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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI RAKESH MISHRA
Present for: Appellant by : Taraknath Jaiswal, Adv. Akhashay Rangasia, CA Respondent by : Madhumita Das, Addl. CIT Date of Hearing : 28.08.2024 Date of Pronouncement : 24.09.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Addl./JCIT(A)-2, Pune [hereinafter referred to as “the Ld. Addl./JCIT(A)”] passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2011-12, dated 14.03.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 20.03.2015.
The grounds of appeal
raised by the assessee are reproduced as under: “1 That, on fact and under the circumstance of the case, the Commissioner of Income Tax (Appeal) ADDL/JCIT(A)
2. PUNE is unlawful in confirming the order of the Ld. Assessing Officer in making the addition of Rs 1377723/- pure guess basis and also wrongly interpreting the provision of Sec 50C of the I.T. Act and without rebutting the claim of the assessee & making addition rather in contrary to the proviso contained in section 50C of the act.
Polly Saha AY: 2011-12 the addition made by AO is based on highly dubicious and flimsy ground which does not carry any merit in the eye of law. 2 That the addition made by Ld. Assessing Officer and upheld by Ld. the Commissioner of Income Tax (Appeal) are liable to be set aside. 3 That the appellant may add, alter, delete, withdraw or modify any of the ground at the time of hearing of the matter with the leave of the Hon'ble ITAT.”
Brief facts of the case are that the assessee is an individual who earned her income through her profession as a teacher. For the Assessment Year (A.Y.) 2011-12, she filed her Return of Income (ROI) on 29.03.2012, declaring total income of Rs. 1,86,188/-. Based on information suggesting escapement of income pertaining to A.Y. 2011-12, arising from the sale of immovable property, the Assessing Officer (the Ld. AO) initiated reassessment proceedings under section 147 of the Act. Accordingly, a notice under section 148 of the Act was issued to the assessee. Pursuant to the issuance of the notice under section 148, the Ld. AO passed an assessment order under section 143(3) read with section 147 of the Act on 20.03.2015 for A.Y. 2011-12. In this order, the Ld. AO assessed the total income of the appellant at Rs. 15,63,910/-. This assessment was primarily on account of long-term capital gains, which the Ld. AO determined had arisen from the sale of land during the Financial Year (F.Y.) 2010-11, relevant to A.Y. 2011-12.
3.1. While making the assessment, the Ld. AO invoked the provisions of section 50C of the Act. He alleged that the stamp duty value of the land sold was Rs. 25,92,567/-, whereas the appellant had declared the sale consideration at Rs. 5,50,000/-. The Ld. AO thus computed the capital gains by substituting the sale consideration with the alleged stamp duty value of Rs. 25,92,567/- and made an addition of Rs. 13,77,723/- in the hands of the assessee.
Polly Saha AY: 2011-12 3.2. Aggrieved with the order passed by the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee contended that the very invocation of section 50C of the Act was incorrect, as the stamp duty value considered by the Ld. AO was erroneous. The appellant submitted that the correct stamp duty value of the property sold was Rs. 9,14,375/-, and not Rs. 25,92,567/- as considered by the Ld. AO. Considering the indexed cost of acquisition and cost of improvement, it would have still resulted in a long-term capital loss. Thus, no income had escaped assessment in this case.
3.3. Despite the assessee’s submission regarding the incorrect stamp duty value, the Ld. CIT(A) passed an order stating that no submission was made by the assessee in this regard. The Ld. CIT(A) upheld the order of the AO without addressing the issue raised by the appellant concerning the incorrect stamp duty value.
We have heard the rival submissions and also gone through the facts of the case. During the course of the appeal, the assessee also filed written submissions. However, it is noticed that the grounds of appeal
mentioned in paper book filed on 26.08.2024 are at variance with the grounds of appeal mentioned in Form No.
36. Hence, the appeal is being decided on the basis of grounds of appeal mentioned in Form No.
36. The assessee has made the following submissions:
“3.1 For ground 1: Incorrect Invocation of Section 50C and Assumption of Incorrect Stamp Duty Value 3.1.1 That the appellant submits that the learned CIT(A) erred in upholding the order of the AO, wherein the AO invoked the provisions of section 50C of the Income Tax Act, 1961, and made an addition of INR 13,77,723/- by assuming an incorrect stamp duty value. The AO had erroneously adopted a stamp duty value of INR 25,92,567/-, which led to the computation of inflated long-term capital gains. 3.1.2 That The AO erroneously adopted the stamp duty value of the property sold as INR 25,92,567/ while the appellant had consistently maintained, with supporting evidence, that the correct stamp duty value was INR 9,14,375/-. The sale consideration as per the registered sale deed was INR 5,50,000/-. Therefore, Polly Saha AY: 2011-12 the assumption of the higher stamp duty value led to the incorrect computation of capital gains, causing undue financial burden on the appellant. The correct stamp duty as evident from the registry document is 9,14,375 (18,28,750/2) for assessee's share of land. The same is enclosed at page of this submission. Had the correct value been considered, there would have been long term loss of INR 3,00,469/- (9,14,375 1,50,000 - 10,64,844) 3.1.3 That the appellant respectfully submits that the addition made by the AO by assuming an incorrect stamp duty value is unsustainable in law and on facts.”
Copy of the written submission filed before the Ld. CIT(A)-13, Kolkata, the copy of purchase deed, the market value of Dag No. RS: 2659 given by A.D.S.R. Rajarhat i.e. Stamp duty Authority and the other details were filed before the Ld. CIT(A). Before the Ld. CIT(A), the assessee disputed the market value adopted by the Ld. AO vide letter dated 26.04.2018 subsequent to the assessment order passed u/s 143(3) of the Act dated 20.03.2015 and similar submission was also made before the Ld. CIT(A); the submission made before the Ld. CIT(A) is reproduced as under:
“1. The sole main ground of appeal by the assessee relates to addition of Rs. 13,77,723/- by the Ld. Assessing Officer by invoking the provision of section 50C of the Income Tax Act. 1.1 The Assessing Officer in this case has observed that the assessee has sold urban Agricultural land (RS Dag No. 2659) on 16-04-2010 & 18/06/2010 at Rs 4,50,000/- which had a registered value for stamp duty purpose by the A.D.S.R. Rajarhat, North
24. Parganas, Kolkata at Rs 9,14,375/- (50% of Rs 18,28,750/-). But the Ld. A.O. has considered value of the land of Rs 25,92,567/- i.e. more than the stamp value duty & has made an addition of Rs 13, 77,723/-. The AO has observed as under; Name of the Nature of Area of Date of Actual Registered Party transaction Land transaction amount Value as per received sec 50C of the L.T. Act, 1961 Late Ratan Purchases
3. Katha 05-02-1988 Rs. Same Saha 5,000/- 8 chatak Polly Saha Sale
1. Katha 16-04-2010 Rs. Rs. 1,85,135/- (wife) & Ritam 1,00,000/- Saha (son)
Polly Saha AY: 2011-12 Polly Saha Sale 2 Katha 18-06-2010 Rs. Rs 50,00,000/- (wife) & Ritam 4,50,000/- (Value of 6k Saha (son) 8 chatak 2ch 25 sq. ft Rs 1,23,19,445/- therefore, value of 2k 8ch comes to Rs 50,00,000/-)
