The ACIT, Circle-3, Ahmedabad V. Shri Rajendra H. Seth, Ahmedabad

ITA 1423/AHD/2010

• Counselvise Citation: 142320514 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 04-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Assessee Lawyers: T SHANKAR
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.1075 / AHD/2010 (ASSESSMENT YEAR 2003-04) SHRI RAJENDRA H SETH, PRO. SHRADDHA MOTORS, 456, K B COMMERCIAL CENTRE, LAL DARWAJA, AHMEDABAD VS. ACIT, CIRCLE -3, AHMEDABAD PAN/GIR NO. : ALKPS3046D I.T.A.NO. 1423/AHD/2010 (ASSESSMENT YEAR 2003-04) ACIT, CIRCLE 3, VS. SHRI RAJENDRA H SETH, AHMEDABAD PRO. SHRADDHA MOTORS, 456, K B COMMERCIAL CENTRE, LAL DARWAJA, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S N SOPARKAR, SR. ADV. RESPONDENT BY: SHRI T. SHANKAR, SR. DR DATE OF HEARING: 31.08.2012 DATE OF PRONOUNCEMENT: 05.10.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THESE ARE CROSS APPEALS OF THE ASSESSEE AND THE RE VENUE WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), GANDHINAG AR DATED 22.07.2010 FOR THE ASSESSMENT YEAR 2003-04. THE ONLY GROUND R AISED BY THE ASSESSEE READS AS UNDER: 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE PENALTY IMPOSED U/S 271 (1) (C) OF THE ACT BY A O ON ADDITION I.T.A.NO. 1075 & 1423 /AHD/2010 2 OF RS. 23, 05,136/- MADE ON ACCOUNT OF COMPUTATION OF LONG TERM CAPITAL GAINS ON SALE OF PROPERTY SIMPLY ON THE BAS IS OF ESTIMATE, SURMISES AND CONJECTURES. THE ADDITION BEING WITHOU T ANY MERITS AND JUSTIFICATION IS PENDING FOR ADJUDICATION BEFOR E THE HON'BLE ITAT. BOTH THE LOWER AUTHORITIES HAVE FAILED TO APP RECIATE THE FACT THAT THE APPELLANT HAS NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ANY INCOME. THE PENALTY LEVIED BEING WITH OUT ANY MERITS AND JUSTIFICATION REQUIRES TO BE QUASHED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEA L AT THE TIME OF OR BEFORE THE HEARING OF THE APPEAL. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDE R: 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN HOLDI NG THAT THE ASSESSEE IS RESPONSIBLE FOR SUBMITTING INACCURATE P ARTICULARS OF INCOME ON THE ISSUES OF ADOPTION OF THE SALE CONSID ERATION AT RS.2,00,02,000/- AS AGAINST THE ASSESSEE'S RS. 1,77 ,50,000/-BY INVOKING THE PROVISIONS OF SECTION 50C, ALLOWING TH E CREDIT OF THE PAYMENT MADE TO MRS. UMA K. SETH, WIDOW OF ONE OF T HE BROTHERS FOR VACATING THE PROPERTY AT RS. 19,72,000/- AS AGA INST RS.59,16,000/- CLAIMED BY THE ASSESSEE AND CLAIM OF OLD LIABILITIES AMOUNTING TO RS.3,15,214/-. HOWEVER, IN RESPECT OF ADOPTION OF FAIR MARKET VALUE AS ON 01.04.1981, THE CIT(A) HAS HELD THAT THE ASSESSEE CANNOT BE SAID TO HAVE SUBMITTED INACCURAT E PARTICULARS, AS THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE WAS B ASED ON VALUATION REPORT OF VALUER. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO RECOMPUTE THE CONCEA LED INCOME IN THE LIGHT OF THE ABOVE FINDING. THE CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN HOLDING THAT IF AS A RESULT OF HIS FIND ING THE ASSESSEE'S LIABILITY TOWARDS LONG TERM CAPITAL GAIN IS AFFECTE D, THE A.O. SHALL COMPUTE THE SAME, WHICH IN TURN, WILL GIVE THE TAX SOUGHT TO BE EVADED AND THEREFORE, THE RESULTANT PENALTY, IF ANY . THE DECISION OF C1T(A) IS NOT ACCEPTABLE AS IT IS ACCEPTED FACT THA T HE ACTION OF THE A.O. IN ADOPTING THE FAIR MARKET VALUE AT RS.2,40,0 00/- AS ON 01/04/1981 AS AGAINST RS.45,60,000/- ADOPTED BY THE ASSESSEE ON THE BASIS OF A VALUER'S REPORT HAS ALREADY BEEN CON FIRMED BY THE CIT(A). IT IS NOT NECESSARY TO PROVE MENS REA BEFOR E LEVY OF PENALTY U/S.271(L)(C) OF THE ACT, SINCE THE PENALTY UNDER THE SAID SECTION IS A CIVIL LIABILITY. RELIANCE IN THIS RESP ECT IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF UO I & ORS. VS. DHARAMENDRA TEXTILE PROCESSOR & ORS. REPORTED IN 30 6 ITR 277. I.T.A.NO. 1075 & 1423 /AHD/2010 3 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AS SESSING OFFICER SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. 3. BRIEF FACTS TILL THE STAGE OF LEVY OF PENALTY BY THE A.O. ARE NOTED BY LD. CIT(A) IN PARA 4 & 5 OF HIS ORDER, WHICH ARE RE PRODUCED BELOW: 4. AS WOULD BE SEEN, AS AGAINST THE APPELLANT'S DE CLARATION OF A LONG TERM CAPITAL LOSS OF RS. 13,86,666/-, THE ASSE SSING OFFICER COMPUTED LONG TERM CAPITAL GAINS AT RS.23,05,136/-. THE MAIN DIFFERENCES BETWEEN THE TWO COMPUTATIONS WERE AS FO LLOWS: 1) THE ASSESSING OFFICER ADOPTED THE SALE CO NSIDERATION AT RS.2,00,02,000/- AS AGAINST THE APPELLANT'S RS. 1,7 7,50,000/- BY INVOKING PROVISIONS OF SECTION 50C, THE FORMER BEIN G THE VALUE ADOPTED BY THE REGISTERING AUTHORITY FOR STAMP DUTY PURPOSE. 2) ALLOWING THE CREDIT OF THE PAYMENT MADE T O MRS. UMA K. SETH, WIDOW OF ONE OF THE BROTHERS FOR VACATION OF THE PROPERTY AT RS. 19,72,000/- AS AGAINST RS.59,16,000/- ON THE GR OUND THAT THE DISPUTE BETWEEN MRS. UMA K, SETH AND THE REST OF TH E FAMILY MEMBERS INCLUDED PROPERTIES OTHER THAN 'PREMKUTIR' ALSO AND THEREFORE HE ASCRIBED CERTAIN PROPORTION OF THE TOT AL PAYMENT MADE, AS A RESULT OF MUTUAL AGREEMENT, FOR THE PURPOSE OF VACATION OF THE PROPERTY IN QUESTION. 3) FOR THE PURPOSE OF COMPUTING CAPITAL GAIN S, THE FAIR MARKET VALUE AS ADOPTED BY THE ASSESSING OFFICER WAS RS.2, 40,000/- AS ON 01/04/1981 AS AGAINST RS.45,60,000/- ADOPTED BY THE ASSESSEE ON THE BASIS OF A VALUER'S REPORT. 4) THE ASSESSING OFFICER DID NOT ALLOW THE C LAIM OF OLD LIABILITIES AMOUNTING TO RS.3,15,214/- ON THE GROUN D OF THERE BEING NO DOCUMENTARY EVIDENCE. 5. AT THE APPELLATE STAGE, THE CIT(A)-VII, AHMEDABA D, VIDE THE DETAILED ORDER DATED 2/12/2006, HAS CONFIRMED ALL T HE FOUR ACTIONS TAKEN BY THE ASSESSING OFFICER AND HAS DISMISSED TH E APPELLANT'S OBJECTIONS TO THE COMPUTATION OF THE LONG TERM CAPI TAL GAINS. THE PRESENT PENALTY HAS BEEN .LEVIED THEREAFTER. IN LEV YING THE PENALTY, THE ASSESSING OFFICER HAS DEALT WITH ALL THE FOUR O BJECTIONS RAISED BY THE ASSESSEE. SINCE THESE OBJECTIONS IN CONTENT ARE MORE OR LESS THE SAME BEFORE ME, THESE SHALL BE DISCUSSED FURTHE R LATER. THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT IT WA S A DELIBERATE ATTEMPT BY THE ASSESSEE TO FURNISH IN ACCURATE PART ICULARS OF INCOME WITH THE RESULT TO UNDER ASSESS HIS INCOME AND THER EFORE ASSESSEE IS I.T.A.NO. 1075 & 1423 /AHD/2010 4 LIABLE FOR PENAL PROCEEDINGS U/S.271(L)(C). CONSEQU ENTLY, HE LEVIED THE PENALTY AT THE MINIMUM LEVEL RS.7,26,118/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THE PENALTY IN PART FOR WHICH REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE IS IN APPEAL BEFO RE US FOR THE REMAINING PART OF THE PENALTY CONFIRMED BY LD. CIT(A). 5. LD. D.R. SUPPORTED THE PENALTY ORDER WHEREAS IT IS SUBMITTED BY THE LD. A.R. THAT THE TRIBUNAL ORDER IN QUANTUM PROCEED INGS IS AVAILABLE ON PAGES 10-12 OF THE PAPER BOOK IN I.T.A.NO. 1495/AHD /2007 DATED 11.11.2011. IT IS FURTHER SUBMITTED THAT AS PER T HE TRIBUNAL ORDER IN QUANTUM PROCEEDINGS, IT WAS HELD BY THE TRIBUNAL TH AT FAIR MARKET VALUE OF THE FLAT AS ON 01.04.1981 AS DECLARED BY THE ASS ESSEE SHOULD BE ADOPTED BY THE A.O. IT IS FURTHER SUBMITTED THAT SINCE IT IS HELD THAT THE MARKET VALUE OF THE FLAT AS ON 01.04.1981 AS DECLARED BY T HE ASSESSEE IS TO BE ADOPTED FOR WORKING OUT CAPITAL GAIN/LOSS OF THE AS SESSEE, THE NET RESULT WILL BE CAPITAL LOSS BECAUSE TOTAL CAPITAL LOSS DEC LARED BY THE ASSESSEE WAS OF RS.96,85,664/- OUT OF WHICH, THE SHARE OF THE AS SESSEE WAS 1/7 TH I.E. RS.13,83,666/- AND THE A.O. COMPUTED TOTAL LONG TER M CAPITAL GAIN AT RS.1,66,35,950/- AND WORKED OUT THE SHARE OF THE AS SESSEE TO THE EXTENT OF 1/7 TH AT RS.23,05,136/-. IT IS FURTHER SUBMITTED THAT W HILE DOING SO, THE A.O. ADOPTED THE INDEXED COST OF ACQUISITION AT RS. 10,72,800/- WHEREAS THE SAME DECLARED BY THE ASSESSEE WAS AT RS.2,03,83 ,200/-. IT IS SUBMITTED THAT SINCE, THE A.O. MADE ADDITION OF RS.1,93,10,4 00/- ON THIS COUNT AND AS A CONSEQUENCE, WORKED OUT TOTAL LONG TERM CAPITA L GAIN AT RS.166.36 LACS. HE POINTED OUT THAT SINCE THIS ADDITION MADE BY THE A.O. ON ACCOUNT OF INDEXED COST OF ACQUISITION IS DELETED, THE RESU LTANT CAPITAL GAIN / LOSS WILL BE LOSS ONLY. HE FURTHER POINTED OUT THAT ALTH OUGH THE A.O. COMPUTED THE SHARE OF THE ASSESSEES CAPITAL GAIN AT RS.23,0 5,136/- AS AGAINST THE I.T.A.NO. 1075 & 1423 /AHD/2010 5 AMOUNT OF CAPITAL LOSS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.13.83,666/- BUT THE PENALTY IS IMPOSED BY HIM ON LY ON THE POSITIVE INCOME OF CAPITAL GAIN ASSESSED BY THE A.O. AT RS.2 3,05,136/- AND NO PENALTY IS IMPOSED BY THE A.O. IN RESPECT OF CAPITA L LOSS DECLARED BY THE ASSESSEE WHICH WAS NOT ALLOWED BY THE A.O. IT WAS HIS SUBMISSION THAT SINCE AFTER THE TRIBUNAL ORDER IN QUANTUM PROCEEDIN GS, THERE WILL BE NO POSITIVE CAPITAL GAIN, NO PENALTY IS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL ORDER IN ASSESSEES OWN CASE IN QUANTUM PR OCEEDINGS. WE FIND THAT AS PER THE RETURN OF INCOME FILED BY THE ASSES SEE, THE ASSESSEE DECLARED LONG TERM CAPITAL LOSS OF RS.13,83,666/- B UT THE A.O. ASSESSED LONG TERM CAPITAL GAIN OF THE ASSESSEE AT RS.23,05, 136/- BUT THE PENALTY IS IMPOSED BY THE A.O. ON THE POSITIVE CAPITAL GAIN CO MPUTED BY HIM AT RS.23,05,136/- AND NO PENALTY IS IMPOSED BY HIM IN RESPECT OF LONG TERM CAPITAL LOSS DECLARED BY THE ASSESSEE AT RS.13,83,6 66/- BUT NOT ALLOWED BY THE A.O. IN THE ASSESSMENT ORDER. SINCE AS PER THE TRIBUNAL ORDER IN QUANTUM PROCEEDINGS, IT IS HELD BY THE TRIBUNAL THA T FAIR MARKET VALUE OF THE FLAT AS ON 01.04.1981 AS DECLARED BY THE ASSESS EE HAS TO BE ADOPTED BY THE A.O. AND AFTER EFFECT IS GIVEN TO THIS TRIBUNAL ORDER IN QUANTUM PROCEEDINGS, THE RESULTANT CAPITAL GAIN WILL NOT BE IN POSITIVE FIGURE BUT IT WILL BE A LONG TERM CAPITAL LOSS ONLY ALTHOUGH THE SAME MAY BE AT A LESSER AMOUNT THAN DECLARED BY THE ASSESSEE. BUT STILL SI NCE NO PENALTY IS IMPOSED BY THE A.O. IN RESPECT OF CAPITAL LOSS DECL ARED BY THE ASSESSEE AND NOT ALLOWED BY THE A.O., THE PRESENT PENALTY CA NNOT SURVIVE BECAUSE PENALTY HAS BEEN IMPOSED BY THE A.O. ON THE POSITIV E CAPITAL GAIN ASSESSED BY HIM AND AS PER THE TRIBUNAL ORDER IN QU ANTUM PROCEEDINGS, I.T.A.NO. 1075 & 1423 /AHD/2010 6 THERE WILL BE NO POSITIVE CAPITAL GAIN AND THEREFOR E, NO PENALTY CAN SURVIVE. HENCE, WE DELETE THE ENTIRE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 19.09/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/09/2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 05/10/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.9/10/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/10/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .