TARABAI KOTUMAL PAHLAJANI, MUMBAI V. ACIT 14(2), MUMBAI

ITA 2459/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92833 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM AND SHRI D. KARUNAKAR A RAO, AM ./ I.T.A. NO.2459 /MUM/2012 ( / ASSESSMENT YEAR : 2004-05 SMT. TARABAI KOTUMAL PAHLAJANI, 9, BHERUMAL BHAVAN, MOGAL LANE, MAHIM, MUMBAI -400 016. / VS. A.C.I.T. 14(2), EARNEST HOUSE, 2 ND FLOOR, NARIMAN POINT, MUMBAI 400 021. ./ PAN : AABPP4753C ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI NISHIT GANDHI RESPONDENT BY SHRI NEIL PHILIP (D.R) / DATE OF HEARING : 06-05-2015 / DATE OF PRONOUNCEMENT : 10-06-2015 [ !' / O R D E R PER VIJAY PAL RAO, J.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15-2-2012 OF LD. CIT(A)- 34, MUMBAI ARISING FROM TH E PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR A.Y. 2004-05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.1 THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN U PHOLDING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY OF R S. 138628/- U/S 271(1)(C) OF THE LT. ACT, 1961 ON UNJUSTIFIABLE AND UNTENABLE GROUNDS. . 1.2 THE LD. CIT(A) FAILED TO APPRECIATE THAT HAVING REGARD TO LAW AND THE FACTS OF THE CASE THE APPELLANT HAS NOT COM MITTED ANY DEFAULT IN TERMS OF SECTION 271(1)(C) OF THE 1. T. ACT, 1961. ITA 2459/M/12 2 1.3 THE APPELLANT PRAYS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE PENALTY OF RS. 138628/-LEVIED U/S 271(1) (C) OF THE LT. ACT, 1961. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY FOR A SALE CON SIDERATION OF RS. 13,70,000/-. THE A.O. ALSO FOUND THAT THE STAMP VAL UATION AUTHORITY HAD VALUED THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 17,90,085/-. ACCORDINGLY, THE A.O. INVOKED THE PROVISIONS OF SECTION 50C OF T HE ACT. THE ASSESSEE OBJECTED TO THE APPLICABILITY OF SECTION 50C ON THE GROUND THAT THE PROPERTY IN QUESTION WAS A BUSINESS ASSET. THE A.O. DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN AMOUNTING TO RS. 4,40,125/- BEING THE DIFFERENCE BE TWEEN THE CONSIDERATION SHOWN BY THE ASSESSEE AND THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY. IN THE QUANTUM APPEAL, THE LD. CIT(A) DI SMISSED THE APPEAL OF THE ASSESSEE AND ISSUE OF ADDITION OF SHORT TERM CAPITA L GAIN ATTAINED FINALLY. THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS. 1,38,628/- BEING 100% OF THE TAX SOUGHT TO B E EVADED VIDE ORDER DATED 31-3-2010. THE ASSESSEE CHALLENGED THE ACTION OF T HE A.O. LEVYING THE PENALTY U/S 271(1)(C) BY FILING THE APPEAL BEFORE THE LD. C IT(A) BUT COULD NOT SUCCEED. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITION ON ACCOUNT OF SALE CONSIDERATION OF THE PR OPERTY IN QUESTION IS MADE BY APPLYING THE DEEMING PROVISION OF SECTION 50C, T HEREFORE, THERE IS NO ALLEGATION OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE HAS DISCLOSED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE O N SALE OF THE PROPERTY IN QUESTION. FURTHER, IN THE WEALTH TAX RETURN, THE AS SESSEE HAS SHOWN THIS PROPERTY AS BUSINESS ASSET WHICH IS THE MATTER OF R ECORD, THEREFORE, THE CLAIM OF THE ASSESSEE IS A BONAFIDE CLAIM THAT THE PROVIS IONS OF SECTION 50C ARE NOT APPLICABLE ON THE PROPERTY. THE LD. COUNSEL CONTEND ED THAT THE ADDITION MADE BY THE A.O. BY APPLYING THE DEEMING PROVISION WOULD NOT BRING THE CASE OF THE ITA 2459/M/12 3 ASSESSEE IN THE CATEGORY OF FURNISHING OF INACCURAT E PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. HE HAS RELIED UPON THE ORDER OF THE TRIBUNAL DATED 14 TH AUGUST, 2013 IN ITA NO. 280/MUM/2012 FOR A.Y. 2005 -06 IN THE CASE OF SMT. DIPTI BARAI VS. ITO. 5. ON THE OTHER HAND, THE LD. D.R. HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ADDITION M ADE BY THE A.O. OF SHORT TERM CAPITAL GAIN ATTAINED FINALITY, THEREFORE, THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME BY NOT DISCLOSING THE CORRECT SALE CONSIDERATION OF THE PROPERTY IN QUESTION AS PER TH E PROVISIONS OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL PLACED ON RECORD. THE ADDITION OF RS. 4,40,125/- HA S BEEN MADE BY THE A.O. BY INVOKING THE PROVISIONS OF SECTION 50C. IT IS NO T A CASE OF THE A.O. THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME SO FAR AS THE ACTUAL AMOUNT OF CONSIDERATION RECEIVED BY THE ASSESSEE. T HE ASSESSEE HAS DISCLOSED THE AMOUNT FOR WHICH THE ASSESSEE SOLD THE PROPERTY IN QUESTION AND, THEREFORE, IT IS NOT A CASE OF SUPPRESS OF CORRECT FACT OR PRESENTING INACCURATE FACTS REGARDING THE SALE CONSIDERATION. AN IDENTIC AL ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNA L IN THE CASE OF SMT. DIPTI BARAI (SUPRA) IN PARA 6 & 7 OF ITS ORDER AS UNDER:- 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE RELEVANT RECORD WE NOTE THAT THE ADDITION HAS B EEN MADE BY THE AO IN THE RETURN OF INCOME OF THE ASSESSEE ONLY BECAUSE O F THE ADOPTION OF FULL SALE CONSIDERATION AS PER THE DEEMING PROVISIONS OF SECTION SAC. IT IS PERTINENT TO NOTE THAT IF THE ADDITION MADE BY THE AO BY INVOKING THE PROVISION OF SECTION SAC OF THE ACT IS EXCLUDED THA N THE REMAINING INCOME DOES NOT FALL UNDER THE MINIMUM SLAB OF INCOME. THE REFORE TO THAT EXTENT IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEDED TH E INCOME. WE FURTHER NOTE THAT THIS TRIBUNAL HAS CONSIDERED AND DECIDED THIS ISSUE IN A SERIES OF DECISIONS AS RELIED UPON BY THE LD. AUTHORISED R EPRESENTATIVE. IN CASE OF RENU HINGORANI VS ACIT (SUPRA) AN IDENTICAL ISSU E HAS BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN PARA 8 AS UNDER: '8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. WE FIND THAT THE AO HAD MADE ADDITION OF RS.9,00,82 4/- BEING ITA 2459/M/12 4 DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SA LE AGREEMENT AND THE VALUATION MADE BY THE STAMP VALUATION AUTHO RITY. THUS, THE ADDITION HAS BEEN MADE BY THE AO BY APPLYING TH E PROVISIONS OF SECTION 50C OF THE ACT. IT IS EVIDENT FROM THE A SSESSMENT ORDER THAT THE AO HAS NOT QUESTIONED THE ACTUAL CONSIDERA TION RECEIVED BY THE ASSESSEE BUT THE ADDITION IS MADE PURELY ON THE BASIS OF DEEMING PROVISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDING THAT THE ACTUAL SALE CONSIDERATIO N IS MORE THAN THE SALE CONSIDERATION ADMITTED AND MENTIONED IN TH E SALE AGREEMENT. THUS IT DOES NOT AMOUNT TO CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO FURN ISH THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT FACTS, DOCU MENTS/MATERIAL INCLUDING THE SALE AGREEMENT AND THE AO HAS NOT DOU BTED THE GENUINENESS AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE . UNDER THESE FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT FURNISHED CORRECT PARTICULARS OF INCOME. MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION ON THE BASIS OF VALUAT ION MADE BY THE STAMP VALUATION AUTHORITY WOULD NOT BE A CONCLU SIVE PROOF THAT THE SALE CONSIDERATION AS PER THIS AGREEMENT W AS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION BECAUSE OF THE DEEMING PROVISIONS DOES NOT IPSO FACTO ATTRACT THE PENALTY U/S 271(L)(C ). HENCE IN VIEW OF THE DECISION OF THE HON 'BLE SUPREME COURT IN THE C ASE OF CIT VIS RELIANCE PETROPRODUCTS PVT.LTD (SUPRA), THE PENALTY LEVIED U/S 271 (1)( C ) IS NOT SUSTAINABLE. THE SAME IS DELETED. ' 7. FURTHER A SIMILAR VIEW HAS BEEN CONFIRMED BY THE HON'BLE CALCUTTA HIGH COURT IN CASE OF CIT VS MADAN TEATRES LTD. (SU PRA) AS WELL AS IN THE OTHER DECISIONS RELIED UPON BY THE ASSESSEE. ACCORD INGLY IN VIEW OF THE DECISIONS OF THIS TRIBUNAL AS WELL AS HON'BLE CALCU TTA HIGH COURT (SUPRA) WE DELETE THE PENALTY LEVIED U/S 271(1)(C). THUS, IT IS CLEAR THAT THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT WHEN THE ASSESSEE HAS DISCLOSED ALL RELEVANT PRIMAR Y FACTS AND DETAILS AND FURNISHED THE RELEVANT DOCUMENT SHOWING THE SALE CO NSIDERATION RECEIVED BY THE ASSESSEE, THEN, THE GENUINENESS OF THE ACTUAL S ALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS NOT IN QUESTION AND THE ADDITIO N WAS MADE ONLY BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. THEREFORE, MERELY BECAUSE THE ADDITION WAS MADE AS PER THE DEEMING PROVISION OF SECTION 50C WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE ITA 2459/M/12 5 PARTICULARS OF INCOME OR CONCEALED ITS INCOME. RES PECTFULLY FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL (SUPRA), WE DELETE T HE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2015. !' # $% &! ' 10-06-2015 . ( ) SD/- SD/- (D. KARUNAKARA RAO) (VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER $ 4 MUMBAI ; &! DATED 10-06-2015 [ .5../ R.K R.KR.K R.K. , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 6 () / THE CIT(A) 25, MUMBAI 4. 6 / CIT- -14 MUMBAI 5. 9:( 55;< , ;< , $ 4 / DR, ITAT, MUMBAI E BENCH 6. (>? @ / GUARD FILE. ' / BY ORDER, 9 5 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 4 / ITAT, MUMBAI