SUNIL DATTATRAYA TAKLE, Nashik V. ITO, Nashik

ITA 1586/PUN/2013

• Counselvise Citation: 158624514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Sale consideration of property below Jantri Value; Deemed to accrue or arise in india; Cost of acquisition; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1586/PN/2013 (ASSESSMENT YEAR : 2009-10) SHRI SUNIL DATTATRAYA TAKLE, 1810, SARTHAK, OLD TAMBAT LANE, NASHIK-422001 .. APPELLANT PAN NO.AGFPT3250E VS. ITO, WARD-2(4), NASHIK .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA DATE OF HEARING : 17-03-2015 DATE OF PRONOUNCEMENT : 25-03-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14-06-2013 OF THE CIT(A)-II, NASHIK REL ATING TO ASSESSMENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF MANUFA CTURING OF DISTILLED WATER REQUIRED FOR BATTERIES AND TRADING OF ACIDS. HE FILED HIS RETURN OF INCOME ON 31-07-2009 DECLARING TOTAL INCOME OF RS.1,92,206/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SOLD THE IMMOVABLE P ROPERTY VALUED AT RS.1,60,00,000/- AS PER THE SALE DEED REG ISTERED WITH JOINT SUB-REGISTRAR, NASHIK. ON BEING ASKED BY THE AO DURING THE 2 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURN ISHED A COPY OF THE SALE DEED DATED 05-07-2008 OF IMMOVABLE PROPERT Y BEARING SURVEY NO. 501/2 SITUATED AT NASHIK. THE ABOVE PRO PERTY WAS JOINTLY OWNED BY 3 PERSONS NAMELY SHRI SUNIL D. TAK LE (ASSESSEE), SHRI SHRIKANT D. TAKLE AND SMT. NEETA D. TAKLE. IT WAS NOTED BY THE AO THAT AGAINST SALE DEED VALUED AT RS.75 LAKHS , THE GOVERNMENT VALUATION WAS AT RS.1,60,00,000/-. THE AO FURTHER NOTED THAT THE ASSESSEE HAD NOT DISCLOSED THE SALE OF THE AFORESAID IMMOVABLE PROPERTY IN THE RETURN OF INCOME AND THE AMOUNT OF LONG TERM CAPITAL GAIN EARNED OUT OF SALE OF THE AF ORESAID PROPERTY. ON BEING CONFRONTED BY THE AO, THE ASSESSEE ADMITTE D THE FACT OF HAVING NOT DECLARED THE SALE OF RESULTANT LONG TERM CAPITAL GAIN. THE ASSESSEE AGREED FOR THE ADDITION OF HIS 1/3 RD SHARE OF LONG TERM CAPITAL GAIN EARNED ON THE SALE OF THE ABOVE PROPER TY. 3. THE AO NOTED THAT THE LAND SOLD WAS PURCHASED BY THE ASSESSEE ON 01-02-1972 FOR RS.5,250/- EXCLUDING STA MP DUTY AND REGISTRATION CHARGES OF RS.48.25. THEREFORE, TO AS CERTAIN THE COST OF ACQUISITION AS ON 01-04-1981, HE MADE A REFERENC E U/S.131 TO THE COLLECTOR OF STAMPS TO ASCERTAIN THE VALUE, STA MP DUTY AND REGISTRATION CHARGES PREVIOUSLY AS ON 01-04-1981 OF THE SURVEY NO. 501/2, FINAL LAYOUT 25 AREA-00H 29.85R OF OPEN SPACE. THE COLLECTOR OF STAMPS VIDE HIS LETTER DATED 25-11-201 1 FURNISHED THE GOVERNMENT VALUATION OF THE SAID LAND/PROPERTY AT R S.2,07,100/- AS PER SCHEDULE-I OF BOMBAY STAMP ACT, 1958 AND VIDE L ETTER DATED 29-11-2011 THE STAMP DUTY AT RS.2,080/- AND REGISTR ATION CHARGES AT RS.2,080/- AS PER PRESCRIBED RATES FOR THE YEAR 1981. 3 SIMULTANEOUSLY, THE JOINT SUB-REGISTRAR ALSO FURNIS HED THE DETAILS OF COPY OF SALE DEEDS VIDE LETTER DATED 16-12-2011. THE AO NOTED THAT THE COPY OF SALE DEEDS OBTAINED FROM THE JOINT SUB-REGISTRAR SUPPORT THE DETAILS FURNISHED BY THE COLLECTOR OF S TAMPS TO ASCERTAIN THE COST OF ACQUISITION AND TO DERIVE THE APPROPRIATE LONG TERM CAPITAL GAIN FOR TAXATION PURPOSE. THE AO ACC ORDINGLY COMPUTED THE ASSESSEES LONG TERM CAPITAL GAIN AT R S.29,23,489/- THE DETAILS OF WHICH ARE AS UNDER : VALUATION OF STAMP DUTY RECOVERY PURPOSE OF SURVEY NO.501/2, NASHIK FINAL PLOT NO.25, AREA-00H=29.85R, OPEN SPACE IN F.Y.1981-82 RS.2,07, 100/- ADD : STAMP DUTY RS.2,080/- REGISTRATION FEE RS.2,080/- RS. 04,160/- ---------------- RS.2,11,260/- COST OF ACQUISITION (INDEXATION) RS.2,11,260/100 X 582) RS.12,29,533/- LONG TERM CAPITAL GAIN (S.P. RS.1,60,00,000 C.A. RS.12,29,533= LTCG RS.1,47,70,467/- ASSESSEES 1/3 RD SHARE = RS.1,47,70,467 RS.0.49,23,489/- 3 --------------------- SINCE THE ASSESSEE HAD NOT DISCLOSED THE ABOVE TRAN SACTION OF LONG TERM CAPITAL GAIN IN HIS RETURN OF INCOME FILED FOR A.Y. 2009-10 AND NOT OFFERED THE AMOUNT OF RS.49,23,489/- FOR TA XATION ON ACCOUNT OF LONG TERM CAPITAL GAIN EARNED, THE AO MA DE ADDITION OF RS.49,23,489/- TO THE TOTAL INCOME OF THE ASSESSEE BEING THE 1/3 RD SHARE OF LONG TERM CAPITAL GAIN OF THE ASSESSEE. T HE AO THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. DURING PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT DU E TO LACK OF KNOWLEDGE AND MISUNDERSTANDING THE CAPITAL GAIN ARI SING ON SALE 4 OF PROPERTY WAS NOT OFFERED TO TAX. HOWEVER, THERE WAS NO INTENTION OF ANY CONCEALMENT OR FURNISHING INACCURA TE PARTICULARS OF INCOME AND THE ASSESSEE HAS PAID TAX WELL IN TIM E. 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE AND HELD THAT THERE WAS NO BO NAFIDE MISTAKE AND IT WAS WILLFUL AND WELL THOUGHT-OUT PLAN TO SUP PRESS THE LONG TERM CAPITAL GAIN TO TAX. HE ACCORDINGLY LEVIED PE NALTY OF RS.10,14,240/- U/S.271(1)(C) OF THE I.T.ACT BEING 1 00% OF THE TAX SOUGHT TO BE EVADED. 5. IN APPEAL WHILE UPHOLDING THE LEVY OF PENALTY U/ S.271(1)(C) OF THE I.T. ACT IN PRINCIPLE, THE LD.CIT(A) DIRECTE D THE AO TO LEVY PENALTY ON THE AMOUNT OF RS.31,25,156/- ONLY WHICH IS THE CAPITAL GAIN THAT THE ASSESSEE SOUGHT TO EVADE FROM TAX. W HILE DOING SO, HE NOTED THAT THE ASSESSEE IS HAVING 1/3 RD SHARE IN THE PLOT OF LAND SOLD FOR A CONSIDERATION OF RS.75 LAKHS WHICH WAS V ALUED BY THE STAMP DUTY AUTHORITY AT RS.1,60,00,000/-. THE PLOT WAS REFERRED FOR VALUATION TO THE DVO IN THE CASE OF ONE OF THE CO-O WNER SMT. NEETA D. TAKLE AND THE DVO HAS DETERMINED THE VALUE OF THE SAME AT RS.1,06,30,000/-. THEREFORE, HE SUBSTITUTED RS. 1,06,30,000/- BEING SALE CONSIDERATION OF THE PLOT AS AGAINST RS. 1,60,00,000/- TAKEN BY THE AO AND ACCORDINGLY DETERMINED THE LONG TERM CAPITAL GAIN AT RS.31,25,156/-. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 5 1. ON THE FACTS AND IN LAW THE CIT(A) ERRED IN LEV YING PENALTY U/S.271(1)(C) AT 100% ON CAPITAL GAINS OF RS.31,25,156 /- WITHOUT CONSIDERING THE FACT THAT THE APPELLANT WAS UNDER BON AFIDE OF NON- TAXABILITY OF CAPITAL GAINS. 2. ON THE FACTS AND IN LAW THE CIT(A) ERRED IN LEVYI NG PENALTY U/S.271(1)(C) ON THE PORTION OF CAPITAL GAINS OF RS.10 ,43,333/- ARISING DUE TO THE DEEMING PROVISIONS OF SECTION 50C O F THE ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ASSESSEE HAS NOT DECLARED THE LONG TERM CAPITAL GAI N THAT HAS ARISEN ON ACCOUNT OF SALE OF THE LAND. HOWEVER, HE CHALLE NGED THE QUANTUM OF CAPITAL GAIN ON WHICH PENALTY CAN BE LEV IED U/S.271(1)(C) OF THE I.T. ACT. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE REPORT OF THE APPROVED VALUER, A C OPY OF WHICH IS PLACED AT PAGES 13 TO 23 OF THE PAPER BOOK, SUBMITT ED THAT THE APPROVED VALUER HAS VALUED THE PROPERTY AS ON 1981 AT RS.9,47,720/-. THEREFORE, THE INDEXED COST OF ACQU ISITION COMES TO RS.55,15,730/-. REFERRING TO THE DECISION OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. FORTUNE HOTELS AN D ESTATES PVT. LTD. VIDE ITA NO.1164/2012 ORDER DATED 26-09-2014 H E SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HA S UPHELD THE DECISION OF THE TRIBUNAL HOLDING THAT PENALTY CANNO T BE IMPOSED U/S.271(1)(C) OF THE I.T. ACT WITH REFERENCE TO ADD ITION OF DEEMED INCOME U/S.50C OF THE I.T. ACT. REFERRING TO THE F OLLOWING CHART, HE SUBMITTED THAT PENALTY, IF ANY, CAN BE LEVIED ON LY ON AN AMOUNT OF RS.6,61,423/- THE DETAILS OF WHICH ARE AS UNDER : SR.NO PARTICULARS AMOUNT (RS.) 1 ACTUAL SALE CONSIDERATION 75,00,000/ - 2 REVISED INDEX COST AS PER APPROVED VALUER'S 55,15,730/ - 3 REVISED CAPITAL GAINS FOR THE ENTIRE LAND 19,84,270/ - 4 L/3 RD SHARE OF THE ASSESSEE BEING 6,61,423/ - 6 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT ADMITTEDLY THE ASSESSEE HAS NOT DISCLOSED THE SHARE OF HIS CAP ITAL GAIN ON ACCOUNT OF SALE OF THE LAND IN QUESTION. THE LD.CI T(A) HAS ALREADY SUBSTITUTED THE VALUATION ADOPTED BY THE DV O AS AGAINST THE STAMP DUTY VALUATION ADOPTED BY THE AO. THEREF ORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF T HE LD.CIT(A) BE UPHELD AND THE APPEAL FILED BY THE ASSESSEE BE DISM ISSED. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BY BOTH THE SIDES. ADMITTEDLY, THE ASSESSEE ALONG WITH 2 OTHER CO-OWNE RS SOLD A PLOT OF LAND FOR RS.75 LAKHS AND DID NOT DISCLOSE HER SH ARE OF LONG TERM CAPITAL GAIN ARISING OUT OF SUCH SALE PROCEEDS. WE FIND IN THE INSTANT CASE THE STAMP DUTY AUTHORITIES HAVE ADOPTE D THE VALUATION OF RS.1,60,00,000/- AS AGAINST THE SALE CONSIDERATI ON OF RS.75 LAKHS. WE FIND, THE AO AFTER DEDUCTING THE COST OF ACQUISITION AS ON 01-04-1981 DETERMINED THE LONG TERM CAPITAL GAIN AT RS.49,23,489/- BEING THE SHARE OF THE ASSESSEE AND LEVIED PENALTY U/S.271(1)(C) OF THE I.T. ACT ON THIS AMOUNT BEING THE LONG TERM CAPITAL GAIN CONCEALED BY THE ASSESSEE. WE FIND TH E LD.CIT(A) SUBSTITUTED THE VALUE OF RS.1,06,30,000/- BEING THE VALUE OF THE LAND IN QUESTION VALUED BY THE DVO AS AGAINST RS. 1,60,00,000/- ADOPTED BY THE ASSESSING OFFICER AND DETERMINED THE LONG TERM CAPITAL GAIN AT RS.31,25,156/- AND DIRECTED THE ASS ESSING OFFICER TO 7 COMPUTE THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT PENALTY CANNOT BE IMPOSED WITH REFERENCE TO ADDITION OF DEEMED INC OME U/S.50C OF THE I.T. ACT WHEN THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE ALONG WITH CO-OWNERS HAS RECEIVED MORE THA N RS.75 LAKHS. IT IS ALSO THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE ASSESSEE HAS FILED THE REPORT OF AN APPROV ED VALUER BEFORE THE LD.CIT(A) ACCORDING TO WHICH THE REVISED INDEXE D COST OF ACQUISITION COMES TO RS.55,15,730/-. THEREFORE, IF THE ACTUAL SALE CONSIDERATION OF RS.75 LAKHS AND THE INDEXED COST O F ACQUISITION AT RS.55,15,730/- ARE CONSIDERED, THEN THE TOTAL CAPIT AL GAIN COMES TO RS.19,84,270/- AND THE SHARE OF THE ASSESSEE ON THI S AMOUNT COMES TO RS.6,61,423/- ONLY. THEREFORE, ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE PENALTY, IF ANY, CAN BE LEVIED ONLY ON THE AMOUNT OF RS.6,61,423/- WHICH IS THE ASSESSEES SHARE OF LONG TERM CAPITAL GAIN THAT HAS NOT BEEN DISCLOSED. 9.1 SO FAR AS THE LEVY OF PENALTY WITH REFERENCE TO ADDITION OF DEEMED INCOME U/S.50C IS CONCERNED, WE FIND THE HON BLE BOMBAY HIGH COURT IN THE CASE OF FORTUNE HOTELS AND ESTATES PVT. LTD., (SUPRA) HAS UPHELD THE DECISION OF THE TRIBUN AL WHERE THE TRIBUNAL HAS HELD THAT PENALTY CANNOT BE IMPOSED WI TH REFERENCE TO ADDITION OF DEEMED INCOME U/S.50C OF THE I.T. ACT. THEREFORE, TO THIS EXTENT WE CONCUR WITH THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE AND HOLD THAT FOR LEVY OF PENALTY U/S.271( 1)(C) OF THE I.T. ACT, THE SALE PROCEEDS DECLARED AT RS.75 LAKHS WILL BE THE 8 CONSIDERATION FOR COMPUTATION OF THE LONG TERM CAPI TAL GAIN AS AGAINST RS.1,06,30,000/- SUBSTITUTED BY THE LD.CIT( A). 9.2 NOW COMING TO THE COST OF ACQUISITION OF THE LA ND IN QUESTION, THE LD. COUNSEL FOR THE ASSESSEE HAS STAT ED THAT THE REVISED INDEXED COST OF ACQUISITION AS PER APPROVED VALUERS REPORT COMES TO RS.55,15,730/- WHEREAS THE ASSESSING OFFIC ER HAS ADOPTED THE SAME AT RS.12,29,533/-. WE FIND THE AP PROVED VALUERS REPORT IS DATED 26-07-2012 AND THE DATE OF PENALTY ORDER IS DATED 25-06-2012 . THIS OTHERWISE INDICATES THAT T HE APPROVED VALUERS REPORT WAS NOT GIVEN BEFORE THE ASSESSING OFFICER DURING PENALTY PROCEEDINGS. BEFORE THE CIT(A) THE ASSESSE E HAS FILED THE VALUATION REPORT OF THE PROPERTY BY AN APPROVED VAL UER ACCORDING TO WHICH THE MARKET VALUE OF THE PROPERTY AS ON 01- 04-1981WAS RS.9,47,720/- AND THEREFORE, THE REVISED INDEXED CO ST OF ACQUISITION COMES TO RS.55,15,730/-. ALTHOUGH SUCH VALUATION R EPORT WAS FILED BEFORE THE LD.CIT(A) DURING QUANTUM APPEAL PR OCEEDINGS, WE FIND THE LD.CIT(A) VIDE HIS ORDER DATED 14-06-20 13 AT PARA 8.2 OF THE ORDER HAS REJECTED SUCH VALUATION REPORT HOL DING THAT THE VALUE DETERMINED BY THE APPROVED VALUER IS ON THE B ASIS OF COMPARABLE SALE INSTANCES DURING THE YEAR 1981 AND IT IS NOT SPECIFIC FOR THE PLOT IN QUESTION. HOWEVER, THE VA LUATION AS ON 01- 04-1981 DONE BY THE AO IS ON THE BASIS OF VALUATION OF ADJACENT PLOTS AS REPORTED BY THE OFFICE OF COLLECTOR OF STA MPS AND CONFIRMED BY THE OFFICE OF THE SUB-REGISTRAR. THE ASSESSEE HAS NOT CHALLENGED THE ABOVE FINDING GIVEN BY THE LD.CIT(A) . THEREFORE, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR 9 THE ASSESSEE THAT THE REVISED INDEXED COST OF ACQUI SITION AS PER APPROVED VALUER REPORT AT RS.55,15,730/- SHOULD BE DEDUCTED FROM THE SALE CONSIDERATION OF RS.75 LAKHS FOR DETERMINA TION OF CAPITAL GAIN. IN VIEW OF OUR ABOVE DISCUSSION WE DIRECT TH E ASSESSING OFFICER TO SUBSTITUTE THE ACTUAL SALE CONSIDERATION OF RS.75 LAKHS FOR THE PURPOSE OF DETERMINATION OF CAPITAL GAIN AN D COST OF ACQUISITION AT RS.12,29,533/- AND COMPUTE THE PENAL TY ON 1/3 RD SHARE OF LONG TERM CAPITAL GAIN RELATABLE TO THE AS SESSEE WHICH HE HAS NOT DISCLOSED. WE HOLD AND DIRECT ACCORDINGLY. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED . 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED: 25 TH MARCH, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE