The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the provisions of Section 50C of the Income Tax Act, 1961 cannot be applied when the property in question was sold under pressure.
The registered sale deed was executed by one Shri Narayanaswamy in his capacity as power of attorney holder for the above said Shri Pazhani and Smt. Santhi. The very same vendor, who executed the sale deed in favour of the assessee. Earlier, under compulsion and pressure, the assessee executed a sale deed in favour of the above persons for a total consideration of Rs. 6,00,000/-. The assessing Officer invoked section 50C and made additions accordingly.
The assessee contended that it is only a distress sale under the circumstance which is explained above, therefore, the Assessing Officer ought to have referred the matter to the valuation officer to find out the actual market value. It was also contended that without referring to the valuation officer, adopting the guideline value for estimating the capital gain is not justified.
On the second appeal, the Tribunal observed that “this case is a classic example of how the State machinery, more particularly, the Revenue and Registration Department of the State Government function. A family member of an army officer was treated in such a manner by the registration and revenue Department, by registering a document executed by an individual who has no right or title over the property. When the document was executed and registered on 11.06.1997 in favour of the assessee, who is none other than a daughter of an army officer, the very same Sub Registrar has registered another document said to be executed by the very same vendor on 20.07.1999 in favour of Shri I.A.J. Balan, Shri I.P. Andrew Raj, Shri I.S.J. Rozario, Shri I. Francis Jeyaraj and Shri I. Jerome Michael Pushpanathan.”
“When the property was sold under pressure and the circumstance which was narrated above, this Tribunal is of the considered opinion that adopting guideline value under Section 50C of the Act is not called for. Under normal circumstances, this Tribunal would have remitted back the matter to the file of the Assessing Officer for referring the matter to the valuation officer. In this case, we are not doing so since the Assessing Officer himself accepted that the property was sold under pressure. This Tribunal is of the considered opinion that remitting back the matter to the file of the Assessing Officer for the purpose of making reference to the valuation officer would tantamount not only harassing the assessee further but also rubbing the salt on the would again and again. This Tribunal is of the considered opinion that the fact and circumstances of the case and the circumstance the assessee executed the sale deed, the apparent sale consideration disclosed in the sale deed has to be considered as market value and the same has to be adopted for the purpose of computing capital gain. Hence, this Tribunal is unable to uphold the orders of both the authorities below.,” the Tribunal said.
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