Facts of the Case

The petitioner, Heritage Holidays Pvt. Ltd., filed a writ petition challenging reassessment proceedings initiated for Assessment Year 2019–20 under the Income Tax Act, 1961.

  • A notice dated 15.03.2023 was issued under Section 148A(b) alleging:
    1. Sale of immovable property (ground floor at Vasant Vihar) below stamp duty value, invoking Section 50C read with Section 43CA.
    2. Non-disclosure of ₹1.25 crore received from transfer of basement property.
  • The petitioner responded stating:
    • Ground floor property was sold for ₹12.21 crore, while circle rate was ₹12.83 crore.
    • The variation was within 5% tolerance limit, hence protected under the 3rd proviso to Section 50C.
    • Basement transaction was incomplete due to buyer default, despite receipt of advance.
  • The agreement concerning the basement property was unregistered, but possession had been handed over.

Issues Involved

  1. Whether reassessment proceedings under Section 148A were valid in the given facts.
  2. Applicability of safe harbour under Section 50C (3rd proviso).
  3. Whether handing over possession constitutes “transfer” under Section 2(47)(v).
  4. Validity of proceedings in absence of approval documents and alleged non-compliance with Section 151A (faceless assessment).

Petitioner’s Arguments

  • The difference between sale consideration and stamp duty value was less than 5%, hence covered under safe harbour provision of Section 50C.
  • Basement transaction was incomplete; amount received was merely advance, not income.
  • Reassessment invalid due to:
    • Non-supply of approval documents.
    • Violation of faceless assessment procedure under Section 151A.
  • Proceedings should be quashed at threshold.

Respondent’s Arguments

  • The case required deeper factual inquiry by the Assessing Officer (AO).
  • It was a rare situation where stamp duty was paid by the seller, raising suspicion of undisclosed cash components.
  • For basement property:
    • Possession already handed over.
    • Hence, transfer complete under Section 2(47)(v).
  • Approval documents would be furnished shortly.
  • Faceless assessment compliance was already ensured.

Court’s Findings / Order

The Delhi High Court dismissed the writ petition, holding:

  • The petitioner approached the Court after a delay of nearly five months.
  • Several factual aspects required examination by the AO.
  • Interference at this stage would not serve justice.
  • Observations:
    • Payment of stamp duty by seller is unusual and requires scrutiny.
    • Receipt of 50% consideration without further legal action against buyers raises doubts.
  • The petitioner is free to raise all legal and factual contentions during reassessment proceedings.
  • Revenue directed to supply approval documents within 10 days. 

Important Clarifications

  • Judicial restraint in reassessment matters: Courts may refuse interference where factual investigation is required.
  • Safe harbour under Section 50C is not automatic and depends on full factual verification, including stamp duty aspects.
  • Transfer under Section 2(47)(v) can be triggered even by possession, irrespective of registration.
  • Delay in approaching writ jurisdiction may weaken the petitioner’s case.

Sections Involved

  • Section 148A – Procedure before issuance of notice for reassessment
  • Section 50C – Special provision for full value of consideration
  • Section 43CA – Transfer of assets other than capital assets
  • Section 2(47)(v) – Definition of transfer (possession-based transfer)
  • Section 151A – Faceless assessment scheme

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS29082023CW114482023_150711.pdf 

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