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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A.MOHAN ALANKAMONY
This appeal of the assessee is directed against the order of the Ld.CIT(A) dated 14.09.2016 in for the Assessment Year 2008-09 passed u/s.250(6) r.w.s.143(3) & 147 of the Act.
The assessee has raised several grounds in its appeal, however the crux of the issue that the Ld.CIT(A) has erred in Rs.24,14,000/- made by invoking the provisions of Sec.50C of the Act.
The brief facts of the case are that the assessee is an individual filed his return of income. Initially, the return was processed u/s.143(1) of the Act and thereafter the case was taken up for scrutiny and finally assessment was completed u/s.143(3) r.w.s.147 of the Act on 11.02.2016, wherein the Ld.AO made addition of Rs.24,14,000/- by invoking the provisions of Sec.50C of the Act. During the course of scrutiny assessment, it was observed that the assessee has sold his land on 22.02.2008 to his wife for a sale consideration of Rs.30,00,000/-. The guideline value of the land was Rs.54,14,000/-. It was further noticed that the assessee had purchased the land from Smt. N. Meena on 05.11.2007 for a purchase consideration of Rs.30,00,000/- by executing a sale agreement and Power of Attorney in his favour on the same date. Subsequently, the sale deed was executed by Smt.N.Meena in favour of the wife of the assessee on 22.02.2008 wherein the sale consideration was stated as Rs.30,00,000/-. Therefore, the Ld.AO opined that the actual seller of the property to spouse of the assessee was the assessee himself, because the General Power
Attorney which was in his favour was used as a disguise for the transaction. Hence, the Ld.AO invoke the provisions of Sec.50C of the Act and added the difference of the guideline value of Rs.54,14,000/- and the sale value declared in the Sale Deed executed by Smt. N. Meena in favour of the assessee’s spouse being Rs.30,00,000/-, in the hands of the assessee, which works out to Rs.24,14,000/-.
On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO by observing as follows: “ 6. The matter is considered. I am unable to accede to the grounds of appeal. The appellant became the owner of the impugned capital asset on the execution of the sale agreement and payment of consideration of Rs.30,00,00/-. The land came into the possession of the appellant and the requirements of transfer for the purposes of Income-tax Act stood completed. The argument that the appellant could not have transferred the property in his name, as he was the holder of the POA is a convoluted defence of his position. Nothing prevented the appellant from directly registering the land either in his name or in the name of his wife in the transaction with the original seller. The fact that he chose to operate through the POA route and then register the property in the name of his wife is a conscious and deliberate decision. The rigors of section 50C(1) get automatically attracted when a capital asset is registered below the guideline value. In the appellant's case it is undeniable that he was the owner of the capital asset, and chose to transfer and register his property to another person, albeit his wife, for a consideration below the guideline value. In view of the same, I find no infirmity in the action of the AO in invoking the provisions of section 50C of the Act. The addition made on this account of Rs.24,14,000/- stands confirmed, and the grounds are dismissed.”
5. Before us, Ld.AR submitted that the actual sale deed was executed by the original owner of the property and therefore, if at all addition has to be made by invoking the provisions of Sec.50C of the Act the same has to be made in the hands of the original owner of the property and not the assessee. He further argued stating that if it was considered that the assessee is the purchaser of the property then the provisions of Sec.50C will have no application in the case of the assessee. The Ld.AR further explained that the assessee had paid the entire sale consideration of Rs.30,00,000/- and taken possession of the property by executing the sale agreement and obtaining the Power of Attorney in his name. Thereafter, transferring the property in his wife’s name was only an internal adjustment. He further argued stating that with respect to the Sale Deed executed by Smt.N.Meena in favour of the wife of the assessee, no consideration was passed. It was therefore pleased that the addition made by invoking the provisions of Sec.50C of the Act in the hands of the assessee amounting to Rs.24,14,000/- may be deleted. On the other hand, Ld.DR strongly argued in support of the orders of the Ld.Revenue Authorities.
We have heard the rival submissions and carefully perused the material placed on record. From the facts of the case, it is apparent that the assessee had entered in to a sale agreement with Smt.N. Meena on 05.11.2007 by making payment of the entire sale consideration of Rs.30,00,000/- to her. Further on the same day, Smt. N. Meena had also executed a General Power of Attorney in favour of the assessee authorizing the assessee to sell her property. In this situation, as per Section 2(47) of the Act, the elements required for treating the transaction as transfer of immovable property is completed. Therefore as per the provisions of the Act, the property now vests with the assessee. Thereafter in order to strengthen the legal title of the property, the assessee had managed with Smt. N. Meena the original of the property to execute the sale deed in favour of his spouse. Thus the entire transactions when viewed in a holistic manner, it is apparent that the seller of the property is Smt. N. Meena and the buyer of the property is the assessee / assessee’s spouse. Therefore as rightly argued by the Ld.AR, if at all provisions of Section 50C is applicable , it can be invoked only in the hands of Smt. N. Meena, the seller of the property and not the assessee, the buyer of the property. Hence, we hereby direct the Ld.AO to delete the addition
Rs.24,14,000/- invoking the provisions of Section 50C of the Act.
In the result appeal of the assessee is allowed.
Order pronounced on the 03rd July, 2018 at Chennai.