SHRI ASHOK NATVARLAL PATEL,AHMEDABAD vs. THE ITO, WARD-2(2)(1), AHMEDABAD

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ITA 1005/AHD/2019Status: DisposedITAT Ahmedabad07 October 2022AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer and CIT(A) ignored the assessee's submissions regarding the sale of the residential building and the claim for exemption under Section 54B. The Tribunal found that merely not objecting to the valuation rate under Section 50C was not a sufficient ground to confirm the addition.

What were the facts?

The assessee declared income from business, capital gains, and other sources. The Assessing Officer added capital gains on the sale of residential and factory buildings, citing Section 50C. The CIT(A) deleted the addition for the residential building but confirmed the addition for the factory building.

What were the issues?

Whether the addition of capital gains under Section 50C was justified when the assessee provided explanations and claimed exemption under Section 54B, and whether failure to object to the valuation rate automatically validates the addition.

Which sections of the Income-tax Act were involved?

Section 50C,Section 54B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE

For Respondent: Shri Rakesh Jha, Sr. DR
Hearing: 12.09.2022Pronounced: 07.10.2022

This appeal is filed by the Assessee against the order dated 15.03.2019 passed by the CIT(A)-10, Ahmedabad for the Assessment Year 2013-14.

2. The assessee has raised the following grounds of appeal :-

“1. The appellant is an individual and filed return of income for A.Y. 2013-14 on 08.09.2014 for total income of Rs.6,12,900/- comprising from business, income from capital gain and income from other sources.

2.

The appellant, from time to time, furnished the details to A.O. as required by notice u/s. 143(2) of the I.T. Act.

3.

The AO issued show cause notice dated 19.02.2016 to the appellant asking as to why capital gain arose on the sale of residential building and sale of factory building as per Section 50C of the I.T. Act shall not be charged in your case.

4.

The appellant vide reply dated 26.02.2016 explained the issue in details but AO without properly considering the same, added capital gain of Rs.14,65,000/- towards sale of residential building and Rs.2,51,667/- towards sale of factory buildings.

5. Before the appellate authority, the fact and circumstances of the case for non-disclosing the capital gain on sale of property and investment in purchasing new residential flat was explained and addition of Rs.14,65,000/- was deleted.

6.

Before the appellate authority the appellant also explained the situation as to why the valuation report from the Registered Valuer not obtained and derived the WDV by adopting depreciation at the rate of 10% as per the law. The Ld. CIT(A) has confirmed the addition without properly considering the fact of the case explained to him.

7.

The appellant is, therefore, before Hon’ble ITAT for kind and judicious consideration.”

3. The assessee filed return of income on 08.09.2014 thereby declaring total; income of Rs.6,12,900/-. The case was selected for limited scrutiny assessment. The Assessing Officer made addition of Rs.2,51,667/- in respect of Short Term Capital Gain (STCG).

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) parlay allowed the appeal of the assessee.

5.

At the time of hearing none appeared on behalf of the assessee. Notice was duly served to the assessee but the same was returned back with the remark that the “assessee left the premises”. No new address was provided to the Registry. Hence, I am proceeding on the basis of the submissions of the assessee reproduced in the order of CIT(A).

6. The Ld. DR submitted that the CIT(A) has rightly confirmed the addition of Rs.2,51,667/- towards capital gain arose out of sale of residential building under Section 50C of the Income Tax Act, 1961 as per jantry rate prevailing on the date of transfer. The Ld DR submitted that the assessee never raised objection to the valuation rate before the Assessing Officer and, therefore, cannot plea that difference between the valuation adopted by Stamp Valuation Authority and sale consideration is very nominal.

Page 3 of 3 7. I have heard the Ld. DR and perused all the relevant material available on record. As relates to Section 50C of the Act, the assessee is required to file objection to the valuation rate applied by Stamp Valuation Authority which was not done in the present case as observed by the CIT(A) but before the Assessing Officer the assessee has categorically replied that the assessee has sold residential building in which he has half share and purchased the residential property in the year jointly which is having half share and, therefore, rightly claimed exemption under Section 54B of the Act in the return of income. The assessee has given all the details which is mentioned in paragraph no.4.3 as well as the application of jantry rate after reducing the depreciation. These facts were totally ignored by the Assessing Officer as well as CIT(A). Merely not objecting cannot be the criteria as per Section 50C of the Act. Therefore, appeal of the assessee is allowed.

8.

In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on this 7th day of October, 2022.

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