CK International Pvt. Ltd. Vs ITO (ITAT Delhi)
Section 50C Adjustment Beyond Scope of 143(1): ITAT Deletes CPC Addition Made at Return Processing Stage
The Delhi Bench “C” of the ITAT, in CK International Pvt. Ltd. v. ITO (AY 2019-20), allowed the assessee’s appeal and held that adjustment under section 50C cannot be made while processing the return under section 143(1).
The assessee had sold an industrial property and declared capital gains based on actual sale consideration. While processing the return under section 143(1), the CPC made a massive adjustment by adopting stamp duty value under section 50C and enhanced long-term capital gains by ₹3.46 crore, which was partly upheld by the CIT(A), who even directed reference to the DVO and application of section 56(2)(vii)(b).
The Tribunal held that the scope of section 143(1) is extremely limited, confined only to arithmetical errors or incorrect claims apparent from the return. Section 50C is a deeming provision involving factual determination and a statutory right of objection and DVO reference under section 50C(2). Making such an adjustment at the processing stage deprives the assessee of this valuable right and is therefore impermissible in law.
Relying on consistent coordinate bench decisions including Inder Jeet Malik, Shankar Dayal HUF, Amit Sabharwal and Rajesh Kumar Sharma, the ITAT held that no addition or adjustment under section 50C can be made under section 143(1). Consequently, the entire adjustment was deleted and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the assessee is against order dated 30.12.2024 of Learned Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as ‘Ld. CIT(A)] under Section 250 of the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of order dated 07.06.2020 of Learned Assessing Officer/Assessment Unit, CPC, Bangaluru (hereinafter referred to as “Ld. AO”) passed under section 143(1) of the Act for assessment year 2019-20.
