Shri Kantibhai Mohanbhai Kheni, Surat V. The ACIT, Circle-9, Surat

ITA 1831/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8898 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Deemed to accrue or arise in india; Valuation report
• Section: 69C; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE: S H RI RAJPAL YADAV , JUDICIAL MEMBER AND SHR I AMARJIT SINGH , ACCOUNTANT MEMBER KANTIBHAI MOHANBHAI KHENI, B - 59 - 60, TRIKAMNAGAR SOCIETY, L.H. ROAD SURAT - 395006 PAN: ABTPK03059P (APPELLANT) VS THE ACIT, CIRCLE - 9, SURAT (RESPONDENT) REVENUE BY : S H RI ALOK KUMAR , SR. D . R. ASSESSEE BY: S H RI MEHUL SHAH , A.R. DATE OF HEARING : 07 - 03 - 2 01 7 DATE OF PRONOUNCEMENT : 20 - 03 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESS EE S APPEAL FOR A.Y. 2010 - 11 , AR IS ES FROM ORDER OF THE CIT(A) - V, SURAT DATED 15 - 04 - 20 14 IN APPEAL NO. CAS/V/122/2013 - 14 , IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1831 / A HD/20 14 A SSESSMENT YEAR 2010 - 11 I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 2 2. THE ASSES SEE HAS RAISED FOLLOWING SUBSTANTIV E GROUND OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN IMPOSING PENALTY OF RS. 41,46,960/ - 3 . THE RETURN OF INCOME DECLARING INCOME OF RS. 55 ,53, 770/ - WAS FILED ON 16 TH MAY, 2011. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SC RUTINY BY ISSUING NOTICE U/S. 143 (2) OF THE ACT ON 25 TH JULY, 2011. DURING THE COURSE OF ASSESSING PROCEEDINGS, ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF UNDISCLOSED LONG TERM CAPITAL GAINS . DURING THE COURSE OF ASSESSING PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESEE HAD SOLD THREE PLOT OF LAND AND SHOWN LONG TERM CAPITAL GAIN OF RS. 67 , 58 , 003/ - . HOWEVER , THE ASSESSING OFFICER FOUND T HAT A SSESSE HAD NOT SHOWN LONG TERM CAPITAL GAIN ACCORDING TO PROVISI ON OF SECTION 50C OF THE ACT. THEREFORE, ON ASSESSEE S REQUEST A REFERENCE WAS MADE TO THE VALUATION OFFICER F OR VALUATION OF PROPERTY U/S. 50 C OF THE ACT. THEREAFTER, ON THE BASIS OF VALUAT ION OFFICER REPOR T UNDER PROVISION OF SECTION 50C(2) OF THE ACT, T HE ASSESSING OFFICER DETERMINED LONG TERM CAPITAL GAIN AFTER INDEXATION OF RS . 2 , 68 , 88 , 883/ - AS THE ASSESSEE HAS ALREADY DISCLOSED LONG TERM CAPITAL GAIN OF RS. 6 7 , 58 ,0 03/ - . THEREFORE, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 2 , 01 , 30 , 880/ - TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED LONG TERM CAPITAL GAIN U/S 50C OF THE ACT. THEREAFTER, T HE ASSESSING OFFICER HAS LEVIED PENALTY U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 26 - 09 - 2013 . AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 3 THE LD. CIT (A) WHO HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6.1.1 I HAVE CONSIDERED THE PENALTY ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. THE GROUNDS OF APPEAL - GROUND NO. 1 & 2 PERTAINS TO LEVYING PENA LTY OF RS. 41,46,960/ - U/S 271(1 )(C) OF THE IT ACT, 1961. ON THE PERUSAL OF THE DETAILS IT IS OBSERVED THAT ON THE BASIS OF THE REFERENCE MADE TO THE VALUATIO N OFFICER FOR VALUATION OF PROPERTY U/S 50C(2), THE AO MADE AN ADDITION OF RS. 20130880/ - U/S 50C OF THE ACT. THE APPELLANT DID NOT FURNISH ANY EXPLANATION BEFORE THE AO DURING THE PENALTY PROCEEDINGS. THE APPELLANT HAS SUBMITTED THAT THE ADDITION HAS BEEN MADE U/S 50C PURELY ON THE DEEMING PROVISIONS OF THE IT ACT. THE CASE LAWS RELIED UPON BY THE APPELLANT HAS BEEN PERUSED. THE FACTS AND CIRCUMSTANCES OF THE CASE ARE DIFFERENT AND NOT APPLICABLE ON THE FACTS OF THE INSTANT CASE. ON THE ANALYSIS OF THE PRO VISIONS OF SECTION 50C, IT IS OBSERVED THAT SECTION 50C IS A DEEMING PROVISION TO TAX THE DIFFERENCE AS CAPITAL GAM. SECTION 50C WAS INCORPORATED TO PREVENT LARGE SCALE UNDERVALUATION OF THE REAL VALUE OF THE PROPERTY IN THE SALE DEED, SO AS TO DEFRAUD THE GOVERNMENT OF REVENUE IT WAS LEGITIMATELY ENTITLED, TO BY PUMPING IN BLACK MONEY. WHAT WAS STATED IN SECTION 50C AS REAL VALUE COULD NOT BE REGARDED AS A NOTIONAL OR ARTIFICIAL VALUE AND SUCH REAL VALUE WAS DETERMINABLE ONLY AFTER HEARING THE ASSESSEE IN ACCORDANCE WITH THE STATUTORY PROVISIONS. 6.1.2 IT IS AN OBLIGATORY DUTY CAST UPON A PERSON FILING THE RETURN OF INCOME TO DISCLOSE ALL HIS INCOME DERIVED FROM ANY SOURCE UNDER VARIOUS HEADS AND INDICATE THE INCOME UNDER EACN HEAD, WHICH IS CHARGEABLE TO I NCOME - TAX, AFTER MAKING THE PERMISSIBLE DEDUCTIONS. DISCLOSURE OF INCOME WOULD BE DISCLOSURE OF PARTICULARS OF INCOME, WHICH A PERSON IS DUTY BOUND TO DISCLOSE IN FULFILLMENT OF HIS STATUTORY OBLIGATIONS TO PAY TAX ON THE INCOME CHARGEABLE TO TAX. AFTER TH E RETURN IS FILED UNDER SECTION 139(1), THE ASSESSMENT OF TAX IS TO BE MADE AND FOR THE PURPOSE OF MAKING AN ASSESSMENT UNDER THE ACT, THE ITO MAKES AN ENQUIRY CONTEMPLATED BY SECTION 142, UNDER WHICH NOTICE IS ISSUED ON THE PERSON WHO HAS MADE THE RETURN TO PRODUCE ACCOUNTS, DOCUMENTS OR FURNISH VERIFIED INFORMATION IN WRITING INCLUDING STATEMENT OF AIL ASSETS, ETC. HOWEVER, WHERE THE AO IS SATISFIED THAT THE RETURN IS CORRECT AND COMPLETE, AS WERE THE WORDINGS OF SECTION 143(1) AT THE RELEVANT TIME, HE HA S TO ASSESS THE TOTAL INCOME WITHOUT REQUIRING THE PRESENCE OF THE ASSESSEE OR PRODUCTION BY HIM OF ANY EVIDENCE THAT THE RETURN IS CORRECT AND COMPLETE, AS LAID DOWN IN SECTION 143(1). WHERE, HOWEVER, THE AO IS NOT SATISFIED WITHOUT THE PRESENCE OF THE AS SESSEE OR PRODUCTION OF I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 4 EVIDENCE THAT THE RETURN IS CORRECT AND COMPLETE, HE IS REQUIRED TO ISSUE NOTICE ENABLING THE ASSESSEE TO PRODUCE EVIDENCE ON WHICH HE MAY RELY IN SUPPORT OF THE RETURN. THE 'TOTAL INCOME' IN S UCH CASES OF REGULAR ASSESSMENT IS, ASS ESSED AFTER HEARING THE EVIDENCE ADDUCED AND CONSIDERING ALL MATERIAL GATHERED BY THE AO AS PROVIDED IN SECTION 143(3). IT, THEREFORE, FOLLOWS THAT IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 143, THE AO CAN FIND OUT WHETHER THE RETURN OF INCOME IS CORRECT AND COMPLETE. IF HE HOLDS THAT THE RETURN OF INCOME IS NOT CORRECT OR THAT IT IS NOT COMPLETE IN RESPECT: OF THE PARTICULARS OF INCOME WHICH ARE REQUIRED TO BE STATED IN THE RETURN, HE WILL REACH THE CORRECT FIGURE OF TOTAL INCOME AND DETERMINE THE SUM PA YABLE BY THE ASSESSEE OR REFUNDABLE ON THE BASIS OR SUCH ASSESSMENT. IF THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, BY REASON OF OMISSION OR FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY F OR HIS ASSESSMENT, REASSES PROCEEDING CAN BE INITIATED AS PROVIDED UNDER SECTION 147. THIS AGAIN SHOWS FULL AND TRUE DISCLOSURE OF INCOME IS A PRIMARY OBLIGATION OF THE ASSESSEE.. 6.1.3 IF A PERSON OBLIGED TO FURNISH THE PARTICULARS OF HIS INCOME OMITS TO FURNISH THEM, HE THEREBY CONCEALS THE PARTICULARS. THIS CONCEALMENT MAY TAKE VARIOUS FORMS. A GLARING ILLUSTRATION OF CONCEALMENT WOULD BE WHERE THE ASSESSEE DOES NOT DISCLOSE OR FULLY DISCLOSE IN THE RETURN THE INCOME DERIVED BY HIM WHICH WOULD FALL UNDER A PARTICULAR HEAD, E.G., 'INCOME FROM OTHER SOURCES' WHILE DISCLOSING HIS INCOME FALLING UNDER OTHER HEADS OF INCOME PRESCRIBED BY SECTION 14. TO THE EXTENT HE DOES NOT DISCLOSE THAT INCOME; HE CONCEALS THE PARTICULARS OF INCOME. THE OBLIGATION IS NOT ONL Y TO DISCLOSE PARTICULARS OF INCOME BUT TO DISCLOSE THEM CORRECTLY AND COMPLETELY. IF WHILE DISCLOSING THE PARTICULARS OF INCOME IN THE RETURN HE PUTS THEM UNDER A WRONG HEAD, HE CAN BE SAID TO BE FURNISHING INACCURATE PARTICULARS OF INCOME. THE PARTICULAR S OF INCOME CAN BE MADE INACCURATE IN A VARIETY OF WAYS, A GLARING ILLUSTRATION OF WHICH WOULD BE WHERE THE ASSESSEE WHILE STATING THE INCOME UNDER A PARTICULAR HEAD, WORKS OUT THE INCOME CHARGEABLE TO TAX AFTER MAKING DEDUCTIONS WHICH ARE FALSELY MA DE. SU CH A PROCESS WOULD MAKE THE PARTICULARS OF INCOME INACCURATE. IN ALL SUCH CASES, WHETHER THE INCOME IS NOT DISCLOSED - AGAINST THE CONSTITUENT ITEM OF THE RETURN IN WHICH IT FALLS OR IS PARTLY NOT DISCLOSED, OR THE PARTICULARS OF INCOME GIVEN IN THE RETURN A RE INCORRECTLY STATED BY ANY MACHINATION, THE IMPACT IS BOUND TO BE ON THE FIGURE OF GROSS TOTAL INCOME TO BE MENTIONED UNDER VARIOUS HEADS OF INCOME AND ALSO ON THE TOTAL INCOME CHARGEABLE TO TAX. IN FACT, REDUCING THE FIGURE OF INCOME THAT I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 5 WOULD BE CHARG EABLE TO TAX WOULD BE FOR THE PURPOSE OF CONCEALMENT OF PART ICULARS OF INCOME OR GIVING INACCURATE PARTICULARS OF INCOME. THE EXPRESSION PARTICULARS OF INCOME' WOULD HAVE RELEVANCE TO ALL THE PARTICULAR'S OF INCOME WHICH THE ASSESSEE IS REQU IRED TO GIVE IN HIS RETURN FULLY AND TRULY, INCLUDING THE PARTICULARS OF INCOME CHARGEABLE TO TAX UNDER VARIOUS HEADS AND THE TOTAL INCOME. THEREFORE, ANY CONCEALMENT OR INACCURACY IN THE PARTICULARS OF INCOME IN THE RETURN OCCURRING AT ANY STAGE UP TO AND INCLUSIVE OF THE ULTIMATE STAGE OF WORKING OUT OF TOTAL INCOME, WOULD ATTRACT THE PE NALTY PROVISION OF SECTION 271(1 )(C) OF THE ACT. EVERY FIGURE IN THE RETURN WHICH IS SET OPPOSITE TO THE ITEM OF INCOME IS A PARTICULAR OF INCOME, WHETHER THE FIGURE IS ON E WHICH IS STATED INDEPENDENTLY OF ANYTHING ELSE THAT APPEARS IN THE RETURN OR THE DOCUMENTS ACCOMPANYING IT OR WHETHER IT IS SOMETHING DERIVED FROM OTHER FIGURES ELSEWHERE STATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORDS 'INACCURATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT. 6.1.4 IT IS CLEAR THAT THE PROCEEDINGS CAN BE INITIATED UNDER SECTION 271(1) ONLY IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF H IS INCOME OR HAS FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME. THE EXPRESSION USED IN CLAUSE (C) IS HAS CONCEALE D THE PARTICULARS OF HIS INCOME OR 'FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. THEREFORE, BOTH IN CASES OF CONCEALMENT AND INACCURACY, THE PHRASE 'PARTICULARS OF INCOME' IS USED. IT WILL BE NOTED THAT AS REGARDS CONCEALMENT, THE EXPRESSION IN CLAUSE (C) IS 'HAS CONCEALED THE PARTICULARS OF HIS INCOME' AND NOT 'HAS CONCEALED HIS INCOME'. IT IS OBVIOUS THAT THE PENAL PROVISIONS WOULD OPERA TE WHEN THERE IS A FAILURE OF DUTY TO DISCLOSE FULLY AND TRULY PARTICULARS OF INCOME, IMPOSED UNDER THE ACT AND THE RULES THERE UNDER. THE DUTY IS ENJOINED UPON A PERSON TO MAKE A CORRECT AND COMPLETE DISCLOSURE OF HIS INCOME AND IT IS ONLY WHEN HE FAILS I N HIS DUTY BY NOT DISCLOSING HIS INCOME OR PART THEREOF, HE CONCEALS THE PARTICULARS OF HIS INCOME. THE DUTY IS ENJOINED UPON HIM TO MAKE A COMP LETE DISCLOSURE OF HIS INCOME AS WELL AS A CORRECT DISCLOSURE. THEREFORE, IF THE DISCLOSURE MADE OF THE PARTICUL ARS OF INCOME IS INCORRECT, THEN ALSO HE COMMITS BREACH OF HIS DUTY. SUCH DEFAULTS ENTAIL THE PENAL CONSEQUENCES CONTEMPLATED BY SECTION 271(1 )(C). THE APPELLANT WAS NOT FORTHCOMING IN THE DECLARATION OF THE TRUE AND CORRECT INCOME WHICH IS APPARENT FROM T HE FACT TRUE I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 6 INCOME FROM THE SALE OF LAND WAS NOT DISCLOSED IN THE RETURN OF INCOME. THE APPELLANT ALSO DID NOT BRING ON RECORD ANY EVIDENCE TO SHOW THAT THE VALUATION DONE BY THE DVO WAS NOT CORRECT. SINCE, THESE FACTS WAS SUPPRESSED AND NOT DISCLOSED TRU LY AND FULLY DURING THE FILING OF RETURN OF INCOME. THE PROVISIONS OF SEC. 271(1 )(C) ALSO INCLUDES DEEMED INCOME. THE POSITION OF LAW WITH REGARD TO LEVY OF PENALTY U/S 271(1 )(C) HAS UNDERGONE A SUBSTANTIAL CHANGE AFTER THE INSERTION OF EXPLANATION (1) TO SECTION 271(1 )(C) W.E.F 01.04.1976. EXPLANATION (1) TO SECTION 271(1 )(C) RAISES A PRESUMPTION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME THE SAME SHALL BE DEEMED OR REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED, SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASE OF A.M. SHAH & CO. VS CIT (GUJ) 238 ITR 415 6.1.5 FURTHER W.E.F. 10.09.1986 AMENDMENT HAS BEEN MADE IN E XPLANATION 1 - B TO SECTION 271(1 )(C). AFTER THIS AMENDMENT FURTHER ONUS HAS BEEN PLACED ON THE ASSESSEE TO PROVE THAT THE EXPLANATION FURNISHED BY HIM WAS BONAFIDE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXPLANATION AND PROVES THAT SUCH AN EXPLANATION WAS BONAFIDE THE ADDITION MADE TO HIS INCOME SHALL DEEMED TO REPRESENT THE CONCEALED INCOME. 6.1.6 ON THE ANALYSIS OF THE PROVISIONS OF SECTION 271(1 )(C) IT IS OBSERVED THAT THE EXPLANATION 1 TO SECTION 271(1) PROVIDES FOR THE SITUATION WHERE NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSESSEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO BE FALSE OR WHERE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THESE CASES, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON SHALL BE DEEMED TO REPR ESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED, AS PER THE PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONAFIDE AND FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM WILL BE ON THE PERSON CHARGED FOR CONCEALMENT. 6.1.7 AS PER THE PROVISIONS OF EXPLANATION (1 )(B),NOW THE ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT ALSO TO SUBSTANTIATE IT AND TO PROVE THAT THE PRESUMPTION WAS BONAFIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION (1) IS REBUTTABLE. 'THE EFFECT IS THAT UNLESS AND UNTIL THE ASSESSEE REBUTS THE PRESUMPTION, HE WOULD BE LIABLE FOR PENALTY UNDER SECTION 271(1 )(C) OF THE ACT. IT IS NOW AN ESTABLISH ED LAW THAT THE PRESUMPTION WOULD NOT STAND REBUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FANCIFUL OR UNREASONABLE EXPLANATION BY I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 7 ASSESSEE. THE EXPLANATION SHOULD BE BASED ON COGENT AND RELEVANT: MATERIAL AND SHOULD BE ACCEPTABLE TO THE AUTHORI TIES. IN THIS CONNECTION REFERENCE MAY BE MADE TO THE DELHI HIGH COURT'S DECISION IN THE CASE OF CIT VS. GURBACHAN LAF REPORTED IN 250 ITR I57(DEIHI) 6.1.8 THE APEX COURT NAA APPROVED THE INTERPRETATION PLACED UPON THE EXPLAN ATION BY A FULL BENCH OF THE OF THE PUN JAB AND HARYANA HIGH COURT IN VISWAKARMA INDUSTRIES VS. CIT (1982) 135ITR652. 6.1.9 SIMILAR VIEW HAS BEEN EXPRESSED BY THE KERALA HIGH COURT IN THE CASE OF CIT VS. K.P. MADHUSUDANA REPORTED IN 246 ITR 218. THIS DECISION HAS BEEN AFFIRMED BY THE SUP REME COURT IN 251 ITR 99. AFFIRMING THE AFORESAID DECISION, THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT AFTER INSERTION OF EXPLANATION ITS EARLIER DECISION IN THE CASE O F SIR SHADI LAL SUGAR END GENERAL MILLS LTD. VS. CIT REPORTED IN 168 ITR 705 ( SC) W AS NO LONGER APPLICABLE. TH E KERALA HIGH COURT AT PAGE 244 HAS OBSERVED AS UNDER: THE QUESTION OF ONUS IS OF PRIMARY AND ADDED IMPORTANCE IN LEGAL ACRIMONY. IN CIT VS. ANWAR ALL (1970) 76 ITR 696, THE APEX COURT LAID DOWN THAT, BEFORE A PERSON COULD BE VI SITED WITH A PENALTY FOR CONCEALMENT, ETC., THE REVENUE MUST PROVE THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE AND THAT HE HAD CONCEALED IT WITH A MOTIVE. IT WAS FURTHER HELD THAT PENALTY COULD NOT BE IMPOSED MERELY BECAUSE ANY EXPLANATION G IVEN BY THE ASSESSEE IN REGARD TO THE ITEMS IN QUESTION WAS NOT BELIEVED TO BE TRUE. THE POSITION OF LAW ON OR AFTER APRIL 1, 1976, IS THAT WHERE IN RESPECT OF ANY ITEM OF CREDIT, (A) THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR (B) THE ASSESSEE OFFERS AN EXPLANATION WHICH THE TAXING OFFICER CONSIDERS TO BE FALSE, OR (C) THE ASSESSEE OFFERS AN EXPLANATION BUT NO MATERIAL OR EVIDENCE TO SUBSTANTIATE IT, HE SHALL BE DEEMED TO HAVE CONCEALED SUCH INCOME WITH IN THE MEANING OF SECTION 271(1 )(C). WHAT SECTIONS 6 8, 69,69A,69B AND 69C DEEM FOR THE PURPOSE OF ASSESSMENT WAS INJECTED FOR THE PURPOSE OF PENALTY BY OPERATION OF A DEEMING PROVISION. A PROVISO WAS ADDED TO THE NEW EXPLANATION. IT CONCERNS CASES WHERE THE ASSESSEE OFFERS AN EXPLANATION WHICH HE IS NOT ABL E TO SUBSTANTIATE. CONSEQUENTIALLY, THE PROVISIONS ARE INTENDED TO SAVE SUCH AMOUNT FROM IMPOSITION OF PENALTY ALTHOUGH THE SAME HAD BEEN ADDED TO THE ASSESSEE'S INCOME IN THE ASSESSMENT. IF THE ASSESSEE'S EXPLANATION IS FOUND TO BE BONAFIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM.' I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 8 6.1.10 THE VIEWS SIMILAR TO THE ABOVE DECISION OF DELHI AND KERALA HIGH COURTS WERE EXPRESSED BY THE ALLAHABAD HIGH COURT IN THE CASE OF SUSHIL KURNAR SHARAD KUMAR 232 1TR 588 (ALL D) . 6.1.11 SIMILARLY, THE DELHI HIGH COURT IN THE CASE OF CIT VS. SOHAN SINGH 254 ITR 170 HAS HELD THAT FOR THE PURPOSE OF PENALTY MATTER HAS TO BE EXAMINED IN THE BACKGROUND OF EXPLANATION TO SECTION 271(1) (C). IT HAS ALSO BE EN HELD THAT EVIDENCE RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THROUGH NOT CONCLUSIVE, ARE NOT TOTALLY IRRELEVANT. THEY COULD BE TAKEN NOTE OF. ACCORDING TO THE HIGH COURT WHAT WAS REQUIRED WAS THAT THE ASSESSEE MUST OFFER AN EXPLANATION WHICH , IF FOUND TO BE UNTENABLE OR UNACCEPTABLE, THEN THE PENALTY C AN BE LEVIED UNDER SECTION 271(1 )(C) OF THE IT ACT. 6.1 .10 THE A.O. HAS TO SATISFY HIMSELF WHETHER PENALTY PROCEEDINGS BE INITIATED OR NOT DURING TH E ASSESSMENT PROCEEDINGS. HE IS NOT REQUIRED T O RECORD HIS SATISFACTION IN A PARTICULAR MAN NER OR REDUCE IT INT O WRITING. THE SCOPE OF S. 271(1 )(C) HAS ALSO BEEN ELABORATELY DISCUSSED BY T HE SUPREME COURT IN UOI VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC) AND C1T VS. ATUL MOHAN BINDAL 317 ITR 1 (SC). THE EXPLA NATIONS APPENDED TO SEASON 27L(1 )(C) OF THE INCOME - TAX ACT, 1961, ENTIRELY INDICATE THE ELEMENT OF STRICT LABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETURN. THE OBJECT BEHIN D THE ENACTMEN T OF SECTION 271(1 )(C) READ WITH EXPLANATIONS INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRAC TING CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE INCOME - TAX ACT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS EVIDENT THAT THE APPELLANT HAD DELIBERATELY AND INTENTIONALLY NOT DISCLOSED THE TRUE AND CORRECT INCOME WITH THE INTENTION TO EVADE TAX. HENCE, THE AO HAS RIGHT LY IMPOSED THE PENALTY U/S 271(1 )(C) OF THE ACT AND THE IMPOSITION OF PENALTY IS UPHELD AND GROUND OF APPEAL IS DISMISSED. 4. DURING THE COURSE OF APPELLATE PR OCE EDINGS BEFORE US, THE LD. COUNSEL CONTENDED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER AS THE ASSESSING OF FICER HAD MADE DEEMED ADDITION O N ACCOUNT OF UNDISCLOSED LONG TERM CAPITAL GAIN U/S. 50C OF THE ACT. HE ALSO FURNISHED PAPER BOOK CONTAINING JU DICIAL PRONOUNCEMENTS IN THE CASE OF CIT VS. MADAN TEATERS LTD. (2013) I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 9 [206 CTR 075], CIT VS. FORTUNE HOTELS AND ESTATES (2014) [52 TAXMANN.COM 330], SUKHABHAI P. AHIR VS. ITO (2009) [ ITA NO. 2454/AHD/2009], CIT VS. GAUTAM MANUBHAI AMIN [ 38 TAXM ANN.COM 42 ], MANILAL M. PATEL [ITO NO. 489/MUM/2010] . HUF VS. ACIT [ITA NO. 2884/AHD/2014] AND ROHIT K. KHANNA VS. ITO . ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF LD. CIT(A). 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. ON THE PERUSAL OF THE OF DETAILS IT IS OBSERVED THAT ON THE BASIS OF THE REFERENCE MADE TO THE VALUATION OFFICER FOR VALUATION OF PROPERTY U/S 50C(2), THE AO MADE AN ADDITION OF RS. 20130880/ - U/S 50C OF T HE A CT O N THE BASIS OF VALUATION OFFICER REPORT, THE ASSESSING OFFICER DETERMINED LONG TERM CAPITAL GAIN AFTER REDUCING RS. 67,58,003/ - WHICH THE ASSESSEE HAS ALREADY DISCLOSED AS LONG TERM CAPITAL GAIN. ON THE ANALYSIS OF THE PROVISIONS OF SECTION 50C, WE 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 CAPITAL ASSETS, B EING LAND OR BUILDING OR BOTH I F LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY. I T IS ONLY ON ACCOUNT OF DEEMING PROVISIONS OF SECTION 50C , THE AO HAS MADE THE ADDITION AFTER CONSIDERING THE VALUATION REPORT OF THE VALUATION OFFICER U/S 50C(2) OF THE ACT AND DETERMINED THE LONG TERM CAPITAL GAIN . THE FACT REMAINS THAT THE ACTUAL AMOUNT RECEIVED WAS OFFERED FOR TAXATION. IT IS ONLY ON THE BASIS OF THE DEEMED CONSIDERATION THAT THE PROCEEDINGS UNDER SECTION 271 (1) ( C ) OF THE ACT HAS BEEN STARTED. THE REVENUE HAS FAILED TO PRODUCE ANY IOTA OF EVIDENCE THAT THE ASSESSEE ACTUALLY RECE IVED ONE PAISE MORE THAN I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 10 THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM. WE OBSERVED THAT IN TERMS OF DEEMING PROVISIONS OF SECTION 50C, HIGHER SALES CONSIDERATION OF PROPERTY DETERMINED BY THE DVO DID NOT BY ITSELF AMOUNT TO FURNISHING INACCURATE PARTICULAR S OF INCOME SO AS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT THE REVENUE HAS ALSO NOT SHOWN AS TO HOW THE ASSESSEE COULD BE HELD TO HAVE ACTUALLY RECEIVED THIS AMOUNT WHICH IS IN EXCESS OF THE AMOUNT OF MENTIONED IN THE SALE DEED . IT HAS ALSO NOT BEEN SHOWN AS TO WHETHER ANY CORRESPONDING ADDITION HAS BEEN MADE IN THE HANDS OF THE BUYER. WE FURTHER NOTICE THAT THE ADDITION WAS MADE TOTALLY BY INVOKING THE PROVISION CONTAINED IN SECTION 50C OF THE ACT, THEREFORE, PENALTY CANNOT BE IMPOSED ON THE I NCOME DETERMINED ON THE BASIS OF DEEMING PROVISION OF SECTION 50C AS THIS SOLITARY DOES NOT LEAD TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THEREFORE, WE FIND LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE PENALTY LEVIED BY THE ASSESSING OFFICER. IN THE CIRCUMST ANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED .' ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 03 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT CAMP : DATED 20 /03/2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 1831 /AHD/ 2014 A.Y. 2010 - 11 PAGE NO SHRI KANTIBHAI MOHANBHAI KHENI VS. ACIT 11 BY ORDER/ , / ,