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Facts
The assessee sold an immovable property for Rs. 10,00,000/-, while the Stamp Valuation Authority assessed its value at Rs. 23,15,000/-. The Assessing Officer (AO) reopened the case and added Rs. 5,62,730/- as undisclosed Long Term Capital Gains (LTCG), treating the stamp duty value as the sale consideration.
Held
The Tribunal held that the case of the assessee was squarely covered by the decisions of the Ahmedabad Bench of the ITAT, which accepted similar LTCG claims of a co-owner. The Tribunal agreed that since the co-owner's returned income was accepted, the assessee should also be entitled to similar relief.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the AO correctly computed LTCG by adopting the stamp duty value over the actual sale consideration, especially when a co-owner's case was accepted differently.
Sections Cited
147, 148, 142(1), 144, 274, 271(1)(c), 271(1)(b), 271F, 151, 148(2), 143(3), 56(2), 50C
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2012-13 Vimal Kumar Banka v. The ITO 5/P/25, Dabauli Ward 1(2)(1) Kanpur Kanpur TAN/PAN:AFZB1801J (Appellant) (Respondent) Appellant by: Shri Rakesh Garg, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. O R D E R This appeal has been preferred by the Assessee against order dated 24.11.2023, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2012-13.
2.0 The brief facts of the case are that as per the Assessing Officer (AO), the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had sold an immovable property, jointly held with Mrs Kanchan Talwar, during the year under consideration for a consideration of Rs.10,00,000/- and the value of the same as per the Stamp Valuation Authority was Rs.23,15,000/-. The Assessing Officer (AO), therefore, reopened the case of the assessee under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice to the assessee under section 148 of the Act. In response to the notice under section 148 of the Act, the submission of the assessee was that the return filed by the assessee for the year under consideration on 30.03.2013, vide Acknowledgement No.0442205100 be treated as return filed in response to notice under section 148 of the Act. Thereafter, the AO issued notice under section 142(1) of the Act, requiring the assessee to furnish the details of income and computation, copy of sale and purchase deed of property, computation of Long Term Capital Gains (LTCG), Bank statement, etc. In response, the assessee had furnished his written submissions along with computation of income. The claim of the assessee before the AO was that the assessee had only 50% of share in the said immovable property, and that the cost of purchase was Rs.45,000/- and also that the cost of improvement was Rs.6,25,560/- and, accordingly, the capital gain was only to the tune of Rs.17,502/- after giving the effect of indexation of cost. However, the AO worked out the LTCG at Rs.11,88,827/- and added 50% of the same (which came to Rs.5,62,730/-) to the income of the assessee as undisclosed LTCG. The AO completed the assessment under section 147 read with section 144 of the Act, computing the income of the assessee as under:
Income from salary : Rs.1,29,708/- Income from other sources : Rs.26,237/- Undisclosed income from LTCG : Rs.5,62,730/- Total assessed income : Rs.7,18,675/- 2.1 The AO also initiated penalty proceedings under sections 274 read with sections 271(1)(c), 271(1)(b) and 271F of the Act, separately.
3.0 Aggrieved, the assessee preferred an appeal before the NFAC, which dismissed the appeal of the Assessee on merits as well as on the issue of validity of reassessment proceedings.
4.0 Now, the assessee has approached this Tribunal challenging impugned order of the NFAC by raising the following grounds of appeal:
Because the reassessment framed under section 147/143(3)/144B is without jurisdiction, bad in law and be quashed.
Because there being no material to form reason to believe that income has escaped assessment, the reassessment framed under section 147 read with section 144B is bad in law, void ab initio and be quashed.
Because there being no approval as mandated as per section 151, from the Chief Commissioner of Income-tax, the notice issued under section 148 is without jurisdiction, the reassessment framed be quashed.
Because neither the reasons recorded under section 148(2) nor the format of approval as mandated under section 151 has been provided to the assessee, as laid down by the Delhi High Court in the case of Sabh Infrastructure Private Limited vs. CIT [2017] 398 ITR 198, the entire proceedings initiated under section 147 are void ab initio, bad in law and be quashed.
Because the Assessing Officer has failed to appreciate the facts and circumstances of the case and has arbitrarily computed the Long Term Capital Gains (LTCGs) at Rs.5,62,730/- as against Rs.17,502/- declared by the assessee, the addition made by the Assessing Officer be deleted.
Because the Assessing Officer has failed to appreciate, that the Long Term Capital Gains as computed in the case of other co-owners having been accepted on the same figure as that declared by the assessee, the initiation of reassessment over loading the same, is contrary to provisions of law, the reassessment framed be quashed. 7. Because the Assessing Officer has failed to refer the matter to the Valuation Officer, in as much as, when the assessee claimed that computation of LTCGs be done on the basis on sale consideration actually received, it was the bounding duty of the Assessing Officer to refer the matter to the Valuation Officer in terms of section 56(2) of the Act to determine the fair market value of the property as on the date of sale that having not been done, the Assessing Officer was not justified in invoking the provisions of section 50C and making the addition of Rs.5,62,730/- at LTCGs, the addition made be deleted.
