Anant Govind Patil Vs ITO (ITAT Mumbai)
Summary: The Mumbai ITAT dismissed the assessee’s appeal concerning long-term capital gains on the transfer of immovable property for AY 2015-16. Reassessment proceedings were initiated under section 148A, and the transaction was independently verified under section 133(6). The registered conveyance dated 31.12.2014 recorded consideration of Rs.67 lakh, while the Stamp Valuation Authority valued the property at Rs.1.58 crore. As 14 co-sellers executed the deed and no evidence established a different ownership ratio, the AO treated the assessee’s share as 1/14th and, applying section 50C, computed long-term capital gain at Rs.11.23 lakh. The Tribunal rejected the claim that the assessee was merely a facilitator who had received only Rs.70,000, noting the absence of any registered document evidencing an earlier transfer or unequal share. It also rejected reliance on section 50CA, as that provision applies to unquoted shares. The claim for fair market value as on 01.04.2001 under section 55(2)(b)(ii) failed for want of reliable supporting evidence. Since the computed income exceeded the applicable threshold, the Tribunal also rejected the plea that no return was required under section 139(1) and upheld the CIT(A)’s order.
Introduction
Recently fought case of an Assessee who was holding PoA for executing the documents for transfer of plot land on behalf of 13 other co-owners, however in the absence of following documents the case was decided against the Assessee:
1. Original Transfer Agreement;
2. Document defining share of each co-owner in the land;
3. Confirmation from other co-owners for receipt of the consideration as well as their share in the land;
4. Document for proving property devolvement of property upon the Assessee or Family Tree;
5. Valuation Report for adopting value as on 01-Apr-2001 or municipal valuation document in support of Fair Market Value as on 01-Apr-2001;
6. No formal request was submitted by the Assessee to AO for referring the matter to Valuation Officer for determining FMV as on 01-Apr-2001.
Facts of the Case:
Plot of Land was transferred by group of family members comprising of 14 co-owners along with two confirming parties vide transfer agreement entered in FY 2011-12. Assessee being one of the co-owners received Rs. 70,000 out of total consideration of Rs. 67,00,000 in FY 2011-12.
In FY 2014-15 Land Conveyance Deed was executed between all the parties which was signed by the Assessee on behalf of other 13 co-owners as Power of Attorney was executed in the name of Assessee by remaining 13 Co-Owners.
At the time of registration of conveyance deed in FY 2014-15 it is found that the stamp duty value of plot of land is Rs. 1,58,68,750 and accordingly case was re-opened under section 148 of the Act.
In the absence of the documentary evidence the learned AO adopted the following for completing the assessment proceedings:
1. 1/14th share of Rs. 1,58,68,750 as sale consideration in the hands of Assessee;
2. Rs. 10,000 as indexed cost of acquisition as there was no valuation report or no request was made by the Assessee for referring the case to Valuation Officer;
The same was upheld by the Commissioner of Income tax Appeals (NFAC).
During the Course of hearing before Hon’ble ITAT, Hon’ble ITAT asked for the above documents which could not be made available as Assessee was not having access to these documents and the Hon’ble ITAT dismissed the Assessee’s appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
This appeal is filed by the Assessee against the order of Ld. NFAC, Delhi, vide DIN: ITBA/NFAC/S/250/2025-26/1084713720(1) dated 13.01.2026 for the Assessment Year 2015-16. The Assessee has raised the following grounds of appeal:
I. Dispute Regarding Actual Share and Sale Consideration
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- Actual Receipt vs. Deemed Value: The actual amount received by the Appellant as per his bank statement was only 70,000 in FY 2011-12.
- Tripartite Agreement Realities: The sale was a tripartite agreement where “Confirming Parties” received 34,00,000 for relinquishing possession, while the 14 vendors collectively received 233,00,000,
- Application of Section 50C & 50CA: Proportional Application of Section 50C: While the Department has invoked the deeming provisions of Section 50C, it is submitted that for FY 2014-15, the tax liability must be grounded in the actual sale consideration held by the Appellant.
- Reference to Section 50CA Principles: It is pertinent to note that under the framework of the Income Tax Act for FY 2014-15, and specifically referencing the principles later clarified under provisions such as Section 50CA, the primary basis for determining the “full value of consideration” should reflect the actual transaction value agreed upon by the parties unless a specific, undisputed entitlement to a higher share is proven.
- Legal Reality of Distribution: Treating the Appellant as an equal beneficiary of the entire “deemed” value ignores the distribution of proceeds among 14 original members and confirming parties.
- Facilitator Role: The Appellant acted primarily as a facilitator under a Power of Attorney for other members and did not receive an equal share of the proceeds.
II. Incorrect Adoption of Cost of Acquisition (COA)
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- Statutory Right u/s 55(2)(b)(ii): Since the property was ancestral and acquired prior to 01-04-2001, the Appellant has the statutory right to substitute the Fair Market Value (FMV) as of 01-04-2001 as the COA.
- Evidence of FMV: The Appellant provided the Stamp Duty Valuation for 2000-2001 provided by the Municipal Corporation.
- FMV Calculation: Based on Survey Nos. 27, 28, 29, 30, and 36, the total FMV as of 01-04-2001 is 7,81,154.
- Arbitrary Nominal COA: The AO’s decision to ignore this valuation and use a “nominal” 10,000 is arbitrary and violates principles of natural justice.
III. Erroneous Finding on Obligation to File Return u/s 139
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- Liability to file arises only if total income exceeds the maximum amount not chargeable to tax.
- As actual receipt was only 70,000, the Appellant was under the bona fide belief that no filing was required.
2. The relevant facts, in brief, are that the assessee, an individual, did not file his return of income for the year under consideration. On the basis of information flagged under the Risk Management Strategy on the “Insight Portal”, it was noticed that during the financial year relevant to assessment year 2015-16, the assessee, along with other co-owners, had executed a registered document for transfer of immovable property. Accordingly, proceedings under section 148A of the Income-tax Act, 1961 (“the Act”) were initiated and notice under section 148 of the Act was issued on 06.04.2022.
3. In response to the notice, the assessee did not file a return of income but furnished an affidavit stating, inter alia, that he was a person of modest means working as a watchman and had not entered into any transaction for sale of immovable property during the relevant year.
4. The Assessing Officer (“AO”), however, undertook independent verification by issuing notice under section 133(6) of the Act to the concerned Sub-Registrar and also through the Verification Unit. On such verification, a registered Deed of Conveyance dated 31.12.2014 was found, whereby land admeasuring 1,355 sq. metres situated at Village Dongare, Taluka Vasai, District Thane was conveyed to Shri Rakesh Kumar K. Wadhawan, Director of M/s. Housing Development & Infrastructure Ltd., for a stated consideration of Rs.67,00,000/-. The value adopted by the Stamp Valuation Authority for the purpose of stamp duty was, however, Rs.1,58,68,750/-.
5. The AO noted that the conveyance deed had been executed by 14 co-sellers/legal heirs of late Shri Padman Keshav Patil. In the absence of any documentary evidence placed on record to establish that the assessee had a share different from that reflected in the conveyance deed, the AO determined his share at 1/14th. Accordingly, applying section 50C of the Act, the AO adopted Rs.1,58,68,750/- as the full value of consideration and determined the assessee’s proportionate share at Rs.11,33,482/-, being 1/14th thereof. Since the assessee did not furnish documentary evidence to establish the cost of acquisition of the previous owner, the AO allowed an indexed cost of acquisition of Rs.10,000/- and determined the long-term capital gain at Rs.11,23,482/-. The assessment was accordingly completed under section 147 read with section 144B of the Act.
6. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the assessment record and the registered Deed of Conveyance, upheld the action of the AO and dismissed the appeal.
7. Before us, the Ld. AR submitted that the assessee is a person of meagre means and was working as a watchman. It was submitted that an amount of only Rs.70,000/- had been received by the assessee in his bank account with Vasant Pragati Co-operative Credit Society Ltd. in financial year 2011-12. According to the AR, under the tripartite arrangement, the confirming parties had received Rs.34,00,000/- whereas the vendors had received only Rs.33,00,000/-. It was contended that the assessee had merely acted as a facilitator pursuant to a Power of Attorney and was not the beneficial recipient of the consideration attributed to him.
8. The AR further submitted that, for the purpose of determining the cost of acquisition, the Fair Market Value (“FMV”) as on 01.04.2001 ought to have been considered in terms of section 55(2)(b)(ii) of the Act. According to him, the FMV based on municipal rates worked out to Rs.7,81,154/-, and therefore the adoption of an indexed cost of only Rs.10,000/- was unjustified. It was also submitted that the assessee was under a bona fide belief that, since the amount actually received by him was below the taxable limit, he was not required to file a return of income.
9. The Ld. DR, on the other hand, supported the orders passed by the Revenue Authorities. He submitted that the transfer was evidenced by a registered Deed of Conveyance dated 31.12.2014 and, therefore, the transaction fell within the previous year relevant to assessment year 2015-16. He submitted that the provisions of section 50C were clearly attracted since the stamp duty value was substantially higher than the stated consideration. It was pointed out that the assessee had neither challenged the stamp valuation nor requested the AO to make a reference to the Departmental Valuation Officer in terms of section 50C(2) of the Act. It was further submitted that no legally enforceable document had been furnished to establish that the assessee’s share in the property was less than 1/14th. Insofar as the cost of acquisition was concerned, the DR submitted that the assessee had failed to furnish any reliable documentary evidence before the AO or the Ld. CIT(A) to substantiate the cost claimed by him. Accordingly, it was submitted that the order of the Ld. CIT(A) deserved to be upheld.
10. I have considered the rival submissions and perused the material available on record.
11. The first issue is whether the AO was justified in adopting the stamp duty value of Rs.1,58,68,750/- for the purpose of computing the full value of consideration under section 50C of the Act.
12. There is no dispute that the registered Deed of Conveyance is dated 31.12.2014. Thus, the registered transfer evidenced by the said document falls within financial year 2014-15 relevant to assessment year 2015-16. The assessee’s contention regarding the receipt of Rs.70,000/- in financial year 2011-12, by itself, cannot displace the effect of the registered conveyance dated 31.12.2014, particularly when no registered document evidencing an earlier transfer of the property by the assessee has been brought on record.
13. Section 50C of the Act provides that where the consideration received or accruing as a result of the transfer of land or building or both is less than the value adopted or assessed by the authority of the State Government for the purpose of payment of stamp duty, the value so adopted or assessed is deemed to be the full value of consideration for the purposes of section 48, subject to the statutory mechanism contained therein.
14. In the present case, the stated consideration in the conveyance deed is Rs.67,00,000/-, whereas the value adopted by the Stamp Valuation Authority is Rs.1,58,68,750/-. The assessee has not brought on record any material to show that the stamp valuation was disputed before the stamp authority. Further, no request for reference to the Departmental Valuation Officer in terms of section 50C(2) was made before the AO. In these circumstances, the adoption of the stamp duty value in accordance with section 50C cannot be faulted.
15. The reference made on behalf of the assessee to section 50CA is also misplaced. Section 50CA deals with the determination of full value of consideration in respect of transfer of unquoted shares and is not the provision applicable to the transfer of the immovable property involved in the present case. The relevant provision is section 50C.
16. The next issue relates to the determination of the assessee’s share in the property.
17. The registered Deed of Conveyance records 14 co-sellers/legal heirs as vendors. The assessee has contended that he was merely a facilitator and that the actual distribution of the consideration was not in equal proportion. However, no registered partition deed, settlement deed, testamentary document, or other legally enforceable document has been placed on record before the lower authorities or before this Tribunal to establish that the assessee’s ownership/share in the property was less than the proportion adopted by the AO.
18. It is also relevant that the assessee initially denied having entered into any transaction relating to the property. Once the registered conveyance deed was brought on record through independent verification, the burden was on the assessee to substantiate, with appropriate documentary evidence, his specific claim regarding the nature and extent of his interest in the property. Mere assertions regarding the distribution of the sale proceeds or his role as a facilitator, without supporting legal or title documents, cannot be accepted in preference to the registered document.
19. Accordingly, on the facts available on record, I find no reason to interfere with the AO’s determination of the assessee’s share at 1/14th. The corresponding share in the deemed full value of consideration works out to Rs.11,33,482/- (approximately), being 1/14th of Rs.1,58,68,750/-.
20. The assessee has also challenged the cost of acquisition adopted by the AO. It is the contention of the AR that the property was ancestral and that, in terms of section 55(2)(b)(ii), the FMV as on 01.04.2001 could be adopted, which according to the assessee was Rs.7,81,154/- on the basis of municipal rates.
21. Section 55(2)(b)(ii) permits, in the case of a capital asset acquired before 01.04.2001, the assessee, at his option, to adopt the FMV of the asset as on 01.04.2001 in place of the actual cost, subject to the statutory conditions. In a case where the asset has devolved upon the assessee by inheritance or otherwise, the provisions relating to the cost to the previous owner also become relevant.
22. In the present case, however, the assessee did not furnish before the AO the primary documents establishing the title history of the property, the manner in which the property devolved upon him, the cost to the previous owner, or reliable evidence substantiating the FMV claimed as on 01.04.2001. The municipal rate/chart relied upon before us, by itself, has not been shown to be a valuation report or other reliable evidence establishing the FMV of the specific property in question as on 01.04.2001.
23. It is significant that, during the assessment proceedings, the assessee had initially denied having undertaken the transaction itself. In the absence of the foundational documents necessary for determining the cost of acquisition or the FMV as contemplated under section 55, the AO adopted an indexed cost of Rs.10,000/-. The assessee has not placed before us sufficient documentary evidence on the basis of which the cost adopted by the AO can be substituted by the figure of Rs.7,81,154/- claimed by him.
24. At the same time, it is clarified that the mere absence of a valuation report is not, by itself, a statutory bar to adoption of FMV as on 01.04.2001. The issue in the present case is that the assessee has not established, through reliable evidence, the claimed FMV or the relevant title and acquisition particulars necessary for computing the cost in accordance with section 55. Accordingly, on the material available on record, no interference with the computation made by the lower authorities is called for.
25. The assessee has lastly contended that he was under a bona fide belief that no return was required to be filed since the amount actually received by him was only Rs.70,000/-.
26. This contention also does not advance the assessee’s case. The obligation to file a return under section 139(1) has to be examined with reference to the total income chargeable to tax as computed in accordance with the provisions of the Act. In the present case, the capital gain arising from the transfer, after applying the deeming provision contained in section 50C, resulted in taxable income exceeding the applicable threshold. The assessee’s personal circumstances or his claimed belief regarding the taxability of the amount actually received cannot, by themselves, override the statutory provisions governing the computation of total income and the obligation to furnish a return.
27. In view of the foregoing discussion and having regard to the registered Deed of Conveyance, the material gathered by the AO through independent verification, and the failure of the assessee to furnish sufficient documentary evidence to substantiate his contrary claims, I find no infirmity in the order of the Ld. CIT(A) warranting interference.
28. Accordingly, the grounds raised by the assessee are dismissed.
29. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 07.09.2026.
