HERITAGE HOLIDAYS PVT LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 10 1 DELHI

1. Allowed, subject to just exceptions. W.P.(C) 11448/2023 & CM Appl.44558/2023 [Application filed on behalf of the petitioner seeking interim relief]

2. This petition concerns Assessment Year (AY) 2019-20.

3. The petitioner was issued a notice dated 15.03.2023, under Section 148A(b) of the Income Tax Act, 1961 [in short, “Act”].

4. Principally, two allegations were levelled against the petitioner/assessee. W.P.(C) 11448/2023 Pg.[2] of 6 4.[1] First, it had sold the subject immovable property i.e., 53, Ground Floor, Paschim Marg, Vasant Vihar, New Delhi [hereafter referred to as “ground floor property”] for an amount which was less than stamp duty value, in contravention of the provisions of Section 50C read with Section 43CA of the Act. The information value concerning the aforesaid property was pegged at Rs.1,30,29,000/-. 4.[2] Second, the petitioner had not disclosed the fact that it had received Rs.1,25,00,000/- on sale/transfer of another part of the aforementioned immovable property i.e., the basement [hereafter referred to as “basement property”]. The information value qua the basement property was pegged at Rs.1,25,00,000/-.

5. The record shows that the petitioner/assessee filed a reply on 20.03.2023. 5.[1] In the reply, the petitioner/assessee indicated that it had sold the ground floor property for a consideration amounting to Rs.12,21,00,000/-. It was also indicated in the said reply that the capital gains earned were declared by the petitioner in its Return of Income (ROI). 5.[2] The petitioner/assessee disclosed that as per the circle rate the value of the property was pegged at Rs.12,83,00,000/-.

6. The defence taken by the petitioner/assessee was that since the variation in the price received by the petitioner and the circle rate value was less than 5%, the transaction would fall in the safe harbour in terms of the 3 rd proviso to Section 50C of the Act. W.P.(C) 11448/2023 Pg.[3] of 6

7. It is not in dispute that the 3rd proviso would be attracted to the said transaction only if the stamp duty amount paid by the petitioner is taken into account. 7.[1] Towards the stamp duty, the petitioner has paid Rs.68.43 lakhs, which is taken into account.

8. Insofar as the second allegation is concerned, the petitioner/assessee has not disputed that as regards the basement property, it has received Rs.1,25,00,000/-, albeit, as advance. 8.[1] The petitioner/assessee’s stand is that on account of litigation, the buyers are unwilling to perform the agreement.

9. The record shows that the agreement to sell dated 26.03.2019, based on which the said transaction is said to have progressed, is an unregistered document. 9.[1] A perusal of clause 2 of the said document would show that the petitioner/assessee has already delivered physical vacant possession of the basement property.

10. Given this position, Mr Kapil Goel, who appears on behalf of the petitioner/assessee, says that the allegation made against the petitioner/assessee is unsustainable as the first transaction concerning the ground floor property falls within the tolerance limit provided in the 3 rd proviso appended to Section 50C of the Act. 10.[1] As far as the basement property is concerned, it is Mr Goel’s submission that although the petitioner/assessee was able to complete the transaction, the buyers, because of their own difficulties, have not come forward to perform their obligations under the agreement. W.P.(C) 11448/2023 Pg.[4] of 6 10.[2] It is also Mr Goel’s contention that the respondent/revenue has not provided the documents concerning the approval received for triggering reassessment proceedings against the petitioner/assessee. 10.[3] Besides this, Mr Goel submits that insofar as this case is concerned, the provisions of Section 151A of the Act are applicable i.e., the proceedings should have been taken out under the faceless assessment regime.

11. Mr Shlok Chandra, learned senior standing counsel, who appears on behalf of the respondent/revenue, on the other hand, says that this is a matter in which the court should allow the reassessment proceedings to continue. 11.[1] In this regard, Mr Chandra pointed out that this is one of the strange and rare cases where the stamp duty, insofar as the sale of the ground floor property is concerned, has been paid by the seller. 11.[2] According to Mr Chandra, the Assessing Officer (AO) needs to examine whether there is a cash component involved in the transaction executed concerning the ground floor property.

12. Furthermore, Mr Chandra says that as regards the transaction carried out by the petitioner/assessee vis-à-vis the basement property is concerned, the provisions of Section 2(47)(v) of the Act would apply, as the petitioner/assessee has already delivered possession of the same.

13. In other words, as per the said provision, since the petitioner/assessee has parted with the possession of the basement property, the transfer has been effected.

14. Mr Chandra says that insofar as approval is concerned, the same has not been given and that the document will be furnished at the earliest. W.P.(C) 11448/2023 Pg.[5] of 6

15. As regards the submission of Mr Goel that the respondent/revenue should have continued with the regime provided pursuant to the insertion of Section 151A of the Act, Mr Chandra says that he has received instructions that compliance with regard to the faceless assessment regime has been made.