Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 5878 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-07-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2006-2007
Appeal Filed On
24-06-2010
Judgement Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER SHRI HARESH P. SHAH, A-14/11. SVP RD. NO.10, UDYOGNAGAR, UDHNA, SURAT. VS. INCOME-TAX OFFICER, WARD 2(1), SURAT. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HARDIK VORA, AR REVENUE BY:- SHRI P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST LE VY OF PENALTY OF RS.33,082/- U/S 271(1)(C) ON AN ADDITION OF RS.1,04 ,405/- MADE U/S 50C OF THE ACT, AS UNDER :- (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN LEVYING PENALTY OF RS.33,082/- U/S 271(1) (C) OF THE IT ACT, 1961, ON ADDITION OF RS.1,04,405/- MADE U/S 50 C OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT DURING THE YEAR T HE ASSESSEE SOLD A PLOT OF LAND NO.A/14/11, UDHNA UDHYOGNAGAR SANDH, F OR A DECLARED SALE CONSIDERATION OF RS.1,26,000/-. THE AO FOUND THAT S TAMP VALUATION AUTHORITY (SVA) HAS VALUED THE PROPERTY AT RS.2,27, 405/- FOR THE PURPOSES OF LEVY OF STAMP DUTY. ACCORDINGLY THE AO SUBSTITUTED THE DECLARED SALE CONSIDERATION WITH THE VALUATION DONE BY STAMP VALUATION ITA NO.2154/AHD/2010 ASST. YEAR :2006-07 2 AUTHORITY AND CALCULATED CAPITAL GAIN THEREON. THUS AS AGAINST DECLARED SHORT-TERM CAPITAL GAIN OF RS.46,000/- THE AO WORKE D OUT SHORT-TERM CAPITAL GAIN OF RS.1,47,405/- RESULTING IN AN ADDIT ION OF RS.1,01,405/- IN THE DECLARED INCOME. THE AO THEREAFTER INITIATED PE NALTY PROCEEDINGS. IN RESPONSE TO SHOW CAUSE NOTICE ASSESSEE HAS FILED WR ITTEN SUBMISSIONS WHICH SEEMS TO HAVE BEEN REJECTED BY THE AO AND PEN ALTY OF RS.33,082/- WAS LEVIED. THE REASON GIVEN BY THE LD. AO IS THAT THERE WAS A CLEAR PROVISION TO SUBSTITUTE VALUATION DONE BY STAMP VAL UATION AUTHORITY AS SALE CONSIDERATION AND THEREBY ASSESSEE HAS WILL-FU LLY IGNORED TO PAY CAPITAL GAIN TAX PROPERLY. WHILE CONFIRMING THE LEV Y OF PENALTY LD. CIT(A) HELD THAT FIRSTLY THERE IS NO REQUIREMENT FOR THE A O TO BRING ANY EVIDENCE ON RECORD TO SHOW THAT TRANSFEROR HAS RECEIVED ADDI TIONAL CONSIDERATION OVER AND ABOVE WHAT IS SHOWN IN THE SALE DEED. SECO NDLY, VALUATION DONE BY STAMP VALUATION AUTHORITY IS DEEMED TO BE THE FU LL VALUE OF CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF TR ANSFER, WHICH GIVES REALISTIC DETERMINATION OF VALUATION. THERE IS AN A TTEMPT ON THE PART OF ASSESSEE TO CONCEAL INCOME AND FURNISH INACCURATE P ARTICULARS OF INCOME BY NOT SUBSTITUTING VALUATION DONE BY STAMP VALUATI ON AUTHORITY. 3. I HAVE HEARD THE PARTIES AND CAREFULLY PERUSED T HE MATERIAL ON RECORD. IN MY CONSIDERED VIEW THERE IS NO CASE OF L EVY OF PENALTY. THE PRESUMPTION ON WHICH THE AUTHORITIES HAVE LEVIED TH E PENALTY IS THAT IN ALL AND EVERY CIRCUMSTANCES THE VALUATION DONE BY SOME VALUATION AUTHORITIES HAS TO BE SUBSTITUTED IN PLACE OF DECLA RED SALE CONSIDERATION. SINCE THERE IS NO OPTION TO THE ASSESSEE AND, THERE FORE, BY NOT PAYING CAPITAL GAINS ON THE BASIS OF VALUATION DONE BY STA MP VALUATION AUTHORITY DEEMING IT AS SALE CONSIDERATION THE ASSESSEE HAS C ONCEALED THE PARTICULARS OF INCOME. IN MY CONSIDERED VIEW THIS PRESUMPTION I S UNFOUNDED. SECTION 50C DOES PROVIDE AN OPTION TO THE ASSESSEE TO CLAIM BEFORE THE AO THAT 3 VALUATION DONE BY STAMP VALUATION AUTHORITIES IS HI GHER THAN MARKET VALUE OF THE PROPERTY AND, THEREFORE, PROPERTY SHOU LD BE REFERRED TO THE DEPARTMENTAL VALUATION OFFICER FOR DETERMINING ITS MARKET VALUE. ON MAKING SUCH A REQUEST THE AO HAS TO REFER THE PROPE RTY WHICH IS SOLD, TO THE DEPARTMENTAL VALUATION OFFICER WHO WILL DETERMI NE THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE. IN CASE MAR KET VALUE OF THE PROPERTY SO DETERMINED BY DISTRICT VALUATION OFFICER IS MORE THAN THE VALUATION DONE BY STAMP VALUATION AUTHORITY FOR THE PURPOSES OF LEVY OF STAMP DUTY THEN VALUATION DONE BY STAMP VALUATION AUTHORI TY, WILL BE TAKEN AS SALE CONSIDERATION FOR CALCULATING CAPITAL GAINS. I N CASE VALUATION DONE BY DISTRICT VALUATION OFFICER IS LESS THAN THE VALUATI ON DONE BY STAMP VALUATION AUTHORITY THEN SUCH MARKET VALUE AS DETER MINED BY DISTRICT VALUATION OFFICER WOULD BE SUBSTITUTED AS SALE CONS IDERATION IN PLACE OF EITHER DECLARED SALE CONSIDERATION OR VALUATION DON E BY STAMP VALUATION AUTHORITY. THEREFORE, IT IS INCORRECT ON THE PART O F AUTHORITIES OF THE DEPARTMENT TO PRESUME THAT ASSESSEE WAS LEGALLY BOU ND TO SUBSTITUTE THE VALUATION DONE BY STAMP VALUATION AUTHORITIES FOR C ALCULATING CAPITAL GAINS. THE ASSESSEE IN HIS OWN WISDOM THOUGHT TO AD OPT THE SALE CONSIDERATION FOR CALCULATING CAPITAL GAINS AND THE N MAKING A CLAIM BEFORE THE AO TO REFER THE PROPERTY TO THE DISTRICT VALUAT ION OFFICER FOR DETERMINING MARKET VALUE BUT SUBSEQUENTLY IT MIGHT HAVE DECIDED OTHERWISE AND ACCEPTED THE WORKING DONE BY THE AO O N THE BASIS OF VALUATION DONE BY STAMP VALUATION AUTHORITIES. BUT FOR THIS REASON IT CANNOT BE SAID THAT CALCULATION OF CAPITAL GAINS BY THE ASSESSEE ON THE BASIS OF DECLARED SALE CONSIDERATION WAS IN ANY WAY INACCURATE OR THERE WAS ANY CONCEALMENT OF INCOME OR FILING OF INACCURA TE PARTICULARS. MERELY MAKING A CLAIM ON THE BASIS OF AVAILABLE OPTIONS IN THE LAW AND THEREAFTER NOT PURSUING THAT OPTION WOULD NOT AMOUNT TO ANY CO NCEALMENT OR FILING OF INACCURATE PARTICULARS. CALCULATION OF CAPITAL G AINS BY THE ASSESSEE IN 4 THE MANNER IT HAS BEEN DONE BY HIM CANNOT BE SAID T O BE IN ANY WAY INACCURATE OR THERE IS ANY HIDING ANY PARTICULARS O F INCOME. ALL THE FACTS ARE ON RECORD AND AS PER LAW AO HAS SUBSTITUTED THE VALUATION DONE BY STAMP VALUATION AUTHORITY IN PLACE OF DECLARED SALE CONSIDERATION. IF FOR CERTAIN REASONS ASSESSEE HAS NOT CHOSEN TO EXERCISE AN OPTION OF ASKING THE AO TO REFER THE PROPERTY TO THE DVO IT WOULD NOT ME AN THAT INITIAL CLAIM WAS IN ANY WAY INCORRECT, FALSE OR FILLED WITH CONC EALMENT. 4. IN ANY WAY HON. SUPREME COURT IN CIT VS. RELIANC E PETROPRODUCTS 322 ITR 158 (SC) HAS HELD THAT MERELY BY MAKING A CLAIM WHICH IS NOT ACCEPTED BY THE AO, PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. EVEN OTHERWISE I AM OF THE VIEW THAT CASE OF THE AS SESSEE IS NOT COVERED WITHIN THE MEANING OF EXPLANATION-1 TO SECTION 271( 1)(C). IT IS BECAUSE ASSESSEE HAS FURNISHED THE EXPLANATION VIDE HIS LET TER DATED 12.6.2009 WHICH IS NOT FOUND TO BE FALSE. THERE IS NO ALLEGAT ION THAT ASSESSEE HAS NOT DISCLOSED ANY MATERIAL FACT FOR THE PURPOSES OF ASS ESSMENT OR FOR THE PURPOSES OF LEVY OF PENALTY. THERE IS ALSO NO ALLEG ATION THAT EXPLANATION FURNISHED BY THE ASSESSEE IS NOT BONA FIDE. FOR INV OKING EXPLANATION-1 TO SECTION 271(1)(C) ALL THE THREE INGREDIENTS ARE TO BE CUMULATIVELY AND SIMULTANEOUSLY SATISFIED AS HELD BY THE TRIBUNAL IN ITAT, LUCKNOW BENCH IN STAR INTERNATIONAL (P) LTD. VS. ACIT (2008 ) 23 SOT 88 (LUCKNOW) AND IN THE PRESENT CASE NONE OF THE INGRE DIENTS IS SATISFIED, THE PENALTY COULD NOT BE LEVIED EVEN WITHIN THE MEANING OF EXPLANATION. THE THREE INGREDIENTS ARE AS UNDER :- (1) THE ASSESSEE OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE; (2) THE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FI DE; AND (3) ALL THE FACTS RELATING TO THE SAME AND MATERIAL FAC TS TO THE COMPUTATION OF TOTAL INCOME THEN DISCLOSED BY HIM. ACCORDINGLY, I HOLD THAT PENALTY IS NEITHER LEVIABL E UNDER THE MAIN PROVISION NOR UNDER EXPLANATION-1 TO SECTION 271(1) (C). 5 5. IN THE RESULT, I CANCEL THE PENALTY AND ALLOW TH E APPEAL FILED BY THE ASSESSEE. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 8/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD
