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2016 (3) TMI 648 - AT - Income TaxAddition u/s 69 on account of unexplained investment - AO relied on the deeming provision of section 50C for drawing an inference that the property in question was transacted at the market value and the consideration received by the seller was based on such market value which was not shown in the sale deed for transfer of this property - Held that:- Section 50C creates a legal fiction for taxing capital gains in the hands of the seller and it cannot be extended for taxing the difference between apparent consideration and valuation done by Stamp Authority is undisclosed income in the hands of the purchaser. It cannot be invoked for charging to tax an undisclosed investment in the hands of the transferee. It is also a point to mention, that Section 50C does not authorize addition with reference to the stamp value as an amount paid by the purchaser, so as to require him to explain the source thereof. Section 50C has a limited operation for assessment of the vendor and not buyer. Therefore, the reliance of the Assessing Officer on the deeming provisions of section 50C for his inference that the property was purchased for a consideration which is much lower than the market value is not justified when the purchase transactions are recorded on the sale deed which was executed before the Sub-Registrar and the identity of the vendor u/s 69 of the I.T. Act, 1961. The Hon’ble High Court of Gujarat in the case of CIT vs. Usha Kant W Patel (2005 (12) TMI 63 - GUJARAT High Court ) have held that the Revenue must establish that there was an unrecorded investment in the relevant financial year and a presumption raised in the assessment proceedings on the basis of provisions of section 50C is not sufficient. The burden is on the Assessing Officer to establish an understatement of consideration which in this case has not been discharged by the Assessing Officer. The Assessing Officer did not make any independent enquiry to bring on record any cogent evidence to establish that the purchase consideration shown in the registered sale deed is much lesser than the market value of the property. - Decided in favour of assessee
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