Rajesh Sharma, Theog V. ITO, W-2, Shimla

ITA 1438/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7810 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Deemed to accrue or arise in india
• Section: 271(1)(c); 2(14); 56

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC , CHANDIGARH . . , BEFORE SHRI N.K. SAINI, VICE PRESIDENT ./ ITA NO.1438/CHD/2018 / ASSESSMENT YEAR : 2014-15 SH.RAJESH SHARMA, SHOP NO.3, THEOG, SHIMLA. THE INCOME TAX OFFICER, WARD-2, SHIMLA. ./PAN NO: AMOPS7657R /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI VISHAL MOHAN, ADV. ! / REVENUE BY : SHRI MANJIT SINGH, CIT DR ' # $ /DATE OF HEARING : 18.03.2019 %&'( $ /DATE OF PRONOUNCEMENT: 14.04.2019 /ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.9.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA (IN SHORT CIT(A)). 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO SUSTENANCE OF PENALTY OF RS.1,23,600/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2014 ELECTRONICALLY DECLARING AN IN COME OF RS.9,39,440/-, WHICH WAS PROCESSED AT THE RETURNED INCOME. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY THROU GH CASS. ITA NO.1438/CHD/2018 A.Y.2014-15 2 4. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICE D THAT THE ASSESSEE HAD PURCHASED A PIECE OF LAND MEAS URING 00-21-64 HECTARE FROM MRS. KAMLA, MS. RAMITA(JOINT OWNERS) ALL RESIDENTS OF VILLAGE JAISH, TEHSIL THEOG, DISTT. SHIMLA FOR A CONSIDERATION OF RS.3,00,000/- AS A GAINST MARKET VALUE/STAMP DUTY VALUE OF THE SAID LAND AT RS.7,00,000/-. THE A.O. WAS OF THE VIEW THAT AS PER PROVISIONS OF CLAUSE (VII) OF SUB-SECTION (2) OF SE CTION 56 OF THE ACT, THE DIFFERENCE BETWEEN STAMP DUTY VALUE AN D CONSIDERATION WAS LIABLE TO BE ASSESSED AS INCOME U NDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE A.O. ASKED TH E ASSESSEE TO EXPLAIN AS TO WHY PROVISIONS OF SECTION 56(2)(VII) OF THE ACT SHOULD NOT BE APPLIED IN RESPECT OF IMMO VABLE PROPERTY PURCHASED FOR RS. 3 LACS AS AGAINST STAMP DUTY VALUE OF RS.7,00,000/-. THE REPLY OF THE ASSESSEE W AS CONSIDERED BUT NOT ACCEPTED BY THE A.O. AND THE AMO UNT OF RS.4,00,000/- BEING DIFFERENCE OF STAMP DUTY VALUE AND PURCHASE CONSIDERATION OF LAND WAS ADDED TO THE TAX ABLE INCOME OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' U/S 56(2)(VII)(B)(II) OF THE ACT. THE A.O . HELD THAT ASSESSEE FAILED TO DISCLOSE DIFFERENCE OF STAMP DUT Y VALUE AND PURCHASE CONSIDERATION OF LAND FOR TAXATION. ACCORDINGLY, THE A.O. IMPOSED PENALTY OF RS. 1,23,6 00/- U/S 271(1)(C) OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND SUBMITTED AS UNDER: ITA NO.1438/CHD/2018 A.Y.2014-15 3 THE PRESENT APPEAL HAS BEEN PREFERRED AGAINST THE IMPOSITIONS OF PENALTY UNDER SECTION 271(1)(C) OF RS. 1,23,600/-. IN THAT REGARD, IT IS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT ASSESSEE HAD PURCHASED AGRICULTURE LAND AT THEOG FOR A CONSIDE RATION OF RS. 3.00 LACS. HOWEVER, THE STAMP DUTY VALUATION OF THE SAME WAS RS. 7.00 LACS AND THEREBY, THE LD. A.O. ATTRACT ED THE PROVISIONS OF SECTION 56 OF THE INCOME TAX ACT, 1961 AND TREATED EXCESS AS THE SAME DEEMED INCOME OF THE ASS ESSEE UNDER THE SECTION AFOREMENTIONED. NATURE OF THE LAN D WAS AGRICULTURE AND THE SAME WAS OUT OF THE MUNICIPAL AR EA AS PER THE FACTS ADMITTED AND COPY OF THE SALE DEED IN RESPECT OF THE SAME IS BEING PLACED ON RECORD FOR YOUR KIND PE RUSAL AND READY REFERENCE. 2. THOUGH, THE ADDITION HAD BEEN MADE AND THE SAME HAD NOT BEEN CHALLENGED, THE ISSUE TO BE ADJUD ICATED UPON BY THIS HON'BLE FORUM ARE TWO FOLDS:- A). WHETHER THE ADDITIONS UNDER SECTION 56 OF THE INCO ME TAX ACT, 1961 ON ACCOUNT OF ALLEGED DIFFERENCE COULD HA VE BEEN MADE? B). THOUGH THE ADDITION IN RESPECT OF THE SAME HAS BEEN MADE AND SAME HAS NOT BEEN CHALLENGED WHETHER THE PEN ALTY UNDER SECTION 271(1)(C) AS IMPOSED IS LEGALLY SUSTAINABLE? 3. AS FAR AS THE ISSUE NO. 1 IS CONCERNED, IT IS MO ST RESPECTFULLY SUBMITTED THAT THE ASSESSEE HAD PURCHA SED THE AGRICULTURAL LAND MEASURING 00-21-64 HECTARES AND THE LAND WAS AGRICULTURE IN NATURE OUTSIDE THE MUNICIPAL ARE A. IT IS PERTINENT TO MENTION THAT SECTION 56 IS ONLY APPLICAB LE TO THE ASSETS WHICH ARE CAPITAL ASSETS UNDER THE LAW AS DEF INED VIDE EXPLANATION (D) TO SECTION 56 WHICH IS BEING REPRODUCED INFRA: ' (D) PROPERTY MEANS THE FOLLOWING CAPITAL ASSET OF THE ASSESSEE, NAMELY:- 4. IN THE INSTANT CASE, THE PROPERTY IS AGRICULTURE I N NATURE OUTSIDE THE MUNICIPAL LIMIT AND IN THE INSTAN T YEAR UNDER CONSIDERATION CONCEPT OF AERIAL DISTANCE WAS NOT IN THE STATUTE AND THEREFORE, THE SAME WAS OUTSIDE THE PURV IEW OF CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2 (14) OF THE INCOME TAX ACT, 1961. AS THE LAND PURCHASED WAS OUTS IDE THE PURVIEW OF CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14), THE ADDITION IN ITSELF IS WRONG MUCH LES S IS THE QUESTION OF IMPOSING PENALTY ON THE SAME. 5. AS FAR AS THE ISSUE NO. 2 IS CONCERNED, IN THE INSTAN T CASE THE ASSESSEE HAD DISCLOSED TRUE FACTS TO THE EX TENT THAT HE HAD SPENT MONEY ON THE PURCHASE OF THE PROPERTY UNDER CONSIDERATION. HOWEVER, THE LD. A.O. WAS OF THE VIE W THAT PROVISIONS OF SECTION 56 WERE ATTRACTED AND THE DIFF ERENTIAL AMOUNT BETWEEN THE AMOUNT OF ACTUAL CONSIDERATION PA ID ITA NO.1438/CHD/2018 A.Y.2014-15 4 AND THE AMOUNT ON WHICH STAMP DUTY WAS VALUED HAD TREATED THE SAME AS DEEMED INCOME OF THE ASSESSEE. THOUGH THE SAID ADDITION HAD BEEN MADE AND THE SAME HAS NOT BEEN CHALLENGED, THE ASSESSEE CANNOT B E TREATED TO HAVE CONCEALED INCOME OR FILED INACCURATE PARTICULARS IN RESPECT OF THE SAME. 6. AT THE COST OF REPETITION, IT IS ONCE AGAIN SUBMITTED T HAT ADDITION IN FACT IN ITSELF IS WRONG AND WHAT HAD BEE N PURCHASED BY THE ASSESSEE, DOES NOT FALL WITHIN THE M EANING CAPITA/ ASSETS AS ELUCIDATED UNDER SECTION 2(14) OF TH E INCOME TAX ACT, 1961. 7. FILING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT ARE POSITIVE FACTS WITH AN INTENT TO DEF RAUD THE REVENUE. IN THE INSTANT CASE PART FROM THE FACT THA T STAMP DUTY VALUATION WAS MORE, NO POSITIVE FACTS OF THE ASSESS EE HAVING PURCHASED THE PROPERTY FOR CONSIDERATION OF MORE THA N THE AGREED CONSIDERATION HAS BEEN PLACED ON RECORD BY THE LD. A.O. 8. JUST BECAUSE THE PROPERTY WAS HAVING MORE VALUE FOR STAMP DUTY VALUATION, DOES NOT TANTAMOUNT TO THE FA CTS OF HAVING CONCEALED THE INCOME OR FURNISHING INACCURATE PARTICULARS IN RESPECT OF THE SAME. 9. AS THE ADDITION ITSELF IS WRONG AND COUPLED WITH THE FA CT THAT THE ASSESSEE HAD DISCLOSED COMPLETE PARTICULARS , NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE IN THE I NSTANT CASE AND THE SAME HAS BEEN ILLEGALLY IMPOSED. 10. THAT BEING THE CASE, IT IS MOST RESPECTFULLY PRAYED THAT THE PENALTY BE ORDERED TO BE DELETED OR ANY OTHER RELI EF BE GIVEN WHICH THIS HON'BLE DEEMS FIT AND PROPER IN TH E FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAINED THE PENALTY BY OBSERVING IN PARA 5.2.2 OF THE IMPUGNED ORDER AS UNDER: 5.2.2 DURING THE APPEAL PROCEEDINGS THE APPELLANT IS CONTESTING THAT THE SAID LAND IS NOT A CAPITAL ASSET, NO INCOME WAS LIABLE TO BE ASSESSED U/S 56 OF THE INCOME TAX A CT AND THE QUESTION OF LEVYING PENALTY DOES NOT ARISE . I HA VE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. APPAREN TLY , NO APPEAL HAS BEEN FILED AGAINST THE ASSESSMENT ORDER . THUS THE SETTLED FACTS ARE THAT THE APPELLANT HAS ACCEPTED THE VALUATION OF THE SAID PROPERTY WHILE PAYING THE STAMP DUTY AND ALSO DURING THE ASSESSMENT PROCEEDINGS. MOREOVER HE HAS ACCEPTED THE SAID ASSET TO BE A CAPITAL ASSET BY NOT ITA NO.1438/CHD/2018 A.Y.2014-15 5 AGITATING THE ASSESSMENT ORDER. ALSO NOTHING HAS BE EN BROUGHT ON RECORD TO SHOW THAT THE LAND IN QUESTION IS AN A GRICULTURAL LAND IS NOT A CAPITAL ASSET AS CLAIMED BY THE APPELL ANT . THE FURTHER ISSUE TO BE CONSIDERED IS THAT THE APPELLANT HAD PURCHASED A PIECE OF LAND WHEREIN THE VALUE OF INVES TMENT MADE AND THE VALUATION AS PER STAMP DUTY WERE AT VA RIANCE AND THE DIFFERENCE WAS REQUIRED TO BE OFFERED AS DE EMED INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' U /S 56(2)(VII)(B)(II) OF THE ACT WHICH THE APPELLANT FAI LED TO DECLARE. HENCE THE APPELLANT FAILED TO DECLARE THE DEEMED IN COME WHICH REQUIRED TO BE OFFERED AS INCOME IN THE RETURN AS PER LAW. THE APPELLANT DID NOT QUALIFY HIS RETURN AND AL SO FAILED TO MAKE THE SAID DISCLOSURE. IN THIS CONTEXT, IT HA S TO BE INFERRED THAT THE APPELLANT TRIED HIS LUCK IN NOT OF FERING THE AFOREMENTIONED INCOME FOR TAXATION. THE APPELLANT H AS NOT BEEN ABLE TO ESTABLISH THE BONAFIDE OF HIS CLAIM ON THAT SCORE. 7. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL F OR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NOTHIN G WAS CONCEALED AND THE PROVISIONS OF SECTION 56(2)(VII) OF THE ACT WERE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS THE PROPERTY IN QUESTION WAS AN AGRICULTURAL LAND S ITUATED OUTSIDE THE MUNICIPAL AREA, WHICH DOES NOT FALL IN THE DEFINITION OF CAPITAL ASSET WHICH HAS BEEN DEFINED VIDE EXPLANATION (D) TO SECTION 56 OF THE ACT. IT WAS SU BMITTED THAT THE ASSESSEE DISCLOSED TRUE FACTS TO THE EXTEN T THAT HE HAD SPENT MONEY ON THE PURCHASE OF THE PROPERTY UND ER CONSIDERATION, HENCE IT CANNOT BE SAID THAT THE ASS ESSEE CONCEALED THE INCOME OR FILED INACCURATE PARTICULAR S OF INCOME. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPE RS PVT. LTD. VS. CIT & ANOTHER, REPORTED IN 348 ITR 306 AND THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BRA HMAPUTRA CONSORTIUM LTD., REPORTED IN 348 ITR 339. ITA NO.1438/CHD/2018 A.Y.2014-15 6 7. IN HIS RIVAL SUBMISSION, THE LD. SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE SOLD THE AGRICULTURAL LAND FOR A SUM OF RS .3 LACS. HOWEVER, THE A.O. HAS TAKEN MARKET VALUE/STAMP DUTY VALUE AT RS.7 LACS AND DIFFERENCE OF RS.4 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF CLAU SE (VII) OF SUB-SECTION (2) OF SECTION 56 OF THE ACT. HOWEVE R, THE SAID LAND WAS NOT AN ASSET AS PER THE DEFINITION PROVIDE D U/S 2(14) OF THE ACT, WHICH DEFINES THE CAPITAL ASSET. THE PROVISIONS CONTAINED IN SUB-SECTION (14) OF SECTION 2 OF THE ACT CLEARLY STATE THAT THE AGRICULTURAL LAND BEYOND THE MUNICIPAL AREA IS NOT TO BE INCLUDED IN THE DEFINIT ION OF CAPITAL ASSET. IN THE PRESENT CASE, THE A.O. ADDED THE NOTIONAL VALUE I.E. THE DIFFERENCE IN ACTUAL CONSID ERATION AND STAMP DUTY VALUE, IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE INSTAN T CASE, THE ASSESSEE DISCLOSED ALL THE TRUE FACTS RELATING TO THE LAND AND NOTHING WAS CONCEALED, THEREFORE, IT MAY BE A G OOD CASE FOR MAKING ADDITION SINCE THERE WAS DIFFERENCE BETW EEN THE ACTUAL CONSIDERATION AND THE STAMP DUTY VALUE. IT I S WELL SETTLED THAT THE PENALTY PROCEEDINGS ARE DIFFERENT AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS. IN THE PR ESENT CASE, IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCE ALED ITA NO.1438/CHD/2018 A.Y.2014-15 7 INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. CONSIDERING THE PECULIAR FACTS OF THIS CASE, IN MY OPINION, IT IS NOT A GOOD CASE WHERE PENALTY U/S 271(1)(C) OF T HE ACT MAY BE LEVIED, THEREFORE, THE PENALTY LEVIED BY TH E A.O. AND SUSTAINED BY THE LD.CIT(A) U/S 271(1)(C) OF THE ACT IS DELETED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.04.2019. SD/- (N.K.SAINI) VICE PRESIDENT '# /DATED: 24 TH APRIL, 2019 * * & *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE & ' / BY ORDER, ! / ASSISTANT REGISTRAR