Income-tax Officer, V. Smt. Sunitha Chinnarao Ganga, Ahmednagar

ITA 434/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1182 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHINNA RAO
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Deemed to accrue or arise in india
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA , JM AND SHRI R.K. PANDA , AM ITA NO. 434 /PN/201 4 ASSESSMENT YEAR : 20 0 8 - 09 THE INCOME TAX OFFICER, WARD 1, AHMEDNAGAR . . APPELLANT VS. SMT. SUNITHA CHINNARAO GANGA, SAI GANGA GENERAL STORES, OPP. SHANTIKAMAL HOTEL, SHIRDI, RAHATA, AHMEDNAGAR. . RESPONDENT PAN : AHXPG7004N / APPELLANT BY : SHRI MAHESH AKHADE / RESPONDENT BY : SHRI CHINNA RAO / DATE OF HEARING : 03 .0 8 .2015 / DATE OF PRONOUNCEMENT: 26 .0 8 .2015 / ORDER PER SUSHMA CHOWLA, JM : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - IT/TP , PUNE DATED 16.12.2013 RELATING TO ASSESSMENT YEAR 20 0 8 - 09 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE SOLITARY ISSUE AR ISING IN THIS APPEAL IS AGAINST DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ADDITION S MADE BY INVOKING SECTION 50C OF THE ACT IN QUANTUM ASSESSMENT ON ACCOUNT OF DEEMED SALE CONSIDERATION OF PROPERTIES SOLD BY SUBSTITUTING THE ACTUAL SALE CON SIDERATION . 3. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD SOLD A PARCEL OF LAND FOR A CONSIDERATION OF RS.30,00,000/ - ON 26.03.2008. HOWEVER, THE MARKET 2 ITA NO. 434 /PN/201 4 VALUE I.E. VALUE ADOPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WAS RS.50,00,000 / - . THEREFORE, THE ASSESSING OFFICER TREATED THE DIFFERENTIAL AMOUNT AS SHORT TERM CAPITAL GAIN BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT . THE ASSESSING OFFICER ALSO SIMULTANEOUSLY INVOKED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE CLAIMED THAT SHE HAD PURCHASED THE LAND WITH THE INTENTION OF D OING LAND DEALING BUSINESS. T HE LAND HELD WAS CLAIMED TO BE IN THE NATURE OF STOCK - IN - TRADE AND THEREFORE PROVISION S OF SECTIO N 50C OF THE ACT WAS NOT ATTRACTED. THE ASSESSING OFFICER OBSERVED THAT THE CONTENTION OF THE ASSESSEE IS NOT SUSTAINABLE ON THE GROUND THAT AS PER THE BALANCE SHEET, THE LAND WAS CLASSIFIED UNDER THE HEAD INVESTMENT, WHICH DENOTES CAPITAL ASSET AND THU S THE PROVISIONS OF SECTION 50 C OF THE ACT IS SQUARELY APPLICABLE . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D OMITTED TO DECLARE THE IMPUGNED INCOME ON SALE OF PLOT AS PER MARKET VALUE UNDER THE HEAD SHORT TERM CAPITAL GAIN AS CONTEMPLATED UND ER SECTION 50C OF THE ACT. THE ASSESSING OFFICER REJECTED HER ARGUMENT THAT THE LAND WAS HELD AS STOCK - IN - TRADE AND FOUND THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT BONA - FIDE . ON THE ADDITION MADE IN THE HANDS OF ASSESSEE, THE ASSESSING OFFICER LEV IED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.6,24,000/ - . 4 . THE CIT(A) OBSERVED THAT VALUATION DONE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WAS TO BE CONSIDERED AS DEEMED SALE CONSIDERATION AND THE ACTUAL VALUE OF THE PROPERTY VARIED DUE TO VA RIOUS FACTORS SUCH AS LOCATION, FRONTAGE AND QUALITY OF CONSTRUCTION, ETC.. THE CIT(A) WAS OF THE VIEW THAT IT WAS INCORRECT TO ADOPT THE STAMP DUTY VALUATION FOR THE PURPOSE OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT . THE CIT(A) WAS OF THE VI EW THAT THE REQUIREMENT OF PENALTY PROVISION IS THAT WHERE THE ASSESSEE HAD ACTUALLY RECEIVED EXCESS SALE CONSIDERATION THAN WHAT HE HAD DISCLOSED IN THE RETURN OF INCOME , PENALTY FOR CONCEALMENT COULD BE LEVIED AND WHERE THE SAME WAS ABSENT, IT WOULD ONLY BE A PRESUMPTION THAT THE ASSESSEE HAD RECEIVED EXCESS SALE CONSIDERATION. THE 3 ITA NO. 434 /PN/201 4 CIT(A) HELD THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD NOT BE LEVIED ON SUCH PRESUMPTION BUT W AS TO BE LEVIED ON ACTUAL EVIDENCE. THE CIT(A) HELD THAT PENALTY WAS NOT LEVIABLE ON THE BASIS OF DEEMING PROVISION AND WITHOUT EVIDENCE AGAINST THE ASSESSEE. IN VIEW THEREOF, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS DELETED BY THE CIT(A). 5 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A). 6 . T HE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 7 . THE HUSBAND OF THE ASSESSEE APPEARED IN PERSON AND PLACED RELIANCE ON THE ORDER OF THE CIT(A). 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. IN THE FACTS OF THE PRESENT CASE, THE ADDITION WAS MADE TO THE RETUNED INCOME BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT, WHICH ARE APPLICABLE IN CASES WHERE THE VALUATION OF THE PROPERTY BY THE STAMP VALUATION AUTHORITY DIFFERED FROM THE SALE CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSEE. CLEARLY, THE IMPUGNED ADDITIONS DO NOT REPRESENT ANY REAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER NOWHERE ALLEGED THAT THE ASSESSEE HA D RECEIVED THE SALE CONSIDERATION OVER AND ABOVE THE AMOUNT SPECIFIED IN THE AGREEMENT ENTERED INTO BY HER FOR SALE OF PLOT/LAND. IT IS A TRITE LAW THAT MERELY BECAUSE SOME ADDITION HAS BEEN MADE TO THE RETURNED INCOME, THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY ENVISAGED UNDER SECTION 271(1)(C) OF THE ACT. IT IS ALSO WELL - SETTLED THAT PENALTY WILL NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. PRESUMPTION RAISED UNDER EXPLAN ATION 1 TO SECTION 271(1)(C) OF THE ACT IS REBUTTED IN THIS CASE, W HERE THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF 4 ITA NO. 434 /PN/201 4 INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT . I N THE ABSENCE OF ANY EVIDENCE HAVING BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAD RECEIVED CONSIDERATION OVER AND ABOVE THE AMOUNTS STATED IN THE REGISTERED DOCUMENTS, WE FIND NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH PRESUMPTION. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HO NBLE JURISDICTION AL HIGH COURT IN CIT VS. FORTUNES HOTELS & STATES PVT. LTD. IN INCOME TAX APPEAL NO.1164 OF 2012, ORDER DATED 26.09.2014. IN TH E SAID CASE, ON BROADLY SIMILAR FACTS, THE HONBLE HIGH COURT HELD THAT EVEN THOUGH SECTION 50C OF THE ACT CRE ATED LIABILITY FOR DEEMED INCOME IN QUANTUM ASSESSMENT , BUT NO PENALTY FOR CONCEALMENT WAS ATTRACTED IN THE CASE. UPHOLDING THE ORDER OF TH E CIT(A), WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 2015. ORDER PRONOUNCED ON THIS 26 DAY OF AUGUST , 2015. SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE ; DATED : 26 TH AUGUST , 2015. / COPY OF THE O RDER IS FORWARDED TO : 1 ) THE ASSESSEE; 2 ) THE DEPARTMENT; 3 ) THE CIT(A) - IT/TP , PUNE ; 4 ) THE CIT - IT/TP , P UNE ; 5 ) THE DR A BENCH, I.T.A.T., PUNE; 6 ) GUARD FILE. / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE