Insertion of first and second proviso to section 50C(1) being curative in nature has retrospective effect

Shri Prakash Sadashiv Vs ITO (ITAT Pune)

ITAT Pune held that first and second proviso(es) to section 50C(1), inserted by the Finance Act 2016 w.e.f. 01.04.2017 being curative in nature inserted for removing hardships to the taxpayers and, therefore, it carries retrospective effect.

Facts- The assessee’s sole substantive grievance herein challenges correctness of both the lower authorities action making long term capital gains addition of 55,70,021/- in the course of sec. 143(3) r.w.s. 147 re­assessment dated 27.12.2016 as upheld in the NFAC’s order under challenge.

Conclusion- This is for the precise reason that although the CIT(A) has refused to apply sec.50C(1) first and second proviso(es), inserted by the Finance Act 2016 w.e.f. 01.04.2017 on the ground that the same do not carry retrospective effect, the fact remains that this tribunal’s coordinate bench’s order in Dharamshibhai Sonani vs. ACIT [2016] 161 ITD 627 (Ahd.) has already decided the issue against the department by holding that this statutory amendment is curative in nature inserted for removing hardships to the taxpayers and, therefore, it carries retrospective effect.

The fact also remains that there is no concrete finding either in re-assessment or in the NFAC’s order as to whether the assessee had received whole or part of the consideration by way of the specified mode(s) or not so as to attract sec.50C(1) first and second proviso. This is indeed coupled with the fact that both the lower authorities have also not sought the DVO’s report held as mandatory even in absence of the assessee’s request as per Sunil Kumar Agarwal, vs. CIT [2014] 372 ITR 83 (Kol.). We accordingly restore the assessee’s instant sole substantive ground back to the Assessing Officer to decide afresh as per sec.50C(1) first and second proviso r.w.s. 50C(2) of the Act preferably within three effective opportunities of hearing. Ordered accordingly.

FULL TEXT OF THE ORDER OF ITAT PUNE

This assessee’s appeal for assessment year 20 12- 2013, arises against the National Faceless Appeal Centre [in short  “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2022-23/ 1048548306(1), dated 09.0 1.2023, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short “the Act”).

Case called twice. None appears at assessee’s behest. He is accordingly proceeded ex-parte.

2. At the outset, it is noticed that there is a delay of 18 days in filing the appeal and the assessee filed an application for condonation of the delay duly stating the reasons. Hon’ble apex court’s landmark decision Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) has settled the law long back that all such technical aspects must make way for the cause of substantial justice. We, therefore, condone the impugned delay and take-up the instant appeal for adjudication on merits.

3. We notice with the able assistance coming from the Revenue side that the assessee’s sole substantive grievance herein challenges correctness of both the lower authorities action making long term capital gains addition of 55,70,02 1/- in the course of sec. 143(3) r.w.s. 147 re­assessment dated 27.12.2016 as upheld in the NFAC’s order under challenge.

3. Mr. Jasnani has strongly supported both the lower authorities action making the impugned long term capital gains addition. Relevant facts qua the instant sole issue are indeed in a very narrow compass. Both the learned lower authorities had found the assessee to have sold the immovable property/capital asset in S.No.900/2 [admeasuring 2 hectare 67R] to Shri Rajendra Rasiklal Shah for Rs. 1,85,00,000/- on 30.12.2011. There is no dispute even as per the assessment findings that the assessee had actually received Rs.72 lakhs only as against stamp valuation of Rs.4,29,63,200/- adopted by the registration authority(ies). The Assessing Officer has further discussed the issue in para-4 pages 2 and 3 of the impugned re-assessment that the assessee had executed the corresponding development agreement on 18.08.2007 in assessment year 2008-2009. He has thereafter computed the impugned long term capital gains after invoking sec.50C; coming to Rs.55,70,021/-.

5. The NFAC has affirmed the impugned addition as under:

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6. We have given our thoughtful consideration to the vehement rival stands and deem it appropriate to restore the instant sole issue back to the Assessing Officer. This is for the precise reason that although the CIT(A) has refused to apply sec.50C(1) first and second proviso(es), inserted by the Finance Act 2016 w.e.f. 01.04.2017 on the ground that the same do not carry retrospective effect, the fact remains that this tribunal’s coordinate bench’s order in Dharamshibhai Sonani vs. ACIT [2016] 161 ITD 627 (Ahd.) has already decided the issue against the department by holding that this statutory amendment is curative in nature inserted for removing hardships to the taxpayers and, therefore, it carries retrospective effect. The fact also remains that there is no concrete finding either in re-assessment or in the NFAC’s order as to whether the assessee had received whole or part of the consideration by way of the specified mode(s) or not so as to attract sec.50C(1) first and second proviso. This is indeed coupled with the fact that both the lower authorities have also not sought the DVO’s report held as mandatory even in absence of the assessee’s request as per Sunil Kumar Agarwal, vs. CIT [2014] 372 ITR 83 (Kol.). We accordingly restore the assessee’s instant sole substantive ground back to the Assessing Officer to decide afresh as per sec.50C(1) first and second proviso r.w.s. 50C(2) of the Act preferably within three effective opportunities of hearing. Ordered accordingly.

7. This assessee’s appeal is allowed for statistical purposes.

Order pronounced in the open Court on 15.05.2023.