TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 409
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....The relevant facts giving rise to this appeal are that the appellant assessee filed his original Income Tax Return ('ITR') of the relevant year on 29.12.2018 declaring income of Rs. 7,95,750/-. The assessee had bought a property; i.e. the land admeasuring 0.405 Hectare having Khasra No.1291/2 Sakti Tehsil for Rs. 18,00,000/-; however, he had paid stamp duty on the market value of Rs. 46,33,000/- the said property determined by the Stamp Valuation Authority/Sub Registrar for levying stamp charges. Since, the difference of value adopted by the Stamp Valuation Authority/Sub- Registrar and the actual purchase consideration taxable under section 56(2)(x)(b) of the Act, which was not offered for tax; therefore, the Ld. Assessing Officer ('AO') inferring that the escapement of income of Rs. 28,33,000/- (Rs.46,33,000/- minus Rs. 18,00,000/-) chargeable to tax under section 56(2)(x)(b) of the Act had taken place. Consequentially, the Ld. AO re-opened the assessment under section 148 of the Act. The consequential reassessment was completed accepting the returned income of Rs. 7,95,750/- vide order dated 25.03.2023 passed under section 147 of the Act. In another words, the Ld. AO did not make....
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.... should have made before completing the assessment as was required from him. In view of the above facts, I am satisfied that the order passed by the Assessing Officer u/s 147 for A.Y. 2018-19 on 25.03.2023 is erroneous in so far as it is prejudicial to the interest of revenue including in terms of Explanation 2(a) and (b) to section 263. Therefore, the order passed by the Assessing Officer u/s 147 for A.Y. 2018-19 on 25.03.2023 is set aside to the above extent. The Assessing Officer is directed to reframe the assessment de novo to the above extent (leaving the other issues in the original assessment order as such) after conducting proper inquiries in the light of the directions / discussion above and after affording reasonable opportunity of being heard to the assessee." [Emphasis supplied] 4. Ms. Namrata Kayawar, CA, the Ld. Authorized Representative ('AR') of the assessee argued that the Ld. PCIT(C) had erred in holding that the reassessment order dated 25.03.2023 passed under section 147 of the Act was erroneous and prejudicial to the interest of revenue including in terms of Explanations 2(a) and (b) to section 263 of the Act as the Ld. AO had not carried out the requisit....
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....had no alternative except to tax the sum of Rs. 94,339/-, which he had failed to do so; hence, the Ld. PCIT(C) was justified in holding that the reassessment order was erroneous and prejudicial to the interest of revenue. He prayed for dismissal of the appeal. 6. We have heard both the parties at length and have perused the materials available on the record. The legislative intent behind the sections 43CA/50C/56(2) of the Act is to plug the black money in sale consideration of immovable properties where actual market rates of immovable properties were substantially higher than their corresponding circle rates. The sections 43CA/50C/56(2) of the Act create a deeming fiction wherein both the transferor & transferee of asset are taxed for the same transaction. The Stamp Duty Value of the property here is not in dispute. The Stamp Duty Value of the property may not accurately reflect the market rate as even for the properties in the same locality the rates may vary due to various factors such as size, location, shape of property, nearby public amenities, distressed sale, transportation facilities. etc. etc. Earlier, sections 43CA/50C/56(2) of the Act did not provide for any safe har....
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....ot or location". Once the CBDT itself accepts that these variations could be on account of a variety of factors, essentially bonafide factors, and, for this reason, Section 50C(1) should not come into play, it was an "unintended consequence" of Section 50(1) that even in such bonafide situations, this provision, which is inherently in the nature of an anti-avoidance provision, is invoked. Once this situation is sought to be addressed, as is the settled legal position- as we will see a little later in our analysis, this situation needs to be addressed in entirety for the entire period in which such legal provisions had effect, and not for a specific Assessment year: 2011-12 time period only. There is no good reason for holding the curative amendment to be only as prospective in effect. Dealing with a somewhat materially identical situation in the case of Rajeev Kumar Agarwal Vs ACIT [(2014) 45 taxmnann.com 555 (Agra)] wherein a coordinate bench was dealing with the question whether insertion of a proviso to Section 40(a)(i) to cure intended consequence could have retrospective effect, even though not specifically provided for, and speaking through one of us (i.e. the Vice President)....
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....luation rate, was thus to address the issue with respect to potential evasion of taxes by understating the sale consideration amount in a sale deed. As noted by the CBDT, while explaining the justification for insertion of Section 50 C, "(t)he Finance Act, 2002, has inserted a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property". Section 50C, thus, on a conceptual note, is a provision to address capital gains tax evasion on account of understatement of the consideration. Of course, the law provides, under section 50C(2), that wherever an assessee claims that the actual market rate is less than the stamp duty valuation, he can have the matter referred to a Departmental Valuation Officer for the ascertainment of the market value, but then it is a Assessment year: 2011-12 cumbersome procedure and, at the end of the day, every valuation, whether by the departmental valuation officer or under the stamp duty valuation notification, is an estimate, and there can always be bonafide variations, though to a certain limited extent, in these estimations. Unless, therefore, some kind of a to....
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....the assessee to practically prove his being truthful in stating the sale consideration. Clearly, therefore, this insertion of the third proviso to Section 50C(1) is in the nature of a remedial measure to address a bonafide situation where there is little justification for invoking an anti-avoidance provision. Similarly, so far as enhancement of tolerance band to 10% by the Finance Act 2020, is concerned, as noted in the CBDT circular itself, it was done in response to the representations of the stakeholders for enhancement in the tolerance band. Once the Government acknowledged this genuine hardship to the taxpayer and addressed the issue by a suitable amendment in law, the next question was what should be a fair tolerance band for variations in these values. As a responsive Government, which is truly the hallmark of the present Government, even though the initial tolerance band level was taken at 5%, in response to the representations by the stakeholders, this tolerance band, or safe harbour provision, was increased to 10%. There is no particular reason to justify any particular time frame for implementing this enhancement Assessment year: 2011-12 of tolerance band or safe harbour....
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.... that "relief is being provided as a special case and this decision may not be considered as a precedent". Nothing can be farther from a judicious approach to the process of dispensation of justice, and such an approach, as is prayed for, is an antithesis of the principle of "equality before the law," which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed, transparent, and predictable, and what we decide for one litigant must hold good for all other similarly placed litigants as well. We, therefore, decline to entertain this plea of the assessee. 9. We have noted that as against the stated consideration of Rs 75,00,000, the stamp duty valuation of the property is Rs 79,91,500. The difference is just Rs 4,91,500, which is about 6.55% of the stated sale consideration. As the difference between the stated consideration vis-à-vis the stamp duty valuation is admittedly less than 10% of the stated consideration in this case, and in the light of the above discussions, we are of the considered view that Section 50C will have no application in the matter. The enhancement in capital gain Assessment year: 2011-12 computation, a....