Capital gains and section 50C apply to a plot transfer through power of attorney despite notice-service objections.

Timely service of notice under section 143(2) was upheld where it was issued within limitation at the address given in the return, and a clerical error in describing the assessee's relationship did not invalidate the assessment. The surplus from the plot transaction was treated as capital gains, not business income, because the assessee had effectively transferred the property through a power of attorney arrangement. Section 50C was held applicable where the declared consideration was below stamp valuation, though the assessee retained the right to seek valuation by the Valuation Officer. The deletion of the addition was reversed and the matter remitted for limited valuation verification and recomputation.

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Issues: (i) Whether the assessment was invalid for want of due service of notice under section 143(2) of the Income-tax Act, 1961. (ii) Whether the surplus arising from the plot transaction was assessable as business income or capital gains and whether section 50C of the Income-tax Act, 1961 applied, warranting deletion of the addition made by the Assessing Officer.

Issue (i): Whether the assessment was invalid for want of due service of notice under section 143(2) of the Income-tax Act, 1961.

Analysis: The notice was issued within the prescribed time to the address given in the return and accompanying documents. The record showed service efforts by speed post and by affixture. The discrepancy in describing the assessee as wife instead of daughter of the named person was held to be only a clerical mistake. The assessee had not intimated any change of address.

Conclusion: The objection to service of notice failed and the assessment was not held invalid on that ground.

Issue (ii): Whether the surplus arising from the plot transaction was assessable as business income or capital gains and whether section 50C of the Income-tax Act, 1961 applied, warranting deletion of the addition made by the Assessing Officer.

Analysis: The transaction was treated as one undertaken by the assessee through her power of attorney holder, with payment made by her and profit declared by her in the return. On those facts, the asset was treated as transferred for purposes of capital gains under section 2(47)(v) read with the principle of part performance, and not as a business adventure. Section 50C was held applicable because it deems the stamp valuation to be the full value of consideration where the consideration disclosed is lower. The precedents relied upon by the assessee were distinguished. At the same time, the assessee was entitled to an opportunity to contest the stamp value by seeking reference to the Valuation Officer.

Conclusion: The deletion by the CIT(A) was reversed, the transaction was held liable to capital gains tax, and the matter was restored to the Assessing Officer for limited verification of fair market value and consequential recomputation.

Final Conclusion: The assessee's challenge to the assessment failed, the revenue's substantive grievance succeeded, and the capital gains issue was remitted only for limited valuation examination.

Ratio Decidendi: Where an assessee has effectively undertaken a property transaction through a power of attorney holder and the consideration is lower than the stamp valuation, section 50C applies for computing capital gains, while clerical defects in notice service do not vitiate the assessment if timely service was attempted at the address furnished in the return.

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