AMIR SAIYED,SURAT V. INCOME TAX OFFICER(INT. TAX.), SURAT

ITA 767/SRT/2024

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The case involves Amir Saiyed, a Non-Resident Indian (NRI), who, along with other co-owners, sold agricultural land for Rs.2,89,70,000/-. The Assessing Officer (AO) added a differential amount of Rs.5,05,226/- to the assessee's income under section 50C of the Income-tax Act, which pertains to the taxation of capital gains based on the higher stamp duty value of the property. The AO also levied a penalty under section 271(1)(c) for concealment of income. The assessee appealed against the penalty, arguing that it was based on a deeming provision and that all income received was declared. The Tribunal agreed with the assessee, referencing a similar case (Kantibhai Mohanbhai Kheni vs. CIT) where it was held that no penalty can be levied on additions made under deeming provisions unless there is evidence of actual concealment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26795 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 07-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 16-07-2024
• Other Referred Cases: Kantibhai Mohanbhai Kheni vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MINAL KAMBLE
• Assessee Lawyers: RAJESH UPADHYAY
• Keywords: Set aside; Capital asset; Opportunity of being heard; Sale consideration of property below Jantri Value; Cost of acquisition; Tax effect; Valuation report
• Section: 148; 142(1); 250; 271(1)(c); 274; 50C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.767/SRT/2024 (Assessment Year: 2015-16) (Physical Hearing) Amir Saiyed, Masjid Street Malekpore, Palsana, Surat – 394315 Vs. The ITO (Int. Tax.), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: FYIPS7714A (Appellant) (Respondent) Appellant by Shri Rajesh Upadhyay, AR Respondent by Shri Minal Kamble, Sr. DR Date of Hearing 07/11/2024 Date of Pronouncement 07/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) by the Learned Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi, [in short, ‘Ld. CITA(A)’], dated 30.06.2024 for assessment year (AY) 2015-16. 2. Grounds of appeal raised by the assessee are as under: 1. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to dismiss appellant’s appeal ex-parte i.e., without providing adequate opportunity of being heard and he also erred to pass speaking order on the grounds raised in appeal before him. 2. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to upheld the penalty levied by the AO at Rs.1,04,076/- ignoring the law that estimated addition does not attract penalty u/s 271(1)(c). 2 ITA No.767/SRT/2024/AY.2015-16 Amir Saiyed 3. Facts of the case in brief are that assessee had not filed his return of income for AY.2015-16. The Assessing Officer (in short, the ‘AO’) found that the assesse along with six other co-owners sold immovable (land) property, situated at Block No.286, Moje – Bhutpore, Tal – Palsana, Surat on a sale consideration of Rs.2,89,70,000/-, in which assessee’s share is Rs.1,05,00,000/-. The stamp (jantry) value of the property was calculated at Rs.3,08,59,300/- by the Sub-Registrar. The difference between sale value and stamp (jantri) value of the immovable property in question amounting to Rs.15,12,106/- [Rs.3,08,59,300 (-) Rs.2,89,70,000] attracts the provisions of section 50C of the Act. The AO observed that the value of assessee’s share in the property comes to Rs.1,11,84,682/- as per valuation by the Stamp Valuation Authority (SVA). The assessee had not filed return of income for the year under consideration. Hence, total stamp value of Rs.1,11,84,682/- remained undisclosed / unexplained on the part of the assessee for the year under consideration. Various notices and show cause notices u/s 148 and 142(1) of the Act were issued on 31.03.2021 and served upon the assessee. On receipt of the notice, the assessee filed return of income, declaring total income of Rs. Nil. The assessee filed reply in response to the show cause notice which is noted at para 4 (page 3) of the assessment order and page 2 of penalty order. However, the reply has neither been reproduced nor discussed by the AO. The AO in assessment order has mentioned that assessee had adopted indexed cost of land at Rs.95/- per sq. mt. as on 01.04.1981 (as per valuation report of a 3 ITA No.767/SRT/2024/AY.2015-16 Amir Saiyed register valuer) whereas in the opinion of AO, it was Rs.92/- per sq. mt. The basis for adopting value at Rs.92/- has not been given by AO. After allowing indexed cost of acquisition, AO has determined long term capital gain at Rs.5,05,226/- [Rs.1,11,84,682 (-) Rs.1,06,79,456]. The AO initiated penalty u/s 271(1)(c) of the Act for concealment of income. During the penalty proceedings, AO issued notice u/s 274 r.w.s. 271(1)(c) on 11.05.2022. There was no response from the assessee. Another notice was issued on 17.01.2023. Again, there was no compliance. Hence, the AO levied penalty of Rs.1,04,076/- being 100% of the tax sought to be evaded on concealment of income of Rs.5,05,226/-. During appellate proceedings, the CIT(A) allowed assessee the opportunity of being heard on 06.12.2023 and 04.06.204. However, assessee did not respond, therefore, the CIT(A) dismissed the appeal by observing that assessee is not interested to pursue the appeal. He also observed that on merits, he could not differ with the finding of AO. In the result, the appeal of the assessee was dismissed by CIT(A). 4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted that the assessee is a Non-Resident Indian (NRI) and sold agricultural land along with other co-owners for Rs.2,89,70,000/- in which his share was Rs.1,05,00,000/-. The AO has taken jantri value at Rs.3,08,59,300/- and arrived at difference of Rs.5,05,226/-. The addition was u/s 50C of the Act. He submitted that AO has levied penalty on the addition made u/s 50C of the Act. 4 ITA No.767/SRT/2024/AY.2015-16 Amir Saiyed He further submitted that assessee has filed all details to CIT(A) during appellate proceedings on 22.12.2023 which has not been considered by him. He further submitted that it is settled position of law that penalty is not leviable on addition made under deeming provisions of the Act. He has relied on the decision in case of Kantibhai Mohanbhai Kheni vs. CIT, in ITA No.1831/AHD/2014, dated 20.03.2017 (Surat – Trib.). 5. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the revenue relied on the orders of the lower authorities. 6. We have heard rival submissions and perused the materials available on record. We have also gone through the decision relied upon by the Ld. AR. There is no dispute that the addition of Rs.5,05,226/- was made u/s 50C of the Act. The sale consideration of the land of the co-owners was Rs.2,89,70,000/- whereas the jantri value of the property was Rs.3,08,59,300/-. The share of the assessee as per jantri value was Rs.1,11,84,682/-. The indexed cost of assessee’s portion was Rs.1,06,79,456/-. The difference of Rs.5,05,226/- was added u/s 50C and penalty has been levied on the above addition. We find that the penalty has been levied u/s 271(1)(c) on account of addition made u/s 50C of the Act. The CIT(A) has not considered the submission of the assessee and sustained the penalty by an ex parte order. Since the tax effect involved in the appeal is rather small at Rs.1,04,076/-, we do not consider it proper to prolong the litigation and therefore decide the appeal at this level. It is settled principle that penalty cannot be levied on estimated addition or addition based on 5 ITA No.767/SRT/2024/AY.2015-16 Amir Saiyed deeming provisions. The decision relied on by the Ld. AR in case of Kantibhai Mohanbhai Kheni (supra) is directly on the issue. In the said case, the AO found that assessee has sold land and shown long-term capital gain which was not according to the provisions of section 50C of the Act. He made addition of the differential amount between the valuation as per section 50C of the Act and the amount declared by the assessee. He added Rs.2,01,30,888/- as undisclosed long-term capital gain u/s 50C of the Act. Thereafter, he levied penalty u/s 271(1)(c) of the Act. After considering submissions of the parties, the Tribunal observed that section 50C is a deeming provision to tax the difference as capital gain where the consideration received as a result of transfer of a capital asset, being land or building or both, is less than the value adopted by the Stamp Valuation Authority (SVA). It is only an account of deeming provisions of section 50C that the AO had made the addition. But the fact remains that the actual amount received was offered for taxation by the assessee. Only based on the deemed consideration, penalty proceeding u/s 271(1)(c) was started. However, revenue failed to produce any evidence that assessee actually received anything more than the amount shown to have been received by him. The Tribunal observed that the difference would not amount to furnishing inaccurate particulars of income so as to levy penalty u/s 271(1)(c) of the Act. In the present case also, the addition and the penalty have been made on similar issue. Revenue has not been able to bring any evidence on record that assessee received any amount over and above the amount shown in the sale deed. 6 ITA No.767/SRT/2024/AY.2015-16 Amir Saiyed Therefore, we do not find any reason to take a divergent view from the finding given by the Co-ordinate Bench (supra). Hence, the order of CIT(A) is set aside and AO is directed to delete the penalty of Rs.1,04,076/- u/s 271(1)(c) of the Act. 7. In the result, appeal filed by the assessee is allowed. Order is pronounced on 07/11/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 07/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) / PCIT 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "