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2016 (9) TMI 1037
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.... land. The return was taken in scrutiny by the Assessing Officer. Various questions were raised. Ultimately, the Assessing Officer passed the order of assessment on 4.12.2007 without any modification in the returned income. In order to reopen this assessment, the respondent issued impugned notice which, as can be seen, was done beyond a period of four years from the end of relevant assessment year. In order to do so, he had recorded the following reasons : "Reasons for the belief that the income has escaped assessment : The assessee has sold its land at Survey No.185 at Katagram, Surat city for Rs. 42,00,000/and offered long term capital gain only on sale value mentioned in the sale document. Information was received by this office from the Naib Collector Stamp Duty Valuation Tantra VibhagI, Surat that it had valued the said land for the purpose of levy of stamp duty at Rs. 71,07,000/- ( instead of the jantri value at Rs. 1,42,14,000/- ) Thus the assessee was found to have suppressed its long term capital gain as per the provisions of section 50C of the IT Act at Rs. 29,07,000/- for AY 200506. Thus there was an escapement of income as per the provisions of section 50C of t....
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....before the Assessing Officer to the notice of reopening under a communication dated 15.12.2011. Such objections however, were rejected by an order dated 16.12.2011. 4. Taking us through the materials on record, the counsel for the petitioner pointed out that there were two grounds pressed in service by the Assessing Officer in the reasons recorded for reopening the assessment. First was with respect to the capital gain arising out of sale of land and the other pertained to netting of interest for deduction under section 80P(2)(d) of the Act. With respect to both these grounds, counsel for the petitioner vehemently contended that all facts necessary for the assessment were part of the record during the original assessment proceedings. The assessee had not withheld the relevant facts and that therefore, notice of reopening issued beyond a period of four years from the end of relevant assessment year was invalid. With respect to the long term capital gain, counsel drew our attention to a letter dated 28.11.2007 written by the Assistant Director of Incometax, Surat, in which he pointed out to the assessee that the valuation of the property mentioned in the sale deed was lower than t....
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.... view that the same was not in order, he could have disallowed part of the claim. At any rate, this cannot be a ground for reopening the assessment beyond a period of four years since it cannot be stated that the petitioner had not disclosed true and full facts. 7. The first ground however, needs a closer scrutiny. In the reasons recorded, the Assessing Officer is contending that the petitioner had sold the land for Rs. 42 lacs and offered long term capital gain on such sale value mentioned in the sale deed. He however, received information from the Stamp Duty Valuation Authority, Surat, that the value of said land for the purpose of stamp duty was assessed at Rs. 71.07 lacs against the jantri value of Rs. 1.42 crores (rounded off). Thus the assessee had suppressed the long term capital gain under section 50C of the Income Tax Act to the tune of Rs. 29.07 lacs. 8. In background of such ground, we may first refer to the materials on record. In the returns filed on 15.10.2005, the petitioner declared the sale consideration of land at Rs. 42 lacs. However, it appears that when the document was presented for registration, the stamp duty authorities had dispute about such valuatio....
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....operty, it is the responsibility of the purchaser and therefore, obviously in any case, the seller is not aware of such duty payment by the purchaser of the property. From the records of my client, at this instance, it can only be said that my client had transferred the agricultural land at Katargram in the year 200405 and accordingly shown in the regular return of income filed. It is pertinent to note that my client is a cooperative society working for the benefits of the members supplying milk from district level and therefore, there is no question of suppression of consideration of immovable property so transferred as presumed by you. However, as stated above, in the absence of the relevant details as required as above, my client is not in the position to understand about the transaction as relied upon by you. In the light of the above facts and circumstances of the case, I have once again to request you to supply the details/ documents/information/ materials if any, gathered and intended by you to take action u/s 50C of the Act in pursuance to the principles of natural justice and oblige." 13. On 6.12.2007, the purchaser had stated as under : "With referenc....
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....Rs. 42 lacs for transfer of such capital asset. Even in reply to the queries raised under communication dated 23.11.2007 regarding details of long term capital gain, the petitioner made no further disclosure, except for producing ledger account of long term capital gain which contained only the figure of Rs. 41.72 lacs towards sale of this land. d) On 4.12.2007, the Assessing Officer passed the order of assessment accepting such declarations. 16. Section 50C of the Act pertains to special provision for full value of consideration in certain cases. Subsections( 1) and (2) which are relevant for our purpose read as under : "[Special provision for full value of consideration in certain cases. 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 [or assessable] shall, for the purposes of sec....
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....or assessable by valuation authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable would be deemed to be the full value of the consideration received or accruing as a result of transfer. In short, for the purpose of capital gain, it would be the valuation adopted by the stamp valuation authority which would by virtue of such deeming fiction prevail, in case, such valuation is higher than the sale consideration. On the other hand under subsection( 2) of section 50C, it would be open for the assessee to question before the Assessing Officer the valuation adopted by such stamp duty authority. 18. Thus in terms of subsection( 1) of section 50C, the assessed value of the land at Rs. 71.07 lacs by such stamp duty authority would be deemed to be full sale consideration and therefore, assessable for capital gain on such basis, unless such valuation is questioned as provided in subsection( 2). The petitioner has not resorted to subsection( 2) of section 50C and disputed such valuation before the Assessing Officer. The sole question is, was he guilty of non declaration of true and full facts since we are examining the ....
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....Ltd. v. Commissioner of Income tax and another reported in (2012) 348 ITR 469 (Delhi). 21. The contention of the petitioner that the Assessing Officer was aware about such difference in two valuations based on the letter dated 28.11.2007 cannot be accepted. The said letter was written not by the Assessing Officer but by the investigation wing of the department which was till then, on prima facie information available, was inquiring further in this respect. It was in this background the Assistant Director of Incometax (Inv), Surat, conveyed to the petitioner that the value of the property mentioned in the sale deed is lower than the value adopted by the stamp valuation authority. The petitioner was therefore, asked to explain whether capital gain was computed on the basis of section 50C of the Act. If yes, the petitioner would submit evidence, if no, the petitioner to show cause why adverse inference should not be drawn. This letter was received by the petitioner on 4.12.2007. On 6.12.2007, it appears that the purchaser of the land had in respect to a similar letter from investigation wing contended that the Government approved valuer had assessed rate of land at Rs. 275/per squa....