ATUL GUPTA,DELHI vs. ACIT CIRCLE 47(1), NEW DELHI

per square meter. The Ld. AR contended that the assessee had

immediately disputed this proposal and had submitted that the

circle rates were in respect of completed property whereas the

assessee had sold rights in an under construction project and,

moreover, even the location of the project was in front of a slum

area and, therefore, there was no justification to apply the proposed

circle rates to an “incomplete and lying dead project”. The Ld. AR

drawing our attention to the letter dated 28/12/2019 contended

that the Ld. CIT (A) had erred in holding that the assessee had not

raised any dispute against the adoption of the circle rate before the

AO and that the AO was not required to make any reference to the

DVO u/s 50C(2) of the Act. He relied on various case laws to

support his arguments that it was mandatory for the AO to have

11 ITA No.3384/Del/2019 Sh. Atul Gupta vs. ACIT

made a reference to the DVO in this case before making any

addition.

4.0 Per contra, the Ld. Departmental Representative

(DR) supported the orders of the AO and the Ld. CIT (A) and

submitted that the addition made by the AO were within the scope

of issues on which the Limited Scrutiny was initiated in this case.

According to the Ld. DR, the AO was fully justified in making the

impugned addition of Rs.2,51,75,550/- as the verification of sale

consideration formed part of the reasons for initiating the limited

scrutiny. He referred to the notice u/s 142(1) dated 06/02/2017

issued to the assessee to contend that the assessee was asked to

furnish details of immovable properties sold during Financial Year

2014-15 along with the documentary evidences and that it was in

continuation of such inquiry that the addition was made and, thus,

it cannot be said that it was outside the scope of limited scrutiny.

He further supported the order of the Ld. CIT (A) to contend that the

provisions of Section 50C were correctly invoked in this case .He

further argued that there was no need to make a reference to the

DVO as the assessee had not raised any dispute that the circle

12 ITA No.3384/Del/2019 Sh. Atul Gupta vs. ACIT

rates were higher than the market price. He prayed for dismissing

the appeal of the assessee.

5.0 We have heard the rival submissions and have

also perused the material on record. It is an undisputed fact that

the instant case was picked up for ‘Limited Scrutiny’ on two specific

issues as reproduced in Para 2.0 above. It is also an undisputed

fact that neither any permission was sought by the AO to expand

the scope of limited scrutiny in the instant case nor such

permission was ever granted by the Ld. Pr.CIT/CIT in this case to

inquire into any other issue during assessment proceedings. The

AO, while passing the assessment order, has not drawn any adverse

inference against the assessee on either of the two issues on which

the case was picked up for limited scrutiny under CASS. The

assessee had claimed TDS credit of Rs.1,55,000/- u/s 194IA of the

Act and had declared sales consideration of Rs.1,55,00,000/- in his

ITR. The rate of TDS during this period was 1% under Section

194IA of the Act and the amount of TDS in this case is Rs.

1,55,000/- which fully corresponds to the amount of

R.1,55,00,000/- declared by the assesse in his ITR. Thus, it cannot

13 ITA No.3384/Del/2019 Sh. Atul Gupta vs. ACIT

be said that the sales consideration declared in ITR is less than the

one reported in FORM 26Q filed by buyer. Even the AO has not

disputed this fact in the assessment order. Likewise, no adverse

inference has been drawn by him against the assessee on the issue

of unsecured loans. In our considered opinion, the findings of the

Ld. CIT (A) on this issue are not correct and there was no valid

basis for the AO to inquire into other issues while conducting a

limited scrutiny, without taking the mandatory permission from the

Ld. Pr.CIT. On these facts, when the CBDT instructions did not

permit the AO to travel beyond the issues which are authorised by

the Board in this regard under CASS, it is held that the addition

made by the AO is beyond his jurisdiction. The AO has travelled

beyond his jurisdiction when he has invoked the provisions of

Section 50C, whereas he only had the jurisdiction to verify as to

whether the sales consideration declared by the assesse in his ITR

was less than the amount reflected in FORM 26QB. Once he was

satisfied on this aspect, he ought not have travelled beyond this

without obtaining the mandatory permission from the Ld. Pr.CIT to

do so in terms of the above referred CBDT Instructions. The finding

14 ITA No.3384/Del/2019 Sh. Atul Gupta vs. ACIT

of the Ld. CIT (A) on this issue, therefore, cannot be upheld and the

assessee’s first ground of appeal is allowed.

5.1 Even otherwise, we find that the possession of the

flat was not offered by the builder as the project was still under

construction as proved from the order of RERA dated 6-10-2017

brought on record by the assessee both before the AO and the Ld.

CIT (A). Thus, it is a case of transfer of only the booking rights of a

residential flat in an under construction project. As the assessee did

not have possession of any immovable property, there was no

question of sale of any land or building or both. On these facts, in

our considered opinion, the provisions of section 50C are not

applicable as the assessee has neither sold any land nor any

building or both.

5.2 Since it has been held by us that the provisions of

Section 50C of the Act are not applicable to the transaction of

selling booking rights/rights to allotment of a flat, as has been done

by the assessee in the instant case, the issue of making reference or

not to the DVO becomes academic and is not adjudicated here.

15 ITA No.3384/Del/2019 Sh. Atul Gupta vs. ACIT

6.0 In the final result, the appeal of the assesse is

allowed.

Order pronounced on 31/08/2020.

Sd/- Sd/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31/08/2020 *DRAGON Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI