Calcutta High Court
Gyanashewar Prasad Agarwal (Huf) & Anr vs Assistant Comm. Of Income Tax on 27 January, 2016
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
WP 2240 of 2005
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
GYANASHEWAR PRASAD AGARWAL (HUF) & ANR.
Versus
ASSISTANT COMM. OF INCOME TAX, CENTRAL CIRCLE-XII AND OTHERS
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 27th January, 2016.
Appearance:
Mr. J.P. Khaitan, Sr. Adv.
Mr. Ananda Sen, Adv.
Md. Nizamuddin, Adv.
The Court : The petitioners have assailed the vires of Section 50C of the
Income Tax Act, 1961. The petitioners have also contended that, the notional market
value of an immovable property taken for the purpose of arriving at the value of stamp
duty payable in respect of a registration of an immovable property cannot form the basis
for computation of the income of the vendor of the property. The notional market value
of the property is the consideration of the sale. The vendor did not receive such
consideration. It is submitted that, the provisions of Section 50C and its manner of
application have received consideration of a Division Bench of the Court in a decision
reported at (2015) 372 ITR 83 (Cal) (Sunil Kumar Agarwal versus Commissioner of
Income-Tax). Relying on such reported decision, it is submitted that, the assessing
officer may be directed to re-visit the assessment for year 2005-06 of the vendor in light
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of the ratio laid down in Sunil Kumar Agarwal (supra) since the assessing officer has,
during the pendency of the writ petition, proceeded to assess the vendor on the basis of
the interim order dated December 21, 2005 without taking into consideration the
application of Section 50C of the Income Tax Act, 1961.
On behalf of the Income Tax authorities, it is submitted that the issue of
vires stands settled by judicial pronouncements. The provisions of Section 50C has not
been found to be ultra vires the Constitution.
I have considered the rival contentions of the parties and the materials
made available on record.
When the writ petition was moved an interim order dated December 21,
2005 was passed. The interim order was in terms of the prayer (f) of the writ petition.
Prayer (f) of the writ petition is as follows :
"(f) that an interim order of injunction may be passed restraining the
Respondents, their servants and agents from giving any effect to and/or
taking any steps to the provisions of Section 50C of the Income Tax Act, 1961 for the purpose of determination of capital gain in respect of disputed properties referred to in the petition until further order of this Hon'ble Court;"
The interim order was continued till the disposal of the writ petition by an order dated April 25, 2006.
In the present case, the assessment of the income of the vendor for the year 2005-06 when the sale of the immovable property took place would come up for consideration before the assessing officer in terms of Section 50C of the Income Tax Act, 1961. In Sunil Kumar Agarwal (supra) the Court has laid down the procedure for quantification of the income where the vendor does not accept the market value for the 3 purpose of calculation of the stamp payable in respect of the registered instrument to be the basis for calculation of its income.
By reason of the interim order dated December 21, 2005 and as extended on April 25, 2006, the assessing officer has proceeded to assess the income of the vendor without taking into consideration the provisions of Section 50C of the Income Tax Act, 1961.
In the facts of this case, it would be appropriate, for the ends of justice, to direct the assessing officer to re-visit the assessment orders in respect of the vendor commencing from the assessment year 2005-06 when the immovable property sold after taking into account the ratio laid down in Sunil Kumar Agarwal (supra) and in accordance with law.
So far as the question of vires is concerned since I have not been called upon to adjudicate the same, I keep the same open.
WP No.2240 of 2005 is disposed of. No order as to costs. Urgent photostat certified copy of this order, if applied for, be supplied to the parties upon compliance of all requisite formalities.
(DEBANGSU BASAK, J.) sp2.