This case summary delves into the appeal filed by Sandeep Hooda against the Principal Commissioner of Income Tax – 7 (Pr. CIT-7), New Delhi, for the assessment year 2015-16. The appellant challenges the order passed by the Pr. CIT under section 263 of the Income Tax Act, claiming it to be erroneous and prejudicial to his interests.
The original assessment for the year was completed under section 143(3) on December 27, 2017, by the Assessing Officer (AO), where certain deductions claimed under section 54 were disallowed. Following this, Pr. CIT-7 invoked section 263, arguing that the original order was erroneous as it failed to properly apply section 50C of the Income Tax Act, which pertains to the sale considerations of capital assets like land and buildings.
The appellant, represented by Dr. Rakesh Gupta along with advocates Somil Agarwal and Deepesh Garg, contested the revisionary authority’s decision before the Income Tax Appellate Tribunal, Delhi. The defense argued that the Pr. CIT erred in law by not considering the detailed inquiries and justifications provided during the original assessment, particularly concerning the property’s sale consideration which was significantly lower than the circle rate.
The tribunal reviewed the submissions, focusing on whether the AO should have referred the matter to the District Valuation Officer (DVO) for a proper assessment of the property’s market value. It was contended that the AO had already considered the fair market value based on a registered valuer’s report and comparable sales in the vicinity.
The final judgment on August 10, 2022, set aside the revisionary order, ruling in favor of the appellant. The tribunal noted that the AO’s decision was based on adequate inquiries and was not erroneous under the provisions of the Income Tax Act.
This case highlights the procedural intricacies involved in the assessment of capital gains and the proper application of section 50C. It underscores the importance of detailed documentation and justification when property transactions fall below statutory circle rates.
Appeal by Sandeep Hooda Against Pr. CIT-7, New Delhi for A.Y. 2015-16
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