Assessee wins as Section 50C addition rejected when plot sale concluded in 2003 despite buyer's 2007 payment to authorities

ITAT Delhi held that no addition under Section 50C was warranted where assessee sold plot through 2003 agreement receiving Rs. 4,50,000 while remaining Rs. 4,76,000 was paid directly to Noida Authorities by buyer in 2007. Since transaction concluded in 2003 with prevailing circle rate applicable at agreement date, and remaining payment went to authorities rather than assessee, taxable consideration should be determined based on 2003 rates. Assessee's appeal allowed.

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Issues:
1. Appeal against National Faceless Appeal Centre (NFAC) order dated 10.07.2023.
2. Challenge to the addition of Rs. 45,08,000/- under section 48 of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the NFAC order, challenging the additions made by the Assessing Officer (AO) under section 48 of the Income Tax Act, 1961. The primary contention was regarding the difference between the actual sale consideration and the value adopted under Section 50C. The appellant argued that the circle rate value should have been adopted as per the Agreement to Sell in 2003, not the Lease deed in 2007. The appellant further contended that the assessment order lacked jurisdiction under Section 143(3)/147 and violated principles of natural justice. The Tribunal noted the procedural irregularities and held that the entire reassessment proceedings were void-ab-initio due to the absence of statutory notices and proper application of tax provisions.

2. The core issue revolved around the addition of Rs. 45,08,000/- under section 48, based on the alleged difference between the actual sale consideration and the value adopted under section 50C. The appellant had received Rs. 9,26,000/- as sale consideration in 2003, but the AO considered the sale at Rs. 54,34,000/- in 2007, leading to the disputed addition. However, the Tribunal observed that the transaction between the appellant and the buyer was finalized in 2003 itself, and the remaining payment was made to the Noida Authorities, not the appellant. As the circle rate applied to the Agreement to Sell in 2003, the Tribunal ruled in favor of the appellant, stating that no addition was warranted under section 50C.

In conclusion, the Tribunal allowed the appeal, emphasizing that the transaction's conclusion in 2003 and the payment to Noida Authorities justified the exclusion of the disputed addition under section 50C. The judgment highlighted the importance of adhering to procedural requirements and applying tax provisions correctly to ensure fairness and justice in tax assessments.

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