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Facts
The assessee filed an appeal against the order of the CIT(A) for AY 2021-22, which upheld an addition made under Section 143(1) of the Income Tax Act. The addition was based on the stamp duty value of a property sold, which was higher than the actual sale consideration agreed upon.
Held
The Tribunal held that an adjustment under Section 50C of the Income Tax Act cannot be made while processing the return under Section 143(1). This is because Section 143(1)(a)(ii) pertains to 'incorrect claims apparent from the return', and Section 50C involves specific procedures that are not covered under this category. Making such an adjustment under 143(1) deprives the assessee of the statutory right to object as per Section 50C(2).
Key Issues
Whether the addition made by CPC under Section 50C of the Income Tax Act can be considered as an adjustment permissible under Section 143(1)(a)(ii) during the processing of the return.
Sections Cited
143(1), 250, 143(1)(a), 50C, 50C(1), 50C(2), 139, 142, 10AA, VI-A
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Income Tax Appellate Tribunal, PUNE BENCHES “ B” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
Assessment Year: 2021-22 Subhadra Tanaji Chavan, V The Income Tax Officer, Plot No.31, Suparna Niwas s Ward-2, Satara. Pawar Colony, Shahupuri, Satara – 415002. Maharashtra. PAN: BGSPC7420D Appellant/ Assessee Respondent / Revenue Assessee by Shri Pramod S Shingte – AR Revenue by Shri Akhilesh Srivastva–Addl.CIT(DR) Date of hearing 10/07/2025 Date of pronouncement 29/07/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2021-22dated 30.03.2025, emanating from order u/s.143(1)of the Income Tax Act, 1961, dated 28.12.2022. The Assessee has raised following grounds of appeal :
“1. On the facts and in the circumstances of the case and in law, Ld.CPC has erred in making the addition to the returned income u/s 50C of the IT Act, without appreciating the fact that neither section 143(1) envisages such addition nor CPC has made any attempt to seek clarifications regarding the proposed adjustment, therefore the addition is incorrect and deserves to be deleted. Without prejudice to the above ground following grounds are taken on merit:
2. On the facts and in the circumstances of the case and in law, Ld.CPC erred in computing the capital gain by adopting a consideration figure at Rs.79,35,500/- instead of actual sale consideration of Rs.22,87,500/- by invoking provisions of section 50C without making any reference to DVO, the entire addition is therefore incorrect and addition deserves to be deleted.
3. On the facts and in the circumstances of the case and in law, Ld. CPC erred in making an addition of Rs.79,35,500/- instead of Rs.22,87,500/-, without appreciating the fact that actual agreement to sale is entered in AY 2012-13, thereby ignored the first two proviso to section 50C(1) of the IT Act, therefore addition deserves to be deleted. 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. This is an appeal filed by the Assessee against the order of ld.CIT(A) for A.Y.2021-22 emanating from order u/s.143(1) of the Act, dated 28.12.2022.
3. It is noted by the ld.CIT(A) that Assessee had filed Return of Income on 08.12.2021 declaring total income of Rs.4,30,880/-. However, the Centralized Processing Center(CPC) passed an order u/s.143(1) determining income of the Assessee at Rs.60,78,880/-. The relevant paragraphs of ld.CIT(A) are reproduced as under : “5.1 The primay contention of the appellant is regarding addition of Rs.56,48,000/- (Rs.79,35,500 – Rs.22,87,500) on account of considering sale consideration of immovable property sold during the year at Rs.79,35,500/-, instead of Rs.22,87,500/-(Rs.79,35,500/- being the stamp duty value of the property sold during the year). 5.2 The return of income was filed by the assessee on 08.12.2021 at an income of Rs.4,30,880/- which was processed u/s.143(1) of the Act vide order dated 28.12.2022 at an income of Rs.60,78,880/-. In its submission, the appellant submitted that that the agreement for sate to the sad property was entered 2011-12, fixing the consideration of the property at Rs 22,87,500 and pursued to the Agreement to sell the appellant has recessed its 3,51,000, upto the date of agreement to sell The appellant has further stated that the gap between actual sales consideration and the stamp duty value was due to certain reasons. 5.3 The facts of the case and the submission of the appellant are carefully considered As per provisions of Sec 500 of the Act, in case the sale consideration received or claimed to be received by the seller on the sale of land or building of both is less than the value adopted by stamp valuation authority (SVA) such value adopted by SVA would become actual sale consideration received or accruing to the seller While there can be varied reasons between the parties for the sale of land or buildings for a consideration lower than the value adopted by SVA, Section 500 provides a safeguard against fluctuation in the value of property caused due to considerable gap between different stages of transaction of sale In order to remove this anomaly in the law Finance Act 2016 amended Section 500 as per the amendment in case the date of agreement fixing the sale consideration and actual date of registration of sale of land or building are not the same, the value adopted by SVA as on the date of agreement can be taken as sale consideration. However, in order to avail this benefit, at least a part of the sale consideration must be received by way of account payee cheque, bank draft or ECS on or before the date of agreement of transfer. 5.4 In the instant case, the appellant has submitted that the agreement to sell has been entered into FY2011-12 and that the appellant has received Rs.3,51,000/- up to the date of agreement to sell. However, the appellant has not advanced her submission by furnishing any documentary evidence in support of her claim Therefore, the submission of the appellant is not found to be acceptable. Moreover, the appellant has failed to furnish any comparable instance. Accordingly, the addition of Rs. 56,48,000/- made to the income of the appellant u/s 50C of the Act vide order dated 28.12.2022 is upheld.” 3.1 Thus, ld.CIT(A) has upheld 143(1) order. The ld.AR has relied on the following decisions of ITAT : Amit Sabharwal Vs. Asst. Director of Income Tax in ITA No.5292/Del/2024. Prabha Anil Gandhi Vs. ADIT in ITA No.1647/MUM/2023.
The Delhi ITAT in of Amit Sabharwal Vs. Asst.Director of Income Tax(CPC), Bengaluru vide order dated 12.03.2025 has held as under : “6. We have heard both parties at length and have perused the material available on record. The Co-ordinate Bench of Tribunal in the case of Inder Jeet Malik (supra) has held as under:
5. I have heard the parties and perused the materials on record. The basic issue requiring consideration is, whether the addition made under section 50C(1) can fall within the ambit of adjustments provided under section 143(1)(a) of the Act. It is noticed; the following adjustments can be made while processing the return under section 143(1) of the Act: "Assessment. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:-- (a) the total income or loss shall be computed after making the following adjustments, namely: - (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (m) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139, (iv) disallowance of expenditure 68/or increase in income) indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.- Deductions in respect of certain incomes", if the return is furnished beyond the due date specified under sub-section (1) of section 139; or ITA No. 1024/Del./2022 AΥ: 2019-20 (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
No doubt, in the present case adjustment has been made under sub- clause (ii) to section 143(1)(a). The expression "incorrect claim apparent from any information in the return" has been explained under Explanation to section 143(1)(a) of the Act and reads as under:
"Explanation- For the purposes of this sub-section- (a) "an incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (i) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
On a conjoint reading of section 143(1)(a)(ii) along with Explanation it becomes very much clear that the addition under section 50C(1) cannot be in the nature of incorrect claim as provided in Explanation to section 143(1)(a)(ii) of the Act. This is because, section 50C has to be read as a whole and cannot be restricted to sub- section (1) alone. It is fairly well settled, a deeming provision has to be taken to its logical end. Undoubtedly, section 50C is a deeming provision. Though, sub-section (1) of section 50C AY: 2019-20 provides for substituting the stamp duty value as deemed sale consideration in place of the declared sale consideration, however, sub-section (2) carves out an exception by providing that if the assessee objects to the stamp duty value, the valuation has to be referred to the Department Valuation Officer (DVO) and in case the value determined by the DVO is lower than the stamp duty value, the value determined by DVO has to be considered for computing capital gain in terms with sub-section (3) of section 50C. Therefore, sub-section (1) to section 50C cannot be considered in isolation. By making an adjustment of the nature contemplated under sub-section (1) to section 50C, that too, by CPC, the Department takes away a valuable statutory right given to the assessee to object to the value determined by stamp valuation authority.
8. Therefore, such type of adjustment, in my considered opinion, cannot be made under section 143(1)(a) of the Act. This is so because, at the stage of processing of return under section 143(1)(a), if such an adjustment is made, the assessee does not get an opportunity to object, as per section 50C(2) of the Act. More so, when conditions of the 1st and 2nd proviso to section 143(1)(a) are not complied. Therefore, I hold that the addition made by CPC ITA No. 1024/Del./2022 AY 2019- 20 under section 50C(1) of the Act by way of adjustment under section 143(1)(a)(ii) is unsustainable. Accordingly, I delete the addition."
7. We are of the considered view that this case is squarely covered by the decision of the Co-ordinate Bench of Tribunal in the case of Inder Jeet Malik (supra). We therefore, following the reasoning given by the Co-ordinate Bench in the case of Inder Jeet Malik (supra), hold that the no adjustment/addition under section 50C of the Act can be made while processing the ITR under section 143(1) of the Act. Accordingly, we delete the addition of Rs.36,51,250/-.
In the result, the appeal of the assessee is allowed.” 5. Respectfully following the decision of ITAT, we hold that this case is squarely covered by the decision of the Co-ordinate Bench of Tribunal(supra). We therefore, following the reasoning given by the Co-ordinate Bench(supra), hold that the no adjustment/addition under section 50C of the Act, can be made while processing the ITR under section 143(1) of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed. 6. Order pronounced in the open Court on 29 July, 2025.