ORDER
Bhavnpesh Saini, Judicial Member - This appeal by assessee has been directed against the order of the Pr. CIT, Allahabad, dated 18th February, 2016, for the A.Y. 2011-2012 under section 263 of the I.T. Act, 1961.
2. The facts as noted in the impugned order are that the A.O. completed the assessment under section 143(3) on 30th March, 2014. The Assessee-HUF sold property located at 77/29 and 79/31, Lal Bahadur Shastri Marg, Allahabad, measuring 11428.10 sq. metres by carving out plots and selling them to the following persons during the assessment year under appeal :
| Sl. No. |
Area of the Plot |
Name of the purchaser |
Amount (in Rs.) |
| 1. |
7818 Sq. Mtrs. with constructed area of 970 sq. mts. |
Shanti Bhushan & Others |
1,00,000/- |
| 2. |
654.01 sq. mtr. |
Milan Infra Developers |
1,83,12,280/- |
| 3. |
228.53 " |
Sushil Khurana & Kanchan Khurana |
63,98,940/- |
| 4. |
228.53 " |
Janki Devi & Others |
63,98,940/- |
| 5. |
208.81 " |
Vinayak Pushp Projects |
55,12,584/- |
| 6. |
780.34 " |
Vinayak Pushp Projects |
2,06,10,976/- |
| 7. |
243.30 " |
Murari Lai Agarwal & Pawan Kumar Agarwal |
68,12,400/- |
| 8. |
238.80 " |
Manoj Jaiswal & Others |
66,86,400/- |
| 9. |
94.62 " |
Nazrul Rehman Khan |
23,06,400/- |
| 10. |
220.54 " |
Rukhsana Begum Khan |
61,75,120/- |
| 11. |
205.68 " |
Krishna Kumar Pandey & Nitin Chugh |
57,79,000/- |
| 12. |
228.53 " |
Ranjna Kakkar & Shruti Kakkar |
63,99,000/- |
| 13. |
220.54 " |
Madhu Arora |
61,75,120/- |
| Total |
11,370.23 Sq. Mtrs. |
|
Rs.9,76,46,960/- |
3. The assessee filed the return of income on 15th July, 2011 on an income of Rs.8,32,23,870 claiming refund of Rs.4,39,985. In the return of income, assessee disclosed (i) "Income from house property" at Rs.2,863 (ii) "Long term capital gains" at Rs.8,11,72,499 and (iii) "Income from other sources" at Rs.40,64,754. The assessee disclosed the sale consideration of Rs.9,76,46,960 on sale of the abovementioned plots. The assessee claimed cost of acquisition (on 11428.10 sq. mts. of land as on 01.04.1981) of Rs.l lakh and indexed cost of acquisition of Rs.7,11,000. Further the assessee claimed cost of improvement after indexation at Rs.52,11,373 (on free-hold charges of Rs.29,75,833 and other expenses paid on 8th June, 2000) and expenditure on transfer of Rs.5,25,000 (brokerage payment), thereby, claiming total deduction of Rs.64,47,373 under section 48 of the I.T. Act. Further, the assessee claimed deduction of Rs.l crore under section 54EC of the I.T. Act. The return of the assessee was selected for scrutiny. Notice under section 143(2) was issued on 11.09.2012. Thereafter, the assessee filed revised return of income on 1st July, 2013 on an income of Rs.39,67,620 claiming refund of Rs.l,67,66,772. Now, the assessee disclosed (i) "Income from house property at Rs.2803, (ii) Long term capital gains at NIL and (iii) Income from house property at Rs.40,64,754. The assessee claimed cost of acquisition (as on 01.04.1981 of Rs.1050 per sq. mtr. on 11,428.10 sq. mts. of land) of Rs. 1.19 crore and the indexed cost of acquisition of Rs.8.53 crores. The Ld. CIT on examination of the assessment record found that there are infirmities in the assessment order, therefore, assessment order is erroneous and prejudicial to the interests of the Revenue on the following reasons :
1.
The return of the assessee filed on 15th July, 2011 was selected for scrutiny but the A.O. made assessment on the basis of the revised return of income filed on 1st July, 2013. The revised return is not filed as per provisions of Section 139(5) of the IT Act because it was filed after expiry of one year from the end of the relevant assessment year. Therefore, revised return was
non-est. Thus, the assessment has been made by the A.O. by taking income returned in as
non-est return.
2.
Regarding sale of plot measuring 7818 sq. meters to Shri Shanti Bhushan and others, the A.O. has considered the sale consideration at Rs.l lakh as per the Conveyance Deed, whereas, stamp duty has been paid at the value of Rs.6,67,000 which was Rs.46,700. Further, in compliance to the letter, the Sub-Registrar, Sadar-1, Allahabad, has intimated that they have worked out the value for the portion sold to Shri Shanti Bhushan and others at Rs. 19,07,79,830 on which an additional stamp duty of Rs. 1,33,07,900 was to be paid. Therefore, as per provisions of Section 50C, A.O. should have considered the value of the plot at Rs. 19,07,71,830 for computing long term capital gains.
3.
The A.O. has not made any enquiry regarding income from house property declared at Rs.2863.
4.
The A.O. has not made any enquiry regarding income from other sources declared at Rs.40,64,754.
4. The Ld. CIT issued show cause notice under section 263 on 19.11.2015 in compliance to which assessee made compliance and filed paper book. The Ld. CIT discussed each issue in the impugned order after considering the explanation of assessee.
5. The assessee explained before Ld. CIT that assessee disclosed long term capital gains in the return of income along with its computation. The assessee filed revised computation sheet along with revised capital gain chart and also filed revised return for assessment year under appeal by disclosing correct valuation on account of long term capital gains. The assessee raised an alternative contention before A.O. and correctly filed revised computation of income. The A.O. did not raise any objection on the same and after due enquiry completed the assessment. The assessee did not make any fresh claim. A.O. applied his mind independently and explained the circumstances of the sale consideration received on sale of the property.
6. The Ld. CIT after considering the explanation of assessee noted that revised computation cannot be accepted because an income originally returned at Rs.8.32 crore only can only be charged by filing a revised return and not by simply revising the computation sheet. The revised return filed by the assessee is non-est because it was filed after expiry of one year from the end of the relevant assessment year. The A.O. has passed the order on non-est return. Therefore, the assessment order is erroneous as well as prejudicial to the interests of Revenue. The assessee made new claim before A.O. on which A.O. did not apply his mind. Ld. CIT relied upon the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1/284 ITR 323 wherein the Hon'ble Apex Court held that claim for a deduction not made in the return cannot be entertained by A.O. otherwise than by filing a revised return. The assessee should have filed revised return within period of limitation. The A.O. is duty bound to pass correct assessment of the true income of the assessee. The Sub-Registrar has valued the portion sold to Shri Shanthi Bhushan and others at Rs. 19,07,79,830. Therefore, as per provisions of Section 50C, the A.O. should have considered the value of the plot at Rs. 19,07,79,830. Therefore, order of the A.O. is erroneous insofar as prejudicial to the interests of the Revenue. The A.O. did not take into account original return of income. The Ld. CIT also considered the issue of correspondence exchanged between assessee and Shri Shanthi Bhushan to purchase the property in the year 1966 which remain subject matter in Civil Court and ultimately compromise was held in Civil Court in October, 2010 and thereafter, Sale Deed was executed in assessment year under appeal. The assessee claimed that date of Sale Deed should be considered from the date of Agreement to Sale in 1966 which was not acceptable in view of provisions of Section 50C of the I.T. Act. The Ld. CIT was of the view that Sale Deed was executed on 29.11.2010 which fall in assessment year under appeal. Therefore, according to Section 50C of the I.T. Act, the value of the property should be considered which is adopted by the Stamp Valuation Authority. The Ld. CIT did not consider the judgment of the Hon'ble Supreme Court in the case of Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/225 Taxman 239/365 ITR 389 relied upon by assessee in favour of the assessee. The Ld. CIT accordingly held that the revised return filed by assessee was non-est and that the sale consideration should be adopted according to Section 50C of the I.T. Act which is determined by Sub-Registrar, Allahabad at Rs. 19,07,79,830. The assessment order was accordingly set aside and A.O. was directed to compute long term capital gains by considering sale consideration as per Section 50C of the I.T. Act at Rs. 19,07,79,830. The A.O. was also directed to make proper enquiry regarding income from house property and income from other sources as disclosed by the assessee in the original return of income.
7. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that A.O. applied his mind to the facts of the case by examining the material on record. The assessment order remained subject to appeal before Ld. CIT(A), Allahabad which was however, dismissed as become infructuous because of the impugned order passed under section 263 of the I.T. Act. He has submitted that A.O. considered the issue of long term capital gains after query and A.O. has referred to chart of the same in the assessment order. The Agreement to Sale is dated 2nd September, 1966 in which the purchaser has paid an advance of Rs.5000 through cheque dated 1st October, 1966. Since there was litigation in Civil Court, therefore, the date of Sale Deed should be considered as Date of Agreement to Sale dated 2nd September, 1966. He has relied upon decision of the Hon'ble Supreme Court in the case of (1) Sanjeev Lal (supra) and decision of Allahabad High Court in the case of CIT v. Shimbhu Mehra [2016] 65 taxmann.com 142/236 Taxman 561 . He has submitted that proviso to Section 50C was came into effect from 01.04.2017 that sale value be considered as per agreement which is retrospective in nature as held by ITAT, Ahmedabad Bench in the case of Dharamshibhai Sonani v. Asstt. CIT [2016] 75 taxmann.com 141/161 ITD 627 . He has therefore, submitted that since proviso to Section 50C is applicable retrospectively w.e.f. 01.04.2003 which would support the claim of assessee that the sale consideration be considered as per agreement instead of date of the Sale Deed. He has also relied upon the order of the ITAT, Mumbai Bench in the case of Westlife Development Ltd. v. Pr. CIT in ITA. No. 688/Mum/2016 of June, 2016, in which the original assessment order under section 143(3) was held to be null and void in the eyes of Law as same was passed upon non-existing entity. It was, therefore, held that CIT could not have jurisdiction under section 263 of the I.T. Act. He has submitted that since the A.O. passed the assessment on a revised return which according to Ld. CIT was non-est, therefore, Ld. CIT, cannot exercise jurisdiction under section 263 of the I.T. Act. Learned Counsel for the Assessee submitted that the view of the A.O. was sustainable in Law and where two views are possible and A.O. has taken one view and the Ld. CIT does not agree with the view taken by the AO, assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. He has relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. Kwality Steel Suppliers Complex [2017] 84 taxmann.com 234/250 Taxman 23/395 ITR 1 . He has also submitted that since A.O. passed the assessment order with due application of mind by considering the material on record, therefore, it is not a case where A.O. passed the order without making enquiry or verification. Therefore, Explanation to Section 263 would not apply in the case of the assessee. He has, therefore, submitted that impugned order may be set aside.
7.1 The Ld. D.R. on the other hand relied upon the impugned order and submitted that A.O. made the assessment on revised return of income filed belatedly on 1st July, 2013. The A.O. did not mention original return of income in assessment order. The A.O. has not mentioned the details of long term capital gains mentioned in the original return of income or revised return of income. Therefore, it is a case of no enquiry, therefore, Ld. CIT was justified in setting aside the same.
8. We have considered the rival submissions. It is not in dispute that assessee filed original return of income on 15th July, 2011 declaring long term capital gains. The assessee later on revised the return of income on 1st July, 2013 and declared NIL long term capital gains. Learned Counsel for the Assessee referred to various documents in the paper book. He has submitted that PB. 1-03 which is details submitted in original return of income showing long term capital gains. Assessee explained that revised return was filed to correct the long term capital gains. The details submitted in the revised return are filed at PB.1-68 to 84. PB1-116 is the order sheet of the A.O. dated 3rd February, 2014, in which the A.O. asked for the details of sale consideration of the property with reference to circle rate. PB.1-111 is reply before A.O. in which the assessee filed the details of the property sold to various purchaser including Shri Shanti Bhushan and others at Rs.l lakh which is supported by valuation report and other details. In the same reply, assessee has also claimed deduction under section 54EC and the rent received on property and details shown under the head "Income from other sources". These facts would show that assessee filed detailed reply before A.O. at assessment stage regarding long term capital gains on account of sale of property in question and other details of rent and income from other sources. PB 121 to 129 are various correspondence held from 2nd September, 1966 onward between Assessee-HUF, Shanti Bhushan and B.N.Rama & Co. (Stores) with regard to proposal to purchase the property in question for Rs. 1 lakh which have been accepted by the assessee and Shri Shanti Bhushan has paid Rs.5000 through cheque 064313 dated 1st October, 1966. The assessee thereafter, moved to the Collector, Allahabad seeking permission to transfer the property in question. Thereafter, the matter was taken to the Civil Court in which the matter was settled and as per Decree of the Court, the sale Deed dated 29.11.2010 have been executed by the Assessee-HUF in favour of Shri Shanti Bhushan and others. The Hon'ble Supreme Court in the case of Sanjeev Lal (supra), held as under :
"One A executed a will bequeathing a life interest in a self-acquired residential house in Chandigarh to his wife and upon her death, absolutely to two sons of his pre-deceased son M and his widow. Upon the death of A, possession of the house was given to his widow and upon her death on August 29, 1993, according to the will, the ownership in respect of the house vested in two sons of his pre-deceased son M and his widow. The appellants (one of the grandchildren and the daughter-in-law of A) entered into an agreement to sell the house on December 27, 2002, for a consideration of Rs. 1.32 crores. Out of this amount, the appellants received a sum of Rs. 15 lakhs by way of earnest money from the intending purchaser. The appellants purchased another house on April 30, 2003, within one year from the date of the agreement to sell. The validity of the will was questioned by another son of the deceased testator in a civil suit, wherein the trial court, by an interim order restrained the appellants from dealing with the house property. The suit was ultimately dismissed in May, 2004, and the validity of the will was upheld. The appellants executed the sale deed in 2004 and it was registered on September 24,2004. On the belief that the long-term capital gains were not chargeable to tax under the provisions of section 54 of the Income-tax Act, 1961, the appellants did not disclose the long-term capital gains in their return of income for the assessment year 2005-06. The Assessing Officer was of the view that the appellants were not entitled to any benefit under section 54 of the Act since the appellants had purchased the new house more than one year prior to the transfer of the original asset. The Commissioner (Appeals) dismissed the assessees' appeals as did the Tribunal and the High Court. On appeals:
Held, allowing the appeals, that in normal circumstances, the entire property cannot be said to have been sold at the time when an agreement to sell is entered into. However, looking at the provisions of section 2(47) of the Act, which defines the word "transfer" in relation to a capital asset, if a right in the property is extinguished by execution of an agreement to sell, and that right is transferred to someone, it would amount to transfer of a capital asset. An agreement to sell in respect of a capital asset had been executed on December 27, 2002, for transferring the residential house and a sum of Rs.15 lakhs had been received by way of earnest money. The sale deed could not be executed because of pendency of the litigation between the testator's son on the one hand and the appellants on the other as to the validity of the will under which the property devolved upon the appellants. By virtue of an order passed in the suit, the appellants were restrained from dealing with the residential house. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed was registered only on September 24, 2004, after the suit challenging the validity of the will, had been dismissed. On the facts and in view of the definition of the term "transfer", some right in respect of the capital asset had been transferred in favour of the vendee and, therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accordance with law. A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid Rs. 15 lakhs by way of earnest money. The intention of the Legislature in enacting section 54 is to give the assessee relief in the matter of payment of tax on long-term capital gains. The appellants were entitled to relief under section 54 of the Act in respect of the long term capital gains which they had earned in pursuance of transfer of their residential property and used for purchase of a new asset/residential house."
9. The Hon'ble Allahabad High Court in the case of Shimbhu Mehra considered the judgment of the Hon'ble Supreme Court (supra) and held in para-14 as under:
"In the light of the aforesaid provision, it is apparently clear that the moment an agreement to sell is executed between the parties and part consideration is received, the transfer for the purpose of section 50C takes place and computation under section 48 will start accordingly, for the purpose of calculating the capital gains under section 45. From the aforesaid, it is apparently clear that the transfer of the property took place in the year 2001 when the provision of section 50C was not in existence. Consequently, the Assessing Officer was not justified in making the reassessment and computing the capital gains by invoking the provision of section 50C, which was clearly not applicable in the assessees' case."
10. Considering the facts of the case and material on record, it is clear that there was an Agreement to Sale between Assessee-HUF and Shri Shanti Bhushan in September, 1966, whereby, the purchaser agreed to purchase the property for Rs. 1 lakh and paid earnest money of Rs.5000 through cheque. It is, therefore, established on record that the purchaser has entered into an Agreement to Sale to purchase the property for a sum of Rs. 1 lakh in September, 1966 but due to litigation in Civil Court, the Sale Deed was executed later on 29.11.2010. Therefore, both the above judgments in the case of Sanjeev Lal (supra), clearly applicable to the facts and circumstances of the case and the Date of Agreement to Sale to be taken as Date of Transfer of Original Asset. On peculiar facts of the case, the sale deed dated 29.11.2010 as per provisions of Law for calculating long term capital gains shall have to be considered as executed on September 1966. Thus, the provisions of Section 50C of the I.T. Act which were not applicable in that year could not be invoked against the assessee.
10.1 We may refer to proviso to Section 50C of the I.T. Act which is inserted into the Act w.e.f. 01.04.2017 and provides as under :
"Provided that where date of agreement fixing the amount for consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by Stamp Valuation Authority on the date of the agreement may be taken for the purpose of computing full value of consideration for such transfer."
10.2 The ITAT, Ahmedabad Bench in the case of Dharamshibhai Sonani (supra), considered the proviso to Section 50C of the I.T. Act, being retrospective in effect and is effective from 01.04.2003. The order of the Tribunal in paras 3 to 10 are reproduced as under :
'[3]
I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position.
[4]
The fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of widespread belief that sale transactions of land and building are often undervalued resulting in leakage of legitimate tax revenues. This Section provides for a presumption, a rebuttable presumption though-something with which I am not concerned for the time being, that the value, for the purpose of computing stamp duty, adopted by the stamp duty valuation authority represents fair indication of the market price of the property sold. Section 50C(1) provides that, "
Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer". The trouble, however, is that while the sale consideration is fixed at the point of time when agreement to sell is entered into, there is sometimes considerable gap in parties agreeing to a transaction (i.e. agreement to sell) and the actual execution of the transaction (i.e. sale deed), and yet, it is the value as on the date of execution of sale deed which is recognized by Section 50C for the purpose of computing the capital gain because that is what is relevant for the purpose of computing stamp duty for registration of sale deed. The very comparison between the value as per sale deed and the value as per stamp duty valuation, accordingly, ceases to be devoid of a rational basis because these two values represent the values at two different points of time. In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, vis-a-vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was infact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. Income Tax Simplification Committee set up in 2015, headed by Justice R V Easwar- a former judge of Delhi High Court and one of the most illustrious former Presidents of this Tribunal, took note of this incongruity and, in its very first report ('
http://taxsimplification.in/REPORT.pdf). observed as follows:
6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL
Section 50C makes a special provision for determining the full value of consideration in cases of 'transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act.
The scope of section 50C was extended w.e.f A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word "assessable" along with words "the value so adopted or assessed". Hence, section 50C is now also applicable in case of such transfers.
The present provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement. A later similar provision inserted by way of section 43CA does take care of such a situation.
6.2 It is therefore proposed to insert the following provisions in section 50C:
(4) Where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of the asset are not same, the value referred to in sub- section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement
(5) The provisions of sub-section (4) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before a date of agreement for transfer of the asset.
[5]
True to the work ethos of the current Government, it was the first time that within four months of the Tax Simplification Committee being notified, not only the first report of the Committee was submitted, but the Government also walked the talk by ensuring that the several statutory amendments, based on recommendations of this report, were introduced in the Parliament. So far as Section 50C is concerned, the Finance Act, 2016, with effect from 1st April 2017, inserted the following provisos to Section 50C:
"
Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer.
Provided further that the first proviso shall apply only in a case where the amount of consideration, or apart thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer."
(6) This amendment was explained, in the Memorandum Explaining the Provisions of Finance Bill 2016 (
http://iondiabudget.nic.in/ub2016-17/memo/mem 1 pdf), as follows:
Rationalization of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property
Under the existing provisions contained in Section 50C, in case of transfer of a capital asset being and or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. The Income Tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. when an immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. 30 These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years.
[7]
While the Government has thus recognized the genuine and intended hardship in the cases in which the date of agreement to sell is prior to the date of sale, and introduced welcome amendments to the statute to take the remedial measures, this brings no relief to the assessee before me as the amendment is introduced only with prospective effect from 1st April 2017. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, resulting in undue hardship to the assessee, as is evident from the observation in Easwar Committee report to the effect that "The (then prevailing) provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement" recognizing the incongruity that the date agreement of sell has been ignored in the statute even though it was crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In support of this proposition, I find support from Hon'ble Delhi High Court's judgment in the case of
CIT v. Ansal Landmark Township Pvt Ltd. [(2015) 377 ITR 635 (Del)], wherein approving the reasoning adopted an order authored by me during my tenure at Agra bench [i.e
Rajeev Kumar Agarwal v.
ACIT (2014) 149 ITD 363 (Agra)] which centred on the principle that when legislature is reasonable and compassionate enough to undo the undue hardship caused by the statute "such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically". In this case, it was specifically observed, and it was this observation which was reproduced with approval by Their Lordships, as follows:
"Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April. 2005. being the date from which sub-clause (ia) of section 40(a) was inserted by Finance (No.2) Act, 2004."
(8) Their Lordships were pleased to hold that this reasoning and rationale of this decision "merits acceptance". The same principle, when applied in the present context, leads to the conclusion that the present amendment, being an amendment to remove an apparent incongruity which resulted in undue hardships to the taxpayers, should be treated as retrospective in effect. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the proviso to Section 50C should also be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. While the Government must be complimented for the unparalleled swiftness with which the Easwar Committee recommendations, as accepted by the Government, were implemented, I, as a judicial officer, would think this was still one step short of what ought to have been done inasmuch as the amendment, in tune with the judge made law, ought to have been effective from the date on which the related legal provisions were introduced. As I say so, in addition to the reasoning given earlier in this order, I may also refer to the observations of Hon'ble Supreme Court, the case of
CIT v.
Alom Extrusion Ltd. [(2009) 319 ITR 306], to the following effect:
"Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April 1988 (
i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of
Allied Motors (P) Ltd. v. Commissioner Of Income Tax, Delhi (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which related to asst yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of
Allied Motors (P.) Ltd. (
supra). However, the assessee contended that even though the first proviso came to be inserted w.e.f 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when s. 43B stood inserted. This is how the question of retrospectivity arose in
Allied Motors (P.) Ltd. (
supra). This Court, in
Allied Motors (P.) Ltd. (
supra) held that when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court in
Allied Motors (P.) Ltd. (
supra), held that the first proviso was curative in nature, hence. retrospective in operation w.e.f. 1st April. 1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in
Allied Motors (P.) Ltd. (
supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively w.e.f. 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example—in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s.43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore. Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003."
(9) So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29-6-2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving 5" opportunity of hearing to the assessee and by way of a speaking order. I order so.
(10) As I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in - there is a fall in the stamp duty valuation rates with the passage of time. Such as that on has actually arisen in many places in the country, such as in 'Gurgaon (http:// hindustantimes. com/gurgaon/ for-the-first-time-circle-rates-educed-in-gurgaon/storv-cip6e72TeGS9H5jJIALAGP. html), New Delhi (http:// www. delhismartcities.com/ bloqs/ hiqh-circle-rates-causing-slump-reality-reduce-delhi-government), and even in Dehradun (Uttarakhand) (http:// www. tribuneindia. com/ news/uttarakhand/ relief-to-property-buyers-as-circle-rates-cut-50-pc/247805.htmL and some other places. It is therefore possible that, at first sight, first proviso to Section 50C may seem to work to the disadvantage of the assessee in certain situation in the event of the word 'may' being construed as mandatory in application, but then one cannot be oblivious to the fact that this proviso states that "the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer (emphasis supplied)" making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in harmony with the legislative intention, insertion of words "at the option of the assessee" between "stamp valuation authority on the date of agreement may" and "be taken for the purposes of computing full value of consideration for such transfer", in first proviso to Section 50C(1), could have made the legal provision even more unambiguous.'
10.3 The above decision would also support the case of the assessee that sale consideration as per Agreement to Sale shall have to be considered, which, in this case was Rs. 1 lakh and was effective in September, 1966. Therefore, the provisions of Section 50C would not apply in the case of the assessee in assessment year under appeal.
10.4 The Learned Counsel for the Assessee also argued that since the assessment is framed on the basis of the revised return filed on 1st July, 2013 and according to Ld. CIT it was a non est return, if assessment is framed on non est return, the assessment itself would be null and void and could not be subject matter of jurisdiction under section 263 of the I.T. Act. In support of his contention, he relied upon the decision of the ITAT, Mumbai Bench in the case of Westlife Development Ltd. (supra) in which original assessment order was held to be null and void in the eye of Law as same was passed upon non-existing entity. Therefore, it was held that Ld. CIT could not have assumed jurisdiction under the Law to make revision of a non est order. Therefore, impugned order passed under section 263 by the Ld. CIT was also held invalid in the eye of Law and therefore, the same was quashed. The A.O. in this case has framed the assessment on the basis of revised return filed on 1st July, 2013 and taken the income from the same for computing the total income of assessee. It is also case of the Revenue that even the A.O. did not mention original return of income in the assessment order, therefore, even if it is considered that revised return dated 1st July, 2013 which is basis for completing the assessment in question was non est, then the entire assessment would vitiated and would also be non est under the eye of Law. Therefore, decision of the Mumbai Bench would apply to the facts of the case. When assessment order itself is null and void based on non est revised return, the Ld. CIT could not have exercise jurisdiction under section 263 of the I.T. Act.
10.5 It is well settled Law that two conditions need to be satisfied for invoking powers under section 263 by the Commissioner which are (1) the Order of the A.O. sought to be revised is erroneous and (2) it is prejudicial to the interests of the Revenue. At the same time this provision cannot be invoked to correct each and every type of mistake or error committed by the A.O. The order of the A.O. cannot be termed prejudicial simply because A.O. adopted one of the course permissible in Law and it has resulted in loss of Revenue or where two views are possible and A.O. has taken one view with which the Commissioner did not agree. Where two views are possible and A.O. has taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. While exercising the revisional jurisdiction, the commissioner has not sit in appeal. We rely upon the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 109 Taxman 66/243 ITR 83 and Kwality Steel Suppliers Complex's case (supra). In view of the above legal proposition and discussion, it is clear that Section 50C would not be applicable to the facts and circumstances of the case. In assessment year under appeal, because the date of Sale Deed shall have to be reckoned on the date of Agreement to Sale i.e., September, 1966, therefore, the view of the A.O. is sustainable in Law and if the Ld. CIT does not agree with him, such order could not be treated as erroneous and prejudicial to the interests of the Revenue. On minor issue, assessee filed reply but no order have been passed by the Pr. CIT. It is a case where A.O. made enquiry into the matter by calling explanation of assessee and was satisfied with the claim of assessee. Therefore, Ld. CIT should not have exercise jurisdiction under section 263 of the I.T. Act. We, therefore, of the view that the order of Ld. CIT is not sustainable in Law. We, accordingly, set aside the order under section 263 of the I.T. Act dated 18th February, 2016 and restore the assessment order under section 143(3) dated 30th March, 2014. We may also note here that Ld. CIT(A) while dismissing the appeal of assessee vide order dated 21st December, 2016 against the original assessment order noted that in case, Hon'ble ITAT set aside the order under section 263, this appeal will get reinstated. Since we have quashed the order under section 263 of the Act, the Ld. CIT(A) may decide the appeal of assessee against the original assessment order in accordance with Law, on merits.
11. In the result, appeal of assessee is allowed.
pooja