2023 (3) TMI 820 - AT - Income Tax

Reopening of assessment u/s 147 - reason to believe - addition of LTCG u/s 50C - AR submitted that reopening was only on the ground of stamp valuation of the land in question is higher than the consideration appearing in conveyance deed - HELD THAT - No discrepancies were pointed out by the Ld. AR as regards to reasons for reopening or approval for reasons for reopening u/s 147 of the Act. Therefore, ground no.1 is dismissed. LTCG addition - nature of land sold - capital asset u/s 2(14) or agricultural land - Section 50C applicability - Reference to DVO - AR submitted that the addition was made pending the report of DVO determining fair market value of the land in question - HELD THAT - The assessee has sold agricultural land and, therefore, the same cannot be termed as capital asset and will not come under the purview of Section 50C - reference to DVO by adopting Fair market Value was not justified in the present case as the said report whether has taken the aspect of Sale Deed of agricultural land or not has not been pointed out by the AO. In the present case, the addition in respect of Section 50C is not justifiable since the agricultural land sale was executed on 27.09.2010 at the prevailing Jantri Rate. The registration of the sale deed was after the addition/contractual obligation relating to agricultural land converting into non-agricultural land was completed and the expenses were borne by the buyer and not by the assessee. Therefore, the addition made by the AO does not sustain. Decided in favour of assessee.

Summary

Issues involved:
The appeal against the order dated 18.01.2018 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2012-13.

Grounds of Appeal:
1. Reopening of assessment under Section 147 of the Act.
2. Characterization of land as a capital asset under Section 2(14) of the Act.
3. Failure to follow a binding order of the Income Tax Appellate Tribunal.
4. Passing of Assessment Order despite pending report from DVO under Section 50C of the Act.
5. Adoption of value of land and consequent addition under Section 50C of the Act.
6. Adoption of market value as on the date of agreement to sell under Section 50C of the Act.
7. Failure to deduct sale consideration while revising assessed income under Section 154 of the Act.
8. Alleged breach of law and Principles of Natural Justice by lower authorities.
9. Levying of interest under Section 234A/B/C of the Act.
10. Initiating penalty under Section 271(l)(c) of the Act.

Reopening of Assessment (Ground 1):
The Assessee challenged the reopening of assessment under Section 147 of the Act, arguing that it was solely based on the difference between stamp valuation and consideration in the conveyance deed. The Tribunal found no discrepancies in the reasons for reopening, thus dismissing this ground.

Characterization of Land as Capital Asset (Grounds 2-7):
The Assessee contended that the land sold was agricultural and not a capital asset under Section 2(14) of the Act. The AR argued that Section 50C was inapplicable as the land was beyond municipal limits and used for cultivation. The Tribunal agreed, citing precedents and the proviso to Section 50C, allowing the Assessee's appeal on these grounds.

General Grounds (Grounds 8-10):
The Tribunal deemed these grounds as general in nature and did not require adjudication, given the decisions on previous grounds.

Conclusion:
The appeal was partly allowed, with the Tribunal ruling in favor of the Assessee on the grounds related to the characterization of the land as a capital asset and the application of Section 50C. The general grounds were not adjudicated.