1.2 We wish to submit before your honour that the above action of AO is most arbitrary & without considering the submission and claim of the assessee. This is a fact born on the record that the assessee had purchased urban Agricultural land (Dag No RS: 2659) 3Katha 8 chatak in the year 1988 by her husband, Late Ratan Shah (Copy of Purchase deed enclosed for your kind consideration). On 16-04- 2010 the assessee sold 1 Katha land of Rs 1,00,000/- & Registered value of Rs 1,85,135/- considered by the Ld. A.O. and on 18-06- 2010 sold 2 Katha 8 chatak of Rs 4,50,000/- the market value considered of Rs 50,00,000/- by the Ld. AO. Your honour the actual market value of the land (Dag No. RS:2659) given by the A.D.S.R. Rajarhat, North 24 Parganas, Kolkata i.e. stamp duty authority of Rs 18, 28,750/- (Copy of Market value report is enclosed for your kind consideration). 1.3 We also wish to submit before your honour that, this is a fact born on the record that the assessee has not received even one rupee except Rs 4, 50,000/- from the sale of property and which has market value of the urban Agricultural land for 3Katha 8 chatak (Dag No RS: 2659) given by the A.D.S.R. Rajarhat, North 24 Parganas, Kolkata i.e. stamp duty authority of Rs 18, 28,750/-. Therefore the assessee share of sold land price under section 500 of the Income Tax Act 1961 is Rs 9, 14,375/- i.e. 50% of Rs 18, 28,750/-. But the Ld. A.O. has considered the value of land of Rs 25, 92,567/- i.e. 50% of Rs 51, 85,135/- which is more than the stamp duty value i.e. against the spirit and intention of section 50C of the Act. The assessee has made available all the documents in support of his claim before the Ld. AO. However Ld. AO has conveniently ignored the submission of the assessee and has made the addition.”
Before us, it was submitted that the assessee is a teacher and the land was sold in 2010 and the Ld. AO had adopted the value of Rs. 50,00,000/- as per the provisions of section 50C of the Act and the assessee’s share as Rs. 25 lacs which is incorrect. As per the registered deed, stamp duty was payable at the market value of Rs. 18,28,750/- and the assessee’s share therefore, comes to approximately Rs. 9 lacs for 3 Katha 8 Chatak of the land, the details are at page 25 of the paper book filed in the course of appeal. It was requested that the value of property for the purpose of section 50C of the Act should be taken as per the market value and the value of Rs. 18,28,750/- was the value adopted by the Polly Saha AY: 2011-12 concerned Registrar of Property for the purpose of stamp duty. The Ld. AR was requested to file a computation for the capital gains based on the stamp duty value of Rs. 18,28,750/- and the same was filed as under:
Capital Gain Working as per Correct Stamp Duty Value Particulars Amount Amount Sales consideration as per Section 50C [Market 18,28,750.00 Value] RS Dag No. [Area 3 Katha 8 Chatak] 50% Market Value Share of assessee i.e. Polly Saha [1828750/2] 9,14,375.00 Less : Index Cost of Purchase of Land [(50% of 25716 = 12856] [12856*711/150] 60,937.00 Cost of Improvement [50% of Rs. 485716 = 242258] 10,03,907.00 Index Cost of Improvement Cost of Land Sale (50% of 300000) 1,50,000.00 12,14,844.00 Long Term Capital Loss (-) 3,00,469.00
As per the computation, the Long-Term Capital Loss is worked out at Rs. 3,00,469/- against the capital gains worked out by the Ld. AO if the market value of the property of area 3 Katha, 8 Chatak is taken as Rs. 18,28,750/- as against Rs. 50 lacs adopted by the Ld. AO. Since the Ld. AO has not given any justification for adoption of the rate of Rs. 50 lacs, therefore, there is merit in the contention of the assessee that the correct market value of Rs. 18,28,750/- needs to be adopted as per which the Long-Term Capital Loss is worked out at Rs. 3,00,469/- and the Ld. AO is directed to adopt the value of Rs. 18,28,750/- and thereafter, compute the capital gains which has been worked out as Long-Term Capital Loss of Rs. 3,00469/- by the assessee. Hence, grounds of appeal are allowed Polly Saha AY: 2011-12 and the addition of Rs. 13,77,723/- made by the Ld. AO is deleted and the same is substituted by Long Term Capital Loss of Rs. 3,00,469/-. Since relief has been allowed on merit and no specific grounds have been taken, Ground Nos. 2 and 3 being general in nature do not require any separate adjudication.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 24th September, 2024.