Pooja Dipen Joshi Vs ITO (ITAT Ahmedabad)
In the case of Pooja Dipen Joshi vs. ITO, the Income Tax Appellate Tribunal (ITAT) Ahmedabad dealt with two appeals from co-owners of a property concerning the application of Section 50C and Section 56(2)(vii)(b) of the Income Tax Act. The appellants, including Pooja Dipen Joshi, had purchased a property where the jantri value (government valuation for stamp duty) was significantly higher than the documented sale value. The Assessing Officer (AO) invoked Section 50C, considering the jantri value for tax computation, and added the difference to the assessee’s income as “income from other sources” under Section 56(2)(vii)(b). The National Faceless Appeal Centre (NFAC) upheld the AO’s addition. However, the assessee contested this, arguing that Section 50C applies to sellers, not buyers, and that Section 56(2)(vii)(b) was introduced in the Finance Act 2013, making it inapplicable for the assessment year in question (2012-13).
Upon reviewing the case, ITAT found merit in the assessee’s arguments. ITAT clarified that Section 50C applies only to the computation of capital gains for sellers, not buyers. Additionally, the tribunal concluded that Section 56(2)(vii)(b) could not be applied retrospectively, as it was explicitly applicable from April 1, 2014, for transactions involving inadequate consideration. The amendment did not apply to the assessment year 2012-13, making the AO’s addition unsustainable. As a result, ITAT canceled the order of CIT(A) and ruled in favor of the assessee.
