2021 (2) TMI 941 - AT - Income Tax

Validity of reopening of assessment - Short Term Capital Gain (STCG) on sale of asset - property owned by co-owners - addition is made by invoking of deeming provision of section 50C - AO made addition solely on the basis of information received from Sub-Registrar Office for charging the additional stamp value for transfer of land as per Jantri rate of Stamp Valuation Authority - HELD THAT - We accept the contention of ld. AR for the assessee that once the similar STCG offered by the co-owner has been accepted by the revenue and the assessee is also entitled for similar relief. We find convincing force in the submissions learned AR for the assessee. Hence the appeal of the assessee is allowed. So far as the objection of learned DR for the Revenue is that the case of co-owner of Shri Dipakbhai Dalpatbhai Rana no scrutiny assessment was initiated is concern we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the similar STCG on same transaction therefore in our view the assessee cannot be treated indifferently for similar transaction. Thus the objection raised by the learned DR for the revenue is not acceptable to us.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the addition made under Section 50C of the Income Tax Act.
3. Application of principles of natural justice in valuation by the District Valuation Officer (DVO).
4. Consistency in treatment of co-owners in similar transactions.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 7 days. The assessee attributed the delay to renovation work in their office, which resulted in the misplacement of the impugned order. The assessee took immediate steps to file the appeal upon discovering the order. The Tribunal considered the small delay and the reasons provided, finding sufficient cause to condone the delay. Therefore, the delay in filing the appeal was condoned.

2. Validity of the Addition Made Under Section 50C:
The main issue on merits was the addition of Rs. 15,77,900/- made by invoking Section 50C of the Income Tax Act. The assessee sold agricultural land, and the sale consideration was shown as Rs. 8,50,000/-. However, the Stamp Valuation Authority valued the property at Rs. 40,06,800/-. The AO adopted this higher value for computing capital gains. The assessee contended that the addition was made arbitrarily and without any material evidence of additional consideration received. The Tribunal noted that the AO did not refer the matter to the DVO initially and made the addition based purely on the stamp duty valuation.

3. Application of Principles of Natural Justice in Valuation by the DVO:
The CIT(A) directed the AO to refer the matter to the DVO, who valued the property at Rs. 65,89,500/-. The assessee objected to the method of valuation, arguing that the DVO used sale instances from 2011-12, which were not relevant to the period in question. The Tribunal observed that the assessee was not given an adequate opportunity to present objections before the DVO, thus violating the principles of natural justice.

4. Consistency in Treatment of Co-owners in Similar Transactions:
The assessee argued that the Revenue accepted the short-term capital gain (STCG) declared by the co-owner of the property without invoking Section 50C. The Tribunal found merit in this argument, citing the principle of equality before the law. The Tribunal referred to the case of CIT vs. Kumararani Smt. Meenakshi Achi, where it was held that co-owners should not be treated differently for the same transaction. The Tribunal also referred to similar decisions by other benches, emphasizing that the Revenue should maintain consistency in its approach.

Conclusion:
The Tribunal allowed the appeal, holding that the assessee should be given the same treatment as the co-owner. The addition made under Section 50C was deleted, and the appeal was decided in favor of the assessee. The Tribunal emphasized the importance of consistency and fairness in tax assessments, ensuring that similar transactions are treated equally. The other grounds of appeal were deemed academic and not adjudicated. The order was pronounced on 12th February 2021.