2014 (7) TMI 1335 - AT - Income Tax

Rectification of mistake u/s 254 - applicability of provisions of s. 50C in determining the deemed full value of consideration received - AO was directed to recompute the capital gains applying the provisions of s. 50C and the assessee is objecting to the same - HELD THAT - We wish to point out that it is well settled that the Tribunal is the final fact finding body. The findings of the Tribunal are not liable to be interfered with, unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person, on the basis of the facts before the Tribunal, could have come to the conclusion to which it has come. In the present case, we have to point out that in the absence of both the lower authorities not considering the provisions of s. 50C, Tribunal in its inherent powers was right in setting aside the issue to the file of the Assessing Officer to follow the procedure prescribed u/s. 50C of the Act. The legal principal that while giving effect to the order of the Tribunal assessed income cannot be enhanced is implicit in each order of the Tribunal. However, since the same has not been explicitly stated in the order of the Tribunal dated 4.4.2014 at para 13, now we amend para 13 of the Tribunal order dated 4.4.2014 and the following sentence is added to para 13 which reads as under Further, the Assessing Officer while giving effect to the order of the Tribunal shall compute the capital gains by applying the provisions of s. 50C and ensure that the finally decided capital gain does not exceed the capital gains originally assessed in the assessment order. MAs are partly allowed.

Summary

Issues:
Rectification of mistakes in the consolidated order for A.Y. 2007-08 regarding determination of sale proceeds received on the sale of the sixth apartment and the nature of construction sold.

Analysis:
The assessee filed a return of income for A.Y. 2007-08, with the Assessing Officer making an addition towards short term capital gains. The CIT(A) directed the Assessing Officer to adopt a specific sale price for the flat. Both the Department and the assessee appealed before the Tribunal, challenging the determination of sale proceeds. The Tribunal found discrepancies in the CIT(A)'s order, noting that the CIT(A) did not adhere to the procedure under Section 50C regarding valuation disputes. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to re-examine the matter, including the nature of construction sold, and make a reference to the Valuation Cell if necessary.

The assessee filed Miscellaneous Applications (MAs) seeking rectification of the Tribunal's order, claiming that it would result in an enhancement of income, which is not allowed under the law. The Assessing Officer was directed to recompute capital gains applying Section 50C, a provision overlooked by both lower authorities. The Tribunal emphasized its role as the final fact-finding body and justified setting aside the issue to ensure compliance with Section 50C.

Citing legal precedents, the Tribunal clarified its wide-ranging powers in dealing with appeals and the implicit principle that assessed income cannot be enhanced while giving effect to its orders. To avoid any misinterpretation, the Tribunal amended its order to explicitly state that the Assessing Officer must compute capital gains in compliance with Section 50C without exceeding the originally assessed amount. Ultimately, the MAs were partly allowed, providing clarity on the computation of capital gains in line with the Tribunal's directions.

This comprehensive analysis of the judgment highlights the issues involved, the Tribunal's reasoning, legal principles applied, and the final outcome, ensuring a detailed understanding of the case.