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TMI Blog2012 (9) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... the DVO u/s 50C and thereafter compute the capital gain on transfer of capital asset. Thus, the order u/s. 263 is modified as stated above - Decided partly in favor of assessee. - ITA No. 1241/Bang/2011 - - - Dated:- 29-6-2012 - SHRI N. BARATHVAJA SANKAR, AND SHRI N.V. VASUDEVAN, JJ. Appellant by : Shri Chythanya K.K., Advocate Respondent by : Shri S.K. Ambastha, CIT-I(DR) O R D E R Per N.V. Vasudevan, Judicial Member This appeal by the assessee is against the order dated 31.01.2011 of the Commissioner of Income-tax, Bangalore-III, Bangalore ( the CIT ) passed u/s. 263 of the Income-tax Act, 1961 ( the Act ) in relation to the assessment year 2006-07. 2. There is a delay of 205 days in filing the appeal by the assessee. The reasons for delay in filing the appeal have been given in the application for condonation of delay in filing the appeal. The appeal is against the order passed u/s. 263 of the Act. It appears that the assessee was under the impression that the CIT has given direction to the Assessing Officer ( the AO ) to make the assessment afresh and therefore there was no necessity to file the appeal against the order u/s. 263. Later on, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the sale consideration of Rs. 40 lakhs mentioned in the instrument of transfer as full value of consideration received on transfer, the ld. CIT was of the view that there was under-assessment of capital gain chargeable to tax. Accordingly, a show cause notice dated 31.08.2010 was issued to the assessee by the ld. CIT. 6. In reply, by letter dated 05.10.2010 the assessee submitted that as per the agreement entered into with the purchaser of the property, the sale consideration was Rs. 40 lakhs and that the same was received by the assessee as follows:- (a) 04.04.2005 Rs.10,000 As advance (b) 30.01.2005 Rs. 39,90,000 By cheque No.030106 dt. 31.01.2006. The assessee further pointed out that the guidelines value were revised by the State Govt. Notification dated 18.07.2005 w.e.f. 14.10.2005. The assessee therefore submitted that the value of Rs. 40 lakhs has to be accepted as proper and the proposed revision by the ld. CIT should not be made. 7. The ld. CIT, however, did not agree with the submissions of the assessee by observing in para 4 of the impugned order as under:- 4. I have considered the facts of the case and assessee s submission. As per the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal. 10. The ld. counsel for the assessee submitted that the property was agreed to be sold on 04.04.2005 and on that date, the guidelines value for the purpose of stamp duty and registration was Rs. 700 per sq.ft. On 18.07.2005, the Government revised the guidelines value effective from 14.10.2005 by which the guidelines value was enhanced to Rs.1,500 per sq.ft. The sale deed was registered on 31.01.2006. The ld. counsel for the assessee brought to our notice the decision of the ITAT Vishakapatnam Bench in the case of Moole Rami Reddy v. ITO 2011-TIOL-135-ITATVIZAG, wherein the ITAT has taken a view that where on the date of agreement, the value adopted by the registering authorities for stamp duty purposes and the value shown in the agreement for sale are identical and where there is an increase in the guidelines value between the date of agreement and registration of sale deed, then the provisions of section 50C cannot be invoked and the guidelines value prevailing on the date of registration of the property cannot be substituted as the full value of consideration received on transfer of capital asset for the purposes of computing capital gain. It was further argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of revenue. With regard to the argument of the ld. DR that there was no agreement dated 04.04.2005 ever produced before the revenue authorities, the ld. Counsel for the assessee submitted that a specific plea was taken in reply to the show cause notice u/s. 263 of the Act regarding existence of an agreement. The ld. CIT did not call for the agreement and therefore no fault can be found with the assessee. 13. We have considered the rival submissions. On the aspect regarding the exercise of jurisdiction u/s. 263 of the Act, we find that the AO has not examined the applicability of section 50C of the Act. Nothing has been brought on record to show that any such enquiry had been made by the AO in the course of assessment proceedings. In view of the specific provisions of section 50C of the Act, the AO ought to have examined this aspect and failure to do so renders the order of assessment erroneous and prejudicial to the interests of revenue. We therefore hold that ld. CIT was justified in initiating proceedings u/s. 263 of the Act. 14. With regard to the merits of the order of the ld. CIT, the plea of the assessee is that the agreement for sale of property was entered into on 04. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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