AO wrongly invoked Section 50C (1) of Income Tax Act: ITAT dismisses Appeal [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer (AO) has wrongly invoked Section 50C (1) of the Income Tax Act, 1961.

The Assessee, Lachu Ram case was reopened under Section 147 of the Income Tax Act on the basis of information received from the Income Tax Officer (Intelligence), Solan.

Thereafter, a statutory notice under Section 142(1) of the Income Tax Act was issued and the assessment was completed in terms of Section 144 r.w.s. 147 of the Income Tax Act based on the written submission of the assessee at an income of Rs.32,93,168/- after making an addition of Rs.31,43,168/- on account of Long Term Capital Gains to be assessed after invoking provisions of Section 50C(1) of the Income Tax Act.

The Assessing Officer stated that the assessee along with two other co-owners had sold his immovable property vide sale deed dated 22.05.2010 for consideration of Rs.20,79,990/-, whereas the value adopted for stamp duty purposes was Rs.94,30,581/- and 1/3rd share of the assessee came to Rs.31,43,168/-.

The assessee approached the National Faceless Appeal Centre (NFAC) but the assessee’s appeal came to be dismissed for not filing any documents before the National Faceless Appeal Centre (NFAC) in spite of issuing five notices.

The Assessing Officer (AO) was directed to recompute the assessee’s income under the head of Short-term capital gain.

During the time of hearing an adjournment application was moved seeking for adjournment. But looking into the facts of the case the adjournment application was rejected and was proceed to hear the appeal ex-parte qua the assessee.

The assessee did not avail any of the opportunities provided by the National Faceless Appeal Centre (NFAC) and also failed to furnish any documentary evidence in support of his appeal. It was also seen that even before the Assessing Officer, the assessee did not make a strong case against invocation of Section 50C (1) of the Income Tax Act.

The two-bench member consisting of Sudhanshu Srivastava (Judicial member) and Vikram Singh Yadav (Accountant member) held to restore the appeal to the file of the Assessing Officer with the direction to re-adjudicate the issue after giving proper opportunity to the assessee to present his case.

The assessee was directed to properly avail the opportunity being granted to him at juncture and to fully cooperate during the set aside the assessment proceedings.

If the assessee fails then the Assessing Officer shall have the liberty to decide the issue at hand ex-parte qua the assessee on merits and in accordance with law. Therefore, the appeal of the assessee stands allowed for statistical purposes.