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Facts
The assessee sold a property in September 2020, but the registration date was 20/09/2014. The Assessing Officer (AO) invoked Section 50C, adding Rs. 85,17,081/- based on the stamp duty value. The assessee contended that the transfer and possession were completed in 2020 and that Section 50C was not applicable to the assessment year in question. The CIT(A) upheld the AO's order.
Held
The Tribunal accepted the additional evidence submitted by the assessee, noting that it was not previously filed before any revenue authorities. The Tribunal found that the issue was factual and that the assessee had raised a plea regarding the timing of the transfer and possession, which needed further verification with the additional evidence.
Key Issues
Whether the addition made under Section 50C based on the registration date is sustainable when the transfer and possession were allegedly completed much earlier, and whether the additional evidence provided by the assessee should be considered.
Sections Cited
50C, 143(3), 250, 70, 2(47)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI OMKARESHWAR CHIDARA
The instant appeal of the assesseewas filed against the order of theLearned National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2015-16,date of order19.12.2023. The impugned orderwas emanated from the order of the Learned Deputy Commissioner of Income-tax, Circle-8(1)(1), Mumbai, order passed under section 143(3) of the Act, date of order 09/11/2017.
“1. On the facts and in the circumstances of the case and in law, the honourable CIT(A) has erred in confirming an addition made by the Ld. AD of Rs. 85.17.081/- u/s 50C of the Income Tax Act, 1961 without appreciating the facts of the case in proper perspective. Hence, the appellant requests your honour to delete the addition of Rs. 85,17,081/- made under section 50C of the Income Tax Act, 1961.
The learned CIT(A) is not justified in upholding the assessment of the long-term capital gains on the alleged transfer of property during the AY 2015-16, by invoking the provisions of section 50C of the Income Tax Act, 1961 under the facts and in the circumstances of the appellant's case. The learned CIT(A) failed to appreciate that there was no transfer of the property during the year under appeal and hence, the computation of the capital gains for the year under appeal is opposed to law and facts of the appellant's case and therefore, the capital gains assessed ought to have been deleted.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition u/s 50C of the Income Tax Act, 1961 of Rs. 85,17,081/- merely based on registration of property in AY 2015-16 without appreciating the evidentiary documents furnished by the appellant.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition u/s 50C of the Income Tax Act, 1961 of Rs. 85,17,081/- merely based on registration of property in AY 2015-16 without appreciating that the transfer was undertaken in the AY 2001-02 as per section 2(47) of the Income Tax Act, 1961.
5. Without prejudice to the Ground of Appeal
no. 1, 2 3 and 4, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that section 50C is not applicable in the case of appellant as the transfer was affected prior to introduction of section 50C in statute
6. The Assessing Officer has transgressed his authority in requiring the appellant to submit documentary evidence of a 17 years old transaction without any empowering provision in the Act or an order or consent or approval from the higher authorities to call for such evidences pertaining to a 17 years old transaction.
Rubinsha Exports Pvt Ltd 7. On the facts and in the circumstances of the case and in law, that during the FY 2014-15 the appellant sold shares which resulted in Short Term Capital Loss of Rs. 2,07,463/-. The Ld. AO erred in calculation of Long Term Capital Gain Income for FY 2014-15 without setting off the said Short Term Capital Loss of Rs. 2,07,463/-. Therefore, your honour is requested to consider the provisions of Section 70 of the Income Tax Act, 1961 which allows the appellant to carry forward the Short- Term Capital Loss and/or to set off the said Short Term Capital Loss with Long Term Capital Gains of the year under consideration.
8. In Addition to ground of appeal
no. 1, 2, 3, 4, 5, 6 and 7 the appellant hereby reserves the right to add, alter, amend or delete any grounds of appeal.”
3. The brief facts of the case are that the assessment was framed under section 143(3) with addition amount to Rs.85,17,081/- for contravening section 50C of the Act. The assessee sold a property at Lower Parel to M/s Hallmark Industries in the month of September 2020 amount to Rs.31,82,500/-. As per the assessee, the execution of registration of the said property was the duty of the purchaser. The assessee was pursuing for the registration; and finally, the registration was executed on dated 20/09/2014 of the said property, Unit No.450 admeasuring 950 sq.ft. in the building “A-1”, Shah & Nahar Industrial Estate, Dhanraj Mills Compound, Lower Parel, Mumbai-400013. The ld.AO found that the stamp duty value of the property was amount to Rs.1,09,06,500/-. The ld. AO calculated the capital gain in pursuance of section 50C of the Act and added back amount to Rs.85,17,081/- with the total income of the asessee. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The ld.CIT(A) rejected the assessee’s claim and upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us.
The ld.AR vehemently argued and filed a written submission with additional evidence before the bench related to its appeal. The ld.AR argued that the Rubinsha Exports Pvt Ltd property was sold during September 2020. The possession of property was handed over, but the execution of registration was the duty of the purchaser as per the agreement, enclosed in APB pages 47 to 49. Finally, the property was registered and copy of the registration certificate is attached with APB. The Ld.AR further stated that the assessee has not taken any amount from the purchaser during this impugned assessment year. The entire amount of transaction was completed during the F.Y. 2020-21. But it is accepted that the assessee was not able to submit any transaction details before any of the revenue authorities. For submitting the additional evidence, the Ld.AR submitted the following documents as a proof of transactions of the property, as additional evidence.The assesee filed the following documents, which are as follows: - Sr.No. Particulars Page Numbers 1 Letter from society confirming possession and operation of Hallmark 1 Industries (buyer) from the immovable property from 12 September, 2000. 2 Letter dated 15 December 2004 written to Central Bank of India by 2 Hallmark Industries by submitting sale deed dated 12 September 2000 in connection with sanction letter Letter 3 Letter dated 26 April 2005 written by Hallmark Industries to Shah and 3 Nahar Industrial Estate for payment of maintenance charges of the immovable property 4 Correspondence exchanged with bank for obtaining bank statements for 4-8 earlier years. 5 General Ledger of Shah & Nahar Industrial Premises reflecting payments 10 towards Immovable Property (Unit No. 450) in FY 2012-13 6 Extract of bank Statements of Hallmark Industries corresponding to 6 11 payment of maintenance charges for Unit No. 450 as matching with the General Ledger at point 5 above
The ld.AR further argued that the purchaser had proceeded to the Central Bank for mortgaging the said property. The bank had accepted the property as Rubinsha Exports Pvt Ltd collateral security of the borrowing of the asseesse. Therefore, here it is clear that the property is possessed by the purchaser. The said letter dated 01/12/2020 issued by Central Bank of India is annexed in APB page 80. Further, the letter of confirmation of possession issued by the Shah & Nahar Industrial Premises (A-1) Co-operative Society Ltd, vide letter dated 29/05/2024 is annexed in APB page 82 as proof of possession of the said property. But it is accepted fact that the additional evidence was not filed before any of the authorities below.
The ld.DR vehemently argued and relied on the orders of the revenue authorities, but related to additional evidence, the ld.DR had not made any objection for acceptance of the additional evidence.
We heard the rival submission and considered the documents available in the record. On factual aspect, the assessee was not able to show any transactions related to the payment received for transferringthe property in 2020 and also the date of agreement was beyond 14 years which is not registered. The revenue has invoked the section 50C, but the arguments of the ld.AR is that the section 50C is implemented from the year 2012 but not for the impugned F.Y. 2000- 01.Considering the factual matrix, it is found that the revenue calculated the capital gain by pursuing Section 50C in the year of registration of the said property. But assessee took the plea that transfer, and possession werecompleted in the year 2020 and the execution of registration is the duty of purchaser. In the favour of the argument the ld. AR relied on additional evidence which are filed before the bench. In our considered view we accept the additional evidence of the assessee. We find that the said additional evidence are never filed before any of the revenue authorities, which are fresh before the Bench.
Rubinsha Exports Pvt Ltd Accordingly, we find that the further opportunity should be allowed to the assessee for verification of the said additional evidence of the assessee. Accordingly, the appeal of the assessee is remanded to the file of the ld.AO for verification of the additional evidence and accept the same. The ld.AO is also directed to consider the observation of the ITAT while passing the order. The issue is entirely factual in nature, so the judgments relied by the ld. AR areonly for academic purposes.Needless to say, that the ld. AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidence /explanation submitted by assessee in its defense shall be admitted by the ld.AO and adjudicate in accordance with law. We order accordingly.
In the result, the appeal of the assessee bearing