CPC can't make an Addition u/s 50C of Income Tax Act without giving proper opportunity to Assessee: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the Centralized Processing Centre (CPC) cannot make an addition under Section 50C of the Income Tax Act, 1961 without giving a proper opportunity to the assessee.

The assessee filed her return of by declaring a total income from Long Term Capital Gain of ₹.3,22,370/-. The Assessing Officer (CPC) observed that the Long-Term Capital Gains have been computed at ₹.53,22,370/- and the assessee has deposited ₹.50,00,000/- in eligible bonds and claimed exemption under Section 54EC of the Income Tax Act.

Accordingly, an order under Section 143(1) of the Income Tax Act was completed and a long-term capital gain of ₹.58,07,342/- in place of ₹.3,22,370/- was determined. The adjustment was made by the Assessing Officer (CPC) under Section 50C of the Income Tax Act by taking the stamp duty valuation of ₹.13,29,23,000/- against the full value of consideration of ₹.10 crores as declared by the assessee while computing the capital gains.

The assessee preferred an appeal before the Commissioner of Income Tax (Appeal) [CIT(A)] and raised a ground “whether the Assessing Officer (CPC) was correct in applying provisions of Section 50C and making the addition as proposed under Section 143(1) of the Income Tax Act”. The CIT(A) dismissed the grounds raised by the assessee.

The Authorized Representative submitted that the proposed addition made by the Assessing Officer under Section 50C of the Income Tax Act is beyond his jurisdiction under Section 143(1) of the Income Tax Act and the proposed adjustment can be made in regular assessment under Section 143(3) and not under Section 143(1) of the Income Tax Act.

The Two-member bench comprising of Kuldip Singh (Judicial member) and S. Rifaur Rahman (Accountant member) held that the proposed addition under Section 50C of the Income Tax Axt was beyond the mandate under Section 143(1) and the same can be processed only under Section 143(3) of the Income Tax Act.

The CPC cannot make an addition without giving proper opportunity to the assessee, it was possible only under Section 143(3) of the Income Tax Act. Therefore, for the overall justice, the bench remitted the issue back to the file of the jurisdictional Assessing Officer. Thus, the appeal of the assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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