DCIT, CC-3(3)(2), MUMBAI V. TRANS FREIGHT CONTAINERS LTD., MUMBAI

ITA 2337/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8366 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIR MIHIR SHAH
• Assessee Lawyers: ARJU GARODIA
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2337/MUM./2016 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT CC - 3(3)(2), ROOM NO. 609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K ROAD MUMBAI 400 020 . APPELLANT V/S TRANS FREIGHT CONTAINERS LTD. 72 - 73, NARIMAN BHAVAN, NARIMAN POINT, MUMBAI 400 021 PAN AAACT1447P . RESPONDENT ASSESSEE BY : MS. ARJU GARODIA REVENUE BY : SHIR. MIHIR SHAH DATE OF HEARING 16.02.2017 DATE OF ORDER 24.02.2017 O R D E R PER: SHAMIM YAHYA T HIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF LEARNED CIT - A DATED 27 /1/2016, AND PERTAINS TO ASSESSMENT YEAR 2009 10. 2. THE GROUNDS OF APPEAL READ AS UNDER; TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 2 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS RIGHT IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF INCOME TAX ACT, 1961 OF RS.34,87,200/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS SUPPRESSED ITS INCOME BY NOT CONSIDERING SPECIFIC PROVISIONS OF SECTION 50C OF THE ACT FOR COMPUTATION OF CAPITAL GAINS AND THE LD. CIT(A) HAD EARLIER CONFIRMED THE ADDITIONS OF RS.1,74,36,000/ - U/S. 50C OF THE ACT?' 2. 'WHETHER ON THE FACTS AND CIRCU MSTANCES OF THE CASE IN LAW, THE CIT(A) IS RIGHT IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF INCOME TAX ACT, 1961 HOLDING THAT THE PENALTY HAS BEEN LEVIED ON THE ADDITION MADE BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C OF INCOME TAX ACT, 1961.' 3) 'THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 4) 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY? 3. B RIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY IN THIS CASE ARE AS UNDER; I) DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS SOLD 2 PIECES OF LAND AT VASHIVALI ADMEASURING 50,450 SQ. MTRS . FOR A TOTAL CONSIDERATION OF RS.1, 71,50000/ - , THE STAMP DUTY VAL UE A S PER AGREEMENT AMOUNTS TO RS. 992,76,000/ - . THE APPELLANT HAD TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 3 OBTAINED VALUATION REPORT OF THE SAID LAND FROM THE GOVERNME NT APPROVED REGISTERED VALUER M/ S. RAJESH SHAH ENGINEERS & CONSULTANTS PVT. LTD. ('REGISTERED VALUER) WHO DETERMINED THE FAIR MA RKET V ALUE OF THE SAID LAND AT RS. 1,64,51.900/ - . II) ACCORDINGLY, AT THE TIME OF FILING THE RETURN, THE APPELLANT, ON THE BASIS OF THE ABOVE VALUATION REPORT, HAS ADOPTED THE ACTU AL SALES CONSIDERATION I.E. RS. 1,71,50,000/ - FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS UNDER THE ACT. THE ASSESSING OFFICER IN THE ORDER PASSED U/S. 143(3) OF THE ACT MADE AN ADDITION OF RS. 8,21,26,000/ - BEING THE DIFFERENCE BETWEEN STAMP DUTY VALUE AND VALUE ADOPTED BY THE APPELLANT BY INVOK ING THE PROVISIONS OF SECTION 50 C OF ACT AND INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. THE ASSESSING OFFICER ALSO REFERRED THE VALUATION OF THE LAND IN DISPUTE TO DEPARTMENT VALUATION OFFICER AS PER PROVISIONS OF SECTION 50 C O F THE ACT WHO VALUED THE PROPERTY AT RS. 3,45,86,000/ - . III) THE APPELLANT PREFERRED AN APPEAL AGAINST THE SAID ADDITION BEFORE THE COMMISSIONER OF INCOM E - TAX (APPEALS). THE CIT (A) VIDE ORDER DATED 23/5/2012 PARTLY ALLOWED THE APPEAL BY GRANTING PART RELIE F TO THE APPELLANT IN RESPECT OF ADDITION MADE U/S 50 C OF THE ACT BY ACCEPTING THE VALUE DETERMINED BY THE DVO . THUS, THE TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 4 ADDITION MADE U/S 50C BY CIT (A) WAS REDUCED FROM RS. 8,21,26,000/ - TO RS.1,74,36,000/ - ( I.E. PS. 3,45,86,000/ - LESS RS. 1,71,50,000/ - ). IV) AFTER RECEIVING THE ORDER OF THE CIT(A), THE APPELLANT WAS ASKED TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE LEVIED U/S. 271(1 )(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME - (I) CAPITAL GAIN U/S. 50C OF RS.1,74,36,000/ - AND (II) SUPPRESSION OF SALE VALUE OF RS. 1,66,876/ - . THE APPELLANT MADE SUBMISSION WHICH WAS DULY CONSIDERED BY THE ASSESSING OFFICER THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND VIDE ORDER DATED 28.03.2014 LEVIED PENAL TY U/ S 271(1)(C) OF THE ACT OF RS. 34,87,200/ - IN RESPECT TO ABOVE ADDITION ON THE BASIS THAT APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED ITS INCOME. THE ASSESSING OFFICER CALCULATED THE PENALTY IN THE PENALTY ORDER AT RS.34,87,200/ - . 4. A GAINST ABOVE ORDER ASSESSEE APPEARED BEFORE THE LEARNED CIT - A . 5. LD. CIT - A DELETED THE PENALTY HOLDING AS UNDER; I) THIS GROUND OF APPEAL PERTAINS TO THE IMPOSITION OF PENALTY U/S 271(1) INCOME TAX ACT, 1961 FOR AN AMOUNT OF RS. 59,26,496/ - . IT IS N OT IN DISPUTE THAT THE APPELLANT HAD TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 5 FURNISHED COPIES OF SALE AGREEMENT FOR THE IMPUGNE D LAND FOR A TOTAL OF RS. 1,71,50,000/ - DURING ASSESSMENT PROCEEDINGS. THE APPELLANT HAD ALSO GIVEN VALUATION REPORT OF AN APPROVED VA LUER DETERMINING THE FMV AT RS. 1,64, 51,900/ - . THE AO HAD MADE ADDITION OF RS. 8,21,26,000/ - U/S 50C OF THE ACT. THIS WAS SUBSEQUENTLY REDUCED BY LD. CIT(A) TO RS. 1,74,36,000/ - BASED ON THE REPORT OF THE DV O WHO DETERMINED THE FMV AT RS. 3,45,86,000/ - . II) IT IS SEEN THAT IN THE INSTANT CASE , THERE IS A REGISTERED SALE DEED AND THE CONSIDERATION MENTIONED THEREIN HAS NOT BEEN PROVED TO BE WRONG BY THE AO. THE ADDITION HAS BEEN MADE INVOKING THE DEEMING PROVISIONS OF SECTION 50 C OF THE ACT. THERE IS NO FINDING THAT THE ACTUAL SALE CONSIDERATIO N IS MORE THAN THAT MENTIONED IN THE SALE AGREEMENT. THE APPELLANT HAD FURNISHED ALL THE RELEVANT DOCUMENTS CALLED FOR BY THE AO. THE AO HAS NOT DOUBTED OR DISPROVED THE VALIDITY OF THE DOCUMENTS. THUS THERE CAN BE NO CASE THAT THE APPELLANT HAS CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS. III) I FIND THAT THE RATIO LAID DOWN IN THE CASE OF CIT VS FORTUNE HOTELS AND ESTATES PVT. LTD. [2014] 52 TAXMANN.COM 330 BY HON'BLE BOMBAY HIGH COURT, BY IT AT BOMBAY IN THE CASE OF ACIT VS. S UNLAND ME TAL RECYCLING (ITA TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 6 NO. 6454/MU M/2011) AND BY HON BLE SUPREME COURT IN DILIP N. SHROFF V JCIT, SPECIAL RANGE, MUMBAI (291 ITR 519) APPLY WITH FULL FORCE TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. THEREFORE, PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1061 OF RS. 50,26,4961 - IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 6. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE US. 7. W E HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . WE FIND THAT THE ISSUE INVOL VED IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS M/S FORTUNE HOTELS AND ESTATES PRIVATE LIM ITED IN ITA NUMBER 1164 OF 2012. V IDE ORDER DATED 26/9/2014 THE HONBLE JURISDICTIONAL HIGH COURT HAS UPHELD THE ITAT FINDING THAT IN CASE OF ADDITION BY INVOKING PROVISIONS OF SECTION 50C, PENALTY UNDER SECTION 271(1)C IS NOT SUSTAINABLE. 8. WE FIND THAT IN THE PRESENT CASE ALSO ASSESSEE HAS FURNISHED THE REGISTERED SALE DEED. THE ASSESSING OFFICER HAS MADE THE ADDITION BY INVOKING DEEMING PROVISIONS OF SECTION 50 C. NO CASE HAS BEEN MADE OUT OF ANY INCRIMINATING DOCUMENT ETC. BEING FOUND. IN SUCH SITUATION ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. FURTHER MORE THE COND UCT OF THE ASSESSEE CANNOT BE HELD TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 7 PENALTY. THIS PROPOSITION IS ALSO SUPPORTED BY THE DECISION RENDERED BY THE LARGER BENCH OF HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD VS STATE OF ORISSA 83 ITR 26. 9 . IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT - A. ACCORDINGLY WE UPHOLD THE SAME. IN THE RESULT THIS APPEAL BY THE REVENUE IS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 .02.2017 SD/ - SD/ - SANJAY GARG SHAMIM YAHIYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24 .02.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY TRANS FREIGHT CONTAINERS LTD. ITA NO. 2337/MUM. /2016 8 (DY./ASSTT.REGISTRAR) ITAT, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 16.02.2017 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17.02.2017 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22 .02.2017 SR.PS 6. DATE OF PRONOUNCEMENT 24 .02.2017 SR.PS 7. FILE SENT TO THE BENCH CLERK 24 .02.2017 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER