Capital gain addition u/s 50C for unauthenticated cuttings in sale deed remanded for verification from Registrar

Capital gain addition u/s 50C for unauthenticated cuttings in sale deed for amount of sale consideration remanded back for obtaining copy from the Registering authority

ABCAUS Case Law Citation:
ABCAUS 2655 (2018) (11) ITAT

The instant appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)

The sole issue was related to the computation of Long Term Capital Gain earned by the assessee on sale of property. The assessment had been framed on the assessee u/s 143(3) of the Act making addition on account of Long Term Capital Gain earned by the assessee on sale of property by adopting the sale consideration of the property at Rs.45 lacs as against sale consideration disclosed by the assessee at Rs.30 lacs.

The reason for addition was that there was cutting in the sale deed and the figure original typed at Rs. 45 lacs had been changed to Rs. 30 lacs manually and the cutting had not been countersigned/attested by the Registering Authority.

The AO also found that stamp duty had been paid on the amount of Rs. 45 lacs and, therefore, he was of the opinion that as per the provisions of section 50C of the Act, the sale consideration for the purpose of computing Long Term Capital Gain on the sale of property was to be adopted at Rs. 45 lacs and not Rs. 30 lacs as submitted by the assessee.

Accordingly addition was made to the extent of long term capital so earned by the assessee on sale of property.

CIT(A) who upheld the order of the Assessing Officer (AO).

In the first round of litigation, ITAT set aside the case to the file of the A.O. directing him to verify the actual sale consideration received by the assessee from the purchaser by issuing summons to him and also to verify the value of the sale declared for the purpose of valuation under the Stamp Duty Act and thereafter to adopt the value whichever is higher of the two, as per the provisions of section 50C of the Act.

During set aside proceedings, the purchaser confirmed payments of Rs. 30 lacs through Demand Draft. The AO also called for information from the Bank with whom the original sale deed was kept by the purchaser who supplied the same copy of the sale deed as was submitted to the AO by the assessee. The AO also obtained copy of the sale deed directly through Suvidha Centre which was also the same.

The AO, however, again adopted the sale consideration of the property at Rs. 45 lacs since as per the A.O. this was the value accepted by the Stamp Value Authority for the purpose of payment of stamp duty.

CIT(A) again upheld the order of the AO. Aggrieved by the same, the assessee was again in appeal before the Tribunal.

The Tribunal opined that the authenticity of the document was clearly not established and it was difficult to believe the version of the assessee that the document submitted was an authentic sale deed duly registered with the Land Revenue Authorities.

The Tribunal was of the view that in the absence of an authenticate sale deed, the determination of the actual sale consideration of the property and the value adopted for stamp duty purposes, as directed by the ITAT in the first round, cannot be legitimately made.

The ITAT found that that the AO had directed the assessee to procure a copy of the sale deed from the registering authorities but , as per the assessment order, the assessee had failed to do so.

The Tribunal opined that it was necessary to obtain the authentic /original sale deed by directly from the Registering authorities, calling for the necessary records maintained in this regard.

The Tribunal accordingly set aside the matter back to the CIT(A) to obtain the copy of the sale deed from the concerned Revenue/Registering authorities and thereafter determine the actual sale consideration and value adopted for stamp duty purposes .

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