The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that capital gains tax applies to the owner as proven by registered sale deeds. Ranganath Ashok Meharwade,appellant-assessee, filed his income tax return on 29th March 2017, declaring ₹1,72,800 as total income. The Assessing Officer ( AO ) later found that he had sold a property on 3rd February 2015 for ₹22 lakhs, while the stamp duty value was ₹54,20,000. Using Section 50C of the Act, the AO proposed to treat the higher stamp duty value as the sale consideration for calculating capital gains. Get a Complete Kit of Essential Books for Daily Practice, Click Here Despite issuing notices under Sections 143(2) and 142(1), followed by a show-cause notice under Section 144, the assessee did not respond. As a result, the AO assessed the capital gains based on the stamp duty value of ₹54,20,000.

The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], claiming that the disputed land belonged to Shri Satyanarayan P. Raibagi, Hubli, and he was not liable for capital gains tax. He argued that the AO used an incorrect valuation, as a prior agreement for the property by Shri Raibagi had a lower value, which should have been considered. The assessee also stated that the AO’s calculation of capital gains was wrong, as it did not include the indexed cost of purchase, development expenses, and other related costs. After reviewing the submissions, the CIT(A) found that the assessee was the owner of the land based on the documents and upheld the AO’s assessment. Aggrieved by the decision of the CIT(A) the assessee appealed before the tribunal. A 20-day delay in filing the appeal was attributed to the previous representative’s illness and the time required to transfer and prepare documents with a new representative. The Tribunal accepted the explanation, condoned the delay, and heard the appeal on merits. Get a Complete Kit of Essential Books for Daily Practice, Click Here

The two member bench comprising Soundararajan ( Judicial Member ) and Waseem Ahmed ( Accountant Member ) examined the paper book submitted by the appellant, which included sale deeds and translations. The sale deed of 03/02/2015 clearly indicated that the appellant, Shri Ranganath, was the seller and had bought 71 guntas of land in 2013. It also stated that the appellant was the absolute owner of 20 plots, 8 of which were sold due to financial difficulties. The tribunal found that the assessee was the rightful owner of the land and rejected the claim that Shri Satyanarayan P. Raibagi was the actual owner. Additionally, the assessee did not provide evidence that Raibagi had declared long-term capital gains in his tax return. The bench upheld the CIT(A)’s decision that the capital gains should be taxed in the assessee’s hands and dismissed grounds. In short,the appeal filed by the assessee was dismissed.