2023 (9) TMI 334 - HC - Income Tax

Reopening of assessment - Capital gain computation - Assessee sold the subject immovable property ground floor property for an amount which was less than stamp duty value, in contravention of the provisions of Section 50C r.w.s. 43CA - Also the petitioner had not disclosed the fact that it had received sum on sale/transfer of another part referred to as basement property - defence taken by the petitioner/assessee was that since the variation in the price received by the petitioner and the circle rate value was less than 5%, the transaction would fall in the safe harbour in terms of the 3rd proviso to Section 50C HELD THAT - We are of the view that apart from the fact that the petitioner has approached this court after nearly five months from the date when the order u/s 148A(d) was passed, there are aspects which the AO needs to enquire into. Having regard the fact that the order under Section 148A(d) was passed on 23.03.2023, the AO may have made some progress in the matter. If we were to interdict the proceedings at this stage, against the backdrop of what has been noted hereinabove, it may, in real terms, neither help the cause of the petitioner/assessee nor the respondent/revenue. Respondent is right that this is one of those rare cases where the stamp duty has been paid by the seller in respect of the transaction concerning the ground floor property. As regards the second transaction concerning the basement property, it also seems rather strange that the petitioner/assessee, after having received 50% of the sale consideration, has not pursued the buyers for the paying remaining amount, although more than four years have passed. We have queried Petitioner as to whether any suit action has been taken out by the petitioner/assessee against the buyers, who says no such steps have been taken. Therefore, having regard to the facts and circumstances given in this case, we are not inclined to entertain the writ petition. Revenue, which is duty-bound to furnish a copy of the document whereby approval was obtained, will do so within the next ten (10) days. It is made clear that during the reassessment proceedings, the petitioner/assessee will be free to take all the legal and factual contentions.

Summary

Issues involved:
The judgment concerns a petition related to Assessment Year 2019-20 under the Income Tax Act, 1961. The two main allegations against the petitioner/assessee are related to the sale of an immovable property below stamp duty value and non-disclosure of receiving payment for another property.

First Issue - Sale of Ground Floor Property:
The petitioner sold a property below the circle rate, but within the safe harbor limit of 5% deviation as per the 3rd proviso to Section 50C of the Act. The stamp duty paid by the petitioner is considered in this transaction. The respondent argues that the Assessing Officer should examine if there was a cash component involved in the sale.

Second Issue - Sale of Basement Property:
The petitioner received payment for the basement property but faced difficulties as the buyers did not fulfill their obligations due to litigation. The unregistered agreement showed that physical possession of the basement property was already given. The respondent argues that as per Section 2(47)(v) of the Act, the transfer of possession constitutes a transfer of property.

Court's Decision:
The court noted that the petitioner approached after a significant delay and that there are aspects the Assessing Officer needs to investigate. The court declined to entertain the petition, considering the progress made by the AO. The court highlighted the unusual situation where stamp duty was paid by the seller and questioned the petitioner's inaction in pursuing the remaining payment for the basement property. The court dismissed the writ petition but directed the revenue to provide the approval document within ten days for reassessment proceedings. The petitioner can raise all legal and factual contentions during the reassessment.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.