Property sale within 10% tolerance limit allows actual consideration for capital gains under section 50C

ITAT Bangalore held that where the difference between actual sale consideration and stamp duty valuation is within the 10% tolerance limit under section 50C(1) third proviso, the actual consideration received should be adopted for computing long-term capital gains under section 48. The assessee sold property for Rs. 8,70,00,000 with a difference of Rs. 56,40,000 from stamp duty value, which fell within the tolerance band introduced by Finance Act 2018. Following Amrapali Cinema precedent, the tribunal allowed the assessee's ground and directed use of actual consideration for capital gains computation.

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Issues Involved:
1. Validity of the assessment order passed in the name of a deceased assessee.
2. Legality of the reopening of assessment under Section 148 of the Income Tax Act, 1961.
3. Applicability of Section 50C of the Income Tax Act, 1961, and the corresponding additions made by the Assessing Officer.
4. Applicability of the 10% tolerance limit under the third proviso to Section 50C.
5. Liability to pay interest under Sections 234B and 234C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order Passed in the Name of a Deceased Assessee:
The appellant argued that the assessment order was passed in the name of a deceased assessee, despite specific intimation of the death to the authorities. The appellant's legal heir filed a submission on behalf of the deceased. The Tribunal noted that the death certificate was submitted to the CIT(Appeals) and found that passing an assessment order in the name of a deceased person is bad in law and void ab initio.

2. Legality of the Reopening of Assessment under Section 148:
The appellant contended that the reopening of the assessment was invalid as the conditions precedent for issuing a notice under Section 148 were not satisfied. The Tribunal observed that the appellant had not been provided with the reasons for reopening, despite multiple requests, which is a violation of the Supreme Court's directive in G.K.N. Driveshafts. The Tribunal concluded that the Assessing Officer's failure to furnish reasons within a reasonable time made the reopening of the assessment bad in law.

3. Applicability of Section 50C and Corresponding Additions:
The appellant argued that the provisions of Section 50C were not applicable as the sale consideration received was more than the guidance value on the date of the agreement to sell. The Tribunal noted that the agreement to sell was executed on 15.10.2014, and the sale deed was executed on 21.03.2016. The appellant received post-dated cheques, which were encashed on 04.02.2015. The Tribunal found that the first and second provisos to Section 50C(1) applied, as the payment was received through cheques before the date of the agreement. Therefore, the guidance value on the date of the agreement should be adopted for computing the sale consideration.

4. Applicability of the 10% Tolerance Limit under the Third Proviso to Section 50C:
The appellant contended that the difference between the guidance value and the sale consideration was within the 10% tolerance limit as prescribed in the third proviso to Section 50C, which is retrospective in nature. The Tribunal relied on various judicial pronouncements, including Amrapali Cinema vs. ACIT and Maria Fernandes Cheryl vs. ITO, which held that the third proviso to Section 50C is curative and retrospective. The Tribunal concluded that the actual consideration received was within the 10% tolerance limit, and thus, the addition made by the Assessing Officer was erroneous and should be deleted.

5. Liability to Pay Interest under Sections 234B and 234C:
The appellant denied liability to pay interest under Sections 234B and 234C, arguing that the interest was levied erroneously. The Tribunal, considering the deletion of the addition under Section 50C, directed the deletion of the consequential interest levied under Sections 234B and 234C of the Income Tax Act, 1961.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment order passed in the name of the deceased assessee, invalidating the reopening of the assessment, and directing the deletion of the addition made under Section 50C and the consequential interest levied under Sections 234B and 234C. The Tribunal emphasized that the amendments to Section 50C, including the 10% tolerance limit, are retrospective and applicable to the appellant's case.

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