Case Law Details
Prakash Chand Bethala (HUF) Vs ITO (ITAT Bangalore)
In , the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by the assessee for Assessment Year 2007-08 and deleted the addition of Rs.26.08 lakh relating to long-term capital gains.
The case concerned sale of an immovable property. The assessee had entered into a sale agreement on 08.03.1993 for consideration of Rs.9,80,500, while the registered sale deed was executed much later on 09.03.2007. At the time of registration of the sale deed, the stamp duty value of the property was determined at Rs.2.7 crore.
Originally, assessment under Sections 143(3) read with 147 was completed on 12.07.2013 by computing capital gains based on the guidance value prevailing on the date of registration of the sale deed. The addition was confirmed by the Commissioner of Income Tax (Appeals).
On further appeal, the Coordinate Bench of the ITAT held that transfer of the property had taken place on 08.03.1993, being the date of the sale agreement, and not on 09.03.2007 when the sale deed was registered. Accordingly, the Tribunal directed that the stamp duty value applicable on the date of the agreement should be considered instead of the value prevailing on the date of registration.
Pursuant to the Tribunal’s directions, the Assessing Officer obtained guidance value information from the Sub-Registrar, Koramangala, who reported market value at Rs.300 per square foot. Based on this, the Assessing Officer recomputed long-term capital gains at Rs.26.08 lakh and determined total income at Rs.28.14 lakh.
The assessee challenged the order before the CIT(A). According to the appellate order, four opportunities of hearing were granted through email, but the assessee did not respond. The CIT(A), observing that the assessee was not interested in pursuing the appeal, confirmed the addition on merits.
Before the Tribunal, the assessee raised an additional ground contending that the assessment order passed under Sections 143(3) read with 254 dated 06.08.2022 was barred by limitation under Section 153 of the Act. The assessee argued that the ground was legal and jurisdictional in nature and therefore could be raised at any stage.
The Tribunal admitted the additional ground after observing that it went to the root of the matter. The Tribunal examined its earlier order dated 28.01.2021 and noted that the Coordinate Bench had clearly held that transfer of the property took place on 08.03.1993. Therefore, according to the Tribunal, capital gains, if any, were chargeable in Assessment Year 1993-94 and not in Assessment Year 2007-08.
The Tribunal observed that its earlier order had also held that Section 50C was not applicable in Assessment Year 2007-08 merely because the sale deed was registered in that year. According to the Tribunal, once it had already been held that transfer took place in 1993, there was no direction to recompute capital gains for Assessment Year 2007-08.
The Tribunal held that the Assessing Officer wrongly assumed jurisdiction by taxing capital gains in the impugned assessment year despite the earlier finding that transfer occurred in Assessment Year 1993-94. On this basis, the addition made by the Assessing Officer was deleted.
Accordingly, the appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal is filed by Mr. Prakash Chand Bethala (the assessee/appellant) against the appellate order passed by National Faceless Appeal Centre Delhi (the learned CIT-A) for assessment year 2007-08 on 21st August 2025 wherein the appeal filed by the assessee against the assessment order passed under Section 143(3), read with Section 254 of the Act dated 06.08.2022 was dismissed.
2. The assessee aggrieved with the same is in appeal before us raising several grounds of appeal of appeal however in substance the assessee is challenging the addition of Rs. 26,08,000/-.
3. Briefly stated the facts of the case shows that the assessee sold an immovable property on 08.03.1993 based on sale agreement for a sale consideration of Rs. 9,80,500/-. The registered sale deed was executed on 9th March 2007.
4. As on the date of the registration of sale deed the market value of the property for stamp duty purposes was considered at Rs. 2.7 crores. Originally the assessment order under Section 143(3) read with Section 147 of the Act was passed on 12th July 2013 and the capital gain was computed based on the above guidance value. On appeal before the learned CIT (Appeal) the addition was confirmed.
5. The Coordinate Bench on appeal held that the transfer has taken place on 08.03.1993 and therefore the stamp duty value to be adopted should be on the date of sale agreement [8/3/1993] and not on the sale deed [9/3/2007]. The agreement to sale was entered into on 8th March 1993 where the sale deed was entered into 9th March 2007.
6. Based on this the learned Assessing Officer on the direction of the ITAT considered the guidance value of the area from the office of the Sub-Registrar Koramangala which stated market value at Rs. 300 per sq. ft. He computed the net long-term capital gain at Rs. 26,08,000/- and total income was determined at Rs. 28,14,130/-.
7. The assessee approached the learned CIT (Appeal) wherein four opportunities were given through e-mail as mentioned in Form No. 35 but assessee did not respond and therefore the learned CIT (Appeal) after looking at the statement of facts held that assessee is not interested in pursuing the appeal and confirmed the same on merit.
8. The assessee is in appeal before us. At the time of hearing the assessee raised an additional ground of appeal stating that the assessment order passed under Section 143(3) read with Section 254 of the Act dated 06.08.2022 is barred by limitation in view of the provisions of Section 153 of the Act. The assessee raised the grounds stating that it is jurisdictional, legal and can be raised at any time.
9. After hearing from both the parties, we find that the additional ground raised by the assessee is jurisdictional and deserves to be admitted as it goes to the root of the matter. Thus, same is admitted.
10. The learned Authorized Representative submitted a paper book containing 43 pages wherein the assessment order, the CIT Appeal order and the copy of the order of the ITAT was submitted.
11. As we go to the additional ground raised by the assessee the facts shows that the order of the Coordinate Bench was passed on 28th of January 2021. The assessment order pursuant to the direction of the Coordinate Bench was passed on 6th August 2022. According to the order of the ITAT the Coordinate Bench has held that transfer has taken place vide sale agreement dated 08.03.1993 and therefore the stamp duty value has to be considered on the basis of guidance value of impugned property as on the date of sale agreement and not on the sale deed dated 09.03.2007. The Coordinate Bench has held that transfer took place on 08.03.1993. Therefore, according to ITAT’s order itself the computation of capital gain is required to be made in assessment year 1993-94. The impugned assessment year before us is assessment year 2007-08.
12. According to Paragraph No. 29 of the order of the ITAT the appeal of the assessee was allowed because in assessment year 2007-08 also it was found that there was no applicability of Section 50C. Merely because the sale deed is registered on 9th March 2007 it cannot be said that capital gain is also chargeable in assessment year 2007-08. Therefore, in substance capital gain according to the ITAT is required to be charged in assessment year 1993-94 and not in assessment year 2007-08. Therefore, the addition made by the learned Assessing Officer deserves to be deleted on this ground.
13. The learned Assessing Officer has wrongly considered that capital gain is chargeable to tax for assessment year 2007-08 whereas the ITAT has held that transfer has taken place in 1993-94. When the ground of appeal of the assessee is allowed, there was no direction by ITAT to the AO to re-compute the capital gain for the impugned assessment year. Thus, the Id. AO has wrongly assumed jurisdiction by taxing capital gain in the impugned year.
14. In the result appeal of the assessee is allowed.
Order pronounced in the open court on 20th May, 2026.
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