Smt. Daxaben K. Patel, Surat V. The Income Tax Officer, Ward-6(1), Surat

ITA 2600/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94352 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Assessee Lawyers: S B VAIDYA
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 147; 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.2600/AHD/2013 /BLOCK ASSTT. YEAR: 2005-2006 SMT. DAXABEN K. PATEL TANKI FALIA, AT PO BUDIYA TALUKA CHORYASI, SURAT. PAN : ATZPP 5102 G VS ITO, WARD - 6(1) SURAT. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI S.B. VAIDYA REVENUE BY : SHRI D.V. SINGH, SR.DR / DATE OF HEARING : 13/08/2015 / DATE OF PRONOUNCEMENT: 26/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-I, SURAT DATED 8.8.2013 FOR ASSTT.YEAR 20 05-2006. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.1,13,083/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S CO-OWNER ALONG WITH NINE PERSONS OF LAND MEASURING 6 HECTOR, 24 ACRE AND 23 SQ.FEETS. SITUATED AT BAMROLI, SURAT. ACCORDING TO THE ASSES SEE, THIS LAND WAS SOLD FOR RS.35 LAKHS. HOWEVER, STAMP DUTY WAS PAID ON THE VALUE OF RS.1,21,72,500/-. AS PER THE ASSESSEE, THE SALE PR ICE FALLEN TO HER SHARE WAS RS.3,55,000/-. THE ASSESSEE DID NOT FILE ANY RETURN. A ITA NO.2600/AHD/2013 2 NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT WAS ISSUED AND IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 5.9.2011 DECLARING TOTAL INCOME OF RS.82,810/-. TH E AO HAS PASSED ASSESSMENT ORDER ON 16.12.2011 UNDER SECTION 143(3) R.W.S SECTION 147 OF THE ACT. THE AO HAS CONFRONTED THE ASSESSEE AS TO WHY VALUE ON WHICH STAMP DUTY WAS PAID OUGHT NOT TO BE CONSIDERE D AS SALE CONSIDERATION. IT APPEARS THAT ON A REFERENCE MADE UNDER SUB-SECTION 2 OF SECTION 50C, THE VALUATION OFFICER HAS REPORTED THE VALUE OF THE LAND AT RS.46,82,000/-. THE SHARE OF THE ASSESSEE ON TH E SALE CONSIDERATION COMES TO RS.4,68,200/-. ON THIS AMOUNT, THE AO HAS COMPUTED THE LONG TERM CAPITAL GAIN OF RS.4,56,219/-. HE ISSUED SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) FOR FURNISHING INACCURATE P ARTICULARS AND CONCEALMENT OF TRUE PARTICULARS OF INCOME. THE ASS ESSEE CONTENDED THAT LONG TERM CAPITAL GAIN OF RS.2,35,000/- WOULD ACCRUE TO THE ASSESSEE ON THE BASIS OF ACTUAL SALE CONSIDERATION, IF INDEX COST OF THE PROPERTY IS DEBITED FROM THIS AT RS.1,19,851/-, THE N CAPITAL GAIN WOULD BE RS.1,16,000/- ROUGHLY. SHE FURTHER CONTENDED TH AT SHE HAD NEVER ANY TAXABLE INCOME, AND THEREFORE, NOR SUBJECTED TO INCOME TAX. HER IMPRESSION WAS THAT HER INCOME IS BELOW TAXABLE INC OME, AND THEREFORE, DID NOT FILE RETURN. THE LEARNED AO OBSERVED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME BY FURNISHING INACC URATE PARTICULARS. HE FURTHER OBSERVED THAT THE ASSESSEE SOUGHT TO EVADE THE TAX OF RS.1,13,083/- ON INCOME OF RS.4,56,219/-. HE, ACCO RDINGLY, IMPOSED PENALTY OF RS.1,13,083/-. 4. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY HAS CONFIRMED THE FINDING OF THE AO. THE LD.CIT(A) HAS FURTHER OBSER VED THAT SINCE THE ASSESSEE FAILED TO FILE RETURN OF INCOME, THEREFORE , THE ADDITION TO HER INCOME BY WAY OF LONG TERM CAPITAL GAIN WILL BE CON SIDERED AS DEEMED CONCEALMENT OF INCOME AS PER EXPLANATION- (1) AND (3) APPENDED TO THE SECTION 271(1)(C) OF THE ACT. ITA NO.2600/AHD/2013 3 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV E, WE GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREF ORE, IT IS PERTINENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 6. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED ITA NO.2600/AHD/2013 4 CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UN DER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FE ATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCO ME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HA S CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUT ORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEE MING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A ) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO T HE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE AS SESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA L); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT S UCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL T HE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOT AL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF THE TOTAL ITA NO.2600/AHD/2013 5 INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE T WO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWAN CE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 7. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FA CTS AND CIRCUMSTANCE OF THE CASE. AS FAR AS COMPUTATION OF LONG TERM CAPITAL GAIN OF RS.4,56,219/- IS CONCERNED, WE FIND THAT TH E LD.AO HAS MADE THIS ADDITION BY INVOKING THE PROVISION CONTAINED I N SECTION 50C OF THE INCOME TAX ACT. THE SECTION 50C IS A DEEMING PROVI SION WHICH EMPOWERS THE AO TO DEEM SALE CONSIDERATION EQUIVALE NT TO THE AMOUNT ON WHICH THE VALUE HAS BEEN ADOPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. TO OUR MIND, THIS FICTION CANNOT BE EX TENDED FOR VISITING THE ASSESSEE WITH PENALTY FOR CONCEALMENT OF INCOME . IT IS PERTINENT TO MENTION HERE THAT THE STAMP DUTY PAID ON A SUM OF R S.1,21,72,500/-. THIS SECTION AUTHORIZES THE AO TO DEEM THIS AMOUNT AS AN ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAIN. HOWEVER, ON A REFERENCE TO THE DVO, THE VALUE HAS B EEN SCALED DOWN TO RS.46,82,000/-. THIS DRASTIC CHANGE IN THE VALUE ITSELF INDICATES THAT IT IS AN ESTIMATED FIGURE. THE FICTION CREATED FOR CO MPUTATION OF CAPITAL GAIN CANNOT BE EXTENDED EVEN FOR VISITING THE ASSES SEE WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS FAR AS TH E INVOCATION OF EXPLANATION 1 AND 3 ATTACHED TO SECTION 271(1)(C) IS CONCERNED, WE FIND THAT THE ASSESSEE HAS CONTENDED BEFORE THE AO THAT SHE HAD NEVER TAXABLE INCOME THROUGHOUT HER LIFE. SHE WAS NOT WE LL-CONVERSANT WITH THE COMPUTATION OF CAPITAL GAIN AND DUE TO BONA FIDE BELIEF THAT HER INCOME IS BELOW TAXABLE INCOME, SHE DID NOT FILE TH E RETURN ORIGINALLY. THE AO HAS ALSO NOT EXACTLY WORKED OUT THE TAXABLE INCOME OF THE ASSESSEE ON THE BASIS OF ACTUAL SALE CONSIDERATION RECEIVED BY HER. ITA NO.2600/AHD/2013 6 CONSIDERING THE EXPLANATION OF THE ASSESSEE, COUPLE D WITH THE FACT THAT FOR THE ADDITIONS MADE WITH THE HELP SECTION 50C, P ENALTY CANNOT BE IMPOSED UPON THE ASSESSEE. THIS GROUND OF THE APPE AL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT OF THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER