TaxTMI 
TaxTMI 
2010 (8) TMI 669
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts and circumstances of the case the order of the ld. Commissioner of Income-tax (Appeals) may be set aside that of the Assessing Officer restored." Grounds of Cross Objections "1. That the impugned assessment order dated 21-11-2005 as passed under section 143(3) of Income-tax Act, 1961 is arbitrary, unjust and illegal in as much as no notice under section 143(2) was actually served on the assessee by 30-11-2004 i.e., within one year from the end of the month in which return was filed (return filed on 24-11-2003). The learned Assessing Officer factually incorrect in his observations made in his order that notice under section 143(2) dated 24-11-2004 was served upon the assessee by affixture on 30-11-2004 an Affidavit to this effect of the assessee is enclosed as Annexure-I. The impugned assessment order deserves to be cancelled. 2. That without prejudice to ground No. 1 as above, the assessee has purchase and sale plot in question as business assets and has declared the profit on sale of plot at Rs. 50,000 as her business income. Therefore, there was no short-term capital gain as was assessed by the ld. Assessing Officer. 3. That without prejudice to above grounds section 50....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see is not traceable." That it was due to non-service of the notice under section 143(2) dated 24-11-2004 fixing the case for 8-12-2004 that no one could appear before the Assessing Officer as also mentioned in the Asst. Order. (5) That for want of actual service of notice under section 143(2) by 30-11-2004 the Asst. order dated 21-11-2005 as passed under section 143(3) for Asst. year 2003-04 in my case is illegal as legally advised to me. That the facts mentioned in Para Nos. 1 to 5 are true and correct, no part of it is false and nothing has been concealed. So help me God. Verified at Meerut on this 18th day of July, 2008. Sd/- DEPONENT" 3. At the time of hearing, ld. AR relied upon the affidavit filed by the assessee to contend that no notice whatsoever was served on the assessee under section 143(2). 4. As against that, it is the case of the revenue that the notice was served by affixture and it is a proper service, therefore, assessment has to be held to be valid. 5. It may be mentioned here that this ground was not taken before the ld. CIT(A). It was pleaded by ld. AR that this being a legal ground can be taken at any stage of the appellate proceedings and the facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer has ordered that notice be served by affixture which is also served on 29-11-2004. Therefore, timely steps were taken by the Assessing Officer to serve the notice on assessee. The Assessing Officer is expected only to serve notice on the address given in the return of income as the assessment proceedings, if initiated, are to be initiated only at the address given in the return of income unless it is shown that any application for change of address later on was filed. There is no such application filed by the assessee intimating that there was any change of address at the relevant time. 13. The second objection of the assessee is that she is not wife of Shri Kishan Lal Gupta as mentioned on the notice, but from the return of income it is found that the assessee has given the name of Shri Kishan Lal Gupta being the name of her father. Thus, it is only a clerical mistake as what was mentioned on the notice was taken from the return filed by the assessee herself instead of writing 'daughter of' it was written as 'wife of'. But that does not vitiate the notice and it cannot be considered to be a defect, which vitiate the whole proceedings. 14. Another objection of the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the case of "capital asset". The land being agricultural land is not a capital asset, therefore, section 50C was not attracted. The Assessing Officer did not accept such contention of the assessee on the ground that the land was situated within 8 Kms of local limits of Municipality of Meerut and, therefore, was to be considered as "urban land" within the meaning of section 2(15)(iii) of Income-tax Act, 1961 and, thus, it was a capital asset. 19. It is further mentioned by the Assessing Officer that the assessee had taken possession of the land and had made full payment of Rs. 14,50,000 and, thus, become owner of the land on 12-9-2002. The Assessing Officer referred to section 2(47)(v) and held that the assessee became the owner of the said property and it is further observed that land was sold for a consideration of Rs. 15 lakhs. On the sale deed the consideration mentioned was Rs. 31 lakhs. Therefore, according to Assessing Officer section 50C was applicable. The Assessing Officer referred to section 50C and, thus, difference between the value considered for stamp purposes minus the purchase price was taken as income earned by way of short-term capital gain. Accordingly, an ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uty. 24. After referring to these submissions and remand report the CIT(A) has observed that the section 50C is attracted only when the consideration received or accrued as a result of transfer by an assessee of a capital asset. He observed that important point was that whether the assessee was directly involved with the transfer of the capital asset either as owner or indirectly as holder of attorney, etc. ld. CIT(A) observed that the assessee is not at all related directly as owner or letter of attorney holder to the transfer of land as clearly evident from the sale deed as well as the land records. The sale of land was effected by Shri K.S. Gupta as power of attorney holder from Shri Aas Mohammed and others to Shri Nikhil Sharma who purchased the land. The receipt of Rs. 15 lakhs as sale consideration on 11-11-2002 appear to be clearly on behalf of Shri K.S. Gupta who first obtained the letter of attorney from the owners of the land and then subsequently sold it to Shri Nikhil Sharma. The payment may be related to the land deal and the profit may be accrued out of the transaction of a capital asset, but to attract the provisions of section 50C the transfer of capital asset has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that purchase price assessed for the purpose of paying stamp duty cannot be taken as sale consideration in the absence of positive evidence. He submitted that the said case law has application with all fours in the present case. Hence, non-applicability of section 50C to the present case should be upheld. He also relied upon the decision of Ahmedabad Bench reported as in the case of Kaushik Sureshbhai Reshamwla v. ITO [2010] 5 taxmann.com 15 and, thus, it was submitted by ld. AR that applicability of section 50C should be held invalid as has been held by CIT(A). He further submitted that as the name of the assessee does not appear in the revenue record and the transaction has been conducted by assessee through her power of attorney and the said asset formed part of the business transaction, the income arising out of that should be considered as business income and, therefore, it could not be assessed as short-term capital gain. Therefore, he pleaded that the appeal filed by the revenue should be dismissed and that filed by the assessee should be allowed. 27. We have carefully considered the rival submissions in the light of the material placed before us. ld. CIT(A) has deleted t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ower of attorney holder of the assessee from where the profit arising out of that transaction of Rs. 50,000 was declared as business income. Therefore, for all practical purposes the assessee has treated herself as the owner of the said property which was purchased and sold by her and the resultant surplus was declared as income. ld. CIT(A) has nowhere discussed the applicability or otherwise of section 2(47)(v) which has been discussed by the Assessing Officer in the assessment order. 30. The applicability of section 50C has been discarded by ld. CIT(A) on the ground that the assessee is not directly involved either as owner or by means of letter of attorney. Here also ld. CIT(A) has wrongly held that section 50C is not applicable. Section 50C reads as under :- "50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed (or assessable) by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value adopted or assessed or assessable shall, for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of transfer. If a capital asset is transferred on which the capital gain is liable to be assessed, then, according to section 50C(1), the value adopted or assessed for the purpose of stamp valuation shall be deemed to be the full value of the consideration received. It nowhere states that the assessee should be directly owner. Moreover, the transaction has been owned by the assessee and it has been so returned by her in the income-tax return. Therefore, now the assessee cannot plead that she was not the owner and she did not transfer the said land and, therefore, no capital gain was assessable in her hand. If the asset transferred is a capital asset, then, she is liable for capital gain which is to be computed in accordance with the provisions of the Act. However, if the assessee claims that the value ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any quarrel with the proposition that section 50C is a deeming Section. Section 50C enable the department to assess the value adopted for the purpose of stamp duty being deemed sale consideration in a case where such valuation is larger than the actual consideration stated in the sale deed and that is for the purpose of computing capital gains in the hands of the seller. The deeming fiction stated in section 50C cannot be extended to the hands of the purchaser to whom the legal fiction has not been extended. The addition in the hands of the purchaser can be made only in the circumstances if there is any independent evidence to arrive at the conclusion that the consideration which has been passed between the seller and the purchaser was more than what was stated in the sale deed and it has been so held by Hon'ble Punjab & Haryana High Court. The facts in the case of the assessee are different as the capital gain has been computed by the Assessing Officer by applying section 50C in the hands of the seller for the purpose of computing capital gain which is very much in accordance and within the four corners of section 50C. Therefore, on the basis of decision of Hon'ble Punjab & Harya....