AI Structured Summary
Not yet generated for this judgment
Judgment
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals) ADDL/JCIT(A)-10 Mumbai (‘Ld. CIT(A)’ for short), New Delhi dated 11/07/2025 for the Assessment Year 2019-20.
Brief facts of the case are that, the Assessee filed return of income by declaring total income of Rs. 8,01,375/- which has been processed by the CPC, Bengaluru by making addition of Rs. 25,90,200/- towards Long Term Capital Gain and assessed the income of the Assessee at Rs. 30,61,335/- under Section154 of the Income Tax Act, 1961 ('Act' for short). Aggrieved by the order dated 28/09/2020 passed by the CPC, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 11/07/2025 dismissed the Appeal of the Assessee.
The Ld. Counsel for the Assessee vehemently submitted that the Ld. CIT(A) committed error by confirming the order of the CPC, Bengaluru. The Ld. Counsel further submitted that the addition has been made by the CPC, Bengaluru, without making any enquiry regarding the actual market value of the property in question and without giving an opportunity to the Assessee, made the addition. The Ld. Counsel for the Assessee relying on the order of the Co-ordinate Bench of the Tribunal in ITA No. 1024/Del/2022 dated 26/07/2022 sought for allowing the Appeal.
We have heard both the parties and perused the material available on record. The only issue to be considered in the present Appeal as to whether the CPC Bengaluru/A.O. can make the addition of Rs. 25,90,200/- on account of LTCG by exercising its poweru/s 154 of the Act. An identical issue has been dealt and decided by the Co-ordinate Bench of the Tribunal in the case of Sh. Inder Jeet Malik Vs. ADIT in ITA No. 1024/Del/2024,vide order dated 26/07/2022 the Co-ordinate Bench of the Tribunal held as under:
“5.I have heard the parties and perused the materials on record. The basic issue requiring consideration is, whether the addition made under section 50C(1) can fall within the ambit of adjustments provided under section 143(1)(a) of the Act. It is noticed, the following adjustments can be made while processing the return under section 143(1) of the Act:
“Assessment.
143.(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:—
(a)the total income or loss shall be computed after making the following adjustments, namely:—
(i)any arithmetical error in the return;
(ii)an incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii)disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139;
(iv)disallowance of expenditure 68[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return;
(v)disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.— Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or
(vi)addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:”
6.No doubt, in the present case adjustment has been made under sub-clause (ii) to section 143(1)(a). The expression “incorrect claim apparent from any information in the return” has been explained under Explanation to section 143(1)(a) of the Act and reads as under:
“Explanation.—For the purposes of this sub-section,—
(a)"an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,—
(i)of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii)in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii)in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
7.On a conjoint reading of section 143(1)(a)(ii) along with Explanation it becomes very much clear that the addition under section 50C(1) cannot be in the nature of incorrect claim as provided in Explanation to section 143(1)(a)(ii) of the Act. This is so because, section 50C has to be read as a whole and cannot be restricted to sub-section (1) alone. It is fairly well settled, a deeming provision has to be taken to its logical end. Undoubtedly, section 50C is a deeming provision. Though, sub-section (1) of section provides for substituting the stamp duty value as deemed sale consideration in place of the declared sale consideration, however, sub-section (2) carves out an exception by providing that if the assessee objects to the stamp duty value, the valuation has to be referred to the Department Valuation Officer (DVO) and in case the value determined by the DVO is lower than the stamp duty value, the value determined by DVO has to be considered for computing capital gain in terms with sub-section (3) of section 50C. Therefore, sub-section (1) to section 50C cannot be considered in isolation. By making an adjustment of the nature contemplated under subsection (1) to section 50C, that too, by CPC, the Department takes away a valuable statutory right given to the assessee to object to the value determined by stamp valuation authority.
8.Therefore, such type of adjustment, in my considered opinion, cannot be made under section 143(1)(a) of the Act. This is so because, at the stage of processing of return under section 143(1)(a), if such an adjustment is made, the assessee does not get an opportunity to object, as per section 50C(2) of the Act. More so, when conditions of the 1st and 2nd proviso to section 143(1)(a) are not complied. Therefore, I hold that the addition made by CPC 6 ITA No. 1024/Del./2022 AY: 2019-20 under section 50C(1) of the Act by way of adjustment under section 143(1)(a)(ii) is unsustainable. Accordingly, I delete the addition.”
Though the above order of the Tribunal in the case of Sh. Inder Jeet Malik Vs. ADIT (supra) being SMC Bench, this Bench is also of the considered opinion that the CPC, Bengaluru either under Section 143(1A) or Section 154 of the Act cannot make the addition under Section 50C of the Act as the Assessee does not get opportunity to object as per Section 50C(2) of the Act. Therefore, we are of the opinion that the CPC, Bengaluru committed error in making the impugned addition under Section 154 of the Act, which does not sustain in the eyes of law. Accordingly, we set aside the order impugnedby deleting the addition made by the CPC which has been confirmed by the Ld. CIT(A) vide order impugned.
In the result, Appeal of the Assessee is allowed.