BATHULA VENUGOPAL,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(3), HYDERABAD

At the outset, it is noticed that there is a delay of 1 day in filing of the appeal before the Tribunal and an affidavit in support of condonation of the delay was filed by the assessee. Taking into consideration the fact that the delay is only one day, the delay is condoned.

Brief facts of the case are that the assessee, an individual, deriving income from business, filed his return of income for the A.Y 2011-12 on 13.6.2012 declaring total income of Rs.1,73,400/-. According to the information received by the Department, the assessee has sold two immovable properties vide document No.1993/2010 and 1994/2010 both dated 29.6.2010 during the relevant previous year for a value of Rs.9,22,000/- each as against the SRO value of Rs.16,38,000/- each respectively. The AO observed that the SRO value being higher than the sale consideration mentioned in the sales deed, the provisions of section 50C are applicable. Accordingly, a show- cause notice was issued to the assessee to which the assessee replied stating that with regard to the sale of property during the financial year 2010-11, there was capital loss and hence he has not disclosed the capital loss in his I.T. returns. The AO however, did not accept the assessee’s contention and adopted the SRO value of Rs.16,38,000/- for each of the flat as sale consideration u/s 50C and computed the long term capital gain accordingly. Aggrieved by the same, the assessee filed an appeal before the CIT (A) and also made a claim of exemption u/s 54 of the I.T. Act. The CIT (A), however, confirmed the order of the AO and rejected the claim of deduction u/s 54 on the ground that the said claim was not made in the return of income and therefore, is not allowable.

The learned Counsel for the assessee submitted that the property is surrounded by various deficiencies due to which the assessee has received less consideration than the SRO value and since the assessee had raised this objection before the CIT (A), he ought to have referred the matter to the file of the Valuation Officer, rather than confirming the order of the AO. Further, he also submitted that the assessee’s claim of deduction u/s 54 should have been considered by the CIT (A).

The learned DR, however, supported the orders of the CIT (A).

Having regard to the rival contentions and the material on record, I find that the assessee has raised additional ground vide letter dated 31.10.2019 i.e. at the time of hearing. The regular grounds raised by the assessee as well as the additional ground are as under: Regular Grounds: “1. On the facts and in the circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) -1, Hyderabad is erroneous and bad in law.

Since the additional ground raised by the assessee is for reference to the Valuation Officer and the assessee had already raised the said objection before the CIT (A), I deem it fit and proper to admit the same and adjudicate as under. Since the assessee had raised its objection to the adoption of the SRO value u/s 50C of the Act, by pointing out certain deficiencies in the property, I deem it fit and proper to set aside the order of the CIT (A) and remand the issue to the file of the AO with a direction to refer the valuation of the property to the valuation cell and recompute the capital gain after giving the assessee a fair opportunity of hearing including claim of deduction u/s 54 made by the assessee on a property the assessee.

In the result, assessee’s appeal is treated as allowed for statistical purposes. Order pronounced in the Open Court on 1st Nov. 2019. Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER