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Facts
The AO reopened the assessment based on information that the assessee sold a property for Rs. 57.16 lakhs, while the stamp duty valuation was Rs. 70.90 lakhs, attracting Section 50C. The assessee claimed to have only purchased a property and not sold it, submitting an agreement for sale as evidence for the first time before the Tribunal.
Held
The Tribunal noted that Section 50C applies only to sale transactions and that Section 56(2)(x) regarding differences in consideration for buyers was introduced from AY 2017-18. Since the assessee's claim of purchase required verification and the AO acted ex-parte due to lack of evidence, the matter was restored to the AO for fresh examination.
Key Issues
Whether the addition under Section 50C for the difference between sale consideration and stamp duty valuation is applicable when the assessee claims to be a buyer and not a seller. Whether the reassessment proceedings were validly initiated without proper evidence.
Sections Cited
148, 50C, 147, 56(2)(x)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “A” BENCH : MUMBAI
Before: SHRI B.R. BASKARAN & SHRI ANIKESH BANERJEE
O R D E R PER B.R. BASKARAN, A.M :
The assessee has filed this appeal challenging the order dt.09-10-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-52, Mumbai [„Ld.CIT(A)‟] and it relates to AY. 2011-12. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the addition of Rs. 70.90 lakhs made by the AO towards Short Term Capital Gain.
None appeared on behalf of the assessee. However, the assessee has filed written statement, containing factual details relating to the addition.
We heard the Ld.DR and perused the record. The AO re-opened the assessment of the year under consideration by issuing a notice u/s. 148 of the Income Tax Act, 1961 („the Act‟), upon receiving information that the assessee has sold a property for a consideration of Rs. 57.16 lakhs, whose stamp duty valuation was Rs. 70.90 lakhs. Since the provisions of section 50C of the Act is attracted and a difference of Rs.13.74 lakhs is required to be assessed as income of the assessee, the AO re-opened the assessment. However, the assessee did not respond to the notices issued by the AO. Hence, the AO in the absence of any details relating to purchase of property, assessed the entire stamp duty valuation of Rs. 70.90 lakhs as Short Term Capital Gain in the hands of the assessee.
Before the Ld.CIT(A), the assessee filed written submissions. It is stated that the assessee is a non-resident Indian and he had actually purchased a property from Lotus Enterprises on 09-08-2010 for a consideration of Rs. 57.16 lakhs. The assessee admitted that the stamp duty valuation was Rs. 70.90 lakhs. It was submitted that the entire consideration of Rs. 57.16 lakhs was paid by way of cheque. Accordingly, it was contended before the Ld.CIT(A) that very initiation of proceedings u/s. 147 of the Act was not correct, as provisions of sec.50C will not be applicable to a purchase transaction. The Ld.CIT(A), however, took the view that the AO has re-opened the assessment on the basis of information furnished by the Investigation Wing and hence, reopening cannot be held to be not valid. Further, the Ld.CIT(A) observed that the assessee has not furnished any detail or evidence to support his claim that he has only purchased a property and not sold a property. Accordingly, he dismissed the appeal of the assessee. Aggrieved, the assessee filed this appeal before the Tribunal.
Before us, the assessee filed a Paper Book as well as written submissions. In the Paper Book, the assessee has furnished a copy of agreement for sale dt. 09-08-2010 in order to substantiate his claim that he has only purchased the property and not sold the property. The Ld.DR submitted that this document is an additional evidence furnished by the assessee for the first time before the Tribunal and accordingly, he submitted that the same requires examination at the end of the AO.
We notice that the AO was constrained to pass the order ex-parte to the best of his judgment, since the assessee did not furnish the evidences to prove that he has only purchased a property and not sold a property. Before the Ld.CIT(A) also, no material was placed, even though in the written submissions filed before him, it was contended that the assessee has only purchased the flat. Thus, we notice thatthe claim of the assessee could not be examined by the tax authorities in the absence of any supporting evidences. Accordingly, we find merit in the submission of the Ld.DR that this issue requires fresh examination at the end of the AO. However, there should not be any dispute that the provisions of section 50C of the Act will be apply only to a transaction of sale of property. The question of assessing the difference between the actual consideration and stamp duty valuation in the hands of buyers was introduced u/s.56(2)(x) of the Act only w.e.f. 01-04-2017. Hence, if the claim of the assessee that he has only purchased a property is accepted, then, the difference between the apparent consideration and stamp duty valuation cannot be assessed in the hands of the assessee during the year under consideration.
6.1. Since the claim of the assessee requires verification at the end of the AO with the supporting documents furnished by the assessee before the Tribunal, we set aside the order passed by the Ld.CIT(A) and restore all the issue to the file of the AO for examining them afresh. We also direct the assessee to fully co-operate with the AO for expeditious completion of the assessment. The AO should consider the legal position discussed above, while finalizing the assessment.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.