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Section 50C can’t be applied when property sold under pressure: ITAT Chennai
CASE LAW DETAILS
CASE NAME: Mrs. Krithika Lingappan, V/S The Income Tax Officer,
DATE OF JUDGEMENT /ORDER: 21.03.2019
RELATED ASSESSEMENT YEAR: 2011-12
COURT: ITAT Chennai
FACTS OF THE CASE:
- The assessee purchased a piece of land in Kolathur on 11.06.1997 from one Shri Pazhani and Smt. Santhi. The registered sale deed was executed by one Shri Narayanaswamy in his capacity as power of attorney holder for the
above said Shri Pazhani and Smt. Santhi.
- The very same vendor, who executed the sale deed in favor of the assessee, according to the Ld. Counsel, has also executed another deed on 20.07.1999 fraudulently transferring the very same land to Shri I.A.J. Balan, Shri I.P. Andrew Raj, Shri I.S.J. Rozario, Shri I. Francis Jeyaraj and Shri I. Jerome Michael Pushpanathan.
- Subsequently, the assessee came to know about the fraudulent execution of the second sale deed in favor of the third parties.
- Having left with no other remedy and out of compulsion and pressure from the above
Said third parties/persons, according to the Ld. Counsel, the assessee executed a sale deed in favor of the above persons for a total consideration of ₹6, 00,000.
- Referring to the assessment order, the Ld.counsel submitted that the Assessing Officer admitted that the property was sold under pressure.
- However, he chose to invoke the provisions of Section 50C of the Income-tax Act, 1961 (in short ‘the Act’) for computing the capital gain.
- According to the Ld. Counsel, it is only a distress sale under the circumstance which is explained above, therefore, the Assessing Officer ought to have referred the matter to the valuation officer to find out the actual market value.
- M. Subashri, the Ld. Departmental Representative, submitted that the assessee executed the registered sale deed in favor of the above said Shri I.A.J. Balan, Shri I.P. Andrew Raj, Shri I.S.J. Rozario, Shri I. Francis Jeyaraj and Shri I. Jerome Michael Pushpanathan claiming that she is the owner of the property.
- The document was executed on behalf of the assessee by her father Col. V.N. Lingappan. Therefore, according to the Ld. D.R., at this stage, the assessee cannot claim that the property was under litigation or encumbrance, hence, the market value was only ₹6,00,000/-.
- When the property was sold under pressure and the circumstance which was narrated above, this Tribunal is of the considered opinion that adopting guideline value under Section 50C of the Act is not called for. Under normal circumstances, this Tribunal would have remitted back the matter to the file of the Assessing Officer for referring the matter to the valuation officer. In this case, we are not doing so since the Assessing Officer himself accepted that the property was sold under pressure. This Tribunal is of the considered opinion that remitting back the matter to the file of the Assessing Officer for the purpose of making reference to the valuation officer would tantamount not only harassing the assessee further but also rubbing the salt on the wound again and again. This Tribunal is of the considered opinion that the fact and circumstances of the case and the circumstance the assessee executed the sale deed, the apparent sale consideration disclosed in the sale deed has to be considered as market value and the same has to be adopted for the purpose of computing capital gain. Hence, this Tribunal is unable to uphold the orders of both the authorities ,” the Tribunal said.