RAGHVENDRASINH DHARMENDRASINH CHUDASAMA,AHMEDABAD vs. INCOME TAX OFFICER, WARD1(10), BHAVNAGAR, BHAVNAGAR

The brief facts of the case are that the assessee did not file his original return of income for A.Y. 2020-21. The AO had received an information that assessee had entered into purchase and sale

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. Th

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

Shri Chetan Agarwal, the Ld. AR of the assessee submitted that the properties in respect of which LTCG of Rs. 5,07,40,136/- was worked out by AO, the sale deed of those properties were subsequently cancelled vide registered cancellation deeds dated 15.07.2024. He further submitted that the assessee was buyer of the properties and not the seller. Therefore, the addition made by the AO u/s. 50C of Act was not correct as no LTCG was derived by the assessee.

Per contra, Shri Rameshwar P Meena, the Ld. SR-DR submitted that the assessee did not take any such plea before the AO that he was the buyer of the properties and not the seller. Rather a submission was made that the two properties were acquired by him in the Financial Year 2005-06 for a consideration of Rs.7,50,000/-, in respect of which deduction for indexed cost of acquisition was allowed by the AO. The Ld. SR-DR submitted that though the assessee had taken a plea before the Ld. CIT(A) that the sale deeds dated 19.09.2019 were cancelled vide cancellation deed dated 15.07.2024, no evidence in this regard was brought on record. He, therefore, requested that the matter may be set aside to the file of the Jurisdictional AO with a direction to verify the correct facts and thereafter re-decide the matter and make the addition under proper section.

We have considered the rival submissions. The AO had computed the LTCG on the basis of information that the assessee had sold 2 properties during the year. The fact that the assessee had sold the properties was not disputed before the AO. From the table given in the assessment order, it is found that the assessee had purchased two immovable properties during the year for a consideration of Rs.7,50,000/-

The information received by the AO required verification as the two properties could not have been purchased and sold on the same date for the same consideration. The AO had flip-flopped between making addition u/s 56(2)(x) or u/s 50C of the Act. The addition as made u/s 50C of the Act was without proper verification of the fact as to whether the transactions were for purchase or for sale of the properties. The contention of the assessee is that the sale deeds dated 19.09.2019 in respect of which addition was made by the AO, were cancelled vide cancellation deed dated 15.07.2024. However, a copy of the cancellation deed and the evidence for receipt of consideration amount was not brought on record. In the interest of justice, we, therefore, deem it necessary to set aside the matter to the file of the Jurisdictional AO with a direction to verify the correct facts and thereafter re-adjudicate the matter as per the provisions of the Act. We make it clear that we are not expressing any opinion on the correctness of the assessee’s claim regarding cancellation of the sale deeds. The AO will be free to verify the

In the result, the appeal of the assessee is allowed for statistical purpose.