect of the guideline value fixed by the State Government. There are long line of decisions of the Hon'ble Supreme Court holding that guideline value is only an indicator and the same is fixed by the State Government for the purposes of calculating stamp duty on a deal of conveyance. Therefore, merely because the guideline was higher than the sale consideration shown in the deed of conveyance, cannot be the sole reason for holding that the assessment is erroneous and prejudicial to the interest of revenue.”
In view of the above facts and circumstances of the case and the judgement of the Hon’ble Madras High Court in the case of CIT Vs. Smt.Padmavathi (supra), wherein the Hon’ble High Court has considered this issue and held that guideline value is only an indicator and the same is fixed by the State Government for the purposes of calculating stamp duty for registering conveyance deed and merely because, the guideline was higher than the sale consideration shown in the deed of conveyance, cannot be sole reason for holding that the assessment as erroneous and prejudicial to the interest of revenue. Hence, revision order passed by the PCIT is bad in law. In the present case before us, facts are much better. Here, there is no excess or deficit stamp duty paid by the assessee or higher value is estimated by the stamp valuation authority for registering documents. Hence, we are of the view that revision order passed by the PCIT is bad in law and hence, quashed.
In the result, appeal of the assessee is allowed.