2024 (2) TMI 544

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....ion 50C. It is prayed that the addition of Rs. 31,55,100/- made by the Learned A.O and confirmed by the CIT (Appeal) may kindly be deleted. 2. On the facts and in the circumstances of the case, the Learned CIT (Appeal) has erred in not allowing deduction on account of cost of acquisition of Rs. 2,78,870/- and not providing indexation benefits for the purposes of computing capital gain arising without considering the period of holding of the immovable property which was more than 3 years. It is prayed that the deduction of Rs. 5,13,169/- may kindly be allowed. 3. Without prejudice to the above, alternatively, it is submitted that on the facts and in the circumstances of the case, the Learned CIT (Appeal) is not justified in passing the order and confirming the addition in an ex-parte order without providing sufficient opportunity of being heard to the assessee and thereby violating the principles of natural justice. Hence, the impugned order passed by the Learned CIT (Appeal) is liable to be declared as illegal and bad-in-law. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be declared as illegal and bad-in-law on account of violation of p....

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....nd complete the assessment to the best of his judgment u/s. 144 of the Act. Accordingly, the A.O adopting the stamp duty value of the aforesaid property, i.e. Rs. 31,55,100/- as the deemed sale consideration u/s. 50C of the Act, therein, determined short term capital gain (STCG) on the transfer of the same at the same value (i.e. without allowing any deduction towards cost of acquisition). Accordingly, the A.O vide his order passed u/s. 144 r.w.s. 147 of the Act dated 12.12.2018 assessed the income of the assessee at Rs. 31,55,100/-. 5. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. Although the CIT(Appeals) had on three occasions afforded opportunity to the assessee to participate in the course of the proceedings before him, but the assessee failed to do so. The CIT(Appeals) though held a conviction that the assessee was not interested in prosecuting his matter, which, thus, was liable to be dismissed on the said count itself, but in all fairness, proceeded with and examined the issue therein involved on merits. As is discernible from the records, the CIT(Appeals) observed that though the A.O in the course of the assessment proc....

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.... appeal of revenue. 6. However the above notwithstanding, the issue is also being examined on merits. The appellant has sold a property for Rs. 31,55,100/-. But on perusal of the ale deed, the AO found that the said property was actually sold at value of Rs. 3,50,000/- whereas the stamp duty value of the said property was at Rs. 31,55,100/-. Various notices u/s 148/142(1) were issued by the AO during the course of assessment proceedings, but the appellant had not replied for the same. Further, the AO also stated that as the property was transferred at a value less than the stamp duty value, hence in his case section 50C is applicable and the capital gain would be calculated on sale consideration of Rs. 31,55,100/-. The AO also asked the appellant as to why the capital shall not be calculated by taking the stamp duty of Rs. 31,55,100/- instead of Rs. 3,50,000/- received as sale consideration. The AO also requested the appellant to furnish purchase deed and proof of exemption / deduction claimed so as to provide eligible deduction to the appellant. However, no response was furnished by the appellant. Thereafter, show cause notice u/s 144 dated 05.12.2018 was issued to the ap....

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.....s 147 of the Act dated 12.12.2018. The Ld. AR in order to fortify the aforesaid factual position had placed on record copy of the death certificate of Shri Arun Kumar (supra). Carrying his contention further, the Ld. AR submitted that though the assessee on the basis of the aforesaid facts before the CIT(Appeals), had explained that as the property under consideration was wall locked land located in between constructed buildings belonging to third parties and had no approach road, therefore, it was for the said reason that the distress sale of the same in absence of any willing buyer was carried out for Rs. 3,50,000/- but the CIT(Appeals) without taking cognizance of the aforesaid material facts had most arbitrarily approved the adoption of the stamp duty value as the deemed sale consideration for calculation of capital gain by the A.O. Apart from that, it was submitted by the Ld. AR that though the assessee had submitted before the CIT(Appeals) that he had purchased the property during F.Y.2003-04 for a total cost of Rs. 2,78,870/- ( including stamp duty & registration charges), and had based on the same worked out the indexed cost of acquisition at Rs. 5,13,169/-, but the said m....

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....AR that the A.O while adopting the stamp duty value of Rs. 31,55,100/- as the deemed sale consideration for computing capital gain on the transfer of the aforesaid property which was claimed by the assessee to have been sold for Rs. 3.50 lacs, should not have mechanically adopted the stamp duty value/segment rate as the deemed sale consideration, and in all fairness, ought to have referred the matter to the District Valuation Officer (DVO) for determining of the FMV of the property as on the date of transfer. Our aforesaid conviction is supported by the judgment of the Hon'ble High Court of Calcutta in the case of Sunil Kumar Agrawal Vs. Commissioner of Income Tax (supra) wherein, the Hon'ble High Court after taking cognizance of the fact that stamp duty was payable by the buyer and not the assessee before them, i.e. seller, had observed that even in a case where no request is made by the assessee/ assessee's counsel for reference to the Valuation Cell for determination of FMV of the property, the A.O discharging quasi-judicial function remained under a bounden duty to have acted upon fairly by giving an option to follow the course provided by law. The relevant observations of the ....

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....edings before the A.O, as a result whereof, there was no occasion for him to have sought a reference to the DVO for determination of FMV of the property under consideration. At the same time, I find that the assessee had in the facts/submissions filed before the CIT(Appeals) categorically stated that as property under consideration was wall locked land located in between constructed buildings belonging to third parties with no independent access/approach road, therefore, for the said reason the said property was sold at a distress value of Rs. 3.50 lacs. Considering the fact that the assessee has specifically brought to the notice of the CIT(Appeals) the locational disadvantages of his property, therefore, in my considered view, the latter in exercise of powers vested with him which are co-terminus with that of the A.O ought to have considered the said material aspect and should have called for a remand report with a direction to the A.O to make a reference to the Valuation Cell for determining the FMV of the aforesaid property in question. 13. Based on the aforesaid facts, I am of a strong conviction that the matter in all fairness requires to be restored to the file of the A.O....