DHWANI MERCANTILE P.LTD, MUMBAI V. ITO 2(1)(2), MUMBAI

ITA 2090/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2530 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLWKAR SR
• Keywords: Sale consideration of property below Jantri Value; Deemed to accrue or arise in india
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.2090/M/2015 (ASSESSMENT YEAR: 2010 - 2011 ) M/S. DHWANI MEWRCANTILE PVT LTD., MANU MANSION, 1 ST FLOOR, 16, SHAHEED BHAGAT SINGH MARG, FORT, MUMBAI 01. / VS. ITO - 2(1)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 20. ./ PAN : AAACD5229M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJESH LOYA, DIRECTOR OF THE ASSESSEE - COMPANY / RESPONDENT BY : SHRI C.W. ANGOLWKAR, SR. AR / DATE OF HEARING : 20.07.2016 / DATE OF PRONOUNCEMENT : 20.07.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 10.4.2016 IS AGAINST THE ORDER OF THE CIT (A) - 4, MUMBAI DATED 22.8.2013 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE PENALTY OF RS. 6,05,700/ - , WHICH WAS LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AND CONFIRMED BY THE CIT (A). 3. BEFORE US , LD COUNSEL FOR THE ASSESSEE NARRATED THE BRIEF FACTS OF THE CASE AND SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSEE SOLD A PROPERTY FOR A SUM OF RS. 7,63,93,000/ - . HOWEVER, AO CONSIDERED THE SALE CONSIDERATION TO THE EXTENT OF RS. 6.5 CRS. INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, AO REFERRED THE PROPERTY TO THE DVO WHO DETERMINED THE PRICE AT RS.6,6 9,60,192/ - . AO QUANTIFIED THE DIFFERENCE OF RS. 83,83,499/ - AND RESTRICTED THE SHORT TERM CAPITAL LOSS TO THE SAME AGAINST THE CLAIM OF RS. 1,03,43,691/ - . THE EXCESS CLAIM DISALLOWED BY THE AO WORKS OUT TO RS. 19,60,192/ - . THIS IS THE SUBJECT MATTER OF PENALTY U/S 271(1)(C) OF THE ACT. 2 4. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE FACTS AND MENTIONED THE ABOVE ADDITION OF RS. 19,60,192/ - IS DIRECTLY LINKED TO THE VALUATION OF THE PROPERTY DONE BY THE DVO. IN THESE CIRC UMSTANCES, WHERE THE DVO IS INVOLVED THE PENALTY SHOULD NOT BE LEVIED U/S 271(1)(C) OF THE ACT. BECAUSE OF THE REASON THAT THE VALUATION OF THE DVO CONSTITUTES MERE ESTIMATION OF AN EXPERT AND THEREFORE, IT IS A CASE OF DEEMED INCOME EARNED BY THE ASSES SEE. THE SAME MAY BE VALID FOR THE PURPOSE OF MAKING ADDITIONS IN VIEW OF THE STATUTORY PROVISIONS BY WAY OF SECTION 50C OF THE ACT. BUT, WHEN IT COMES TO THE PENALTY US 271(1)(C) OF THE ACT, IT IS A SETTLED PROPOSITION OF LAW THAT THERE IS A REQUIREMENT OF INCRIMINATING MATERIAL TO DEMONSTRATE THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME , AS THE CASE MAY BE. 5. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE ABOVE LEGAL POSITION OF THE ISSUE, WE ARE OF THE OPINION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE DECISION OF THE CIT (A) IS REVERSED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 T H JULY, 2016. S D / - S D / - ( SANJAY GARG ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 0 .07.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 3 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI