P.V.Sanjay Kumar, Hyderabad V. ACIT, Hyderabad

ITA 393/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3179 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 271(1)(c); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.393/HYD/2010 ASSTT. YEAR 2005-06 PV SANJAY KUMAR, HYDERABAD (PAN NO. ACJPP 6313Q) V/S. ACIT, CIRCLE 6-1, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. DEVDAS RESPONDENT BY : SMT. NIVEDITA BISWAS, DR O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-0 6 IS DIRECTED AGAINST THE ORDER OF THE CIT (A). THE ONLY I SSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE VALIDITY OF PENALTY LEV IED U/S 271 (1)(C) OF THE ACT AT RS.3,25,740/-. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING AN INCOM E OF RS.9,97,900/- AND IT INCLUDES LONG TERM CAPITAL LOSS AT RS.8,38,647/-. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SOLD ITS PROPERTY AT SANTOSHIMA COMMERCIAL COMPLEX, RTC X ROAD FOR SALE CONSIDERATION OF RS.15.00 LAKHS FROM WHICH THE COST OF ACQUISITION OF RS.23,38,647/- (AS PER INDEXATION) WAS DEDUCTED COMIN G TO A LOSS ITA NO.393/HYD/2010 SHRI PV SANJAY KUMAR, HYDERABAD. 2 OF RS.8,38,647/-. HE SUBMITTED THAT THE COMPLETE DATA OF THE DATE OF PURCHASE AND SALE OF THE PROPERTY ALONGWITH THE AMOUNT OF SALE CONSIDERATION AND THE COST OF ACQUISITION AS PER COST INFLAT ION INDEX WERE SUBMITTED IN ITS COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME BY THE ASSESSEE. HE SUBMITTED THAT THE ADDITION TO THE SALE CONSIDERATION WAS MADE BY THE ASSESSING OFFICER BY INVOKING THE DEEMING PROVISION OF SEC.50C OF THE ACT AND THEREBY TH E 'AREA RATE' OF THE PROPERTY WAS ADOPTED BY THE ASSESSING OFFICER RESU LTING IN THE ADDITION IN THE CASE OF THE ASSESSEE. HE SUBMITTED THAT AS PER THE DEEMING PROVISION OF SEC.50C, IT IS THE LIABILITY OF T HE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION FIGURE AT 'AREA RATE' OF THE PROPERTY AND THE ASSESSEE COULD NOT BE HELD GUILTY FOR DECLARING T HE ACTUAL AMOUNT RECEIVED BY IT AS SALE CONSIDERATION OF THE PROPE RTY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A CASE OF GENUINE SALE AND THE PROPERTY WAS LYING VACANT FOR THE PAST SEVERAL YEARS AND WAS REFLECTED IN THE RETURN OF INCOME FILED B Y THE ASSESSEE PERIODICALLY AND THERE WAS NO INCOME FROM THE PROPERT Y FOR SO MANY YEARS AND THE ASSESSEE COULD GET A BUYER WITH GREAT DIFF ICULTY AND ACCORDINGLY SOLD THE PROPERTY AT A ROUND FIGURE OF RS.1 5.00 LAKHS. HE SUBMITTED THAT THE ISSUE IN THIS APPEAL OF THE ASSESSEE IS CO VERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HON'BLE PU NJAB & HARYANA HIGH COURT IN CIT VS. CHANDANI BHOCHAR 323 ITR 510. HE RELIED UPON THE DECISION IN 189 TAXMAN , 282 (P & H) AND 189 TAXMAN 322 SC AND OF HYDERABAD TRIBUNAL IN P.M. TELELINKS LTD., VS. DCIT (ITA NO.7/HYD/2007, DATED 29-6-2007). 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A). SHE SUBMITTED THAT THE CASE LAW ITA NO.393/HYD/2010 SHRI PV SANJAY KUMAR, HYDERABAD. 3 RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE ON FACTS. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS ACCEPTED T HE ADDITION MADE BY THE ASSESSING OFFICER AND THE ASSESSEE HA S FILED INACCURATE PARTICULARS OF ITS INCOME. SHE SUBMITTED THAT I T WAS ONLY DUE TO THE FACT THAT THE CASE OF THE ASSESSEE WAS SELECTED F OR 'SCRUTINY' BY THE DEPARTMENT THAT THE CONCEALMENT OF THE ASSESSEE WA S DETECTED AND BUT FOR THE SELECTION OF THE CASE OF THE ASSESSEE UNDER 'SCRUTINY' ASSESSMENT, THE ASSESSEE WOULD HAVE GONE SCOT-FREE. SHE REFER RED TO THE RELEVANT PARAS OF THE ORDER OF THE CIT (A) IN SUP PORT OF THE CASE OF THE REVENUE THAT THE ASSESSEE HAS IGNORED THE STATUTORY P ROVISION OF SEC.50C AND HAS NOT STATED THE CORRECT CONSIDERATION AS PER THE STATUTORY PROVISION OF LAW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFULLY. WE FIND THAT THE ASSESSEE HAS SOLD ITS PROPERTY FOR A CONSIDERATION OF RS. 15.00 LAKHS AND HAS DECLARED THE LONG TERM CAPITAL LOSS AND HAS FILE D THE RELEVANT DETAILS IN THE FORM OF ANNEXURE D OF THE LONG TERM CAPITAL LOSS CLAIMED BY IT DECLARING THE FULL ADDRESS OF THE PROPERTY SOLD A ND THE DATE OF PURCHASE AND THE SALE OF THE PROPERTY AND THE CONSIDERA TION FOR SALE OF PROPERTY AT RS.15.00 LAKHS WAS DECLARED. THE ASSESSEE HAS DI SCLOSED THE BASIC FACTS WITH REGARD TO ITS ASSESSMENT OF CAPITAL G AINS. THE ASSESSEE DECLARED THE LONG TERM CAPITAL LOSS BY TAKING THE INDEXED COST OF ACQUISITION OF THE PROPERTY. THE ASSESSING OFFICER SUBST ITUTED THE SALE CONSIDERATION OF THE PROPERTY WITH THE FIGURE OF THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITIES OF THE ST ATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY I N RESPECT OF SUCH TRANSFER BY INVOKING THE DEEMING PROVISION OF SEC. 50C OF THE INCOME TAX ACT 1961. THE ASSESSEE HAS TWO OPTIONS IN THIS MA TTER ITA NO.393/HYD/2010 SHRI PV SANJAY KUMAR, HYDERABAD. 4 NAMELY EITHER TO ACCEPT THE VALUE ADOPTED IN ACCORDANCE WITH THE VALUE ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY B Y THE STATE VALUATION AUTHORITY OR TO HAVE CLAIMED BEFORE THE ASSE SSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER OF THE PROPERTY. IN CASE THE ASSESSEE CHOSE THE SECO ND OPTION AVAILABLE TO IT AND CLAIM BEFORE THE ASSESSING OFFICER TH AT THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEED THE FAIR MARKET VALUE OF THE PROPERTY, THE ASSESSING OFFICER WAS BOUND TO REFER THE ISSUE OF VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. BUT IN THIS CASE BEFORE US THE ASSESSEE FOR MORE THAN ONE VALID RE ASONS OPTED FOR THE FIRST OPTION AVAILABLE TO IT AND ACCEPTED THE VALUATION OF THE PROPERTY AS ASSESSED BY THE STAMP VALUATION AUTHORITY FO R THE PURPOSE OF PAYMENT OF STAMP DUTY AND ACCORDINGLY PAID THE TAX DETERMINED BY THE ASSESSING OFFICER BY SUBSTITUTING THE SALE CONSIDERATION OF THE PROPERTY WITH THE VALUATION AS ASSESSED BY THE STAMP VAL UATION AUTHORITY AND HAS PAID THE TAXES THEREON. WE FIND TH ERE IS NO MATERIAL BEFORE US TO SUGGEST THAT THE CONDUCT OF THE ASSESSEE IN ACCE PTING THE SUBSTITUTED VALUE OF THE SALE CONSIDERATION IN ACCORDANCE W ITH THE DEEMING PROVISION OF SEC.50C OF THE ACT, WAS NOT BONAF IDE. THE PROVISION OF SEC.50C IS ADMITTEDLY A DEEMING PROVISION FOR THE LIMITED PURPOSE OF CALCULATION OF LONG TERM CAPITAL GAIN/LOSS AND THE PROVISION NOWHERE PROVIDES THAT THE SUBSTITUTED CONSIDERATION AS PER THE ASSESSMENT MADE BY STAMP VALUATION AUTHORITY OF THE STA TE GOVERNMENT WOULD BE DEEMED TO BE THE ACTUAL CONSIDERA TION RECEIVED BY THE ASSESSEE. IT IS THE STATUTORY DUTY OF THE ASSESSING OF FICER TO APPLY THE PROVISION OF SEC.50C OF THE ACT WHILE DETERM INING THE FIGURE OF CAPITAL GAIN/LOSS OF A PARTICULAR TRANSACTION, WHEREV ER THE CONDITIONS ITA NO.393/HYD/2010 SHRI PV SANJAY KUMAR, HYDERABAD. 5 FOR APPLICABILITY THEREOF ARE SATISFIED. WE FIND THAT IT WAS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IN FACT HAS RECEIVED SOME AMOUNT WHICH IS OVER AND ABOVE THE APPARENT CONSIDERATION IN T HE REGISTERED SALE DEED EXECUTED BY THE ASSESSEE. THERE IS NO EVIDENCE IN THIS CASE TO SUGGEST THAT THE ASSESSEE HAS IN FACT RECEIVED A RUPEE MO RE THAN THE APPARENT SALE CONSIDERATION OF RS.15.00 LAKHS DECLAR ED IN THE SALE DEED. THE SALE PRICE ASSESSED FOR THE PURPOSE OF PAYING T HE STAMP DUTY COULD NOT BE TAKEN AS ACTUAL SALE CONSIDERATION IN T HE ABSENCE OF ANY POSITIVE EVIDENCE TO THIS EFFECT. IT IS ONLY DUE TO DEEMING PROVISION OF SEC.50C OF THE ACT THAT THE DIFFERENCE BETWEEN THE APPARENT CONSIDERATION AND THE VALUE ASSESSED FOR THE PURPOSE OF PA YMENT OF STAMP DUTY BY THE STAMP VALUATION AUTHORITY IS BROUGHT TO TAX AND SUCH DIFFERENCE IN THE ABSENCE OF ANY EVIDENCE, COULD NOT BE SAID TO REPRESENT THE ACTUAL CONSIDERATION PASSED ON TO THE SELL ER. IN THIS VIEW OF THE MATTER, WE FIND THAT THE ADDITION DUE TO INV OKING OF THE DEEMING PROVISION OF SEC.50C OF THE ACT MAY BE JUSTIFIED IN A G IVEN CASE, BUT IN THE ABSENCE OF ANY POSITIVE EVIDENCE TO PROVE THAT SOMET HING MORE THAN STATED IN THE REGISTERED DOCUMENT HAS CHANGED HAN DS, THE DIFFERENCE ASSESSED DUE TO THE DEEMING PROVISION OF LAW CO ULD NOT BE TAKEN AS REPRESENTING THE ACTUAL CONSIDERATION PASSED ON TO THE SELLER AND THEREBY MAKING THE SELLER ASSESSEE LIABLE FOR PENALT Y PROVISIONS OF SEC.271(1) (C) OF THE ACT. IN CIT VS. CHANDANI BHOCHAR 3 23 ITR 510 HON'BLE PUNJAB & HARYANA HIGH COURT HAD AN OCCASION TO CONSIDER THE DEEMING PROVISION OF SEC.50C OF THE ACT AND HAS HELD TH AT PURCHASE PRICE ASSESSED FOR THE PURPOSE OF PAYING STAMP DUTY NOT TO BE TAKEN AS SALE CONSIDERATION IN THE ABSENCE OF POSITIVE EVIDENCE. WE FIND THAT THE ADDITION MADE IN THE HANDS OF THE ASSESSEE IN THIS CASE DU E TO SUBSTITUTION OF SALE CONSIDERATION BY INVOKING THE PROVI SIONS OF SEC.50C ITA NO.393/HYD/2010 SHRI PV SANJAY KUMAR, HYDERABAD. 6 OF THE ACT IS NOT DUE TO ANY DETECTION OF CONCEALMENT OF INCOME OR FILING OF ANY INACCURATE PARTICULARS OF THE INCOME BY THE ASSESSEE. MERELY BECAUSE THE ASSESSEE IS SUBJECTED TO TAX BY INVOKING THE DEEMING PROVISION OF LAW WOULD NOT IPSO-FACTO LEAD TO THE INFERENCE THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FI LING OF INACCURATE PARTICULARS OF INCOME. IN THESE FACTS OF THE CASE WE HAVE NO HESITATION IN HOLDING THAT NO CASE OF HOLDING THE ASSESSE E GUILTY FOR CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS O F THE INCOME COULD BE MADE OUT AGAINST THE ASSESSEE AND ACCORDINGLY WE HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WHICH IS ACCORDINGLY CANCELLED AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11-06-2010. SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE: 11TH JUNE, 2010. COPY FORWARDED TO: 1. SHRI P V SANJAY KUMAR, 8-2-248/B/28/A NAGARJUNA HILLS, HYDERABAD 2. THE ACIT, CIRCLE-6 (1) HYDERABAD 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) IV, HYDERABA D. 4. THE COMMISSIONER OF INCOME-TAX-III, HYDERABAD 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.