Procedure u/s 50C must follow while Sale consideration differs from Stamp Value: ITAT [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that when the sale consideration in the sale deed differs from the stamp duty value, the Assessing Officer ( AO ) must follow the procedures outlined under Section 50C of the Income Tax Act,1961.

Ranganath Ashok Meharwade,appellant-assessee, filed his income tax return on 29th March 2017, declaring ₹1,72,800 as total income. The Assessing Officer ( AO ) later found that he had sold a property on 3rd February 2015 for ₹22 lakhs, while the stamp duty value was ₹54,20,000. Using Section 50C of the  Act, the AO proposed to treat the higher stamp duty value as the sale consideration for calculating capital gains.

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Despite issuing notices under Sections 143(2) and 142(1), followed by a show-cause notice under Section 144, the assessee did not respond. As a result, the AO assessed the capital gains based on the stamp duty value of ₹54,20,000.

The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], claiming that the disputed land belonged to Shri Satyanarayan P. Raibagi, Hubli, and he was not liable for capital gains tax. He argued that the AO used an incorrect valuation, as a prior agreement for the property by Shri Raibagi had a lower value, which should have been considered.

The assessee also stated that the AO's calculation of capital gains was wrong, as it did not include the indexed cost of purchase, development expenses, and other related costs. After reviewing the submissions, the CIT(A) found that the assessee was the owner of the land based on the documents and upheld the AO’s assessment.

Aggrieved by the decision of the CIT(A) the assessee appealed before the tribunal.

A 20-day delay in filing the appeal was attributed to the previous representative’s illness and the time required to transfer and prepare documents with a new representative. The Tribunal accepted the explanation, condoned the delay, and heard the appeal on merits.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

The two member bench comprising Soundararajan ( Judicial Member ) and Waseem Ahmed ( Accountant Member ) reviewed the arguments and materials provided. It found that when the sale consideration in the sale deed differs from the stamp value, the AO must follow the procedures under section 50C of the Act, which was done in this case.

The appellate tribunal rejected the assessee's claim that the sale was linked to an earlier purchase agreement, as the agreement was signed by a different party, Shri Satyanarayan P. Raibagi. Since there was no connection between the earlier agreement and the sale deed executed by the assessee, the tribunal dismissed the ground raised.

In short the appeal filed by the assessee was dismissed.

To Read the full text of the Order CLICK HERE

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