2022 (11) TMI 30 - AT - Income Tax

LTCG computation - Deduction u/s 54B - Applicability of Section 50C, where entire actual sales consideration has been invested - lower authorities had denied the claim by stating that the land was purchased after the due date of filling of the Return - whether the assessee is eligible for deduction u/s 54B for purchase of land after due of filing of return and what amount is to be invested whether according to actual sale consideration or as per DLC Rate for claiming deduction u/s 54B of the Act, whether for calculation of LTCG, the cost of acquisition should be as per DLC rate or actual sale consideration and what is the actual DLC rate or whether assessee has received excess sale consideration as mentioned in the sale deed? - HELD THAT - Person had not furnished return of previous year within time allowed under subsection (1) i.e. before 31st day of July of Assessment Year, assessee could file return before expiry of one year from end of ever relevant Assessment Year-Considering said case, instant court had considered provisions and interpreted same-In that view of matter, issue was required to be answered in favour of assessee and against department-Assessee's appeal allowed - See Shankar Lal Sharma 2018 (1) TMI 1000 - RAJASTHAN HIGH COURT The assessee is eligible for claim of deduction u/s 54B and as per record and purchase deed the assessee had invested the amount of Rs.13,51,388/-( 1/4th of Rs.51,50,000/- purchase cost 2,55,550/- stamp duty). Amount which is to be invested for claiming the deduction u/s 54B for calculation the LTCG - whether according to actual sale consideration or as per DLC rate? - As no addition is required to be made on account of LTCG in the present case. As per decisions for claiming u/s 54B on account of LTCG, the assessee is required to invest the amount as per actual sale consideration and not as per DLC Rate. The assessee as per record i.e. sale deed and purchase deed had invested the amount of Rs.13,51,388/-( 1/4th of 51,50,000/- purchase cost 2,55.550/- stamp duty) u/s 54B of the Act in purchase of new assets i.e. agriculture land while the actual LTCG was of Rs.6,71,250/-, which was to be invested by the assessee. It shows that the assessee had invested more amount of Rs.13,51,388/- than the amount of Rs.6,71,250/-. Thus no addition is required to be made. Calculation of LTCG, the cost of acquisition should be as per DLC rate or actual sale consideration and what is the actual DLC rate or whether assessee has received excess sale consideration as mentioned in the sale deed - Since entire amount of sale consideration has been invested in bands, therefore, provisions of s. 50C are not applicable - In absence of evidence on record, higher price for sale of land could not be presumed from the consideration shown in registered sale deeds and rates of property fixed by Stamp Valuation Authority for registration purposes could not be taken to be price for which property might had been sold. It is noted that in this case the AO has not brought evidence of receiving excess amount. The AO proceeded only on the basis of the value adopted by the Stamp Valuation Authorities. Thus as per the findings given by the Hon ble Courts no addition is liable to be made. In this view of the matter, the addition sustained by the ld. CIT(A) is deleted.

Issues Involved:
1. Validity of assessment order under Sections 147/144.
2. Adequacy of opportunity provided to the assessee.
3. Confirmation of addition on account of Long Term Capital Gain (LTCG) and applicability of Section 50C.
4. Denial of deduction under Section 54B.
5. Charging of interest under Sections 234A, 234B, and 234C.

Detailed Analysis:

1. Validity of Assessment Order under Sections 147/144:
The assessee challenged the assessment order on the grounds of jurisdiction, limitation, and lack of proper approval. The tribunal noted that the Assessing Officer (AO) initiated proceedings based on information received from the Director of Income Tax (I&CI) regarding the sale of agricultural land and the application of Section 50C. The AO recorded reasons and obtained prior approval from the Principal Commissioner of Income Tax (Pr. CIT). The tribunal upheld the initiation of proceedings under Section 147, as the AO had valid reasons to believe that income had escaped assessment.

2. Adequacy of Opportunity Provided to the Assessee:
The assessee argued that the ex-parte assessment order was passed without providing adequate opportunity to be heard. The tribunal observed that multiple notices were issued to the assessee, and despite this, there was non-compliance. Hence, the tribunal found no merit in the assessee's claim of inadequate opportunity and upheld the assessment proceedings.

3. Confirmation of Addition on Account of LTCG and Applicability of Section 50C:
The AO calculated LTCG based on the value adopted by the Sub-Registrar, which was higher than the actual sale consideration. The assessee contended that the land was agricultural and not a capital asset, and the sale consideration mentioned in the sale deed should be considered. The tribunal noted that the Tehsildar confirmed the land was within municipal limits, making it a capital asset. The tribunal also referred to various judicial precedents, concluding that for the purpose of Section 54B, the actual sale consideration should be considered, not the deemed value under Section 50C. Therefore, the tribunal held that the assessee had correctly invested the amount in new agricultural land, and no addition was required on account of LTCG.

4. Denial of Deduction under Section 54B:
The AO denied the deduction under Section 54B, stating the new agricultural land was purchased after the due date for filing the return. The tribunal referred to judicial precedents, including the Hon'ble Rajasthan High Court's decision in Pr. CIT vs. Shankar Lal Sharma, which held that the extended due date under Section 139(4) should be considered. The tribunal concluded that the assessee had invested the capital gains within the stipulated period and was eligible for the deduction under Section 54B.

5. Charging of Interest under Sections 234A, 234B, and 234C:
The tribunal noted that the charging of interest under Sections 234A, 234B, and 234C is consequential. Since the primary addition on account of LTCG was deleted, the interest charged would also be adjusted accordingly.

Conclusion:
The tribunal partly allowed the appeal, deleting the addition on account of LTCG and allowing the deduction under Section 54B. The initiation of proceedings under Section 147 and the ex-parte assessment were upheld, and the charging of interest was deemed consequential.

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