SHIVANAND MADAS,HYDERABAD vs. ITO., WARD-10(1), HYDERABAD
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
PER MANJUNATHA, G.
This appeal has been filed by the assessee against the Order dated 29.01.2025 of the learned Addl/Joint
Commissioner of Income Tax (Appeals)-6, Delhi, relating to assessment year 2019-2020. 2. The assessee has raised the following grounds in the instant appeal :
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“The order of the CIT(A)/NFAC is contrary to the provisions of law and therefore is bad in law. 2. The order of the CIT(A)/NFAC is erroneous on facts and in law. 3. The CIT(A)/NFAC erred in upholding the addition made u/s 50C of the Act by CPC. 4. The CIT(A)/NFAC erred in upholding the assessment of capital gains by adopting the SRO value of Rs.42,67,68,750 as deemed value of consideration overlooking the dispute on title. 5. The CIT(A)/NFAC erred in dismissing the appeal. 6. The CIT(A)/NFAC erred in upholding the assessment of income chargeable to tax u/h capital gains by CPC at Rs.31,92,84,693. 7. The CIT(A)/NFAC erred in upholding the assessment of total income by CPC at Rs.32,31,30,100. 8. The CIT(A)/NFAC erred upholding the demand of Rs.6,08,19,592 determined by CPC. 9. Any other grounds that may be urged at the time of hearing.”
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Brief facts of the case are that, the assessee filed his return for the assessment year 2019-2020 on 24.10.2019 declaring total income of Rs.11,49,92,940/-. The return of income was processed u/sec.143(1) of the Income Tax Act, 1961 on 28.02.2020 and determined the total income of assessee at Rs.32,31,30,100/- by making addition of Rs.20,81,37,160/- under the Head “Income from Capital Gain” towards difference in sale consideration for sale of property and stamp duty value of the property as on the date of registration as per the provisions of sec.50(C) of the Income Tax Act, 1961. 4. The assessee challenged the addition made by the Assessing Officer towards computation of capital gain by considering deemed consideration as per the provisions of sec.50C before the learned CIT(A) and argued that, in the intimation issued u/sec.143(1)(a) of the Act, no adjustment can be made in terms of sec.50C because, the said issue is a debatable issue which requires deliberations on the facts and, therefore, cannot be considered as prima facie adjustment which could be made u/sec.143(1) of the 4 ITA.No.483/Hyd./2025
Income Tax Act, 1961. The assessee had also challenged the addition made by the Assessing Officer towards difference in sale consideration as per the registered document and fair market value of the property as per stamp duty valuation as per the provisions of sec.50C of the Act in light of defects in title of the property and also pending litigation before the Court of Law in respect of title and also valuation of the property. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of relevant facts observed that, valuation adopted by the stamp valuation authority forms the basis of the addition, which is currently under challenge before the Hon'ble High Court of Telangana. The outcome of the writ petition will directly impact the determination of the property's fair market value and the resulting computation of capital gains. In view of the pending litigation before the Hon'ble High Court, no interference with the order passed by the CPC is warranted at this stage. Accordingly, the appeal is dismissed for statistical purposes with a direction to the Assessing Officer to revisit the matter and take appropriate action in 5
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accordance with the decision of the Hon'ble High Court of Telangana as and when it is pronounced.
5. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
6. CA, Aluru V Sai Sudha, Learned Counsel for the Assessee submitted that, the learned CIT(A) was erred in dismissing the appeal filed by the assessee for statistical purposes with a direction to the Assessing Officer to take appropriate action in accordance with the decision of the Hon'ble High Court of Telangana, even though, the CPC does not have power to make any adjustment towards deemed consideration as per provisions of sec.50C of the Act in the intimation issued u/sec.143(1) of the Act.
Learned Counsel for the Assessee referring to the decision of ITAT, Mumbai Bench, Mumbai in the case of Prabha Anil
Gandhi, Mumbai vs., ADIT-CPC, Bengaluru in ITA.No.1647/
Mum./2023, Order dated 25.10.2023 submitted that, the issue of consideration of deemed consideration as per the provisions of sec.50C of the Act is a disputed issue and the party has certain rights to object like request for referring
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the case to the DVO. Therefore, the CPC cannot make addition without giving proper opportunity to the assessee.
Learned Counsel for the Assessee referring to the facts of the present case submitted that, although, the learned CPC has given an opportunity to the assessee as claimed by the learned CIT(A) in it’s order, but, the assessee could not notice the opportunity provided by the learned CPC and, therefore, could not respond to the notice issued by the Assessing Officer/CPC. Further, the issue of additions towards capital gains on the basis of deemed consideration as per the provisions of sec.50C is not a prima facie adjustment which can be made while processing the return of income. Further, the subject property transferred by the appellant is under litigation before various Courts including before the Hon’ble High Court for the State of Telangana by way of Writ Petition, which challenges the validity of value determined by the stamp duty authority for payment of stamp duty while registering the property. Since the Assessing Officer-CPC has made adjustment without considering the relevant facts, the addition made by the 7
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Assessing Officer-CPC towards capital gains cannot be sustained. Therefore, she submitted that, the addition made by the Assessing Officer should be deleted.
7. MS U Mini Chandran, learned CIT-DR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the case law relied upon by the Learned Counsel for the Assessee in the case of Prabha
Anil Gandhi, Mumbai vs., ADIT-CPC, Bengaluru (supra), is distinguishable on facts because, in the above case, the findings of the Tribunal are that, in absence of any opportunity to the appellant, no adjustment can be made u/sec.50C of the Act in the intimation issued u/sec.143(1)(a) of the Income Tax Act, 1961. In the present case, going by the facts available on record including para-5
of the learned CIT(A)’s order, it is undisputedly clear that, the ADIT-CPC has issued communication dated 04.06.2020
proposing adjustment u/sec.143(1)(a) of the Act for substitution of the Sub-