Provisions of Section 50C in computing the long-term capital gain

This case concerns the assessment of capital gains tax on land sold by the assessee. The assessee argued the land was agricultural and located outside municipal limits. The Income Tax Appellate Tribunal found that the Assessing Officer (AO) failed to comply with legal requirements, specifically regarding objections to reassessment proceedings under Section 147, as mandated by the Supreme Court in GKN Driveshafts (India) Ltd. Despite the AO's claim of time constraints, the Tribunal ruled that non-compliance renders the assessment order invalid. Consequently, the appeal was allowed, and the assessment order was annulled.

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER

ITA No.382/Bang/2018
Assessment year : 2009-10

Shri. Lakshmana,
S/o. Late Chikkathimmaiah,
Kanminike Village, Kengeri Hobli,
Bengaluru South Taluk
Bengaluru – 560 039.
PAN : APPPL 7076 K

APPELLANT

vs

ITO,
Ward – 3(2)(3),
Bengaluru.

RESPONDENT

Appellant by : Shri. Ravishankar, Advocate
Respondent by : Smt. R. Premi, JCIT(DR)(ITAT), Bengaluru
Date of hearing : 20.07.2021
Date of Pronouncement : 28.07.2021
O R D E R
 

This is an appeal by the assessee against the order dated 01.12.2017 of CIT(A)-3, Bengaluru, relating to Assessment Year 2009-10. The assessee raised several grounds of appeal.

2. The assessee is an individual. He owns certain land in Survey No.55 in Kaniminiki Village, Kengeri Hobli, Bengaluru South Taluk, Bengaluru. According to the assessee, the land so held by him was an agricultural land which was situated beyond 8 kms. from the municipal limits of Bruhat Bengaluru Mahanagara Palike (BBMP). According to the assessee, the property owned by him was agreed to be sold under agreement dated 28.12.2005 and was ultimately sold by a registered sale deed dated 24.09.2008 for a consideration of Rs.10,37,500/-.

3.The CIT(A) agreed that the AO has not complied with the requirements of the law laid down by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) but sustained the order of the AO on the ground that the AO had very little time for completing the assessment proceedings and therefore could not pass a separate order as the limitation period for passing assessment order was very short. The findings of the CIT(A) in this regard are contained in paragraph 5.2 of his order.

4. The sum and substance of the conclusion of the CIT(A) is that the AO could not pass a separate order on the objections with regard to proceedings under section 147 of the Act due to paucity of time available to the AO and that the non-compliance with the requirements as laid down by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) will not render the order of assessment null and void. In this regard, the CIT(A) has placed reliance on two decisions (1) decision of the Hon’ble Gujarat High Court in the case of Principal CIT Vs. Sagar Developers [2016] 72 taxmann.com 321 (Gujarat) and (2) decision of Hon’ble Madras High Court in the case of Avera T & D India Ltd., Vs. ACIT [2007] 165 Taxman 123 (Madras).

5. The other decisions of the Hon’ble Gujarat High Court and the Hon’ble Madras High Court referred to in the order of the CIT(A) being the decisions of the non-jurisdictional High Courts, are not binding in the light of the decision of the Hon’ble jurisdictional High Court. Consequently, we uphold the grievances projected by the assessee in ground No.3 n) and hold that the order of assessment passed is vitiated and liable to be annulled. In view of the above conclusion, we are of the view that the other issue raised by the assessee in its appeal does not require examination.
 In the result, appeal by the assessee is allowed.
 Please find the attached enclosed file for the full judgement.