2023 (7) TMI 233 - AT - Income Tax

Deemed income liable for capital gain tax - difference in sale consideration as per sale-deed and circle rate determined by the Stamp Valuation Authority - HELD THAT - Before AO it was stated that the property was gifted but not sold. However, the AO did not accept this explanation on the basis that Smt. Arvind Kaur had received sale consideration at Rs. 4,00,000/- i.e. Rs. 1,00,00/- in cash and Rs. 3,00,000/- by cheque. This fact is not controverted by the assessee by placing any material before us. CIT(Appeals) has rightly concluded that property once gifted cannot be sold or bequeathed. The assessee has failed to bring any evidence to controvert the finding of the lower authorities. Decided against assessee.

Summary

Issues involved:
The judgment involves the interpretation of provisions of Section 50C of the Income-tax Act related to the addition on account of the difference in sale consideration as per sale-deed and circle rate determined by the Stamp Valuation Authority.

Issue 1: Deeming gift of immovable property as sale
The appellant contested the order of the Commissioner of Income-tax (Appeals) which deemed the gift of immovable property as a sale, resulting in tax liability under the head "capital gain." The appellant argued that the gift was made by Mama Sasur to Mrs. Arvinder Kaur and should not be treated as a sale.

Issue 2: Invocation of provisions of Section 50C
The appellant challenged the invocation of provisions of Section 50C of the Act regarding the gift of immovable property. The appellant disputed the application of this section to the transaction in question.

Issue 3: Non-compliance of Registration Act provisions
The appellant contended that the Commissioner of Income-tax (Appeals) erred in not considering the gift deed and supporting documents due to non-compliance with the provisions of the Registration Act, 1908, and similar laws.

The Assessing Officer, based on information regarding the sale of a residential plot, reopened the assessment under Section 147 of the Act. The assessment resulted in the addition of long-term capital gain, leading to an income assessment of Rs. 1,27,12,539. Despite the appellant's appeal before the CIT(Appeals), the appeal was dismissed. The appellant then approached the Tribunal for relief.

During the hearing, the appellant was absent, and no adjournment was sought. The Tribunal proceeded with the hearing based on the available record.

The Tribunal focused on the issue of the difference in sale consideration as per the sale deed and the circle rate determined by the Stamp Valuation Authority. The Assessing Officer treated this difference as deemed income subject to capital gain tax.

The Tribunal upheld the decision of the lower authorities, stating that the property, once gifted, cannot be sold or bequeathed. The appellant failed to provide evidence to refute the findings of the authorities, leading to the rejection of the grounds raised in the appeal.

In conclusion, the Tribunal dismissed the appeal of the assessee, affirming the decision of the authorities below.