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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: SH. N. K. BILLAIYA & SH. C.N. PRASAD
ORDER
PER N. K. BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 08.10.2021 pertaining to A.Y. 2019-20.
The grievance of the assessee read as under :- 1. On the facts and in the circumstances of the case and in law, the authorities below have erred in invoking section 50C of the IT Act without following the proper procedure laid down in the act. The action of the authorities below is wrong, illegal, misconceived and unjustified therefore it should be quashed.
2. On the facts and in the circumstances of the case and in law, the authorities below have erred in confirming the addition on account of deemed capital gain amounting to Rs.9,50,000/-. The action of the authorities below is wrong, illegal, misconceived and unjustified therefore it should be quashed.
3. On the facts and in the circumstances of the case and in law, the authorities below have erred in imposing additional tax of Rs.1,38,656/- (surcharge) on income. The action of the authorities below is wrong, illegal, misconceived and unjustified therefore it should be quashed.
4. On the facts and in the circumstances of the case and in law, the authorities below have erred in confirming the interest u/s 234A, 234B & 234C of the Income Tax Act. The action of the authorities below is wrong, illegal, misconceived and unjustified therefore it should be quashed.
5. The appellant craves the right to add, submit, alter or withdraw any or all grounds of appeal before or on the date of hearing.
At the very outset the Counsel for the assessee stated that the impugned quarrel has been decided by this Tribunal in the case of the co-owner Smt. Nita Singh in for A.Y.2019-20. The Counsel supplied the copy of the judgment of the coordinate Bench.
Per contra the DR could not bring any distinguishing decision in favour of the revenue.
We have carefully perused the orders of the authorities below. The quarrel is whether while processing the return u/s. 143 (1)(a) provisions of section 50C can be involved for making addition on account of deemed capital gain. This issue has been considered by the coordinate Bench in the co-owner of the property in ITA No.1793/Del/2022. The relevant findings read as under :-
“5. In the present case, as noted by the Id.CIT(A) in para 1 of the first appellate order, the assessee preferred an appeal against the intimation u/s 143(1) of the Act dated 15.07,2020 issued by CPC, Bangalore for AY 2019-20 wherein the CPC made addition of Rs.9,50,000/- on account of capital gain on the basis of stamp value of assets u/s 50C of the Act.
6. The coordinate Bench of ITAT in the case 51/5 Guarding Services Pvt. Ltd. vs. WO (supra), in para (E) held as follows:- "(E) In the light of the foregoing conclusions in paragraph (D.2.1) of this order, we are of the view that the aforesaid additions of Rs.29,52,674/- by way of adjustment and intimation u/s 143(1) of Income Tax Act, were beyond the scope of Section 143(1) of Income Tax Act; and further, that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue. Accordingly, we set aside the impugned appellate order dated 03.12.2021 of the Ld. CIT(A), and direct the Assessing Officer to delete the aforesaid addition of Rs. 29,52,674/-.
(E.l) By way of abundant caution, we hereby clarify that we have not expressed any view in this order, on whether the aforesaid amendments brought in by Finance Act, 2021 [whereby Expianation-2 was inserted in Section 36(l)(va) of Income Tax Act and Explanation-5 was inserted in Section 43B of Income Tax Act] are prospective or retrospective. In the light of our decision in foregoing paragraph (E) of this order; this issue is merely academic in nature; hence not decided."
Further, the coordinate Bench of ITAT Delhi in the case ACTT vs. Haryana Telecom Ltd. (2009) 14 taxmann.com 122 (WAT, Delhi) (supra), in para 27, under identical facts and circumstances, held as follows:-
"27. We, therefore, hold that it is beyond the power of the Assessing Officer under section 143(l)(a) to make prima facie adjustments of controversial nature and where by resorting to prima facie adjustments of controversial nature in purported exercise of power under section 143(i)(a), it can be said that the Assessing Officer over-stepped his jurisdiction thereby determining the income much higher than what was returned by the assessee. This has obviously introduced an error, which is apparent from record. When such an error of making prima facie adjustments of controversial under section 143.(l)(a) is pointed out to the Assessing Officer, he is duty bound to amend, under section 154(i)(b), the intimation under section 143(1 )(a). This is a case where the illegality or mistake in the intimation under section 143(1 )(a) arises for the reason that the said provision of making prima facie adjustment of controversial nature which ought not to have been invoked has been invoked by the Assessing Officer and the income was wrongly determined by making unilateral adjustments of controversial nature which do not fall within the ambit of section 143(l)(a) of the Act. Thus, in such circumstances, if the Assessing Officer passes an order rejecting the assessee's application under section 154, it can be said that the Assessing Officer has failed to exercise his jurisdiction which he ought to have exercised under section 154 of the Act by rejecting his intimation and deleting therefrom the prima facie adjustments of controversial nature earlier made by him while making an intimation under section 143(1 )(a) of the Act. The hon'bie Rajasthan High Court in the case of CIT v. Bank of Rajasthan Ltd. [2008] 306 ITR 363 has held that where the provisions of making prima facie adjustments under section 143(i)(a) are not attracted and since the action has been taken by the Assessing Officer under section 143(i)(a), it rightly attracted the right of the assessee to move an application under section 154, and in that view of the matter, the application under section 154 was rightly allowed by the learned Commissioner of Income- tax (Appeals), as well as the Income-tax Appellate Tribunal."
In view of the above, I am inclined to hold that the AO has made addition u/s 50C of the Act in the intimation issued u/s 143(l)(a) of the Act on a controversial issue. In my humble understanding, the impugned addition by way of adjustment and intimation u/s 143(1) of the Act is beyond the scope of section 143(1) of the Act and the Id.CIT(A) has also erred in law in confirming the aforesaid addition on a debatable and controversial issue. Accordingly, the addition made by intimation u/s 143(l)(a) of the Act and confirmed by the Id.CIT(A) is set aside and the AO is directed to delete the addition of Rs.9,50,000/-. Accordingly, the grounds of the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Respectfully following the findings of the coordinate Bench (supra) we direct the AO to delete the impugned addition. The appeal filed by the assessee is allowed. Order pronounced in the open court on 19.04.2023.