2024 (5) TMI 802 - AT - Income Tax

Addition u/s 50C r.w.s. 56(2)(vii) (b) - Additions in the hands of the buyer of the property - difference between the purchase price as per sale deed and the jantri value of the property on which the stamp duty was paid - Assessee is co-owners of the same property - As submitted the assessee was a buyer of the property, no capital gain could have arisen in her hand, therefore, the provision of Section 50C of the Act was not applicable at all in this case - HELD THAT - An addition could have been made under this Section only if any immovable property, with stamp duty value exceeding Rs. 50,000/-, was acquired without consideration. In this case, the property was not acquired without consideration. Therefore, the provision of Section 56(2)(vii)(b) of the Act is not found applicable in this case. This provision was amended by the Finance Act, 2013 w.e.f. 01.04.2014 whereby the difference between the stamp duty value and the actual sale consideration was made liable for addition as income from other sources . As explicitly mentioned in the Memorandum that the existing provision was applicable to immovable property received without consideration only and that it did not cover cases of inadequate consideration. In order to include the cases of inadequate consideration, the provision of Section 56(2)(vii)(b) of the Act was amended with effect from 01.04.2014. It is categorically mentioned that this amendment was effective from 01.04.2014 onwards and applicable to A.Y. 2014-15 and subsequent years. Therefore, this amendment cannot be extended to past years. Accordingly, no addition u/s. 56(2)(vii)(b) of the Act could have been made in A.Y. 2012-13 u/s. 56(2)(vii)(b) of the Act in the case of inadequate consideration. Therefore, the addition as made by the AO cannot be sustained. Addition u/s. 69C - CIT(A) was also wrong in confirming the addition u/s. 50C r.w.s. 69 of the Act. As already discussed earlier, the provision of Section 50C of the Act is not applicable in the case of buyer and the department never had any case of making any addition u/s. 69C - addition u/s. 69C could have been made only in respect of actual investment as made by the assessee in the property and not in respect of jantri value. The addition u/s 69 also can t be sustained for the reason that case was reopened to consider the difference between jantri value and actual purchase value. When the addition on the issue on which the case was reopened is not sustained, no other addition is permissible. The CIT(A) had also not issued any show cause notice to the assessee for making the addition u/s. 69C of the Act. Therefore, the order of the CIT(A) is cancelled. Appeal preferred by the assessee is allowed.

Summary

Issues involved:
The judgment involves two appeals filed by different assesses against separate orders of the National Faceless Appeal Centre (NFAC), Delhi, both for the Assessment Year 2012-13, regarding the treatment of property acquisition and valuation under Sections 50C and 56(2)(vii)(b) of the Income Tax Act, 1961.

Case of Pooja Dipen Joshi:
The appellant's case involved a property purchase jointly with 8 persons, with a jantri value higher than the transfer document value. The Assessing Officer (AO) treated the difference as 'income from other sources' under Section 50C. The appellant challenged this addition, arguing that Section 50C applies to sellers, not buyers, and Section 56(2)(vii)(b) does not apply as the property was not acquired without consideration. The appellant also contended that the amendment to Section 56(2)(vii)(b) was not retrospective to AY 2012-13. The Tribunal agreed, holding that the additions under both sections were unjustified due to incorrect application and lack of compliance.

Case of Ashokkumar C. Joshi:
This case mirrored Pooja Dipen Joshi's situation, with the co-owner appealing against the addition under Section 50C. The Tribunal found the same issues present, with the AO's treatment under Section 50C not applicable and the amendment to Section 56(2)(vii)(b) not retrospective to AY 2012-13. The addition was deemed unjustified and deleted.

Conclusion:
Both appeals were allowed, as the additions under Section 50C and Section 56(2)(vii)(b) were found to be incorrect and not applicable to the assesses' situations. The Tribunal canceled the orders of the CIT(A) and ruled in favor of the assesses in both cases.