2025 (4) TMI 41 - AT - Income Tax

Revision u/s 263 - application of Section 50C related to the sale of immovable property at a value less than the stamp duty valuation - HELD THAT - It could be seen that the assessee s case was specifically scrutinized to verify the purchase of property at a lesser value than its stamp duty valuation. AO in notice u/s 142(1) raised a specific query in this regard. In response the assessee filed a detailed reply giving all the particulars and by furnishing explanation regarding sale consideration. The copy of order of Civil Judge-4 Agra was also furnished along with various other relevant documents. Considering all these aspects / submissions AO accepted the claim of the assessee and chose not to make any such addition on this account. In our view Ld. AO had taken one of the possible views in the matter and the same could not be said to be opposed to any law or any statutory provisions. Having gone through the reply of the assessee and after having satisfied himself AO accepted the claim of the assessee with due application of mind - AO could be said to be one of the possible views. In such a scenario Ld. Pr. CIT in our considered opinion could not have substituted the opinion of Ld. AO with that of his own view unless the view of Ld. AO was shown to be perverse. We find that the view of Ld. AO was a plausible view. Further the provisions of Sec.50C are not absolute rather a provision has been made for reference to DVO for valuing the property in cases where the assessee questions the stamp duty valuation. This being the case the revision of the order could not be held to be justified. Lastly Hon ble High Court of Madras in the case of CIT vs. Smt. Padmavathi 2020 (10) TMI 425 - MADRAS HIGH COURT on similar facts considered the effect of the guideline value fixed by the State Government and observed that there are long line of decisions of the Hon ble Supreme Court holding that guideline value is only an indicator and the same is fixed by the State Government for the purposes of calculating stamp duty on a deed of conveyance. Therefore merely because the guideline was higher than the sale consideration shown in the deed of conveyance the same could not be the sole reason for holding that the assessment was erroneous and prejudicial to the interest of revenue - Decided in favour of assessee.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal issue in this judgment is the correctness of the revisionary jurisdiction exercised by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act for the assessment year 2018-19. The core question is whether the assessment order passed by the Assessing Officer (AO) under Section 143(3) was erroneous and prejudicial to the interests of the revenue, particularly concerning the application of Section 50C related to the sale of immovable property at a value less than the stamp duty valuation.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

Section 50C of the Income Tax Act provides that if the consideration received from the transfer of a capital asset, being land or building, is less than the value adopted or assessed by the stamp valuation authority, then the value so adopted or assessed shall be deemed to be the full value of the consideration for the purposes of computing capital gains. However, the assessee has the right to contest this valuation and request a reference to the Departmental Valuation Officer (DVO).

The Tribunal also referenced a precedent from the Hon'ble High Court of Madras in the case of CIT vs. Smt. Padmavathi, which held that the guideline value set by the State Government for stamp duty purposes is merely an indicator and not conclusive for determining the correctness of the assessment.

Court's Interpretation and Reasoning

The Tribunal noted that the AO had scrutinized the assessee's case specifically to verify the purchase of property at a value lower than the stamp duty valuation. The AO had issued a notice under Section 142(1) and received a detailed response from the assessee, which included a copy of the court order and other relevant documents. After considering these submissions, the AO accepted the assessee's claim without making any additions based on the stamp duty valuation.

The Tribunal emphasized that the AO's decision was one of the possible views and was not contrary to any statutory provision. It further stated that the Pr. CIT could not substitute his opinion for that of the AO unless the AO's view was shown to be perverse or legally unsustainable.

Key Evidence and Findings

The key evidence included the court order from Civil Judge-4, Agra, which dictated the sale of the property to the assessee for Rs. 46.50 Lacs due to a long-standing dispute and the inability to find a higher bidder. The Tribunal found that the AO had duly considered this evidence and the explanations provided by the assessee before finalizing the assessment.

Application of Law to Facts

The Tribunal applied the legal principles from Section 50C and the relevant case law to the facts of the case. It concluded that the AO had exercised due diligence and had taken a plausible view based on the evidence and explanations provided by the assessee. The Tribunal found no justification for the Pr. CIT's revisionary order, as the AO's assessment was neither erroneous nor prejudicial to the revenue's interest.

Treatment of Competing Arguments

The Tribunal considered the arguments from both sides. The assessee argued that the AO had verified all documents and submissions, and the Pr. CIT's revision was unwarranted. The Tribunal agreed with this position, noting that the AO's assessment was based on a thorough examination of the facts and applicable law. The Tribunal found the Pr. CIT's view to be an unjustified substitution of the AO's plausible view.

Conclusions

The Tribunal concluded that the revisionary jurisdiction exercised by the Pr. CIT was not justified. It quashed the impugned revisionary order and restored the assessment order as originally framed by the AO.

SIGNIFICANT HOLDINGS

The Tribunal held that the AO's decision was a plausible view and could not be overturned by the Pr. CIT unless it was shown to be perverse. The Tribunal emphasized that the provisions of Section 50C are not absolute and allow for a reference to the DVO when the assessee disputes the stamp duty valuation. The Tribunal also highlighted that guideline values for stamp duty are merely indicators and cannot solely determine the correctness of an assessment.

"The provisions of Sec.50C are not absolute rather a provision has been made for reference to DVO for valuing the property in cases where the assessee questions the stamp duty valuation."

The Tribunal's final determination was to allow the appeal and restore the original assessment order, thus rejecting the Pr. CIT's revisionary order.