5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee was the co-owner, having 50% share in the immovable property. It was submitted that the AO himself has accepted the fact of the assessee being co-owner. My attention was also drawn to the copy of the sale deed executed on 31.05.2011, wherein, the name of co-owners, i.e. Shri Vimal Banka (assessee) and other co-owner, Smt. Kanchan Talwar have been mentioned. My attention was further drawn to the copy of purchase deed dated 28.10.2002, wherein, the co-owners/co- purchasers have been mentioned as Shri Vimal Banka, Smt. Suman Talwar and Smt. Kanchan Talwar. It was submitted that notices under section 148 were issued both to the assessee as well as to Smt. Kanchan Talwar and in the case of Smt. Kanchan Talwar proceedings under section 148 of the Act had been dropped by accepting the return filed by Smt. Kanchan Talwar and no addition was made in respect of any undisclosed LTCG as has been done in the case of the assessee. The Ld. A.R. also submitted that the observation of the AO that the assessee had not filed his return of income was incorrect and my attention was drawn to the copy of the original income filed by the assessee. The Ld. A.R. submitted that, thus, the very basis for re-opening that the assessee had not filed his return of income and, therefore, notice under section 148 of the Act was to be issued, was factually incorrect and further the fact that in the co-owner’s case, returned income had been accepted, would show that the impugned addition in the hands of the assessee was legally incorrect. The Ld. A.R. placed reliance on two orders of the Ahmedabad Bench of the ITAT, viz., in the case of ACIT-5 vs. Mahesh Chunilal Shah in vide order dated 27.08.2014 and in the case of Rasilaben Yogeshbhai Patel vs. ITO in vide order dated 07.10.2022, wherein, it had been held that once similar LTCG offered and exemption claimed by the co-owner had been accepted by the Revenue, then the assessee would also be entitled for similar relief. The Ld. A.R. also drew my attention to the copy of reassessment order in the case of Smt. Kanchan Talwar, co- owner, vide order dated 05.12.2019 and submitted that in the co- owner’s case, returned income had been accepted. The Ld. A.R. prayed that in view of these facts and the precedents as cited (supra), the appeal of the assessee may be allowed.
6.0 Per contra, the Ld. Sr. D.R. submitted that the issue of validity of reassessment proceedings had been dealt with in detail by the Ld. First Appellate Authority and he was placing reliance on the same. It was also submitted that raising an objection to the initiation of reassessment proceedings should not be entertained inasmuch as the assessee had duly co-operated during the course of reassessment proceedings before the AO and had not raised any objection to the same. With respect to the merits of the case, the Ld. Sr. D.R. submitted that although the co-owner’s return of income might have been accepted, each case has to be examined on its own set of facts and, therefore, the case of the co-owner cannot be a binding precedent for the assessee.
7.0 I have heard the rival submissions and have also perused the material on record. It is seen that in the present case, the reassessment had been framed on a total income of Rs.7,18,675/- after making an addition of Rs.5,62,730/- as LTCG on sale of half share of the immovable property being Flat No.504, 15/70, Civil Lines, Kanpur. The AO had computed LTCG by adopting stamp value of Rs.11,57,144/- as against Rs.5.00 lakhs which was the actual sale consideration received. The Ld. A.R. has brought on record copy of assessment order passed under section 143(3) read with 147 of the Act in the case of Kanchan Talwar, wherein, LTCG of Rs.17,472/- had been disclosed and the returned income has been duly accepted. Therefore, I agree with the contentions of the Ld. A.R. that the case of the assessee is squarely covered by the two orders of the Ahmedabad Bench of ITAT (supra), as argued by the Ld. A.R. For ready reference, the relevant portion of these two orders are being reproduced hereunder:
In the case of ACIT-5 vs. Mahesh Chunilal Shah in “6. We have heard the rival submissions and perused the material on record. The fact that the godown was constructed in F.Y. 1995-96 is not in dispute. The dispute is about the cost of construction. Assessee after considering the cost of acquisition at Rs. 27 lacs had worked out the capital gains which was not acceptable to AO, Ld. CIT(A) while allowing the appeal of Assessee has noted that the valuation report of the valuer had also estimated the cost of construction of the godown at Rs. 54 lacs and therefore the Assessee’s share of ½ worked out to Rs. 27 lacs and thus he has considered the cost of acquisition of Rs. 27 lacs considered by Assessee to be in order. Before us, Revenue has not brought any material to controvert the finding of ld. CIT(A). Further, Assessee has submitted that the balance ½ share which belonged to his brother and in his assessments, the cost of acquisition of the same godown has been accepted by the Revenue. Before us, no material has been brought on record to show that the valuation of the godown in the case of Assessee’s brother has been challenged in appeal before Tribunal. We further find that the Hon’ble Madras High Court in the case of CIT vs. Kumararani Meenakshi Achi (supra) has held that the differential treatment cannot be meted out to another co-owner while making the assessment of same property or while valuing the same property. In view of the aforesaid facts and relying on the aforesaid decision of Hon’ble Madras High Court, we find no reason to interfere with the order of Ld. CIT(A) and thus these grounds of Revenue are dismissed. In the case of Rasilaben Yogeshbhai Patel vs. ITO in ITA No.631/AHD/2019. 10.1 In view of the above elaborated factual and legal discussion, and respectfully following the finding of coordinate bench of this tribunal in aforesaid case. We accept the contention of ld. AR for the assessee that once, the similar LTCG offered and exemption claimed by the co-owner has been accepted by the Revenue, then the assessee is also entitled for similar relief. We find convincing force in the submissions of the learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR that in the case of co-owner, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the capital gain and exemption on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us. Hence, the ground of appeal of the assessee is hereby allowed. 7.1 Accordingly, on merits, the assessee has a strong case and I deem it appropriate to allow the assessee’s appeal on merits and since I am allowing the assessee’s claim on merits, the grounds raised by the assessee, challenging the validity of reassessment proceedings, are not being addressed to and the same are being dismissed as having become infructuous.
8.0 In the final result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 25/08/2025.