Case Law Details
Rajpal Mehra (HUF) Vs ACIT (ITAT Mumbai)
Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai, in a recent ruling involving Rajpal Mehra (HUF) vs. ACIT, underscored the anti-avoidance intent of Section 50C(1) of the Income Tax Act, 1961. The provision, aimed at curbing tax evasion through the undervaluation of property sales, was analyzed for its retrospective applicability, especially concerning the “safe harbour limit of 5%” introduced by the 3rd proviso. The ruling, dated January 17, 2024, delved into whether this amendment, deemed curative of unintended consequences, should apply to transactions prior to its official enactment in 2019.
Detailed Analysis
The case arose from the appellant’s sale of immovable property, where the sale consideration was slightly lower than the valuation as per the ready reckoner rates, leading to an addition by the Assessing Officer (AO) under Section 50C of the Act. The core of the dispute was the applicability of the “safe harbour limit of 5%” introduced by the Finance Act, 2018, effective from A.Y. 2019-20, to the appellant’s transaction in A.Y. 2016-17.
The appellant contested the addition, citing a precedent where the ITAT Mumbai extended the benefit of a similar amendment retrospectively, arguing that the provision was introduced to address genuine discrepancies between the sale consideration and stamp duty values. The Revenue opposed, maintaining the amendment’s prospective application as outlined by its enactment year.
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