Loading judgment…
Facts
The assessee filed his return and was selected for scrutiny. The AO passed a best judgment order under section 144 r.w.s 144B, making an addition of Rs. 31,62,000/- on account of the difference between sale consideration and stamp duty value for two property transactions, invoking section 50C of the Act. The CIT(A) dismissed the assessee's appeal due to delay.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A). It noted that the CIT(A) had dismissed the appeal in limine without considering the merits. The Tribunal found that the AO invoked section 50C based on an assumption and without considering various market realities. Therefore, the matter was remitted back to the AO.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on grounds of limitation without considering the merits, and whether the AO correctly invoked Section 50C without proper investigation into property values and market conditions.
Sections Cited
143(2), 142(1), 144, 144B, 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH : MUMBAI
Before: JUSTICE (RETD.) SHRI C.V. BHADANG & SHRI VIKRAM SINGH YADAV
Assessment Year : 2018-19 Dosjibhai Chellabhai Patel, Commissioner of Income Tax 2/201, Surbhi Apartment, (Appeals), Dafatry Road, vs. NFAC, Delhi Malad East, Mumbai-400097. PAN : AADPP5454C (Appellant) (Respondent) For Assessee : Ms. Mansi Joshi For Revenue : Ms. Nidhi Agarwal, Sr.DR (virtually present) Date of Hearing : 04-12-2025 Date of Pronouncement : 10-12-2025 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 30-07-2025, pertaining to Assessment Year (AY) 2018-19.
At the outset, it is noted that there is a delay of 11 days in filing the appeal as pointed out by the Registry. After hearing both the parties and perusing the material placed on record, we find that there was reasonable cause for the delay in filing the present appeal and hence, the delay is hereby condoned and appeal is admitted for adjudication.
Briefly stated facts of the case are that the assessee filed his original return of income declaring total income of Rs.3,75,730/- on 29-03-2019. Subsequently, the case of the assessee was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Income Tax Act, 1961 („the Act‟) were issued. However, there was no compliance on the part of the assessee and thereafter, the AO proceeded and passed the order u/s. 144 r.w.s. 144B of the Act vide order dt. 20-04-2021. As per the AO, basis information available with the Department, the assessee has entered into two transactions relating to sale and purchase of immoveable property, wherein the difference between transaction value and the registered value comes to Rs. 31,62,000/-. As per the AO in both the cases, the transaction value is less than stamp duty value and, therefore, the provisions of section 50C of the Act are clearly attracted as the assessee has sold immoveable property at sale consideration less than the stamp duty value and in absence of any submissions and supporting documentary evidences, the AO proceeded to tax the sum of Rs. 31,62,000/- u/s. 50C of the Act. The assessee, thereafter carried the matter in appeal before the Ld.CIT(A), who has dismissed the appeal of the assessee on account of delay in filing the appeal and against the said order, the assessee is in appeal before us.
During the course of hearing, the Ld.AR submitted that the Ld.CIT(A) has erred in dismissing the appeal on account of limitation. It was submitted that the assessee has moved an application for seeking condonation of delay in filing the appeal before the Ld.CIT(A), however, the same has not been considered and the Ld.CIT(A) has proceeded and dismissed the appeal of the assessee. It was further submitted that no specific show cause notice has been issued to the assessee before dismissing the appeal of the assessee. It was also submitted that the assessee is a senior citizen and due to his health issues which significantly impaired his ability to focus on and attend to complex tax compliance matters, the appeal could not be filed in time. It was also submitted that it was during the Covid period that the assessment order was passed by the AO and due to the national lock-down on account of Covid pandemic, the appeal could not be filed in time before the Ld.CIT(A). It was submitted that without taking into consideration the entirety of facts and circumstances of the case, the appeal of the assessee has been dismissed.
It was further submitted that the AO has brought to tax the difference between the transaction value and stamp duty value and has invoked the provisions of section 50C of the Act. It was submitted that the assessee has in fact sold the property vide agreement dt. 08-05-2017 and has purchased a property vide agreement dt. 30-05-2017. However, the difference between transaction value and the registered value has been brought to tax, invoking the provisions of section 50C of the Act which can be applied only in the context of sale of property. It was further submitted that the AO has not considered various adverse factors and market realities prevailing at the time of the transaction of the property sold and purchased as these properties were not in good condition and there was limited access and entrance to the concerned property and over all, road connectivity options are also very limited. It was submitted that the AO failed to appreciate that the prevailing market value of the property at the time of transaction was genuinely lower than the municipal valuation, due to the aforesaid disadvantages, and the addition of Rs. 31,62,000/- is not justified and it was accordingly submitted that the matter may be remitted to the file of the AO with a direction to refer the matter to the DVO so that true value of the property can be worked out.
The Ld. Sr.DR has been heard, who has relied on the orders passed by the AO as well as that of the Ld.CIT(A). It was submitted that during the course of assessment proceedings, various notices were issued and necessary opportunity was also provided to the assessee. However, there was no compliance on the part of the assessee, which has resulted in passing of the best judgment order. It was further submitted that even before the Ld.CIT(A), there was a substantial delay in filing of the appeal and in absence of any reasonable and sufficient cause for delay in filing the appeal, the appeal has rightly been dismissed by the Ld.CIT(A).
We have heard the rival contentions and perused the material available on record. We find that the AO has brought to tax the difference between the transaction value and stamp duty value and has invoked the provisions of section 50C of the Act. It has been contended before us that the assessee has in fact sold a property vide agreement dt. 08-05-2017 and has purchased another property vide agreement dt. 30-05-2017. We therefore find that in absence of requisite information/documentation available on record, the AO has invoked the provisions of section 50C on the assumption that both the transactions relates to sale of immoveable property. Further, it has been contended before us that the prevailing market value of both the properties at the relevant point in time was lower than the stamp duty valuation due to varied reasons, and the matter may be remitted to the file of the AO with a direction to refer the matter to the DVO so that true value of the property can be worked out. We therefore find that in the peculiar facts and circumstances of the present matter, where relevant documentation were not on record at the time of passing of the assessment order and there is no finding on merits of the case and even before the ld CIT(A), the matter has been dismissed in limine, in the interest of justice and fair play, it would be appropriate that the matter is remitted to the file of the AO for deciding the matter afresh as per law. The AO is also hereby directed to call for a report from the DVO and take into consideration the transaction documentation for sale and purchase of property as so submitted by the assessee and seek necessary information/documentation as deemed appropriate. The assessee is also directed to attend to the proceedings and is at liberty to raise necessary contentions as so advised.