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Facts
The assessee, who had not filed an income tax return, sold a 1/6th share in an immovable property. The Assessing Officer initiated reassessment proceedings under Section 148 and made an addition of Rs. 5,42,000/- under Section 68, treating it as unexplained money and invoking Section 50C based on the Stamp Duty Value. This addition was subsequently upheld by the CIT(A).
Held
The Tribunal found that the Assessing Officer erred by not accounting for the indexed cost of acquisition. Upon proper consideration of the indexed cost of acquisition (Rs. 32,69,175/-) against the Stamp Duty Value (Rs. 32,55,000/-) of the property, it was determined that the transaction resulted in a loss, not an income. Consequently, the Tribunal directed the deletion of the addition.
Key Issues
Whether the lower authorities were justified in making an addition under Section 68 read with Section 50C for the sale of immovable property without reducing the indexed cost of acquisition, leading to the treatment of such amount as unexplained money.
Sections Cited
68, 144, 147, 148, 250, 271(1)(c), 274, 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2011-12 Shivaji Vishnu Chavan, V The Income Tax Officer, Gomukh, 92/2, Gangtok, s Ward-5(4), Pune. Narsapur, Pune – 411004. Maharashtra. PAN: AASPC1061B Appellant/ Assessee Respondent / Revenue Assessee by Shri Pramod S Shingte – AR Revenue by Shri Arvind Renge – Addl.CIT(DR) Date of hearing 31/07/2025 Date of pronouncement 13/08/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee Shivaji Vishnu Chavan in Form No.36 against the order of Ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Act, dated 31.05.2024 for the A.Y.2011-12 emanating from assessment order u/s.147 r.w.s 144 of the Income Tax Act, 1961 for A.Y.2011-12, dated 12.12.2018. The Assessee has raised the following grounds of appeal :
[A] “1. On the facts and in the circumstances of the case and in law, Ld.AO erred in making an addition of Rs.5,42,000/- u/s 68 - Unexplained Money, being sale of immovable property, without appreciating the fact that appellant is only the owner of 1/6th portion of such property and if the indexed cost of acquisition is considered there will be no tax implications. Your appellant prays for correct calculation as per the provisions of law and the entire addition needs to be deleted. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.” Findings & Analysis :
2. We have heard both the parties and perused the records. In this case, as per the assessment order, the Income Tax Officer, Ward -5(5), Pune issued notice u/s.148 of the Act, dated 28.03.2018 for A.Y.2011-12. As per the assessment order, the reason for issuing notice u/s.148 was that Assessee had sold immovable property for Rs.32,55,000/- during the year and assessee had not filed Return of Income. During the assessment proceedings, Assessee had not filed any details, therefore, Assessing Officer made an addition of Rs.5,42,500/-. The relevant paragraph 7 of the assessment order is reproduced here as under : “7. On verification of the documents available on records, it is seen that assessee had sold immovable property in cash for Rs.30,00,000/ during the year jointly with other 5 parties. Market price of the properly was Rs.32,55,000/- . Hence, provisions of section 50C of the Act gets attracted. Assessee’s share in this property is 1 /6th of the total consideration of land amounts to Rs.32,55,000/6= Rs.5,42,500/- by 50C of the Income tax Act, 1961. Hence, assessee’s share of Rs.5,42,000 is treated as his income of the year under the head Income from capital gain and unexplained money u/s. 68 of the Act and brought to tax . Penalty proceedings u/s. 274 r.w.s. 271(l)(c ) of the Act has been initiated separately by issuing notice for concealment of income.”
However, in paragraph 8 of the assessment order, Assessing Officer has computed Income as under : “8. Subject to the above total income of the assessee is computed as under : Assessed income as per para 7 of the order Rs.5,42,000/- Round off Rs.25,00,000/-
Ld.DR for the Revenue accepted that it is a typing error and assessed income should have been Rs.5,42,000/- only. Apparently, it is clear that when we read paragraph 7, one can understand that Assessing Officer has held taxable income at Rs.5,42,000/- only, therefore, we agree that erroneously while rounding off, it has been mentioned as Rs.25 lakhs. Therefore, in the assessment order, Assessed Income was Rs.5,42,000/-. The Assessee filed appeal before ld.CIT(A) and made elaborate submission. However, ld.CIT(A) upheld the assessed income at Rs.5,42,000/-.
Aggrieved by the order of the ld.CIT(A), Assessee has filed appeal before this Tribunal.
At the outset of hearing, ld.AR for the Assessee brought to our notice that Assessing Officer has not reduce cost of acquisition. Therefore, after considering the cost of acquisition, there is actually a loss.
6.1 Ld.AR for the Assessee submitted that the impugned property was purchased jointly for Rs.17,58,260/- on 27.08.2007. The impugned property was sold on 08.02.2011 for Rs.30 lakhs. As per the Stamp Authority, value of the property for the purpose of calculating Stamp Duty was Rs.32,55,000/-. Ld.AR submitted that after reducing the Index Cost of Acquisition, which comes to Rs.32,69,175/-, there will be a loss. Ld.AR submitted that all these details were submitted before the ld.CIT(A).
We have perused the impugned sale deed which was registered on 08.02.2011. As per the said sale deed, six persons have jointly sold the impugned property for a total consideration of Rs.30 lakhs and Stamp Duty Value was Rs.32,55,000/-. Therefore, Assessee’s share will be 1/6th of Rs.32,55,000/-. However, the impugned property was purchased on 27.08.2007. Therefore, Index Cost of Acquisition needs to reduced from sale consideration. Accordingly,
In these facts and circumstances of the case, we direct the Assessing Officer to delete the addition of Rs.5,42,000/-. Accordingly, grounds of appeal raised by the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 13 Aug, 2025.