Lakshmi Lingineni, Hyderabad V. Income Tax Officer, Ward-12(4), Hyderabad

ITA 2208/Hyd/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6510 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J PAVITRAN KUMAR
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Sale consideration of property below Jantri Value; Source of fund
• Section: 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 2208/HYD/2017 ASSESSMENT YEAR: 2008-09 SMT. LAKSHMI LINGINENI, HYDERABAD [PAN: ACXPL4307L] VS INCOME TAX OFFICER, WARD-12(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI B. SHANTHI KUMAR, AR FOR REVENUE : SHRI J. PAVITRAN KUMAR, DR DATE OF HEARING : 18-07-2018 DATE OF PRONOUNCEMENT : 20-07-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD D ATED 18-09-2017, CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT [ACT] TO AN EXTENT OF RS. 70,324/- LEVIE D ON THE REASON THAT ASSESSEE HAS NOT OFFERED CAPITAL GAINS. I.T.A. NO. 2208/HYD/2017 :- 2 - : 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND HAS NO OTHER SOURCES OF INCOME AND NO T AN ASSESSEE ON RECORD. ON THE BASIS OF INFORMATION RECE IVED THAT ASSESSEE ALONG WITH HER HUSBAND, HAD SOLD LAND ADME ASURING 182 SQ. YDS., AT VISAKHAPATNAM TO ONE M/S. DATLA CONSTRUCTION LTD., HYDERABAD, AO HAS INITIATED PROCEEDIN GS U/S. 147 OF THE ACT. INITIALLY IT WAS SUBMITTED BY A SSESSEE THAT ASSESSEE HAS RECEIVED PROPORTIONATE SALE CONSIDERATION OF RS. 5,82,400/- OUT OF RS. 21,31,200/- MENTIONED IN THE SA LE DEED AND AS PER ASSESSEE, IT RESULTS IN SHORT TERM CAPITAL L OSS OF RS. 1,73,350/-. HOWEVER, AO WAS OF THE VIEW THAT THE SRO, VALUE WAS AT RS. 53,28,000/- AND ASKED ASSESSEE TO FI LE RETURN OF INCOME ACCORDINGLY. ASSESSEE ADMITTED THAT THEY HAVE RECEIVED AN AMOUNT TO AN EXTENT OF RS. 31,96,800/- FRO M THE SAID PARTY AND ASSESSEES PROPORTIONATE SHARE WAS ONL Y RS. 8,73,600/- AND IF THAT AMOUNT IS TAKEN, STILL THERE WO ULD BE NO TAXABLE CAPITAL GAIN OR INCOME. HOWEVER, AO DID NOT AG REE AND WITHOUT SPECIFYING THAT HE HAS INVOKED PROVISIONS OF S ECTION 50C ADOPTED THE VALUE AS PER THE SUB-REGISTRAR AND COMP UTED THE CAPITAL GAINS AT RS. 4,90,250/- BY INCLUDING INCOM E OF OTHER SOURCES AT RS. 250/-. ASSESSEE ON BEING TOLD THA T THE PROVISIONS OF SECTION 50C ARE APPLICABLE SEEMS TO HAV E FILED RETURN ACCORDINGLY AND AO HAS COMPLETED THE ASSESSMEN T. THERE IS NO APPEAL ON THE ABOVE ORDER AND ASSESSEE PAID THE TAXES THEREON. HOWEVER, AO HAS INITIATED PENALTY PROCE EDINGS U/S. 271(1)(C) AND LEVIED PENALTY OF RS. 70,324/- O N THE REASON THAT ASSESSEE HAS WILFULLY CONCEALED FILING OF THE RETU RN AND PAYMENT OF CAPITAL GAINS ARISING ON SALE OF LAND. AO HAS RELIED ON THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF U NION I.T.A. NO. 2208/HYD/2017 :- 3 - : OF INDIA & OTHERS VS. DHARMENDRA TEXTILE PROCESSORS A ND OTHERS [306 ITR 277]. 3. BEFORE THE LD.CIT(A) ASSESSEE CONTENDED THAT AS PER THE CONSIDERATION RECEIVED BY HER, THE TRANSACTION RESUL TED IN LOSS AND ACCORDINGLY, THERE IS NO NEED TO FILE RETURN OF INCOME AND SHE WAS NOT AWARE ABOUT IMPLICATIONS OF PROVISIO NS OF SECTION 50C AS SHE WAS NOT AN INCOME TAX ASSESSEE AND IS NOT FULLY CONVERSANT WITH THE PROVISIONS OF INCOME TAX AC T. IT WAS FURTHER SUBMITTED THAT HAVING BEEN ADVISED BY AO ABOUT TH E PROVISIONS OF SECTION 50C, SHE IMMEDIATELY FILED RETU RN OF INCOME AND SHE HAS A GENUINE BELIEF THAT THE SALE PRO CEEDS OF THE PLOT ARE NOT COVERED BY THE IT ACT AND THERE IS NO MALAFIDE INTENTION TO AVOID TAX. LD.CIT(A), HOWEVER, DID NOT AG REE WITH THE CONTENTIONS AND UPHELD THE PENALTY, STATING AS UNDER: 6.4 THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CAR EFULLY CONSIDERED. IN THE PRESENT CASE, THE APPELLANT HAS NOT DISCLOSED SHORT TERM CAPITAL GAIN NOR FILED THE RETURN OF INCOME WI THIN TIME. THIS ITSELF, ONLY SHOWS MENS REA FOR EVASION OF TAX. APPELLANT H AS NOT SUBMITTED ANY SUBMISSION REGARDING NON-FILING OF RETURN NOR R EASONS FOR NOT OFFERING TO TAX. ONLY REASON WAS THAT THE APPELLANT HAS SOLD THE PROPERTY FOR THE FIRST TIME IN HER LIFE. THIS ITSEL F, IS NOT A VALID REASONS FOR NOT FILING RETURN OR OFFERING CAPITAL GAINS TO TAX. IT IS SOLELY ACTION OF THE DEPARTMENT WHICH HAS LET TO UNEARTHING CONCEALM ENT OF CAPITAL GAIN INCOME IN HER CASE. HENCE, IT IS A FIT CASE FO R LEVYING PENALTY. THE PENALTY IS UPHELD. -GROUND DISMISSED 3.1. ASSESSEE HAS RAISED THE GROUNDS THAT THE NOTICE ISSUED U/S. 271(1)(C) HAS NOT SPECIFIED WHETHER PENAL TY WAS INITIATION FOR CONCEALMENT OF INCOME AND FOR FURNISHI NG I.T.A. NO. 2208/HYD/2017 :- 4 - : INACCURATE PARTICULARS. HOWEVER, IN THE COURSE OF AR GUMENTS, LD. COUNSEL RESTRICTED HIS CONTENTIONS TO THE ISSUE ON F ACTS THAT A PENALTY CANNOT BE LEVIED ON THE INVOKING OF DEEM ED PROVISIONS IN THE COMPUTATION. HE RELIED ON THE CO-OR DINATE BENCH DECISION IN THE CASE OF BHAVYA ANANT UDESHI VS. ITO IN ITA NO. 565/HYD/2015, DT. 04-09-2015 FOR THE PROPOSITION THAT PENALTY U/S. 271(1)(C) IS NOT ATTRACTED WHEN THE PROV ISIONS OF SECTION 50C ARE INVOKED. 4. LD.DR, HOWEVER, SUBMITTED THAT THE PROCEEDINGS ARE INITIATED U/S. 147 AND ASSESSEE HAS FILED THE RETUR N ACCORDINGLY, ADMITTING CAPITAL GAINS. THEREFORE, PENAL TY IS WARRANTED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE FACTS. AS PER THE SALE DEED, THE SALE CON SIDERATION RECEIVED BY ASSESSEE AS STATED IN THE DOCUMENT WAS ONL Y RS. 21,31,200/-, ON WHICH ASSESSEES COMPUTATION OF CAPIT AL GAINS OUT OF HER SHARE OF SALE CONSIDERATION RESULTS IN CAP ITAL LOSS OF RS. 1,73,350/-. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS IN CASE OF HER HUSBAND, IT SEEMS THE ASSE SSEES HAVE ADMITTED RECEIPT OF CONSIDERATION TO AN EXTENT OF R S. 31,96,800/- AND PROPORTIONATE SHARE OF ASSESSEE WAS DETERMINED AT RS. 8,73,600/-. EVEN WITH THIS SALE CONSIDERATION, THERE WOULD BE CAPITAL LOSS ARISING TO ASSESSEE. ONLY WITH THE INVOCATION OF PROVISIONS OF SECTION 50C , THE SALE CONSIDERATION WAS DETERMINED AT RS. 14,56,000/- IN THE HANDS OF ASSESSEE AND AO HAS GIVEN DEDUCTION TO AN EXTENT OF RS. 10,47,000/- TOWARDS COST PRICE AND TRANSFER EXPENSES. THUS, I.T.A. NO. 2208/HYD/2017 :- 5 - : THE INCOME COMPUTED UNDER THE HEAD CAPITAL GAINS IS CLEARLY THE AMOUNT ARISING OUT OF THE ADDITION BECAUSE OF DEEMIN G PROVISIONS OF SECTION 50C. SINCE THE DEEMING PROVISIO N IS INVOKED BY AO, WE ARE OF THE OPINION THAT THE FACTS DOES NOT RESULT IN CONCEALMENT OF INCOME. THIS ISSUE WAS CONS IDERED BY THE CO-ORDINATE BENCH IN THE CASE OF BHAVYA ANANT UDESH I VS. ITO IN ITA NO. 565/HYD/2015, DT. 04-09-2015, WHEREIN THE ISSUE WAS DISCUSSED ELABORATELY AS UNDER: 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS CAN BE SEEN F ROM THE FACTS AND MATERIALS ON RECORD, WHILE THE ASSESSEE COMPUTED CA PITAL GAIN ON THE BASIS OF SALE CONSIDERATION MENTIONED IN THE REGIST ERED SALE DEED, THE A.O. COMPUTED THE CAPITAL GAIN BY INVOKING THE PROV ISIONS OF SECTION 50C OF THE ACT AS THE REGISTERING AUTHORITY OF THE STATE GOVERNMENT HAS VALUED THE PROPERTY FOR THE PURPOSE OF STAMP DU TY AT RS.2.55 CRORES. THOUGH, IT MAY BE A FACT THAT THE ITAT WHIL E DECIDING ASSESSEES QUANTUM APPEAL HAS UPHELD APPLICATION OF SECTION 50C OF THE ACT FOR THE PURPOSE OF COMPUTATION OF CAPITAL G AIN BUT THAT ITSELF WILL NOT LEAD TO THE CONCLUSION THAT ASSESSEE EITHE R HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE P ARTICULARS OF INCOME. AS CAN BE SEEN FROM THE LANGUAGE OF SECTION 50C IT IS A DEEMING PROVISION. IN A CASE WHERE A.O. FINDS THAT THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITY FOR THE PURP OSE OF STAMP DUTY IS MORE THAN THE CONSIDERATION CLAIMED TO HAVE BEEN RECEIVED BY THE PARTY, THEN THE VALUE ADOPTED BY THE SRO SHALL BE DEEMED TO BE THE CONSIDERATION RECEIVED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THUS, FOR APPLICATION OF SECTION 50C OF THE ACT, IT IS NOT NECESSARY FOR THE A.O. TO EXAMINE WH ETHER ACTUALLY ASSESSEE HAS RECEIVED ANYTHING OVER AND ABOVE THE A MOUNT MENTIONED IN THE SALE DEED AS HE SIMPLY HAS TO GO B Y THE VALUATION ADOPTED BY THE SRO. HOWEVER, AS FAR AS IMPOSITION O F PENALTY IS CONCERNED, THERE MUST BE POSITIVE EVIDENCE BEFORE T HE A.O. TO CONCLUDE THAT ASSESSEE HAS RECEIVED THE AMOUNT AS V ALUED BY SRO FOR STAMP DUTY PURPOSE. UNLESS THERE ARE POSITIVE E VIDENCE TO INDICATE RECEIPT OF ON MONEY TO THE EXTENT OF VALUATION MADE BY SRO BY THE ASSESSEE, PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED. FURTHER, IN THE PRESENT CASE AS IS EVIDENT FROM THE MATERIAL S ON RECORD, THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING HAS FURNISHED ALL NECESSARY AND RELEVANT DOCUMENTS RELATING TO THE TR ANSACTION OF THE PROPERTY IN QUESTION INCLUDING REGISTERED SALE DEED . THE ASSESSEE HAS I.T.A. NO. 2208/HYD/2017 :- 6 - : NOT SUPPRESSED ANY MATERIAL FACT FROM THE NOTICE OF THE A.O. IN THESE CIRCUMSTANCES, THE IMPOSITION OF PENALTY UNDER SECT ION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS O F INCOME OR CONCEALMENT OF INCOME, IN OUR VIEW, IS NOT APPROPRI ATE. THE ITAT, MUMBAI BENCH IN THE CASE OF RENU HINGORANI, MUMBAI VS. ACIT, RANGE 19(3), MUMBAI (SUPRA) WHILE CONSIDERING IDENT ICAL NATURE OF DISPUTE, DELETED THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT BY HOLDING AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELE VANT RECORD. WE FIND THAT THE AO HAD MADE ADDITION OF RS.9,00,824/- BE ING DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SALE AGREEMENT AND THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY. THUS, THE ADDITION HAS BEEN MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE AO HAS NOT QUESTIONED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE BUT THE ADDITION IS MADE PURELY ON THE BASIS OF DEEMING PROV ISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDIN G THAT THE ACTUAL SALE CONSIDERATION IS MORE THAN THE SALE CONS IDERATION ADMITTED AND MENTIONED IN THE SALE AGREEMENT. THUS IT DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCU RATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FURNI SHED ALL THE RELEVANT FACTS, DOCUMENTS/MATERIAL INCLUDING THE SA LE AGREEMENT AND THE AO HAS NOT DOUBTED THE GENUINENESS AND VALIDITY O F THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDERAT ION RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT FURNISHED CORRECT PARTIC ULARS OF INCOME. MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION ON T HE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTHORITY WOULD NOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER T HIS AGREEMENT WAS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION BE CAUSE OF THE DEEMING PROVISIONS DOES NOT IPSO FACTO ATTRACT THE P ENALTY U/S 271 (1)(C). HENCE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VIS RELIANCE PETROPRODUCTS PVT.LTD (S UPRA), THE PENALTY LEVIED U/S 271 (1)(C) IS NOT SUSTAINABLE. T HE SAME IS DELETED. 5.1. THE PRINCIPLES LAID DOWN IN OTHER DECISIONS RE LIED UPON BY LD. A.R. ALSO EXPRESS SIMILAR VIEW. FOLLOWING THE CONSI STENT VIEW EXPRESSED IN THE DECISIONS REFERRED TO ABOVE, WE AR E OF THE OPINION THAT IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE PRESENT CASE IS NOT VALID. ACCORDINGLY, WE DELETE T HE PENALTY. I.T.A. NO. 2208/HYD/2017 :- 7 - : 5.1. RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOW N THEREON, WE HOLD THAT THE FACTS OF THE CASE DO NOT WARRANT PENALTY U/S. 271(1)(C), ACCORDINGLY, THE PENALTY LEV IED IS CANCELLED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018 SD/- SD/- (CHALLA NAGENDRA PRASAD) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH JULY, 2018 TNMM I.T.A. NO. 2208/HYD/2017 :- 8 - : COPY TO : 1. SMT. LAKSHMI LINGINENI, C/O. B. SHANTHI KUMAR, ADVOCATE, 111, TARAMANDAL COMPLEX, 5-9-13, SAIFABAD , HYDERABAD. 2. INCOME TAX OFFICER, WARD-12(4), HYDERABAD. 3. CIT (APPEALS)-1, HYDERABAD. 4. PR.CIT-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.