The ACIT, Circle-2, Bharuch V. Shri Girishchandra Ambalal Gandhi L/h of late Ambalal Chimanlal Gandhi, Ankleshwar

ITA 260/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1494 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GIRISHCHANDRA
• Keywords: Sale consideration of property below Jantri Value; Income from undisclosed sources; Deemed to accrue or arise in india; Fair market value
• Section: 50C

Judgement Text

I.T.A. NO . 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR: 20 11 - 12 PAGE 1 O F 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD B BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR : 20 11 - 1 2 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 2, BHARUCH . .. .......... .A PPELLANT VS. GIRISHCHANDRA AMBALAL GANDHI .............. RESPONDENT L/H OF AMBALAL CHIMANLAL GANDHI 99, GANGA JAMUNA SOCIETY, ANKLESHWAR 393 001. [PAN: A HZPS 5712 M ] APPEARANCES BY: R.K. GUPTA , FOR THE APPELLANT GIRISHCHANDRA (ASSESS EE) , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : APRIL 8 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 201 6 O R D E R PER PRAMOD KUMAR , AM : 1. THIS APPEAL CALLS INTO QUESTION CORRECTNESS OF THE ORDER DATED 19 TH NOVEMBER 201 5, PASSED BY THE LEARNED CIT(A), IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 20 11 - 12. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT( APPEALS ) ERRED IN DELETING THE PENALTY OF RS.10,19,730/ - LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY HOLDING THAT NO PENALTY IS LEVIABLE ON ACCOUNT OF DEEMED INCOME, CONTRARY TO THE FACT THAT THE ADDITION WAS MADE CONSEQ UENT TO THE VALUATION OF PROPERTY BY DVO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) E RRED IN IGNORING THE FA C T THAT THE VALUE A S PER STAMP VALUATION AUTHORITIES WAS MUCH HIGHER, I.E. 9,06,50,400/ - , BUT THE AO HAD FAIRLY ADOPTED THE VALUE DETERMINED BY DVO, I.E. RS.5,77,90,000/ - INSTEAD OF I.T.A. NO . 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR: 20 11 - 12 PAGE 2 O F 5 RS.5,21,23,980/ - DECLARED BY THE ASSESSEE AND, THE VALUE DETERMINED BY THE DVO IS CONCLUSIVE AND WAS ACCEPTABLE TO THE ASSESSEE WHICH LED TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. TO ADJUDICATE ON THIS APPEAL, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT THE IMPUGNED PENALTY IS IMPOSED IN RESPECT OF QUANTUM ADDITION, MADE TO THE DISCLOSED SALE CONSIDERATION, UNDER SECTION 50C OF THE ACT. THERE IS NOTHING MORE THAN VALUATION, BY DEPARTMENTAL VALUATION OFFICER, TO SUPPORT THIS ADDITION. ON THESE FACT, THE ASSESSING OFFICER H A S IMPOSED THE IMPUGNED PENALTY BY OBS34RVING AS FOLLOWS : - 6. THE EXPLANATION OF THE ASSESSEE IS DULY CONSIDERED. HOWEVER, IT IS FOUND NOT ACCEPTABLE LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE CASE. AS PER PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961, THE ASSESSEE WAS REQUIRED TO COMPUTE CAPITAL GAIN ON SALE OF THE IMMOVABLE PROPERTY I.E. LAND CONSIDERING THE AMOUNT OF SALE CONSIDER ATION OF THE PROPERTY OR THE VALUATION OF THE PROPERTY AS PER STAMP DUTY AUTHORITY, WHICHEVER IS HIGHER. THE ASSESSEE HAS FAILED TO DO SO. BY PAYING STAMP DUTY OF RS.44,87,500/ - , THE ASSESSEE WAS WELL AWARE THAT THE VALUATION OF THE PROPERTY AS PER STAMP D UTY AUTHORITY IS MUCH HIGHER THAN THE AMOUNT OF SALE CONSIDERATION OF THE PROPERTY. AT THAT STAGE ALSO , THE ASSESSEE HAS NOT DISPUTED THE VALUATION ADOPTED BY STAMP DUTY AUTHORITY. IN THE COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE ALONG WITH THE R ETURN, IN THE COMPUTATION OF CAPITAL GAIN, THE ASSESSEE HAS SHOWN SALE VALUE U/S 50C AT RS . 5,28,02.500/ - AND ALSO FULL VALUE OF SALE CONSIDERATION AT RS . 5,28,02.500/ - , WHICH IS NOT FACTUALLY CORRECT. 6.1 IN THE SUBMISSION, THE ASSESSEE HAS CONTENDED THAT THE VALUATION ADOPTED BY DVO IS NOT A CONCLUSIVE EVIDENCE OF ACTUAL FAIR MARKET VALUE OF THE PROPERTY AND THEREFORE, NO PENALTY CAN BE LEVIED AGAINST THE ADDITION MADE BY APPLYING THE DEEMING PROVISIONS OF LAW. THERE IS NO MERIT IN THE SUBMISSION OF T HE ASSESSEE. THE VALUATION ADOPTED BY DVO IS AS PER PROVISIONS OF SECTION 50C OF THE L.T. A CT AND THIS IS BINDING ON BOTH THE ASSESSEE AND THE DEPARTMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE INFORMATION RECEIVED FROM T HE DEPUTY COLLECTOR, STAM P DUTY VALUATION ORGANIZATION, BHARUCH ALSO SHOWED THAT THE FAIR MARKET VALUE OF THE PROPERTY UNDER CONSIDERATION COMES TO RS . 9, 06,50,400/ - . ON HIS OWN, THE ASSESSEE HAS CONCLUDED THAT ONLY THE SALE CONSIDERATION IS THE ACTUAL FAIR MARKET VALUE OF THE PR OPERTY. THIS IS CLEAR VIOLATION OF THE PROVISIONS OF SECTION 50C OF THE L.T. ACT. THE FACTS IN THE ASSESSEE'S CASE ARE DISTINGUISHABLE FROM THE FACTS OF CASE LAWS RELIED UPON BY THE ASSESSEE IN HIS SUBMISSIONS. IT IS CRYSTAL CLEAR THAT THE ASSESSEE HAS DE LIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING SALES CONSIDERATION AS FAIR MARKET OF THE PROPERTY THEREBY TO REDUCE ITS TAX LIABILITY. I.T.A. NO . 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR: 20 11 - 12 PAGE 3 O F 5 4. IN APPEAL, HOWEVER, LEARNED CIT ( A ) DELETED THE PENALTY BY OBSERVING AS FOLLOWS : - 5. I HAVE CO NSIDERED THE FACTS OF THE CASE, SUBMISSIONS OF THE APPELLANT AND THE AO'S OBSERVATIONS. IN MY OPINION, THE AO IS NOT CORREC T IN LEVYING THE PENALTY OF RS. 10,19,7307 - U/S 271(1 )(C) OF THE IT ACT ON THE ADDITION MADE U/S 50C OF THE IT ACT. PENALTY U/S 271( 1 ) (C) OF THE ACT CANNOT BE LEVIED IN THE CASES WHERE ADDITION HAS BEEN MADE ON THE BASIS OF PROVISIONS OF SECTION 50C OF THE ACT UNLESS AND UNTIL IT IS ESTABLISHED BY THE AO BY BRINGING EVIDENCES ON RECORD THAT THE ASSESSEE HAS ACTUALLY CONCEALED THE PARTICU LARS OF INCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME. THE AO HAS NOT ESTABLISHED IN THE ASSESSMENT ORDER THAT THE APPELLANT HAD RECEIVED ANY AMOUNT IN EXCESS OF WHAT IS SHOWN IN THE RETURN OF INCOME AS FILED BY THE APPELLANT FOR THE YEAR UNDER CONS IDERATION. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAD RECEIVED ANY AMOUNT OVER AND ABOVE THE SALE VALUE DECLARED IN THE RETURN OF INCOME BY THE APPELLANT OR THE PURCHASER OF THE PROPERTY HAS PAID ANY ADDITIONAL AMOUNT TO THE APPELLANT OVE R AND ABOVE THE DECLARED VALUE OF THE PROPERTY. I AGREE WITH THE SUBMISSION OF THE APPELLANT THAT VALUATION ADOPTED BY STAMP DUTY AUTHORITIES CANNOT BE CONSIDERED AS CONCLUSIVE AND THE JANTRY I.E. MARKETING VALUATION RECORD BOOK MAINTAINED BY THE STAMP V ALUATION AUTHORITIES REFLECTS PROBABLE MARKET VALUE AND THE SAME CANNOT BE SAID TO BE CONCLUSIVE EVIDENCE FOR LEVYING THE PENALTY. IN MY OPINION, MERELY BECAUSE THE APPELLANT AGREED FOR ADDITION ON THE BASIS OF VALUATION MADE BY THE DISTRICT VALUATION OFFI CER CANNOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THE DECLARED AGREEMENT WAS INCORRECT AND WRONG. THE VALUATION BY THE DVO IS NOT A CONCLUSIVE EVIDENCE OF ACTUAL MARKET VALUE OF THE PROPERTY AND THEREFORE NO PENALTY CAN BE LEVIED AGAINST THE ADDITION MADE BY THE AO BY APPLYING THE DEEMING PROVISIONS OF LAW, I ALSO AGREE WITH THE SUBMISSION OF THE APPELLANT THAT EVEN IF THE APPELLANT HAS AGREED FOR ADDITION IN VIEW OF THE LEGAL FICTION CREATED UNDER STATUTORY PROVISIONS, IT CANNOT BE TREATE D AS AN ADMISSION OF SUCH SUM REPRESENTING THE INCOME OF THE APPELLANT PARTICULARS OF WHICH WERE CONCEALED BY HIM ON THE BASIS OF SUCH AGREEMENT. 5.1 AS STATED IN EARLIER PARAGRAPH THAT THE CASE OF THE APPELLANT IS BASED ON DEEMING PROVISION OF SECTION 50 C WHEREIN NO UNACCOUNTED INCOME HAS BEEN FOUND OR BROUGHT ON RECORD BY THE AO AND THERE FORE PENALTY U/S 271(1 )(C) IS NOT LEVIABLE. IN THIS REGARD THE SUPPORT IS DRAWN FROM THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. FORTUNE HOTELS & ESTATES (P.) LTD. 52 TAXMANN.COM 330. IN THIS CASE THE QUESTION BEFORE THE HON'BLE HIGH COURT OF BOMBAY AROSE AS TO WHETHER WHERE IN RESPECT OF SALE OF PROPERTY, MATTER WAS REFERRED TO DVO WHO DETERMINED SALE CONSIDERATION AT A HIGHER AMOUNT, THAT BY ITSE LF WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME SO AS TO LEVY PENALT Y U/S 271(1 )(C). THE ANSWER OF THE HON'BLE HIGH COURT OF BOMBAY WAS YES . IN OTHER WORDS, THE HON'BLE HIGH COURT OF BOMBAY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. SUPP ORT IS DRAWN FROM THE DECISION OF HON'BLE HIGH COURT OF CALCUTTA ALSO IN THE CASE OF CIT VS. MADAN TEATRES LTD. 42 TAXMANN.COM 26. IN THIS REFERRED CASE THE ASSESSEE SOLD A PROPERTY FOR A SUM OF RS. 5.19 CRORE AND ON THAT BASIS STAMP DUTY WAS REALIZED. THE RE UPON THE AO HAVING ADOPTED SALE PRICE AT RS. 5.19 CRORE AND I.T.A. NO . 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR: 20 11 - 12 PAGE 4 O F 5 PASSED A PENALTY ORDER U/S 271( 1 )(C). THE TRIBUNAL SET ASIDE THE SAID PENALTY ORDER OF THE AO. THE MATTER WENT TO THE HON'BLE HIGH COURT CALCUTTA. IT WAS OBSERVED BY THE HON BLE COURT THAT THE ACTUAL AMOUNT RECEIVED ON SALE WAS OFFERED FOR TAXATION AND IT WAS ONLY ON BASIS OF DEEMED CONS IDERATION, PROCEEDINGS U/S 271(1 )(C) WERE STARTED. EVEN OTHERWISE, THE REVENUE FAILED TO PRODUCE ANY EVIDENCE THAT THE ASSESSEE HAD ACTUALLY RECEIVED ONE PAISE M ORE THAN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM. THE HON'BLE HIGH COURT OF CALCUTTA HELD THAT THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE PENALTY ORDER. THUS, THE HON'BLE HIGH COURT OF CALCUTTA DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. 5.2 IN VI EW OF THE DECISIONS OF HON'BLE HIGH COURT OF BOMBAY AND CALCUTTA AS REFERRED TO IN PRECEDING PARAGRAPHS AND ALSO IN VIEW OF THE FACTS AS DISCUSSED IN THESE PARAGRAPHS IT IS HELD THAT THE AO IS NOT CORRECT IN LEVYING THE PENA LTY OF RS . 10,19,730/ - U/S 271(1 ) (C) OF THE IT ACT AND THEREFORE THE SAME IS DELETED. THUS, THE GROUNDS OF APPEAL OF THE APPELLANT ARE ALLOWED. 5. THE A SSESSING OFFICER, HOWEVER, IS NOT SATISFIED BY THE STAND SO T AKEN BY THE L D. CIT(A) AND IS IN APPAL BEFORE US. 6. WE HAVE HEARD THE RIV AL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. AS THE LEARNED CIT ( A ) HAS WELL EXPLAINED, IN HIS ERUDITE ORDER, A VALUATION BY DVO CANNOT BE SOUND BASIS TO COME TO THE C ONCLUS ION , FOR THE PURPOSE OF PENALTY UNDER SECTION 271(1)(C), THAT THE ASSESSEE HAS CONCEALED INCOME, AND TO REJECT THE EXPLANATION OF THE ASSESSEE. THERE IS NOTHING MORE THAN DVO S VALUATION TO S UPPORT THE IMPUGNED PENALTY. WE APPROVE THE WELL R EA SONED ORDER OF THE LD . CIT ( A ) A ND DECLINE TO INTERFERE IN THE MATTER. 8. IN THE RESULT, APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN COURT TODAY ON THE 31 ST DAY OF MAY , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL ME MBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MAY , 2016. I.T.A. NO . 2 60 /AHD/ 20 1 6 ASSESSMENT YEAR: 20 11 - 12 PAGE 5 O F 5 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD