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

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 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 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 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.

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

Order pronounced on 31/08/2020.