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2017 (2) TMI 1540 - AT - Income TaxEnhancement by CIT(A) - addition under the deeming provisions of Section 50C - CIT(A) not only confirmed action of the AO but also directed the AO to make an addition in respect of cost of acquisition as there was variation in the figures of cost of acquisition as per record vis-a-vis the lease deed - HELD THAT:- A co-ordinate bench of this Tribunal in the case of M/s. Monga Metal Pvt. Ltd[2013 (8) TMI 1179 - ITAT LUCKNOW] has held that such an action of the AO i.e. of proposing enhancement without putting the assessee to specifically notice in this regard is unsustainable in law as provisions of section 251(2) categorically says that the Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Therefore, it is incumbent upon the ld. CIT(A) for affording a reasonable opportunity of showing cause against enhancement to the assessee. If he fails to afford an opportunity to the assessee, enhancement made by him is not sustainable in the eyes of law. In the light of these facts, enhancement made by the ld. CIT(A) is not sustainable as it was done without issuing a show cause against enhancement to the assessee. We, therefore, find no merit in the additions. Whether the provisions of section 50C can be invoked in respect of the lease hold property? - As this issue is no longer res integra, there are several decisions of this Tribunal including the case of DCIT vs. Tejinder Singh [2012 (3) TMI 47 - ITAT, KOLKATA], Atul G. Puranik [2011 (5) TMI 576 - ITAT, MUMBAI] in support of the proposition. Hon’ble Delhi High Court in the case of CIT vs. Shri Kishan Das [2014 (2) TMI 897 - DELHI HIGH COURT] has approved this school of thought and inter alia observed strictly construed the letter of Section 50C to say that the conveyance has to be complete in respect of all entitlements to the property. In the present case, the Tribunal has upheld the valuation of the assessee. We notice that apart from the three Benches, decisions of which have been relied on, the Tribunal also considered the distinction made between Section 50C and 54D(1) which specifically provides that capital gains from, transfer by way of compulsory acquisition under any law of capital asset being land, building or any right in the land or building Section 50C, on the other hand, talks of, transfer by assessee of a capital asset being land or building or both. The contrast in language, given that Section 50C is a specific provision, which seeks to enact a presumption is significant. The valuation of the concerned State agency or the government that the cost of the land is, in the circumstances, higher, is determinative. We notice that in the present case, there has been no such valuation. That apart, the Tribunal adopted an approach which, with respect, appears to be correct, in that it took note of the proportionate transfer of leasehold rights for 54 years. If the Revenue’s contentions were to be conceded, then in the given facts of case, if the leasehold rights for residual period of 3 or 4 years were to be valued at par with the cost of acquisition of the full tenure of the lease of 90 years, absurd and anomalous results would ensue. Thus both the grievances of the assessee indeed deserve to be upheld. Neither the learned CIT(A) was justified in confirming the action of the Assessing Officer in treating the stamp duty valuation as consideration for transfer for the purpose of computing capital gain, nor was he justified in proposing enhancement of income regarding reduction in the cost of acquisition without putting assessee to notice in this respect. We, therefore, uphold the plea of the assessee.
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