The Income Tax Appellate Tribunal (ITAT), Delhi bench comprising N.K. Billaiya, Accountant Member, and Shri Yogesh Kumar, Judicial Memberhave observed thatan assessment order cannot be held as “erroneous” for failure to comply with the provisions of section 50C of the Income Tax Act, 1961 if the sale of property was made under the SARFEASI Act, 2002.
A revision order under section 263 was passed against the assessee, M/s H.T.L Ltd by observing that the order was passed without complying with the provisions of section 50C of the Income Tax Act, 1961. According to the Pr. CIT, the Provisions of Section 50C of the Act are deeming provisions and mandatory, failure of Assessing Officer to apply provisions of Section 50C would render assessment order erroneous and prejudicial to the interest of the revenue.
Section 50C deals with the computation of capital gain on sale of land or building or both which is held as capital asset. As per this section, the value of sale consideration should not be less than the stamp duty value which is assessed by the Stamp Valuation Authority.
The division bench found that the PCIT was unaware of the relevant provisions of SARFEASI Act, 2002.
“We are of the considered view that before issuing notice u/s 263 of the Act and before assuming jurisdiction thereupon, the PCIT ought to have gone through the underlying facts of the case in hand. If the PCIT had gone through the records of the assessee, he would have come to know that the accumulated losses of the assessee were more than the paid up capital and free reserves, the assessee company became a sick company as per the provisions of Sick Industrial Companies Act [SICA] and was referred to the Board of Industrial and Financial Reconstruction [BIFR] u/s 15(1) of the SICA [Special Provisions] Act declaring the company as a sick industrial company,” the bench said.
Quashing the impugned revisional order, the Tribunal held that “As mentioned elsewhere, in the case in hand, sale was under SURFEASI Act and sale was not by the assessee. Considering the facts of the case in totality from all possible angles, we are of the considered view that the order framed u/s 263 of the Act deserves to be set aside in light of the peculiar facts of the case in hand. We, accordingly, set aside the order of the PCIT and restore that of the Assessing Officer dated 18.12.2016 framed u/s 143(3) of the Act.”
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