Shri Dharmesh Padamshibhai Patel, Surat V. The Dy.CIT, Circle-2, Surat

ITA 2183/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0068 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MIHIR D GANDHI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM & SHRI MANISH BORAD , AM. ITA NO. 2183/AHD/2013 ASST. YEAR: 2006-07 SHRI DHARMESH PADAMSHIBHAI PATEL, 1101 -1102, ADARSHILA APARTMENT, GHOD DOD ROAD, SURAT. VS. DCIT, CIRCLE-2, SURAT. APPELLANT RESPONDENT PAN ABGPP 6255P APPELLANT BY SHRI MIHIR D. GANDHI, AR RESPONDENT BY SHRI K. MADHUSUDAN, SR.DR DATE OF HEARING: 11.11.2016 DATE OF PRONOUNCEMENT: 16/11/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE FOR ASST. YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, SURAT, DATED 18 .07.2013 IN APPEAL NO. CAS-II/86/2012-13 ARISING OUT OF ORDER U/S 271( 1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT) FRAMED ON 31.3.2011 BY DCIT , CIR-2, SURAT. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE , THE CIT(A) HAS GROSSED ERRED - IN ACCEPTING THE UNLAWFUL ACT OF DY. COMMISSIONER O F INCOME TAX, CIRCLE - 2, SURAT (HEREIN AFTER REFER AS LEARNED AO) OF LEVYING PENAL TY AMOUNTING TO RS. 3,04,330/- U/S. 27L(L)(C) ON DEEMED ADDITION ARISING U/S. 50C. ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 2 IN CONFIRMING THE PENALTY EVEN THOUGH THE SUBJECT C ASE WAS SQUARELY COVERED MATTER AND THE HON'BLE JURISDICTIONAL TRIBUNAL HAS DELETED THE PENALTY LEVIED U/S. 271(L)(C) ON DEEMED ADDITION ARISING U/S. 50C IN MANY CASES. IN NOT FOLLOWING THE PRINCIPLES OF JUDICIAL DISCIPL INE. 2. THE APPELLANT CRAVES TO ADD, AMEND, ALTER, SUB STITUTE, MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL, IF NECESSARY, ON THE BASIS OF SUBMISSIONS T O BE MADE AT THE TIME OF PERSONAL HEARING. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS AN INDIVIDUAL HAVING SOURCE OF INCOME FROM COMMISSION, CAPITAL GAIN, SHARE OF PROFITS FROM FIRM AND INCOME FROM OTHER SO URCES. RETURN OF INCOME FOR ASST. YEAR 2006-07 WAS FILED ON 21.02.20 07 DECLARING TOTAL INCOME AT RS.4482786/-. CASE WAS SELECTED FOR SCRUT INY ASSESSMENT AND ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS FRAM ED ON 16.12.2008 DETERMINING TOTAL INCOME AT RS.1,02,42,9 83/- AFTER MAKING ADDITION OF RS.27,12,394/- U/S 50C OF THE ACT ON AC COUNT OF UNDER- VALUATION OF PROPERTY AND RS.30,47,800/- U/S 69B OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT. IN QUANTUM APPEA L BEFORE LD. CIT(A) ADDITION OF RS.30,47,800/- U/S 69B OF THE AC T WAS DELETED WHEREAS ADDITION U/S 50C OF THE ACT TOWARDS UNDER V ALUATION OF PROPERTY WAS SUSTAINED AT RS.27,12,394/-. PENALTY P ROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED AT THE TIME OF FRAMING ASSESSMENT ORDER U/S 143(3) OF THE ACT. AFTER THE ORDER OF LD. CIT(A) ON QUANTUM APPEAL LD. ASSESSING OFFICER FRAMED PENALTY ORDER U /S 271(1)(C) OF THE ACT IMPOSING PENALTY OF RS.3,04,330/- ON THE ADDITI ON SUSTAINED U/S 50C OF THE ACT ON RS.27,12,394/- BY CIT(A). 4. ASSESSEE WENT IN APPEAL BEFORE CIT(A) AGAINST TH E PENALTY IMPOSED U/S 271(1)(C) OF THE ACT BUT COULD NOT SUCC EED. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 3 6. LD. AR SUBMITTED THAT DURING THE FINANCIAL YEAR 2005-06 THERE WERE FIVE TRANSACTIONS OF SALE OF LANDS AND THE TOT AL VALUE OF SALE CONSIDERATION AS PER AGREEMENT WAS AT RS.73,95,206/ - WHEREAS THE JANTRI PRICE ADOPTED BY DY. COLLECTOR FOR THE PURPO SE OF CHARGING STAMP DUTY WAS TAKEN AT RS.10107600/-. THE DIFFEREN CE OF THE JANTRI PRICE AS AGAINST SALE CONSIDERATION CAME TO RS.27,1 2,394/-. IT WAS CONSIDERED AS DEEMED DIFFERENTIATED CONSIDERATION B Y LD. ASSESSING OFFICER U/S 50C OF THE ACT. LD. AR FURTHER SUBMITTE D THAT THE IMPUGNED TRANSACTION FOR SALE OF LAND WERE CARRIED OUT AT FA IR MARKET VALUE ON THE BASIS OF SALE RATE ADOPTED FOR LAND SITUATED NE ARBY. FURTHER NO EVIDENCE WAS BROUGHT ON RECORD BY LD. ASSESSING OFF ICER TO PROVE THAT ASSESSEE HAS RECEIVED CONSIDERATION OVER AND ABOVE THE AGREEMENT VALUE AND THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF JANTRI PRICE. IN SUCH SITUATION ASSESSEE COULD NOT BE DEEM ED IN DEFAULT U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF INCOME OR CONCEALING INCOME. ALSO ADDITION WAS MADE ON THE B ASIS OF SECTION 50C WITHOUT BRINGING ANY DOCUMENTARY EVIDENCES PROV ING THE MENS REA OR GUILTY MIND OR EVIL INTENTION OR EVEN KNOWLE DGE OF THE WRONGFULNESS OF THE ACT. REVENUE HAS BEEN UNABLE TO PROVE THAT THE CALCULATION OF CAPITAL GAIN BY ASSESSEE ON THE BASI S OF DECLARATION OF SALE CONSIDERATION WAS IN ANY WAY INACCURATE OR FUR NISHED INACCURATE PARTICULARS OF INCOME. LD. AR FURTHER REFERRED AND RELIED ON THE WRITTEN SUBMISSION ALONG WITH LIST OF JUDGMENTS AND DECISIO N. SPECIFICALLY LD. AR REFERRED AND RELIED ON THE DECISION OF THE CO-OR DINATE BENCH IN ITA NO.2177/AHD/2013 IN THE CASE OF MAFATLAL NATHAL AL PATEL PRONOUNCED ON 17.08.2016. ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 4 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. SOLITARY GRIEVANCE OF THE ASSESSE E IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING PENALTY OF RS.3,04,3 30/- IMPOSED ON DEEMED ADDITION MADE U/S 50C OF THE ACT. WE FIND TH AT IN THE CASE OF ASSESSEE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPL ETED AFTER MAKING CERTAIN ADDITION WHICH ALSO INCLUDED ADDITIO N U/S 50C OF THE ACT AT RS.27,12,394/- MADE ON THE BASIS OF DEEMED C ONSIDERATION CALCULATED BY REDUCING SALE CONSIDERATION AS PER AG REEMENT AS AGAINST JANTRI PRICE OF THE PROPERTIES SOLD. WE FUR THER OBSERVE THAT THE IMPUGNED ADDITION OF RS.27,12,394/- WAS MERELY BASE D ON THE CALCULATION MADE BY LD. ASSESSING OFFICER TAKING JA NTRI PRICE AS AGAINST SALE PRICE SHOWN BY THE ASSESSEE. AT ANY PO INT OF TIME REVENUE HAS NOT PLACED ON RECORD ANY MATERIAL EVIDE NCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CONSIDERATION OVER A ND ABOVE THE AGREEMENT VALUE. PENALTY OF RS.3,04,330/- U/S 271(1 )(C) OF THE ACT HAS BEEN IMPOSED ON THE ADDITION CONFIRMED U/S 50C OF THE ACT. WE FURTHER OBSERVE THAT SIMILAR TYPE OF FACTS CAME UP BEFORE THE CO- ORDINATE BENCH IN THE CASE OF MAFATLAL NATHALAL PAT EL VS. DCIT (SUPRA) WHEREIN PENALTY U/S 271(1)(C) OF THE ACT WAS DELETE D BY THE CO- ORDINATE BENCH BY OBSERVING AS UNDER :- ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 5 7. WE FIND THAT IN ITS RETURN OF INCOME, THE ASSESS EE HAS SHOWN CAPITAL GAINS ON THE BASIS OF THE SALE CONSIDERATION IN THE AGREEMENT. INVOKING T HE PROVISIONS OF SECTION 50C OF THE ACT, THE STAMP DUTY VALUATION WAS TAKEN AS THE FULL VALU E OF CONSIDERATION. IN OUR UNDERSTANDING, SINCE THE ASSESSEE HAS OFFERED CAPITAL GAINS ON THE BASIS OF THE SALE CONSIDERATION RECEIVED, ASSESSMENT MADE BY INVOKING THE PROVISIONS OF SECTI ON 50C OF THE ACT WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS BECAUSE THE AS SESSMENT HAS BEEN COMPLETED BY A LEGAL FICTION. 8. THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE O F MADAN THEATRES LTD. 260 CTR 75 HAS HELD:- 'THAT THE ACTUAL AMOUNT RECEIVED WAS OFFERED FOR TA XATION. IT WAS ONLY ON THE BASIS OF THE DEEMED CONSIDERATION THAT THE PROCEEDINGS U/S. 2YI(I)(C) STARTED. THE REVENUE HAD FAILED TO PRODUCE ANY IOTA OF EVIDENCE THAT THE ASS ESSEE ACTUALLY RECEIVED ONE PAISE MORE THAN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM. THUS, PENALTY ORDER WAS LIABLE TO BE SET ASIDE.' 9. A SIMILAR VIEW WAS TAKEN BY THE CO-ORDINATE BENC H IN THE CASE OF CHIMANLAL MANILAL PATEL. IN ITA NO. 5O8/AHD/2OIO, THE CO-ORDINATE BENCH HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS A FACT THAT THE ADDITION HAS BEEN MADE BY THE A.O. IN THE REVISIONARY PROCEEDINGS. A.Y. 2008-09 THE ADDITION HAS BEEN MADE ON THE BASI S OF PROVISIONS OF SECTION 50C. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS RECEIVED CONSIDERATION OVER AND ABOVE THAN THAT DECLARED IN THE SALES DEED. THE AO HAS NOT DISPUTED THE CONSIDERATION RECEIVED BY THE ASSESSEE. THE ADDITIO N HAS BEEN MADE ON THE BASIS OF DEEMING PROVISIONS OF SECTION 50C. THE ASSESSEE HAS FURNISHED ALL THE FACTS OF SALE, DOCUMENTS/ MATERIAL BEFORE THE AO. THE AO HAS NOT D OUBTED THE GENUINENESS OF THE DOCUMENTS/DETAILS FURNISHED BY THE ASSESSEE. ONLY B ECAUSE THE ASSESSEE AGREED TO THE ADDITIONS BECAUSE OF THE DEEMING PROVISIONS IT CANN OT BE CONSTRUED TO BE FILING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. THE ASSESSEE AGREED TO ADDITION ON THE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTHORITY CANNOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THE SALE A GREEMENT IS SEEMED TO BE INCORRECT AND WRONG. IN VIEW OF THESE FACTS WE ARE OF THE CON SIDERED VIEW THAT PENALTY CANNOT BE LEVIED ON THE BASIS OF DEEMING PROVISION. WE ACC ORDINGLY DELETE THE SAME. 10. RESPECTFULLY FOLLOWING THE DECISION OF THE HON' BLE HIGH COURT OF CALCUTTA (SUPRA) AND THE CO-ORDINATE BENCH (SUPRA) WHICH ARE ON IDENTICAL SE T OF FACTS, WE SET ASIDE THE FINDINGS OF THE ID. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALT Y OF RS. 39,715/-. 9. WE OBSERVE THAT THE FACTS DEALT IN THE ABOVE REF ERRED DECISION BY THE CO-ORDINATE BENCH ARE SQUARELY SIMILAR TO TH OSE OF ASSESSEE SO MUCH SO THAT IN THE CASE OF ASSESSEE ALSO LD. AS SESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE DOCUMENT OR THE DETAILS ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 6 FURNISHED BY THE ASSESSEE AND ASSESSEE AGREED TO TH E ADDITION BECAUSE OF THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT WHICH CANNOT BE CONSTRUED TO FILING INACCURATE PARTICULAR S OF INCOME OR CONCEALMENT OF INCOME ON THE PART OF ASSESSEE. RESP ECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH, WE SET ASIDE THE FINDINGS OF LD. CIT(A) AND DIRECT THE ASSESSING OFF ICER TO DELETE THE PENALTY OF RS.3,04,330/-. ACCORDINGLY, THIS GROUND OF ASSESSEE IS ALLOWED. 10. GROUND NO.2 IS OF GENERAL NATURE, WHICH NEEDS N O ADJUDICATION. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2016 SD/- SD/- (R. P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 16/11/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2183/AHD/2013 ASST. YEAR 2006-07 7 1. DATE OF DICTATION: 15/11/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15/11/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 16/11/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: