Shri Sukhabhai P.Ahir(HUF), Surat V. The Income tax Officer,Ward-2(4), Surat

ITA 2454/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6844 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Deemed to accrue or arise in india; Fair market value; Capital Gains
• Section: 271(1)(c); 143(3); 50C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI N.S.SAINI, A.M . ) I.T.A. NO. 2454/AHD./2009 ASSESSMENT YEAR : 2005-2006 SHRI SUKHABHAI P. AHIR (HUF) -VS- I.T.O., WARD-2(4), SURAT (PAN: AAEHS 3778M) (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI K. MADHUSUDAN, SR.D. R O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 22.06.2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SUR AT CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961 FOR T HE ASSESSMENT YEAR 2005-2006. 2. BRIEFLY STATED THE FACTS ARE THAT IN THE ASSESSM ENT ORDER UNDER SECTION 143(3) DATED 01.10.2001, THE ASSESSING OFFICER MADE AN ADDITION OF RS.3,60,518/- BEING LONG TERM CAPITAL GAIN BY INVOKING THE PROVISIONS CONTAINED IN SECTIO N 50C OF THE I.T. ACT. SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) VIDE ORDER DATED 28.04.2008 AMOUNTING TO RS.73,546/-. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DIRECTED THE ASSESSING OFFICER TO RE-C OMPUTE THE PENALTY IN THE HANDS OF THE ASSESSEE @100% OF TAX SOUGHT TO BE EVADED ON INCOME DETERMINED UNDER SECTION 154 ONLY I.E. AT 50% OF CONCEALMENT EARLIER DETERMINED IN TH E ASSESSMENT PROCEEDINGS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. ON THE DATE FIXED FOR HEARING, NONE WAS PRESENT FROM THE SIDE OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS WERE FILED WHEREIN IT WAS CONTENDED THAT THE ITAT, JABALPUR 2 ITA NO. 2454-AHD-2009 BENCH IN THE CASE OF ITO-VS- SHRI SURESHCHANDRA LAL A KISHANDAS REPORTED IN (1977) 3 TTJ 241 (JAB) HELD THAT NO PENALTY CAN BE IMPOSED FOR N OT SHOWING THE DEEMED INCOME AS THE ASSESSEE WAS UNDER NO OBLIGATION TO SHOW THE DEEMED INCOME. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT, SMC BENCH, AHMEDABAD IN THE CASE OF SHRI HARESH P. SHAH VS- ITO IN ITA NO.2154/AHD/2010 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN PENALTY LEVIED IN RESPECT OF ADDITION MADE UNDER SECTION 50C IS DELET ED. FINALLY, RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT, CHENNAI, D, BENCH IN THE CA SE OF ACIT-VS- MRS. N. MEENAKSHI REPORTED IN 319 ITR (A.T.) 262 (CHENNAI) WHEREIN AT PARA 13,14 AND 15 PAGE 268 HELD AS UNDER: 12. A READING OF THE ABOVE MAKES IT CLEAR THAT THE SECTION IS APPLICABLE IN CASES WHERE STAMP DUTY HAS BEEN PAID FOR TRANSFER. MOREO VER, THIS SECTION ALSO POSTULATES THAT THE FAIR MARKET VALUE MAY BE DIFFERENT FROM T HE VALUE ADOPTED BY THE REGISTRATION AUTHORITY AND IN SUCH CASES, PROCEDURE FOR REFEREN CE TO VALUATION CELL IS PROVIDED. HENCE, THIS SECTION IS NEITHER APPLICABLE NOR IT I S THE CASE OF THE REVENUE THAT ANY REFERENCE TO VALUATION CELL HAS BEEN MADE OR THAT THE ASSESSING OFFICER HAS OBTAINED INDEPENDENT INSTANCES OF COMPARABLE SALES IN THAT PERIOD, OF THAT AREA. 13. UNDER SUCH CIRCUMSTANCES, IF THE ASSESSEE HAS ACCEPTED ADDITION, IT CANNOT BE SAID THAT THE ASSESSEE IS GUILTY OF FURNISHING INACCURA TE PARTICULARS OR CONCEALMENT. HENCE, WE AFFIRM THE ORDER OF THE LEARNED CIT(A). 5. ON THE OTHER HAND, SHRI K. MADHUSUDAN, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS). 6. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE QUANTUM PROCEEDINGS, THERE IS NO F INDING THAT THE ASSESSEE HAS RECEIVED ANYTHING MORE THAN THE CONSIDERATION MENTIONED IN T HE SALE DEED. THE ADDITION WAS MADE BY INVOKING THE PROVISIONS CONTAINED IN SECTION 50C OF THE I.T.ACT, 1961. IN THE CASE OF SHRI HARESH P. SHAH ( SUPRA ), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, ON IDENTICAL FACT, THE PENALTY OF RS.33,082/- WAS LEVIED UNDER SECTION 271 (1)(C) OF THE I.T. ACT AND THE SAME WAS CANCELLED BY THE ITAT, SMC BENCH, AHMEDABAD VIDE ORDER DATED 08.07.2010 ( SUPRA ). THE REASONING GIVEN BY THE TRIBUNAL FOR CANCELLING THE PENALTY IS AS UNDER: 3. I HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN MY CONSIDERED VIEW THERE IS NO CASE OF LEVY OF PENALT Y. THE PRESUMPTION ON WHICH THE AUTHORITIES HAVE LEVIED THE PENALTY IS THAT IN ALL AND EVERY CIRCUMSTANCES THE VALUATION 3 ITA NO. 2454-AHD-2009 DONE BY SOME VALUATION AUTHORITIES HAS TO BE SUBST ITUTED IN PLACE OF DECLARED SALE CONSIDERATION. SINCE THERE IS NO OPTION TO THE ASS ESSEE AND, THEREFORE, BY NOT PAYING CAPITAL GAINS ON THE BASIS OF VALUATION DONE BY ST AMP VALUATION AUTHORITY DEEMING IT AS SALE CONSIDERATION THE ASSESSEE HAS CONCEALED T HE PARTICULARS OF INCOME. IN MY CONSIDERED VIEW THIS PRESUMPTION IS UNFOUNDED. SEC TION 50C DOES PROVIDE AN OPTION TO THE ASSESSEE TO CLAIM BEFORE THE AO THAT VALUAT ION DONE BY STAMP VALUATION AUTHORITIES IS HIGHER THAN MARKET VALUE OF THE PRO PERTY AND, THEREFORE, PROPERTY SHOULD BE REFERRED TO THE DEPARTMENTAL VALUATION O FFICER FOR DETERMINING ITS MARKET VALUE. ON MAKING SUCH A REQUEST THE AO HAS TO REFE R THE PROPERTY WHICH IS SOLD, TO THE DEPARTMENTAL VALUATION OFFICER WHO WILL DETERMINE THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE. IN CASE MARKET VALUE OF TH E 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 AUTHORITY, WILL BE TAKEN AS SALE CONSIDERATION FOR CALCULATIN G CAPITAL GAINS. IN CASE VALUATION DONE BY DISTRICT VALUATION OFFICER IS LESS THAN TH E VALUATION DONE BY STAMP VALUATION AUTHORITY THEN SUCH MARKET VALUE AS DETERMINED BY DISTRICT VALUATION OFFICER WOULD BE SUBSTITUTED AS SALE CONSIDERATION IN PLACE OF E ITHER DECLARED SALE CONSIDERATION OR VALUATION DONE BY STAMP VALUATION AUTHORITY. THERE FORE, IT IS INCORRECT ON THE PART OF AUTHORITIES OF THE DEPARTMENT TO PRESUME THAT ASSE SSEE WAS LEGALLY BOUND TO SUBSTITUTE THE VALUATION DONE BY STAMP VALUATION A UTHORITIES FOR CALCULATING CAPITAL GAINS. THE ASSESSEE IN HIS OWN WISDOM THOUGHT TO A DOPT THE SALE CONSIDERATION FOR CALCULATING CAPITAL GAINS AND THEN MAKING A CLAIM BEFORE THE AO TO REFER THE PROPERTY TO THE DISTRICT VALUATION OFFICER FOR DETERMINING MARKET VALUE BUT SUBSEQUENTLY IT MIGHT HAVE DECIDED OTHERWISE AND ACCEPTED THE WORK ING DONE BY THE AO ON THE BASIS OF VALUATION DONE BY STAMP VALUATION AUTHORITIES. BUT FOR THIS REASON IT CANNOT BE SAID THAT CALCULATION OF CAPITAL GAINS BY THE ASSE SSEE ON THE BASIS OF DECLARED SALE CONSIDERATION WAS IN ANY WAY INACCURATE OR THERE W AS ANY CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS. MERELY MAKING A CLAIM ON THE BASIS OF AVAILABLE OPTIONS IN THE LAW AND THEREAFTER NOT PURSUING THA T OPTION WOULD NOT AMOUNT TO ANY CONCEALMENT OR FILING OF INACCURATE PARTICULARS. C ALCULATION OF CAPITAL GAINS BY THE ASSESSEE IN THE MANNER IT HAS BEEN DONE BY HIM CAN NOT BE SAID TO BE IN ANY WAY INACCURATE OR THERE IS ANY HIDING ANY PARTICULARS OF INCOME. ALL THE FACTS ARE ON RECORD AND AS PER LAW AO HAS SUBSTITUTED THE VALUA TION 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 MEAN THAT INITIAL CLAIM WAS IN ANY WAY I NCORRECT, FALSE OR FILLED WITH CONCEALMENT. 4. IN ANY WAY HON. SUPREME COURT IN CIT VS. RELIA NCE PETROPRODUCTS 322 ITR 158 (SC) HAS HELD THAT MERELY BY MAKING A CLAIM WHICH IS NO T ACCEPTED BY THE AO, PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. EVEN OTH ERWISE I AM OF THE VIEW THAT CASE OF THE ASSESSEE IS NOT COVERED WITHIN THE MEANING OF EXPLANATION-1 TO SECTION 271(1)(C). IT IS BECAUSE ASSESSEE HAS FURNISHED THE EXPLANATI ON VIDE HIS LETTER DATED 12.6.2009 WHICH IS NOT FOUND TO BE FALSE. THERE IS NO ALLEGA TION THAT ASSESSEE HAS NOT DISCLOSED 4 ITA NO. 2454-AHD-2009 ANY MATERIAL FACT FOR THE PURPOSES OF ASSESSMENT O R FOR THE PURPOSES OF LEVY OF PENALTY. THERE IS ALSO NO ALLEGATION THAT EXPLANATION FURNI SHED BY THE ASSESSEE IS NOT BONA FIDE. FOR INVOKING EXPLANATION-1 TO SECTION 271(1)(C) AL L 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 (200 8) 23 SOT 88 (LUCKNOW) AND IN THE PRESENT CASE NONE OF THE INGREDIENTS IS SATISFIED, THE PENALTY COULD NOT BE LEVIED EVEN WITHIN THE MEANING OF EXPLANATION. THE THREE INGRE DIENTS 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 FIDE; 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 LEVIAB LE UNDER THE MAIN PROVISION NOR UNDER EXPLANATION-1 TO SECTION 271(1)(C). 5. IN THE RESULT, I CANCEL THE PENALTY AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 6.1 THE AFORESAID DECISION OF THE ITAT, SMC BENCH , AHMEDABAD IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. WE, THEREFORE, FOLLOWING THE SAME, CANCEL THE PENALTY UNDER SECTION 271(1)(C) ON INCOME TO THE EXTENT OF RS.1,80,259/- CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.04.2 011. SD/- SD/- (N.S.SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15/04/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, I TAT, AHMEDABAD TALUKDAR/SR.P.S. 5 ITA NO. 2454-AHD-2009