2025 (8) TMI 39 - AT - Income Tax

Reopening under Section 147 valid; Sale value on agreement date accepted for Section 50C valuation, addition disallowed

Kamleshbhai Baldevbhai Patel Versus The ITO, Ward-1, Mehsana

The ITAT Ahmedabad held that the reopening of assessment under section 147 was valid as the notice was issued within the limitation period. However, ... Reopening of assessment u/s 147 - period of limitation - notice on the basis of available information regarding sale of immovable property - HELD THAT:- The notice was issued on 14-03-2020. Notice u/s. 142(1) of the Act dated 29-09-2020 was issued and thus proceedings were well within the time and thus this ground is treated dismissed. Addition invoking proceedings u/s. 50C - assessee and co-owners has sold the land more than the jantri value - HELD THAT:- The banakhat categorically pointed by the A.R. whereby it was agreed upon to make the sale of concerned land which was duly made in the registered sale deed related to the aforesaid amount of the transaction. Tribunal in case of Devindraben Rajeshbhai Sharma [2024 (11) TMI 1482 - ITAT AHMEDABAD] as categorically mentioned that the value on the date of entering into an agreement has to be considered as sale value in accordance with law of the provisions of section 50C of the Act. Thus, in the present case also, the value as on the date of entering into an agreement was properly justified by the assessee and therefore provisions of section 50C of the Act will not be applicable - Assessee appeal allowed. ISSUES: Whether the assessment made under section 147 of the Income Tax Act is invalid due to issuance of a time-barred notice under section 143(2) during the course of proceedings under section 148.Whether the addition made by invoking provisions of section 50C of the Income Tax Act is justified when the sale consideration exceeds the stamp duty (jantri) value. RULINGS / HOLDINGS: The issuance of notice under section 143(2) during proceedings under section 148 was within time as evidenced by the notice under section 142(1) issued within the prescribed period; therefore, the assessment under section 147 is not invalid or void ab initio and the Assessing Officer did not assume invalid jurisdiction.Since the sale consideration of the immovable property (Rs. 46,00,000/-) exceeded the jantri value (Rs. 37,93,750/-) applicable as per the date of agreement (banakhat), the provisions of section 50C are not applicable, and the addition made under section 50C is disallowed. RATIONALE: The Court applied the statutory time limits prescribed under the Income Tax Act for issuance of notices under sections 143(2), 142(1), and 148, confirming that the procedural requirements for reopening assessment were met.The Court relied on the principle that the value for section 50C purposes is to be determined as on the date of entering into the agreement (banakhat), referencing precedent that supports considering the sale value as agreed at that date rather than the date of registration.The Court noted that when the actual sale consideration exceeds the jantri (stamp duty) value, section 50C does not apply to inflate the sale consideration for capital gains computation.