Addition of LTCG by invoking  S. 50(c) of Income Tax Act without retrospective effect is invalid : ITAT directs Re-adjudication[Read Order]

The Pune Bench of Income Tax Appellate Tribunal (ITAT) held that the addition of long term capital gain by invoking section 50(c) of the Income Tax Act 1961 which does not carry retrospective effect is invalid.

Shri Prakash Sadashiv, the appellant assessee was an individual and had derived income from partnership firm, income from other sources and agricultural income. Further the assessee challenged the correctness of both lower authorities' action making long term capital gains addition in the course of sec.143(3) read with section 147 of the Income Tax Act 1961 reassessment.

The assessee submitted that the order passed by the assessing officer after invoking Section 50C of the  Income Tax Act, which are dismissed. The main ground of appeal is that the property is owned by the another family, but there is no evidence in support of the claim that the property belongs to another family and not the appellant. The decision is based on the factual matrix of the case and the applicable legal position.

The counsel for the assessee contended that the assessing officer erred in making capital gain, disregarding the fact that the land was owned by another family which was not owned by the assessee.

 Shri M.G. Jasnani , the counsel for revenue strongly supported both the lower authorities action making the impugned long term capital gains addition.

The tribunal observed that the Commissioner of Income Tax (Appeals) has refused to apply sec.50C(1) first and second proviso(es) inserted by the Finance Act 2016 due to the fact that the statutory amendment is curative in nature inserted for removing hardships to the taxpayers and carries retrospective effect.

The two member bench comprising of Satbeer Singh Godaraj ( judicial) And Dr. Dipak P. Ripote (Accountant) held that there is no concrete finding either in re-assessment or in the National Faceless Appeal Centre (NFAC) order as to whether the assessee had received whole or part of the consideration by way of the specified modes or not so as to attract sec.50C(1) first and second proviso of the Income Tax Act 1961 inserted by the Finance Act 2016  as they do not carry retrospective effect.

The tribunal restore the matter back to the assessing officer for re-adjudication while allowing the appeal.

To Read the full text of the Order CLICK HERE

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