2024 (8) TMI 165 - AT - Income Tax

Capital gain - rate adopted for working out the taxable sale consideration under Section 50C for the purpose of calculating taxable capital gains for the year under consideration - HELD THAT - Assessee was allotted a plot by Noida Authorities. He entered into an agreement to sell on 07.02.2003 and the amount of Rs. 4,50,000/- have been duly received by the assessee. The remaining amount of Rs. 4,76,000/- has to be paid to the Noida Authorities as per the payment schedule of Noida Authorities. The assessee has paid the remaining amount to Noida Authorities in 2007 and the Noida Authorities had duly executed the lease deed in favour of the buyer. Thus, the transaction between the buyer and the assessee was concluded in 2003 itself. The buyer has not paid the remaining amounts to the assessee but to the Noida Authorities who inturn transferred the lease to the buyer and since, the amount of the circle rate as on the date of agreement and since the remaining amounts have been paid not to the assessee but to the Noida Authorities, keeping in view the fact that the transaction between the assessee and the buyer was concluded 2003 itself as per the prevailing circle rate, in the specific facts of the instant case, it is hereby held that no addition is called for u/s 50C - Appeal of the assessee is allowed.

Summary

Issues:
1. Appeal against National Faceless Appeal Centre (NFAC) order dated 10.07.2023.
2. Challenge to the addition of Rs. 45,08,000/- under section 48 of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the NFAC order, challenging the additions made by the Assessing Officer (AO) under section 48 of the Income Tax Act, 1961. The primary contention was regarding the difference between the actual sale consideration and the value adopted under Section 50C. The appellant argued that the circle rate value should have been adopted as per the Agreement to Sell in 2003, not the Lease deed in 2007. The appellant further contended that the assessment order lacked jurisdiction under Section 143(3)/147 and violated principles of natural justice. The Tribunal noted the procedural irregularities and held that the entire reassessment proceedings were void-ab-initio due to the absence of statutory notices and proper application of tax provisions.

2. The core issue revolved around the addition of Rs. 45,08,000/- under section 48, based on the alleged difference between the actual sale consideration and the value adopted under section 50C. The appellant had received Rs. 9,26,000/- as sale consideration in 2003, but the AO considered the sale at Rs. 54,34,000/- in 2007, leading to the disputed addition. However, the Tribunal observed that the transaction between the appellant and the buyer was finalized in 2003 itself, and the remaining payment was made to the Noida Authorities, not the appellant. As the circle rate applied to the Agreement to Sell in 2003, the Tribunal ruled in favor of the appellant, stating that no addition was warranted under section 50C.

In conclusion, the Tribunal allowed the appeal, emphasizing that the transaction's conclusion in 2003 and the payment to Noida Authorities justified the exclusion of the disputed addition under section 50C. The judgment highlighted the importance of adhering to procedural requirements and applying tax provisions correctly to ensure fairness and justice in tax assessments.