Shri Prahladkumar Agrawal, Surat V. The Income tax Officer,Ward-2(2), Surat

ITA 2545/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2397 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Capital Gains
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 31/12/2010 DRAFTED ON: 04 /01/11 ITA NO.2545/AHD/2010 ASSESSMENT YEAR : 2005-06 PRAHLADKUMAR AGRAWAL A-401, ELBEE APARTMENT RING ROAD SURAT VS. THE INCOME TAX OFFICER WARD-2(2) SURAT PAN/GIR NO. : AAPPA 6865 L ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RAJESH M.UPADHYAY, A.R. RESPONDENT BY: SHRI S.S. SHUKLA, D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS)-II, SURA T DATED 02/06/2010. THE APPELLANT IS AGGRIEVED BY THE CONFIRMATION OF P ENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 26 /08/2009 AND ASSESSMENT ORDER MADE U/S.143(3) DATED 12/12/2007 W ERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY IS IN THE BUSI NESS OF TRADING OF ART SILK CLOTH. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS SOLD A RESIDENTIAL FLAT FOR A SALE CONSIDERATION OF ` 7 LACS. HOWEVER, IT WAS NOTED BY THE ASSESSING OFFICER THAT FOR THE PURPOSE OF STAMP DUTY THE ITA NO. 2545/AHD/2010 PRAHLADKUMAR AGRAWAL VS. ITO ASST.YEAR - 2005-06 - 2 - VALUE OF THE PLOT WAS EVALUATED AT ` 9,45,700/-. ACCORDINGLY, THE CONSIDERATION AS DISCLOSED BY THE ASSESSEE WAS REPL ACED AND THE LONG TERM CAPITAL GAIN WAS RECALCULATED AND THE BALANCE OF ` 1,18,114/- WAS TAXED. BEING AGGRIEVED, THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY WHO HAS CONFIRMED THE ADDITION. 2.1. AN IDENTICAL MATTER WAS BEFORE THE ITAT PUNE BENCH B, PUNE BY WAY OF ITA NO.1257/PN/08 & OTHERS (FOR AY 2004-05) IN THE CASE OF SHRI BALKRISHNA RAGHUNATH WAGHERE & OTHERS VS. IT O AND VIDE FOLLOWING PARAGRAPH, THE FINDING OF THE LOWER AUTHO RITIES WERE CONFIRMED. 3. WITH THIS BRIEF FACTUAL BACKGROUND, NOW BEFORE U S, FOLLOWING DECISIONS HAVE BEEN CITED: SL.NO(S) DECISION IN THE CASE OF REPORTED IN /UNREPORTED IN 1. ANIL KUMAR PATNI VS. ITO ITA NO.439/IND/2009 ORDER DATED 22.11.2010 INDORE ITAT 2. BALKRISHNA R.WAGHERA VS. ITO ITA NO.1258/PN/08 ORDER DTD. 24/02/2010 PUNE ITAT 3. PRAKASH CHAND NAHAR VS. ITO 110 TTJ 0886 (JODHPUR ITAT) 4. THIS IS THE CASE WHERE AN ADDITION WAS MADE PRIM ARILY BECAUSE THE VALUE OF A FLAT WAS DISTURBED DUE TO THE VARIATION IN VALUATION FOR STAMP DUTY PURPOSE. ONCE IT WAS NOTICED BY THE ASSESSIN G OFFICER, THEN THE ITA NO. 2545/AHD/2010 PRAHLADKUMAR AGRAWAL VS. ITO ASST.YEAR - 2005-06 - 3 - PROVISIONS OF SECTION 50C OF THE I.T.ACT WERE INVOK ED. THE ISSUE WAS DEALT WITH BY THE RESPECTED CO-ORDINATE BENCH AND I T WAS EXPRESSED THAT THE ASSESSEE HAS TO DEMONSTRATE THE FAIR MARKET VAL UE AND IF IT IS PROVED THAT THE FAIR MARKET VALUE IS LESS THAN THE STAMP D UTY VALUATION, THEN THE FAIR MARKET VALUE HAS TO BE ADOPTED. IT HAS ALSO BEEN EXPRESSED THAT SINCE THE ASSESSEE HAS NOT PLACED ANY MATERIAL TO PLACE O N RECORD THE FAIR MARKET VALUE, THEREFORE, THE VALUE AS EVALUATED FOR STAMP DUTY PURPOSE WAS REPLACED. MEANING THEREBY THE SALE CONSIDERAT ION AS DISCLOSED BY THE ASSESSEE WAS REPLACED BY THE VALUE AS DETERMINE D BY S.A.V. (STAMP VALUATION AUTHORITY) FIXED TO COLLECT THE STAMP DUT Y AT THE TIME OF REGISTRATION OF A DOCUMENT. ON IDENTICAL SITUATION IN THE CASE OF SHRI BALKRISHNA RAGHUNATH WAGHERE(SUPRA), THE ITAT PUNE BENCH HAS HELD THAT WHERE PENALTY IS ATTRACTED ON ACCOUNT OF APPL ICATION OF DEEMING PROVISION OF SECTION 50C OF THE I.T.ACT, THEN THE C ONCEALMENT PROCEEDINGS SHOULD BE DROPPED. THE RELEVANT PORTIO N IS REPRODUCED BELOW:- 7..B) OTHER REASON FOR ADDITION IN THE REASS ESSMENT IS THE PROVISION OF SECTION 50C OF THE A CT, WHICH IS BASICALLY A DEEMED SECTION. IT IS DECIDED ISSUE AT THE LEVEL O F THE CHENNAI BENCH OF THE TRIBUNAL THAT THE PENALTIES ARE NOT AT TRACTED WHEN THE ADDITIONS ARE MADE ON ACCOUNT OF DEEMED PROVISION U /S.50C AS THE VALUES ARE AS PER THE REGISTERED AUTHORITIES ARE BA SED ON AD-HOC WORKINGS AND THEREFORE, ANY ADDITION UNDER THESE PR OVISIONS DOES NOT PIN POINTEDLY UNEARTHS THE CONCEALMENT OF INCOM E. THESE GUIDELINE VALUES OF REGISTRATION DEPARTMENT ARE INC ONCLUSIVE INSOFAR AS CONCEALMENT MATTERS ARE CONCERNED. THER EFORE, THE ADDITIONS MADE BY THE AO ON THIS ACCOUNT SHOULD NO T ATTRACT PENALTY. IN SUCH CASES, ASSESSEE IS NOT GUILTY UND ER CONCEALMENT EVEN THAT ASSESSEE ACCEPTED THE ADDITIONS. THE ABO VE INTERPRETATION HAS THE STRENGTH OF CHENNAI BENCH DE CISION IN THE CASE OF MRS. N. MINAKSHI 125 TTJ 856 CHENNAI AND AL SO OF THE JODHPUR BENCH DECISION IN THE CASE OF PRAKASH CHAND RA NAHAR ITA NO. 2545/AHD/2010 PRAHLADKUMAR AGRAWAL VS. ITO ASST.YEAR - 2005-06 - 4 - 110 TTJ 886. THE CONCLUSION OF THE SAID DECISION R EADS THAT ASSESSEE IS NOT GUILTY ON ACCOUNT OF FURNISHING OF INCORRECT PARTICULARS OF INCOME MERELY BECAUSE AO HAS WORKED OUT HIGHER CAPITAL GAINS BY TAKING OF FMV OF THE PROPERTY AS O N 01-04-1981 ON THE BASIS OF VALUE OBTAIN BY SUB-REGISTRAR OFFIC ER IN PREFERENCE TO THE VALUE OBTAINED BY THE ASSESSEE FROM THE VALU ERS REPORT AND HENCE PENALTY U/S.271(10(C) IS NOT LIVABLE. 4.1. IN SUPPORT, TWO DECISIONS; VIZ.ASST.CIT VS. MRS. N.MENNAKSHI REPORTED AS 125 TTJ 856 (CHENNAI ITAT) AND OF PRAKA SH CHAND NAHAR VS. ITO REPORTED AS 110 TTJ 886 (JODHPUR ITAT) HAVE BEEN RELIED UPON. FROM THE ABOVE EXPOSITION, IT CAN BE HELD THAT THE LAW GOVERNING THE ASSESSMENT PROCEEDINGS DO NOT AUTOMATICALLY SUGGEST THE LEVY OF CONCEALMENT PENALTY. HENCE, THE ISSUE BEING A DIF FERENCE OF OPINION ON ACCOUNT OF EVALUATION OF A PROPERTY, WE DEEM IT PR OPER TO REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND DIRECT TO DEL ETE THE PENALTY. GROUND IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 7/ 1 /2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2011 T.C. NAIR T.C. NAIR T.C. NAIR T.C. NAIR, SR. PS , SR. PS , SR. PS , SR. PS ITA NO. 2545/AHD/2010 PRAHLADKUMAR AGRAWAL VS. ITO ASST.YEAR - 2005-06 - 5 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION ..31/12/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04/1/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 7.1.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.1.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER