2023 (11) TMI 34 - AT - Income Tax

Tribunal Condones 350-Day Delay, Deletes Rs. 930K Addition for HUF; Appeal for 2016-17 Allowed Due to Valuation Tolerance.

Narendra Ravji Patel HUF Versus ITO, Ward 27 (2) (4), Mumbai

The appellate tribunal ITAT Mumbai allowed the appeal of the assessee HUF, condoning a 350-day delay in filing the appeal due to sufficient reasons ... Computation of capital gain - FMV determination - difference of 10% between value adopted by department valuer and actual transaction value - addition u/s 50C - tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation - scope of Amendment made in scheme of section 50C(1) - HELD THAT:- Admittedly, assessee has sold a property at the transaction value of ₹ 130 lakhs. The valuation by the departmental valuer comes to ₹ 13,930,000/–. Therefore, the difference between the transaction value and the value of property as denied by the departmental valuation officer is ₹ 930,000. We find that the tolerance limit provided under section 50 C (1) was 5%, which was enhanced to 10% with effect from 1/4/2021, and therefore apparently for assessment year 2016 – 17 it was not available. It has been held that Amendment made in scheme of section 50C(1), by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation from 5 per cent to 10 per cent are effective from date on which section 50C, itself was introduced, i.e. 1-4-2003 in [2021 (4) TMI 1160 - ITAT DELHI]. Therefore rate of 10% of tolerance limit is applicable with effect from 1/4/2003 itself, no addition could be made in the hence of the assessee. Accordingly, we direct delete the addition u/s 50C - Appeal of assessee allowed. Issues involved:The issues involved in this case are the condonation of delay in filing the appeal and the addition made under section 50C of the Income Tax Act.Condonation of Delay in Filing the Appeal:The appeal was filed by the assessee HUF against the appellate order passed by the National faceless appeal Centre Delhi for assessment year 2016-17. The registry raised an objection that the appeal was time-barred by 350 days. The assessee, a senior citizen not familiar with technology and English, submitted an affidavit explaining the delay. The delay was caused due to inadvertence without any malafide intent. The tribunal found the reasons provided by the assessee sufficient to condone the delay. The appeal was admitted based on the merits of the case and the principles established by the Supreme Court. The delay in filing the appeal was condoned, and the appeal was allowed.Addition under Section 50C of the Income Tax Act:The assessee declared total income and sold a property at a transaction value of Rs. 130 lakhs. The departmental valuer determined the value at Rs. 13,930,000, resulting in a difference of Rs. 930,000. The assessee contended that the difference was less than 10% and therefore no addition should be made under section 50C. The CIT-A confirmed the addition, leading the assessee to appeal. The departmental representative argued that no provision applied for that assessment year, justifying the addition. However, the tribunal noted that the tolerance limit of 10% was effective from the introduction of section 50C in 2003. Following a previous decision, the tribunal directed the assessing officer to delete the addition of Rs. 930,000 under section 50C. Consequently, all grounds of the assessee's appeal were allowed.Conclusion:The appellate tribunal ITAT Mumbai allowed the appeal of the assessee, condoning the delay in filing the appeal and directing the deletion of the addition made under section 50C of the Income Tax Act for the assessment year 2016-17. The order was pronounced in the open court on 30.10.2023.