2024 (10) TMI 1753 - AT - Income Tax

Property sale consideration dispute and deemed valuation u/s50C upheld; s.69/s.115BBE switch rejected, assessment sustained.

In an assessment arising from alleged suppression of sale consideration, the ITAT held that the AO's invocation of s.69 and consequent taxation under ... Undisclosed investments u/s 69 - assessee was found to have suppressed sale value u/s 50C - CIT(A) observed in the impugned order, that the Assessing Officer was not correct in applying provisions of section 69 of the Act and charging the income to tax under section 115BBE, and as such he went on to confirm the addition u/s 50C - HELD THAT:- We have given sufficient opportunity of being heard, to both the parties, deem it to be a fit case to pass orders while resorting to the appropriate provisions.Therefore, there is no merit in the contention raised on behalf of the appellant so far as addition made u/s 50C is concerned. Validity of assessment order as no DIN Number was generated - Even though this is a legal ground and can be raised before the Appellate Tribunal, it was for the assessee-appellant to prove to the satisfaction of this Tribunal if any prejudice has been caused to the assessee-appellant due to non mentioning of DIN number. Instructions issued by Central Board of Direct Taxes are meant for compliance by the Income Tax Authorities. When the instructions were issued that such communications without DIN number shall be treated as ‘non-est’, and shall be deemed to have never been issued, same can safely be said to have been issued to ensure, and lay emphasis on, their compliance by the Income tax authorities, without fail. It is not the allegation of the appellant that no assessment proceedings were conducted by the Assessing Officer or that the impugned assessment order is a made up or forged and fabricated document. In absence of any such plea or material to suggest that any prejudice was caused to the assessee-appellant, we do not find any merit in the contention raised on behalf of the assessee-appellant that because of non mentioning of DIN number. in the impugned assessment order, the same deserves to be set aside. Impugned assessment order not digitally signed-its impact - The original assessment order is stated to be forming part of the original record pertaining to assessment proceedings. Exact copy of the said original order has not been made available. In absence thereof, it is difficult to say if this is a case of any violation of the provisions of section 282A of the Act. In the written submissions reference has been made to instruction N0.6 dt. 3.10.2017, requiring the Income tax authorities to digitally sign the assessment order, demand notice and computation sheet etc. Instruction No.1/18 dated 12.2.2018 issued by Central Board of Direct Taxes has also been relied on in the written submissions to submit that all departmental orders/notices/communications issued to the assessee through ‘e-proceedings’ are to be digitally signed by the AO. As already noticed above, instructions issued by Central Board of Direct Taxes are meant for compliance by the Income Tax Authorities. Same can safely be said to have been issued to ensure compliance and lay emphasis on their compliance by the Income tax authorities, without fail. It is not the allegation of the appellant that no assessment proceedings were conducted by the Assessing Officer or that the impugned assessment order is a made up or forged and fabricated document. Appellant has not been able to satisfy if any prejudice was caused to the assessee-appellant for want of digital signatures on the impugned assessment order. Accordingly, we do not find any merit in the contention raised on behalf of the appellant. Prior approval u/s 153D whether the same was granted mechanically? - Copy of approval u/s 153D of the Act, accorded by Additional Commissioner of Income Tax, Central Range, Udaipur, vide its letter dated 31.12.2019.The impugned assessment order is dated 30.12.2019. It is available from the abovesaid letter dated 31.12.2019 that on receipt of letter dated 30.12.2019 from the office of DCIT, Central Circle, forwarding therewith draft assessment orders, mentioned therein, for approval u/s 153D of the Act, Additional Commissioner of Income Tax went through the contents of draft assessment orders and accorded approval u/s 153D of the Act. In view of the said document submitted by the appellant, there is no merit in the contention raised on behalf of the assessee-appellant. ISSUES PRESENTED AND CONSIDERED 1. Whether the addition of Rs. 2,40,000/- on account of difference between declared sale consideration and stamp duty valuation was rightly sustained by applying the deeming provisions of section 50C. 2. Whether the appellate authority's confirmation of the addition under section 50C, despite the assessment order's tabular reference to section 69 and taxation under section 115BBE, was impermissible or vitiated the assessment. 3. Whether absence of a DIN on the assessment order rendered the assessment a nullity in the absence of any shown prejudice. 4. Whether the assessment order was invalid for want of digital signature under section 282A / CBDT instructions, in the absence of proof of prejudice or of the original order showing non-compliance. 5. Whether the assessment was without jurisdiction for want of valid prior approval under section 153D, or because such approval was mechanical. ISSUE-WISE DETAILED ANALYSIS Issue 1: Applicability of section 50C and sustenance of addition for suppressed sale value Legal framework: The Court considered the deeming mechanism under section 50C (as discussed in the order) where stamp duty value adopted by the registering authority exceeds declared consideration, and the consequence of such difference for computation of income. Interpretation and reasoning: The Court found it admitted that the assessee sold the immovable property and declared LTCG on the stated consideration of Rs. 21,00,000/-. It also found, on documentary evidence referred to in the assessment/appellate orders, that the registering authority adopted a higher value of Rs. 23,40,000/-. The appellate authority had sustained the addition noting that stamp duty value exceeded more than 110% of the stated consideration and therefore section 50C applied. The Court rejected reliance on a decision cited by the assessee as factually distinguishable because that case turned on absence of search material, whereas here the valuation adopted by the registering authority supported the application of section 50C. Conclusion: The Court held the addition of Rs. 2,40,000/- was rightly sustained under section 50C and found no merit in the challenge to the addition on merits. Issue 2: Effect of assessment order referencing section 69/115BBE and appellate confirmation under section 50C Legal framework: The Court examined whether the appellate authority could confirm the impugned addition under section 50C where the assessment order's summary/table mentioned section 69 and section 115BBE, and whether this amounted to an impermissible change of provision without notice. Interpretation and reasoning: The Court noted that the assessment order's substantive discussion expressly recorded that the assessee 'suppressed the sale value u/s 50C' by Rs. 2,40,000/- and added it to income on that basis. The Court treated the reference to section 69 in the assessment order's table as a typographical mistake, since the reasoning and basis were clearly section 50C. It further held that the appellate authority correctly observed that section 69 and taxation under section 115BBE were wrongly applied, and therefore confirming the addition under section 50C did not vitiate the outcome. The Court also observed that parties were given sufficient opportunity of being heard and that the dispute essentially concerned the section 50C adjustment. Conclusion: The Court upheld confirmation of the addition under section 50C and rejected the contention that the appellate authority's approach rendered the order invalid. Issue 3: Non-mentioning of DIN on the assessment order Legal framework: The Court considered CBDT instructions requiring DIN and the assessee's plea that the order should be treated as non-est, while also noting the issue was stated to be sub judice before the Supreme Court. Interpretation and reasoning: The Court noted the assessee had not raised this objection before the appellate authority. Although it treated the ground as legal and permissible to raise, it held the assessee had to demonstrate prejudice from the absence of DIN. The Court emphasized that there was no allegation that proceedings were not conducted or that the assessment order was forged/fabricated. In the absence of any material showing prejudice, the Court declined to invalidate the assessment merely for lack of DIN. Conclusion: The Court rejected the DIN-based challenge and held the assessment could not be set aside on this ground without proof of prejudice. Issue 4: Alleged invalidity due to manual signature / lack of digital signature Legal framework: The Court considered section 282A and CBDT instructions cited to argue that orders issued through e-proceedings should be digitally signed. Interpretation and reasoning: The Court observed that the record before it contained only a photocopy of the order supplied to the assessee and the original assessment order was not produced, making it difficult to conclude violation of section 282A. It further reiterated that CBDT instructions are meant to ensure compliance by authorities, but the assessee neither alleged that assessment proceedings were not conducted nor that the order was forged. The assessee also failed to show any prejudice caused due to absence of digital signature. Conclusion: The Court found no merit in the challenge based on lack of digital signature and refused to annul the assessment on this ground. Issue 5: Validity of prior approval under section 153D Legal framework: The Court examined the statutory requirement of prior approval under section 153D and the plea that approval was absent or mechanical. Interpretation and reasoning: The Court noted the assessee raised inconsistent pleas (no approval; approval not from specified authority; or mechanical approval). The Court relied on the approval document placed by the assessee in the paper book showing that the specified authority received draft assessment orders, went through their contents, and accorded approval under section 153D. In view of this documentary record, the Court held the objection lacked merit. Conclusion: The Court upheld existence and validity of approval under section 153D and rejected the jurisdictional challenge.