2012 (1) TMI 207 - AT - Income Tax

Summary

Issues Involved:
1. Reopening of assessment u/s 148.
2. Applicability of section 50C of the Income Tax Act.
3. Calculation of capital gains on the transfer of property.
4. Validity of invoking section 50C in the context of an unregistered sale agreement.

Summary:

Reopening of Assessment u/s 148:
The assessee challenged the reopening of the assessment by issuing a notice u/s 148. The assessee argued that the information from the Inspector of Stamps and Registration Department pertained to a sale deed registered on 16-05-2007, which was irrelevant to the transaction completed on 06-09-2002. The Tribunal found that the reopening of the assessment was not justified as the information was not relevant to the assessment year 2003-04.

Applicability of Section 50C:
The primary issue was whether the provisions of section 50C applied to the transfer of property through an unregistered sale agreement. The Tribunal noted that various Benches, including the Jaipur Bench, consistently held that section 50C does not apply to transfers made through unregistered agreements. The Tribunal cited the case of Navneet Kumar Thakkar vs. ITO, where it was held that section 50C could not be invoked if the property was transferred through an unregistered agreement.

Calculation of Capital Gains:
The AO calculated the capital gains based on the valuation of Rs. 2,58,44,260/- determined by the Sub Registrar, which the assessee contested. The Tribunal observed that the AO should have referred the matter to the valuation officer as per section 50C(2) when the value assessed by the stamp valuation authority exceeded the fair market value. The Tribunal also noted that in the case of the purchaser, the DVO valued the property at Rs. 32,01,100/-, and the CIT (A) accepted the declared value of Rs. 18,00,000/-.

Validity of Invoking Section 50C:
The Tribunal held that the provisions of section 50C were not applicable in the present case as the property was transferred through an unregistered sale agreement. The Tribunal also noted that the adjacent plot sold by the assessee's husband was treated differently, and the proceedings u/s 148 were dropped in that case.

Conclusion:
The Tribunal concluded that the addition made by the AO, confirmed by the CIT (A), was not justified. The Tribunal deleted the impugned addition and allowed the appeal of the assessee. The Tribunal did not address the legal ground against the initiation of proceedings u/s 148 as the addition was already deleted on merit.