Reassessment valid as issue of deemed sale consideration as per Sec. 50C wasn’t considered during original assessment

 

Rakesh Ambalal Patel

[2021] 127 taxmann.com 276 (Ahmedabad – Trib.)

 

Short Overview of the case:

Section 50C, read with sections 45 and 148, of the Income-tax Act, 1961 

Capital gains 

Special provision for computation of full value consideration (Reassessment)

 Assessment year 2010-11 

Assessee sold a house and filed its return of income showing Sale Consideration of Rs. 8 lakhs 

Same was accepted and an assessment order was passed 

Subsequently, Assessing Officer issued a reopening notice against assessee on ground that deemed value of such house property as per provisions of section 50C would be Rs. 13.17 lakhs, thus, there was under assessment of Rs. 5.17 lakhs

Assessee contended that fact of sale of house property for a consideration of Rs. 8 lakhs as per sale deed was very much present before Assessing Officer during original assessment and, therefore, invoking section 147 for purpose of determination of capital gains with reference to section 50C was not justified 

It was noted that difference between deemed full value of sale consideration accruing to assessee as a result of transfer of house and apparent sale consideration as recorded in sale agreement was not found to be considered by Assessing Officer during original assessment

No explanation for such vast difference in sale consideration qua adoptable value was discernible from record 

Pertinently, no enquiry was made by Assessing Officer from perspective of applicability of section 50C or otherwise on issue of computation of capital gains in original proceedings 

Whether, on facts, impugned reopening notice issued against assessee was justified and same was to be upheld 

 Held, yes

Conclusions :

Where assessee sold a house and declared capital gain of certain amount and Assessing Officer issued a reopening notice on ground that deemed value of such house property as per provisions of section 50C was at higher amount than what was shown by assessee, thus, differential amount had escaped assessment, since issue of deemed sale consideration as per provision of section 50C was not considered at all by Assessing Officer while determining capital gains during original assessment, impugned reopening was justified