Kovvur Chandrashekhar Vs DCIT (ITAT Bangalore)
50C Can’t Tax a Gift-by-Mistake — Bangalore ITAT Remands Case Where “Sale Deed” Was Later Cancelled as Erroneous Documentation
The Bangalore ITAT (A Bench) allowed the appeal of the Assessee for statistical purposes & remanded the matter to the AO for de novo adjudication, holding that the issue of applicability of Section 50C requires fresh examination where the Assessee claims that the registered sale deed was erroneously executed instead of a gift deed & was subsequently cancelled by mutual consent.
The Assessee, proprietor of M/s Cargo of India, had executed a registered sale deed dated 10-08-2015 in favour of his father-in-law, showing consideration of ₹58 lakh, against a guidance value of ₹1.50 crore. The AO reopened the assessment & applied Section 50C, making an addition of ₹92 lakh, which was confirmed by the CIT(A).
Before the Tribunal, the Assessee contended that:
- No sale consideration was ever received,
- Possession of land was never handed over,
- The intention was to execute a gift between relatives, &
- The sale deed was a mistake of the document writer, later rectified through a cancellation deed, which was accepted by the revenue authorities under the Karnataka Stamp Act.
The Tribunal noted that the Assessee had produced material showing repeated attempts to rectify the error & an order dated 13-09-2022 of the competent authority allowing cancellation & mutation, but also observed that several documents were uncertified & some were in vernacular language.
Holding that the matter required proper verification of facts, including whether there was any “transfer” u/s 2(47) & whether Section 50C could apply in absence of consideration & possession, the ITAT remitted the issue back to the AO with a direction to re-examine all documents & decide the issue afresh in accordance with law, after granting reasonable opportunity to the Assessee.
Accordingly, the appeal was allowed for statistical purposes, with a caution that no further leniency would be granted if the Assessee failed to substantiate the claim with cogent evidence
FULL TEXT OF THE ORDER OF ITAT BANGALORE
