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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. JYOTHIMANI
N. Meenakshi
Versus
The Assistant Commissioner of Income Tax
W.P.No.851 of 2009
Decided On : 11-09-2009
Section 50C - Assessment Order - Income Tax Act, 1961 - [Section 50C(2)] - Summary of Acts and Sections: The court discussed the application of Section 50C of the Income Tax Act, 1961, which deals with the determination of the full value of consideration in certain cases. The court highlighted the provisions of Section 50C(2) and its implications on the assessment of capital gains. The judgment also referenced Section 55A, Section 153(1) and 153(3) of the Act, and Section 47A of the Indian Stamp Act. The court emphasized the rights and safeguards available to the assessee under these provisions and their impact on the assessment process.
Fact of the Case:
The petitioner, the owner of a plot of land, sold the property to the Indian Oil Corporation for Rs.99 Lakhs. The Assessing Authority proposed to assess the capital gains based on the value adopted by the Stamp Authorities, which was in excess of the actual consideration received by the petitioner. The petitioner challenged the vires of Section 50C of the Income Tax Act, which was dismissed. The Assessing Authority passed the assessment order without waiting for the valuation report from the Valuation Officer, leading to the present writ petition.
Finding of the Court:
The court found that the impugned assessment order, passed without waiting for the valuation report and deciding the amount of capital gain on the basis of the stamp duty paid by the purchaser, was opposed to the guarantee granted to the assessee under Section 50C of the Act. The court set aside the assessment order and directed the Assessing Authority to proceed with the assessment of capital gain after obtaining the valuation report.
Issues: The issues involved in the case included the validity of the assessment order under Section 50C of the Income Tax Act, the rights and safeguards available to the assessee, the Assessing Authority's obligation to wait for the valuation report, and the availability of alternative remedy under Section 246A of the Act.
Ratio Decidendi: The court held that the impugned assessment order, passed without waiting for the valuation report and deciding the amount of capital gain on the basis of the stamp duty paid by the purchaser, was opposed to the guarantee granted to the assessee under Section 50C of the Act. The court also considered the applicability of alternative remedy and the rights and safeguards available to the assessee under the relevant provisions of the Act.
Final Decision: The writ petition was allowed, the impugned assessment order was set aside, and the matter was remitted to the Assessing Authority for fresh disposal after obtaining the valuation certificate from the District Valuation Officer. No costs were awarded to the petitioner.
The writ petition is directed against the assessment order of the respondent dated 312. 2008 by which the respondent, having referred the matter to the Valuation Cell on 112. 2008 as per Section 50C(2) of the Income Tax Act, 1961 (for brevity, "the Act"), completed the assessment by invoking Section 50C of the Act by taking the value of land as determined for stamp duty purpose as the sale value, as no valuation report was received from the Valuation Cell till the said date.
1. The petitioner was the owner of a plot of land comprised in R.S.No.3123/2, Block No.51, Old No.258 (New No.849), Poonamallee High Road, Purasawalkam, Chennai. She leased out the said portion of land to the Indian Oil Corporation for more than 40 years in which the Corporation was operating a petrol bunk. The petitioner, having decided to sell the property to the Indian Oil Corporation, after negotiation, fixed the sale consideration at Rs.99 Lakhs. Pursuant to the agreement, a sale deed was executed in favour of the Indian Oil Corporation. Since there was a capital gain on the sale, the petitioner offered the capital gains for assessment based on the actual consideration received by her, namely Rs.99 Lakhs and paid capital gains tax. However, the Registering Authority adopted the guideline value of the property which comes to Rs.3,92,68,800/- and levied stamp duty and the Indian Oil Corporation which is the purchaser has also paid stamp duty on the said amount.
2. According to the petitioner, in these circumstances, the Assessing Authority proposed to assess the capital gains on the basis of the value adopted by the Stamp Authorities which was in excess of actual consideration received by the petitioner and the petitioner filed a writ petition challenging the vires of Section 50C of the Act, which was dismissed. The matter was also ultimately decided by the Supreme Court by rejecting the SLP and directing the petitioner to approach the authorities by keeping open the question of vires of the provision.
3. Thereafter, the Assessing Authority proposed to assess the capital gain on the value fixed by the Stamp Authorities. The petitioner made a request to the Assessing Authority to refer the matter to the Valuation Officer for determining the market value of the property and the reference was made to the Valuation Officer in the course of the assessment proceedings. However, even before the Valuation Officer filed a report, the Assessing Authority passed the assessment order taking the value of the land as determined by the Registering Authority, which according to the petitioner is against Section 50C(2) of the Act.
4. The assessment is challenged on the grounds that it is opposed to Section 50C of the Act; that it is opposed to principles of natural justice; that, admittedly, the Valuation Officers report has not been received before 312. 2008 and the Assessing Authority has passed the assessment order urgently; and that even though there is a right of appeal available against the assessment order inasmuch as the order is said to be without jurisdiction the present writ petition is maintainable.
1. Mr. V. Ramachandran, learned Senior Counsel appearing for the petitioner would submit that the Supreme Court while upholding Section 50C(2) of the Act has kept open the issue relating to its validity. He would rely upon an order of this Court dated 24. 2009 made in W.P.No.2092 of 2009 in an identical situation. It is his contention that there was no opportunity given before passing such order and the order itself is without jurisdiction since at the request of the petitioner the matter has been referred for the purpose of valuation and the assessment has been passed without the valuation report.
2. It is his submission that Section 55A of the Act cannot be invoked as that provision empowers the Assessing Authority to refer for valuation, while Section 50C(2) of the Act is the right of the assessee.
3. It is his submission that the valuatio
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