TMI Blog2022 (4) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the s.263 proceedings. Lack of enquiry, as explained by the Apex Court in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] is per se a sufficient ground for assuming jurisdiction u/s. 263. Applicability of section 50C - We are unable to on the basis of the clear language of s. 50-C, draw any distinction between a genuine or a non-genuine agreement, or, those whose genuineness can be doubted and others. Rather, a non-genuine agreement, where so, has no sanctity in law, and any benefit there-under cannot be availed of under law. This is particularly so as the subject matter of s.50C is the transfer consideration (for the purpose of computing capital gains u/s. 48) and, inasmuch as it deems the same by adopting the value declared or assessed by the State for the purpose of levy of stamp duty on the transfer of immovable property, it fairly provides for a mechanism for an assessee to contest the said adoption in his case. This is even as the stamp valuation itself is guided by the consideration of fmv of the relevant property, making the provision complete and legally firm. It is for this reason that we stated the argument advanced by and on assessee s behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disputed before the VO. There is nothing in the proviso to suggest restricting the exception only to cases governed by proviso to s.50C(1), and s.50C(2) is without prejudice to the entire s.50C(1). The assessee s challenge to the revisionary proceedings fails for being barred by time and, besides, is, even on merits, misconceived. As apparent from the facts discovered and found in the set-aside proceedings, as well as issues arising qua the applicability or otherwise of s.50C, discussed in detail in the instant order, prove the assessment subject to revision as being a clear case of non-application of mind by the assessing authority. The assessee s case on quantum, which is the same as found acceptance by the assessing authority at the time of the earlier assessment, is, in the main, that he was bound by the court order, which overlooks the fact that the court has only endorsed the agreement entered into by him and, two, the argument would be valid where the court had opined on the fmv which is the subject matter of s. 50C, of the subject land. The assessee s CO is supportive. The reference to the VO, sought initially by the assessee, stands abandoned in view of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 4,25,000 per acre, accompanied by a cheque (No.145203, dated 02/01/2005) for ₹ 1 lac as advance. Differences arose between the parties soon thereafter, with each side raising claim/s on the other. The buyer, a Jabalpur-based partnership firm by the name M/s. Om Sai Prakash Constructions (OC), filed a suit for specific performance (of the agreement dated 21.8.2005), which was decided by the District Court, Jabalpur, vide its Order dated 26/03/2007, dismissing each of the claims by the defendant (MC) and, on his behalf, his only son, the assessee. The Court held the agreement dated 21.8.2005 to be a valid agreement. Vide decree of even date, the parties were directed to execute a sale deed (for 23 acres) at the agreed amount, i.e., ₹ 97.75 lacs, being also the suit amount. The court, in so deciding, took note of the fact that the defendant had soon thereafter (i.e., on 17.9.2005) entered into another agreement for the sale of subject land with one, Ashok Urmeliya (AU), at ₹ 5 lac per acre, i.e., for a total consideration of ₹ 115 lacs, receiving ₹ 6 lacs upfront, of which ₹ 3 lac was by way of cheque (No. 014600) dated 17.9.2005. The defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich sum there was in fact no documentary evidence on record. The capital gains was accordingly directed by him to be assessed afresh after examining the said aspects, and in accordance with law. In the set aside proceedings, the AO adopted the guideline value as the sale consideration, i.e., ₹ 758.44 lacs, as against the returned consideration of ₹ 115 lacs. The assessee failing to adduce any material toward the fair market value (fmv) as on 1.4.1981, the guideline value (as on 01.4.1987) was worked back by him to the year 1981 on the basis of cost inflation index for the relevant years, to arrive at a surrogate fmv as on 01.4.1981, the base year for applying the FMV, at ₹ 10.41 lacs. 2.3 The guideline value for stamp duty purposes was adopted as the deemed sale consideration, i.e., ₹ 758.44 lacs, and capital gains computed accordingly, at ₹ 676.23 lacs. The matter was taken by the assessee before the first appellate authority who, without expressing any opinion on the rival contentions, held that inasmuch as s. 50C provides for adoption of the guideline value as applicable for the year of agreement, i.e., where it is prior to the year of transfer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nand K. Khemariya, only where-after the assessee contacted Shri Modh on 30.11.2017, i.e., after nearly seven months. The affidavit is deficient on material facts, viz. the reason for the non-communication of change in address, admittedly in 2010, by the assessee to the Revenue, or even after the death of Shri Rahangdale; the date of his death; the long delay in conveying the order to Sh. Modh for filing the appeal, etc. The change of residence itself is in 2010, i.e., years earlier. Why, the assessment proceedings, also being attended to by Shri Modh, were on during relevant period, and which were also at the same address. The assessee s conduct is clearly one of gross, willful negligence, not warranting indulgence, much less exhibits sufficient cause, as required by the Limitation Act, 1963. The reliance is placed on Prasahant Projects Ltd. v. Dy. CIT [2013] 37 taxmann.com 137 (Mum-Trib), even as the case law in the matter is legion. Further, as shall be, nevertheless, presently seen; the facts relevant for deciding the quantum appeals; the entire deliberation; indeed, the delineation of the issues arising for consideration in the matter, has been only in the set-aside proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es whereby the agreement dated 21.8.2005 between the assessee and the first proposed buyer (OC) stands modified so as to include another and, two, enhance the sale price (through mutual consent) to ₹ 5 lacs per acre (for the entire land). The premise of the assessee s case is of he being bound by the court order. The argument may hold only where the High Court had opined on the fair market value of the subject land, which is the subject matter of s. 50C. The suit filed, which was by the first buyer, i.e., OC, was only for the specific performance of the agreement dated 21.8.2005, which was held as maintainable by the Court vide Judgment dated 26.3.2007. And against which appeal was in fact preferred by the assessee-respondent before the Hon'ble High Court. However, as by then he had entered into another agreement (on 17.9.2005) and in fact received ₹ 44 lacs thereunder from the second proposed buyer, a tripartite compromise was arrived at on 29.8.2010 whereby OC relinquished its rights in 10.65 (out of 23) acres of land (PB pgs. 69-71). And which would accrue to the second buyer, AU, both of whom would pay the assessee-seller @ ₹ 5 lac per acre. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument advanced by and on assessee s behalf to be flawed, both in law and on facts. To conclude, s.50C is clearly applicable, and which forms another reason for upholding the revision. 3.5 The next question that arises is if the amendment to s. 50C by way of first and second provisos thereto, by Finance Act, 2016, w.e.f. 1.4.2017, is prospective or retrospective. The ld. CIT(A) has applied the amended law without discussing this aspect of the matter; the year under appeal being AY 2012-13, and which explains the Revenue appeal. The assessee finds fault with it by claiming the adoption of the agreement value, i.e., ₹ 5 lac per acre, and which we have already answered in the negative by holding that s. 50C shall apply. The section, as originally cast, did not contemplate a situation where the transfer of an immovable property (IP) is not accompanied by, for any reason, execution of transfer deed. This led to an anomaly inasmuch as for such transfers it is only the stated consideration that would hold. This was met by adding the words or assessable after the word assessed in s. 50C(1) by Finance (No.2) Act, 2009, w.e.f. 01/10/2009, so that the stamp valuation as would h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Judgment dated 26/03/2007 / PB pgs. 35-68). The said narration of facts leaves one in no manner of any doubt that the agreement dated 21.8.2005 was entered into at the relevant time. The requirement of the second proviso to s.50C is, in our view, under the facts and circumstances, met. This is as, in view of the peculiar facts, a purposive interpretation, consistent with the object and intent of the statute, i.e., to accord credence to extant transactions, obtain. Support is drawn from the decision in Sanjeev Lal v. CIT [2014] 365 ITR 389 (SC), wherein the Apex Court, relying on the decision in Oxford University Press v. CIT [2001] 247 ITR 658 (SC), held that though equity and tax are strangers, a harmonious construction, which sub-serves the object and purpose of the provision, should be made, particularly where one is concerned with an exemption provision. Though section 50C cannot be regarded as an exemption provision, i.e., as s.54, which was involved in that case, the two provisos to the provision, inserted by Finance Act, 2016, are toward mitigating the rigor of the provision, and in that sense, benevolent. The agreement dated 21.8.2005, thus, though not accompanied or pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, need not be acted upon. The issue before us is not with reference to the identity of the buyer/s, but the value to be, in view of s. 50C, adopted for the purposes of s.48 in computing capital gains. 3.7 Shri Modh would during hearing raise an objection, stating that inasmuch as a reference to Valuation Officer (VO) had been sought during assessment proceedings, and indeed made by the AO, it is the agreed sale consideration, and not the guideline value for f.y. 2005-06, that would apply. True, s.50C, which we have held as applicable in the instant case, provides a leeway under sub-section (2) thereof, where the assessee claims that the value u/s. 50C(1), i.e., the guideline value in it s case as on the date of transfer, exceeds the fair market value as on that date. The reference sought by the AO was for fmv as on 01.04.1981 and 28.10.2011, the date of transfer. The former is not contested, and latter, not relevant, as the ld. CIT(A) has directed for adoption of guideline value for fy 2005-06. In fact, the assessee s representation dated 8.12.2007 to the VO (PB pgs. 108-109) reads as under in the relevant part: 12. That the guide line value for applicability of sec. 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t land. The suit filed (by the buyer) was in fact only for the specific performance of the said agreement, found valid by the court per its Judgment dated 26/3/2007. The Revenue s case as to the prospective nature of the amendment by Finance Act, 2016 to s. 50C, held applicable by the first appellate authority, does not find our approval in view of the same being curative, i.e., toward mitigating a hardship and, in fact, in the same series as the earlier amendment by Finance (No. 2) Act, 2009, found retrospective in nature by the Hon'ble Courts. Further, though the sale agreements dated 21/8/2005 and 17/9/2005, entered into with the two buyers (with whom compromise stands arrived at) on the respective dates, accompanied by payment of part consideration by cheque, stand substituted by another in August, 2010, duly endorsed by the court, inasmuch as it is only in continuation thereof, are found to be relevant agreements for the purpose of s. 50C, i.e., irrespective of their status under the law of contract, which may not, we though clarify, be construed as giving rise to any general proposition in law. The condition/s of the amended s. 50C(1) are thus found to be, in the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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