2021 (12) TMI 1164 - AT - Income Tax

Computation of capital gain - determination of deemed sale consideration under section 50C - Change in circle rate in-between the date of agreement and date of registration - CIT(A) accepted contentions of the assessee - HELD THAT - Section 50C of the Act provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. There is no dispute with regard to the fact that stamp valuation authority has determined value of the property for charging stamp duty at ₹ 5,82,39,975/-, but referring to the fact brought the notice of the ld.Revenue authorities is that the assessee has purchased this property on 17.9.2010 for a consideration of ₹ 24 lakhs. Thereafter, it was converted to non-agriculture land. The assessee has sold the same on 28.9.2011. The assessee had entered into an agreement with M/s.Ashwal Infracon P.Ltd. on 23.12.2010 and sale consideration was settled at ₹ 80.00 lakhs. The assessee has received part payment through account payee cheque. Stamp duty valuation authority have revised their valuation on 1.4.2011, and thereafter vendee was required to pay additional stamp duty of ₹ 24,58,000/- In the present case, we find that there are two different dates. One is 23.12.2010 when the assessee entered into an agreement for sale of this property and another 29.9.2011 when the sale deed was ultimately registered. At the time of agreement and prior to that the assessee has received part payments through negotiation. Such payments have been received through account payee cheque. He received ₹ 25 lakhs on 26.2.2011 and ₹ 10.00 lakhs on 13.10.2010. This part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis- -vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and this aspect has been dealt with by the ld.CIT(A) elaborately in the finding extracted (supra), therefore, no interference from our side is called in the impugned order on the issue. Reopening of assessment u/s 147 - We find that the AO got concrete information about the sale of the property and therefore he has a reason to believe that income has escaped assessment, and has rightly reopened. The ld.CIT(A) has examined this issue elaborately, and has rightly rejected the contentions of the assessee. We do not find any merit in this CO of the assessee

Summary

Issues Involved:
1. Determination of deemed sale consideration under section 50C of the Income Tax Act, 1961 for the purpose of computation of capital gain under section 48 of the Act.
2. Validity of reopening of the assessment under section 147 of the Act.

Issue-wise Detailed Analysis:

1. Determination of Deemed Sale Consideration under Section 50C:

The primary issue in the appeal was the determination of the deemed sale consideration under section 50C of the Income Tax Act, 1961. The property in question was sold on 29.9.2011 for ?80,00,000, while the stamp duty valuation was ?5,82,39,975. The AO reopened the assessment and made an addition of ?5,52,03,376, taking the sale consideration at the stamp duty valuation.

The assessee argued that an agreement to sell was executed on 23.12.2010 for ?80,00,000, and part payments were received before the revision of the stamp duty valuation on 1.4.2011. The CIT(A) accepted the assessee's contention, noting that part payments were made through account payee cheques, and the agreement to sell was acted upon in substance. The CIT(A) relied on various judicial precedents, including decisions from the Allahabad High Court, Mumbai Tribunal, and Ahmedabad Tribunal, which supported the assessee's argument that the stamp duty valuation on the date of the agreement should be considered.

The Tribunal upheld the CIT(A)'s decision, noting that the amendment to section 50C by the Finance Act, 2016, which allows the value adopted by the stamp valuation authority on the date of the agreement to be considered if part payment is received through banking channels, is retrospective. The Tribunal concluded that the assessee's case fell within the first proviso of section 50C, as the agreement to sell was executed before the revision of the stamp duty valuation, and part payments were received through account payee cheques.

2. Validity of Reopening of the Assessment under Section 147:

The assessee challenged the reopening of the assessment under section 147 of the Act. The AO had received information about the sale of the property and believed that income had escaped assessment, leading to the issuance of a notice under section 148. The CIT(A) rejected the assessee's challenge, and the Tribunal upheld this decision, stating that the AO had concrete information and a reason to believe that income had escaped assessment.

Conclusion:

The Tribunal dismissed both the appeal of the Revenue and the cross-objection of the assessee. It upheld the CIT(A)'s decision to consider the stamp duty valuation on the date of the agreement for the purpose of computing capital gains under section 50C, and it found the reopening of the assessment under section 147 to be valid. The order was pronounced on 25th November 2021 at Ahmedabad.