Shri Chinubhai Ambalal Patel, Ahmedabad V. The Income Tax Officer, Ward-6(2), Ahmedabad

ITA 119/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8663 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

ITA NO 119/AHD/ 2015 ASSESSMENT YEAR : 2010 - 11 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ CORAM: PRAMOD KUMAR, ACCOUNTANT MEMBER] ITA NO. 119 / AHD / 2 0 1 5 ASSESSMENT YEAR: 2010 - 11 CHINUBHAI AMBALAL PATEL ....... ...... ..... APPELLANT 7, VRUNDAVAN BUNGALOW, GULAB TOWER, B/H. AAKASH FLAT, SOLA ROAD, THALTEJ, AHMEDABAD [ PAN : ABGPP 7139 Q ] VS. INCOME - TAX OFFICER WARD 6(2) , AHMEDABAD . ............................RESPONDENT APPEARANCES BY: NONE FOR THE APPELLANT PRASOON KABRA FOR THE RESPONDENT D ATE OF CONCLU DING THE HEARING : 05.07. 2017 DATE OF PRONOUNCING THE ORDER : 29 .08.2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 20.09.2014, PASSED BY THE LEARNED CIT(A) - XI, AHMEDABAD , UPHOLDING PENALTY IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER ), FOR THE ASSESSMENT YEAR 2010 - 11. 2. ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES : - 1 . 1 THE ORDER PASSED U/S 250 ON 20.09.2014 FOR AY 201 0 - 11 BY CIT(A) - XI, ABAD UPHOLDING THE PENALTY OF RS.4,50,383/ - LEVIED U/S 271(1)(C) BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1 . 2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PR OPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED PENALTY. ITA NO 119/AHD/ 2015 ASSESSMENT YEAR : 2010 - 11 PAGE 2 OF 5 2 . 1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN CONFIRMING THE PENALTY OF RS.4,50,383/ - LEVIED U/S 271(1)(C) IN RESPECT OF ADDITION OF R S.21,39,294/ - MADE TOWARDS LONG TERM CAPITAL GAIN AND RECEIPT OF RS.15,750/ - FROM ASTHA BUILDCON. 2 . 2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE PENALTY OF RS.4,50,383/ - LEVIED U/S 271(1)(C). 3. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 13 TH OCTOBER 2010 DECLARING TOTAL INCOME AT RS.15,86,662/ - AND AGRICULTURAL INCOME AT RS.35,500/ - . ON SCRUTINY OF THE AC COUNTS IT W A S REVEALED TO THE ASSESSING O FFICER THAT ASSESSEE H A S SOLD TWO IMMOVEABLE PROPERTY FOR RS.2, 00, 72,400/ - WITH THREE OTHER CO - OWNERS. HE FOUND THAT STAMP DUTY VALUATION AUTHORITIES HAVE VALUED THE PROPERTY FOR THE PURPOSE OF STAMP DUTY AT RS.2,6 7, 04,000/ - . WITH THE HELP OF SECTION 50C, THE ASSESSING O FFICER HAS ADOPTED SALE CONSIDERATION AT RS.2,67,04,000 / - . THE ASSESSEE HAS ONE FOURTH SHARE WHICH COMES OUT TO RS.66,76,000/ - . A FTER ADOPTING THIS SALE CONSIDERATION , HE COMPUTED THE LONG TERM CA PITAL GAIN AND MADE AN ADDITION OF RS.21,23,544/ - . APART FROM THAT THE ASSESSING O FFICER HAS ALSO NOTED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.15,750/ - FROM ASTHA BUILDCON AND TDS OF RS.1 , 575/ - . THESE AMOUNTS HAVE NOT BEEN DISCLOSED BY THE ASSESS EE. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE . HE AGREED FOR ADDITION A ND ACCORDINGLY ADDITION OF RS.15 , 750/ - WAS ALSO MADE. THE ASSESSING O FFICER IN THIS WAY HAD MADE TOTAL ADDITION OF RS.21,39,294/ - TO THE TOTAL INCOME OF THE ASSESSEE . HE I SSUED SHOW CAUSE NOTICE UNDER SECTION 271(1 ) (C) INVITING EXPLANATION OF THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. ACCORDING TO THE A SSESSING O FFICER THE ASSESSEE DID NOT COMPLY WITH THE NOTICES AND HE IMPOSED A PENALTY OF RS.4.50 , 383/ - WHICH I S ITA NO 119/AHD/ 2015 ASSESSMENT YEAR : 2010 - 11 PAGE 3 OF 5 EQUIVALENT TO THE TAX SOUGHT TO BE EVADED. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE BUT I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 5. SECTION 48 OF THE I NCOME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPITAL GAIN S . THIS SECTION CONTEMPLATES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET TH E FOLLOWING AMOUNTS , NAMELY : - ( A) E XPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, (B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THEREAFTER. S ECTION 50C FURTHER PROVIDES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSACTION, THE VALUE SO ADOPTED OR ASSESSED SHALL, FO R THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. IN OTHER WORDS , FULL CONSIDERATION MENTIONED IN SECTION 48 IS TO BE REPLACED BY THE CONSIDERATION ON WHICH VALUE OF THE PROPERTY WAS ADOPTED FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY. ITA NO 119/AHD/ 2015 ASSESSMENT YEAR : 2010 - 11 PAGE 4 OF 5 6. SUB - SECTION ( 2 ) OF SECTION 50C FURTHER CONTEMPLATE S THAT IN CASE THE ASSESSEE ALLEGES THAT STAMP DUTY VALUATION AUTHORITY UNDER SUB - SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY, THE ASSESSING OFFICER MAY REFER THE VALUATION TO THE CAPITAL ASSET TO THE V ALUATION O FFICER. A PERIPHERAL LOOK TO THE SC HEME OF SECTION 50C WOULD INDICAT E THAT FULL SALE CONSIDERATION RECEIVED BY THE ASSESSEE AND REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING CAPITAL GAIN UNDER SECTION 48 IS TO BE REPLACED WITH THE HELP OF DEEMING FICTION PROVIDED IN THIS . THIS REPLACEMENT IS FURTHER SUBJECT TO DETERMINATION OF FAIR MARKET VALUE AS CONTEMPLATED UNDER SECTION 2. T HUS AN ADDITION TO THE INCOME OF THE ASSESSEE WITH THE AID OF SECTION 50C IS ONLY UNDER DEEMING CONDITION WHICH MAY VARY IF A REFERENCE TO THE DVO IS BEING SENT UNDER SUB - SECTION ( 2 ) OF SECTION 50C. IT WOULD INDICATE THAT IT IS QUITE DIFFICULT TO CONCLUSIVELY HOLD AN ASSESSEE LIABLE FOR CONCEALMENT OF FACTS OR FURNISHING OF PARTICULARS OF INCOME. AN ASSESSEE MAY STICK TO HIS STAND THAT WHA TE VER HE HAS SHOWN AS ACTUAL CONSIDERATION AND IT CAN BE T E ST E D BY MAKING A REFERENCE TO TH E DVO UNDER SUB - SECTION ( 2 ) OF SECTION 50C. THUS AN ASSESSEE COULD NOT BE VISITED WITH PENALTY UNDER SECTION 271(1)(C) W HEN AN ADDITION IS BEING MADE WITH THE HELP OF DEEMING FICTION PROVIDED IN SECTION 50C . 7. AS FAR A S OTHER ADDITION OF RS.15 , 750 / - IS CONCERNED NO ELABORATE DISCUSSION HAS BEEN MADE INDEPENDENTLY IN THE PENALTY O R DER. THE A SSESSING O FFICER HA S TREATED BOTH THESE AMOUNT S AT PAR AND TOOK A CONSOLIDATED FIGURE . HE HAS NOWHERE MADE OUT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. E VEN IN THE ASSESSMENT O R DER MUCH DISCUSSION IS NOT AVAILABLE ON THIS ISSUE. CONSIDERING OVERAL L FACTS AND CIRCUMSTANCES , I FIND FO R C E IN THE CONTENTIONS OF THE ASSESSEE AND DELETE THE PENALTY. ITA NO 119/AHD/ 2015 ASSESSMENT YEAR : 2010 - 11 PAGE 5 OF 5 8. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 29 TH DAY OF AUGUST, 2017. SD/ - PRAMOD KUMAR ACCOUNTANT MEMBER) AHMEDABAD, THE 29 TH DAY OF AUGUST, 2017 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD