Nigam R. Desai, Vapi V. Income Tax Officer, Ward-2, Vapi

ITA 2615/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1713 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITA RAM MEENA
• Assessee Lawyers: S K KABRA
• Keywords: Cost of acquisition

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2615/AHD/2014 / ASSTT. YEAR: 2008-09 NIGAM R. DESAI NEHARU STREET TAL: PARDI, VAPI 396 191. PAN : AIMPD 0632 R VS. ITO, WARD-2 VAPI. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.K. KABRA REVENUE BY : SHRI SITA RAM MEENA, SR.DR ! / DATE OF HEARING : 27/04/2017 '#$ ! / DATE OF PRONOUNCEMENT: 02 /05/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A), VALSAD DATED 20.8.2014 PASSED FOR THE AS STT.YEAR 2008-09. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1,22,690/- WHICH WAS IMPOS ED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D SOLD A PIECE OF LAND WHICH WAS OWNED BY HIM ALONGWITH 13 CO-OWNERS. WHILE COMPUTING CAPITAL GAIN THE ASSESSEE HAS ADOPTED COS T OF ACQUISITION AT RS.103/- PER SQ.METER. THIS RATE WAS ADOPTED BY TH E ASSESSEE ON THE ITA NO.2615/AHD/2014 2 BASIS OF REPORT OBTAINED FROM REGISTERED VALUER. T HE LD.AO CALLED FOR THE INFORMATION FROM SUB-REGISTRAR, DAMAN WHO HAS STATE D THAT RATES IN THAT VILLAGE WERE RANGING BETWEEN RS.33/- TO RS.53/ -. THE LD.AO COMPUTED THE CAPITAL GAIN BY ADOPTING COST OF ACQUI SITION AT THE RATE OF RS.43/- PER SQ.METER. 3. DISSATISFIED WITH ACTION OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) WHO HAS MADE AN ANAL YSIS OF ALL THE INFORMATION AND DIRECTED THE AO TO COMPUTE CAPITAL GAIN BY ADOPTING RATE AT RS.73/- PER SQ.METER. ACCORDINGLY CAPITAL GAIN IN THE HANDS OF THE ASSESSEE WAS DETERMINED. THE LD.AO HAS INITIAT ED PENALTY PROCEEDINGS AND ULTIMATELY IMPOSED A PENALTY OF RS. 1,22,690/- WHICH IS EQUIVALENT TO TAX SOUGHT TO BE EVADED BY THE ASSESS EE. IT IS ALSO PERTINENT TO MENTION THAT THE ASSESSEE HAS DISCLOSE D CAPITAL GAIN OF RS.7,69,585/-. THE AO HAS MADE AN ADDITION OF RS.8 ,74,592/-. THUS, CAPITAL GAIN WAS ESTIMATED BY THE AO AT RS.16,44,20 0/-. AFTER THE ORDER OF THE LD.CIT(A) THE ADDITION OF RS.8,74,592/ - REDUCED TO RS.4,81,486/-. THIS AMOUNT HAS BEEN CONSIDERED BY THE AO TO VISIT THE ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. 4. THE AO HAS IMPOSED PENALTY OF RS.1,22,690/- WHIC H HAS BEEN CONFIRMED BY THE LD.CIT(A). 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1 961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTI NENT 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)** ** ** ITA NO.2615/AHD/2014 3 (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 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 ITA NO.2615/AHD/2014 4 WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATE S 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 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, IF WE EXAMINE THE FAC TS OF THE PRESENT CASE, THEN IT WOULD REVEAL THAT THE AO HAS ADOPTED RATE OF RS.43/- PER SQ.METER AS COST OF ACQUISITION. THIS RATE WAS ENH ANCED TO RS.76/- BY THE CIT(A), AS AGAINST THIS, THE ASSESSEE HAS CLAIM ED RATE OF RS.103/- ITA NO.2615/AHD/2014 5 PER SQ.METER. THIS RATE WAS ALSO BASED ON VALUATIO N REPORT. THE ASSESSEE HAS DISCLOSED COMPLETE FACTS. IT IS THE D IFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE ABOUT THE COST OF A CQUISITION. BOTH THE OPINIONS ARE BASED UPON INFORMATION GIVEN BY AN EXPERT, WHICH ARE AGAIN AN ESTIMATION. THEREFORE, THE ASSESSEE CANNO T BE SAID TO HAVE BEEN FURNISHED INACCURATE PARTICULARS OF HER INCOME . THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE TO CO NCEAL HER INCOME. THE LD.CIT(A) HAS ERRED IN VISITING THE ASSESSEE WI TH PENALTY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND DELETE PENALTY OF RS.1,22,690/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER