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Facts
The assessee sold agricultural land, claiming it was exempt from tax. The AO invoked Section 50C of the Income Tax Act, using the stamp duty value as the sale consideration and computing capital gains. The assessee argued that the land was agricultural and stamp duty rates were random.
Held
The Tribunal held that the AO erred by not referring the matter to the valuation officer as mandated by Section 50(C)(2) when the assessee objected to the stamp duty value. The CIT(A) also erred by dismissing the appeal without considering the merits.
Key Issues
Whether the AO correctly invoked Section 50C without referring the valuation to the valuation officer when objected to by the assessee, and whether the land qualified for capital gains tax.
Sections Cited
143(3), 147, 148, 142(1), 50C, 50(C)(2)
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SANDEEP SINGH KARHAIL, JM Smt. Rakhmabai Mhatre
This appeal is filed by Smt. Rakhmabai Mhatre [Assessee / Appellant] against the appellate order passed by the Commissioner of Income Tax (Appeals),National Faceless Appeal Centre, Delhi[Ld. CIT(A)] dated 31.5.2023 for Assessment Year 2011-12, wherein the appeal filed by the Assessee against the assessment order dated 27.12.2018 passed by the Income Tax Officer, Ward 2(3) (Ld. AO) under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) computing the total income of the Assessee as Rs.33,40,374/-, was dismissed.
Assessee has preferred an appeal raising following grounds:-
i) That, the impugned order dated 31/5 / 2023 issued U / s 250 is passed against the basic principle of natural justice and audi alteram partem, since appellant was never informed about hearing before NFCA by previous authorised representative. ii) That, all the emails of notice hearing were received by previous authorised representative, who never informed appellant about hearing, consequently appellant was precluded from participating in appellate proceedings. iii) That, in consequence of impugned order dated 31/5 / 2023 intrinsically following additions were upheld by Id. NFAC made by AO vide assessment order dated 27/12 / 2018: a) Addition on account of capital gains amounting to Rs.31,85,497/-, by assuming sale consideration U / s 50C of the Act amounting to Rs.64,64,010/-. b) That, it is submitted that land in question, which was sold by appellant during the AY under consideration is agricultural land and was exempted for being tax under tax laws.
The brief fact of the case shows that the Assessee is an individual. She does not file any return of income. The information was received that the Assessee has sold immovable property at Rs.1,28,83,000/- jointly with two other persons who did not offer any capital gain. Further, it was also found that Rs.17 lakhs have been deposited in her bank account. Therefore, notice under section 148 of the Act was issued on 27.3.2018. Further notice under section 142(1) of the Act was also issued on 12.7.2018. The CA of the Assessee
The Assessee submitted that the sale of land is related to an agricultural land situated within the specified limit from the council area of Ambernath and agricultural activities were carried out at the time of sale of land. Due to undeveloped location as compared to the urban area, the value of the land has to be considered as agricultural land only. It was further stated that it does not have any other facilities compared to urban land. The Assessee also stated that the rate of agricultural land would be Rs.5880/- per guntha as per the value ready reference book and therefore stamp duty rate cannot be taken. It was further stated that value done at the time of registration is also taken random rates instead of proper computation of slab rates as applicable.
The Ld. AO rejected the contentions of the Assessee stating that the land is an agricultural land as it is situated within the
The Assessee aggrieved preferred the appeal before The Ld. CIT(A) issued notice on 7.1.2021 and 9.11.2021 which were not replied to. He further issued a notice on 21.7.2022, 5.8.2022 and 16.5.2023 which were also not replied to and therefore he dismissed the appeal without discussing the merits of the case. The Assessee aggrieved has preferred this appeal.
We have heard the rival contentions and perused the orders of the lower authorities. Ms. Apurva Hire ld AR vehemently contended that addition is incorrect and the Ld.DR supported the orders of the lower authorities.
Facts clearly shows that the Assessee has sold the property for a sale consideration of Rs. 71,51,300/- whose deemed market value is Rs.1,28,83,000/-. The Ld. AO invoked the provision of Section 50 C of the Act whereby the full value of the consideration was to be used for computation of capital gain by deeming the
In the result, the appeal of the Assessee is allowed as directed for statistical purposes.