Tax Tribunal Overturns Rs. 42.39L Addition; Sections 50C, 56(2)(vii) Not Applicable for AY 2012-13.

The ITAT PATNA allowed the appeal, overturning the CIT(A)'s order, which had confirmed an addition of Rs. 42,39,000/-. The Tribunal found the addition unsustainable, as section 50C applies to sellers, not purchasers, and section 56(2)(vii) was not applicable for A.Y. 2012-13. The Tribunal criticized the revenue authorities for their approach and deleted the addition, ruling in favor of the assessee.

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Issues:
Appeal against order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre for A.Y. 2012-13; Ex-parte decision due to absence of assessee; Confirmation of addition of Rs. 42,39,000/-; Interpretation of section 50C of Income Tax Act; Application of section 56(2)(vii) introduced by Finance Act, 2013; Deletion of addition made by Assessing Officer.

Analysis:
The judgment pertains to an appeal before the Appellate Tribunal ITAT PATNA against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre for the assessment year 2012-13. The Tribunal noted that despite the assessee raising multiple grounds of appeal, the main grievance was the confirmation of an addition of Rs. 42,39,000/- made by the Assessing Officer. The Tribunal proceeded ex-parte as no one appeared on behalf of the assessee during the hearing. The primary issue under consideration was whether this addition was sustainable or not.

The Assessing Officer had based the addition on the discrepancy between the declared sale consideration and the value determined by Stamp Duty Valuation Authorities, invoking section 50C of the Income Tax Act. However, the Tribunal observed that the assessee was a vendee, not the vendor, and highlighted the introduction of section 56(2)(vii) by the Finance Act, 2013. This section deals with deeming fiction of deemed gift in cases where Stamp Duty Valuation Authorities determine a higher value than the purchase cost. The Tribunal clarified that for the assessment year 2012-13, no deeming fiction could be invoked in the hands of the purchaser, and section 50C was applicable to the seller, not the purchaser. Therefore, the Tribunal deemed the Assessing Officer's inference as contrary to the law and unsustainable.

Furthermore, the Tribunal noted that the total purchase consideration disclosed by the assessee was Rs. 48,60,000/-, which should have been considered in the assessment. The Tribunal criticized the revenue authorities for acting with a vindictive approach and without a proper understanding of the legal issues involved. Consequently, the Tribunal held that the additions made by the revenue authorities were not sustainable and proceeded to delete the addition of Rs. 42,39,000/-.

In conclusion, the Tribunal allowed the appeal of the assessee, pronouncing the order in open court on 10.10.2024.

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