The Sathe Biscuit & Chocolate Co. Ltd., Pune V. DCIT, Cir.-7, Pune

ITA 495/PUN/2010

• Counselvise Citation: 49524514 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: DR SUNIL PATHAK
• Keywords: Principle of natural justice; Cost of acquisition; Fair market value; Valuation report
• Section: 142(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 495/PN/2010 : A.Y. 2005-06 SATHE BISCUIT & CHOCOLATE CO. LTD., SATHE MEMORIAL COMPLEX 820 BHAWANI PETH, PUNE-411 002 PAN AACCT 3593 Q APPELLANT VS. DY. CIT CIR. 7, PUNE RESPONDENT APPELLANT BY: DR. SUNIL PATHAK AND SHRI NIKHIL PATHAK RESPONDENT BY: SHRI S.K. SINGH DATE OF HEARING: 02-3-2012 DATE OF PRONOUNCEMENT : 20-3-2012 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-III PUNE DATED 17-12-2009 FOR A.Y. 2005-06 ON THE POINT OF PENALTY OF RS. 9,59,31,626/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BISCUITS AND CHOCOLATES AND STATED TO HAVE CLOSED ITS BUSINESS ACTIVITIES FROM 1996. NO RETURNS OF INCOME WERE FILED BY THE ASSESSEE FROM A.Y. 2000 -01 ONWARDS. HOWEVER, THE ASSESSEE HAS SOLD TWO PROPERT IES MENTIONED BELOW DURING THE YEAR UNDER CONSIDERATION . 2 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 SR.NO. PARTICULARS OF THE PROPERTY AREA IN SQ. MTRS. DATE OF SALE CONSIDERATION (RS.) 1. SURVEY NO. 44, HISSA NO. 1/A 19,324 1 - 4 - 2004 7,28,00,000 2. SURVEY NO. 44, HISA NO. 1/A 27,298 28 - 3 - 2005 16,00,00,000 3. THE ABOVE SALE TRANSACTIONS WERE REFLECTED IN TH E ANNUAL INFORMATION RETURNS FILED U/S 285BA OF THE A CT. THEREFORE, A NOTICE U/S 142(1) OF THE ACT WAS ISSUE D ON 30- 8-2007 CALLING FOR THE RETURN OF INCOME FOR A.Y. 20 05-06. IN RESPONSE TO THE SAME, THE ASSESSEE INSTEAD OF FI LING RETURN OF INCOME SUBMITTED A LETTER DATED 20-9-2007 WHEREIN IT WAS STATED AS TO HOW THE ASSESSEE SUFFER ED LOSSES AND REQUIRED TO CLOSE ITS BUSINESS ACTIVITIE S AND FURTHER ELABORATED THE FINANCIAL DIFFICULTIES. IT WAS ALSO MENTIONED THAT ON ACCOUNT OF ESTIMATED TAX LIABILIT Y, THE ASSESSEE HAS PAID LONG TERM CAPITAL GAIN OF RS. 4.5 0 CRORES AND PROPOSED TO DISCHARGE THE REMAINING LIABILITY I N DUE COURSE. WHEN QUESTIONED ABOUT THE CAPITAL GAINS ON SALE OF LAND, THE ASSESSEE VIDE LETTER DATED 26-9-2007 FURN ISHED THE WORKING OF ESTIMATED LOSS AMOUNTING TO RS. 17,93,93,090/- WHICH INCLUDED LOSS ON SALE OF CAPIT AL ASSET OF RS. 5,39,25,300/-. FURTHER NOTICE U/S 142(1) OF THE ACT DATED 12-10-2007 WAS ISSUED FOR CALLING THE NECESSA RY DOCUMENTARY EVIDENCE IN SUPPORT OF THE VALUE OF THE PROPERTY ADOPTED AS ON 1-4-1981 @ 1,230 PER SQ. MTR . IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED LETT ER DATED 29-10-2007 ENCLOSING THEREWITH A COPY OF VALUATION REPORT DATED 18-12-2003 PREPARED BY REGISTERED VALUER WHER EIN FAIR MARKET VALUE WAS TAKEN AT RS. 1,230 PER SQ. MT RS. THEREAFTER, THE CONCERNED ASSESSING OFFICER OBTAINE D 3 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 CERTIFIED COPIES OF THE FOLLOWING SALE INSTANCES FR OM THE JT. SUB-REGISTRAR CONCERNED. I) CONVEYANCE DEED DATED 1-2-1980 (REGISTERED IN 1981 BETWEEN SHRI ARUNAK PIYUSH DIWAN (VENDOR) AND SHRI SUBEDAR MAJOR KARAM SINGH, SHRI MANJEET SINGH (VENDEES), LAND BEA RING SR.NO.33/1/3-1/2,. PLOT NO.15, DHANORI. ADMEASURING 591 11 SQ. MTS. CONSIDERATION - RS.9,OOO/- AT RS.15.23 PER ,SQ. MT. II) SALE DEED DATED 20-8-1979 (REGISTERED IN 1981) BETWEEN SHRI MADHAVAN PILLAI (CONSTITUTED ATTORNEY OF SHRI K.G.K .NAIR OWNER OF PLOT) AND SMT.KAMAT BHATTACHARYA (PURCHASER), SR . NO. 33/2, PLOT NO.17, DHANORI ADMEASURING 480 SQ. MTRS FOR RS. 3,000/- AT RS. 6.25 PER SQ MTRS (III) SALE DEED DATED 25-8-1980 (REGISTERED IN 1981 ) BETWEEN SUDAKAR GANESH GAME (1/4 SHARE) AND OTHERS AND PRAB HAKAR CHANGIA KOLI, SR. NO.51, PLOT NO.173, DHANORI, ADME ASURING 117 SQ. MT. (OUT OF 468.1 SQ. MTS), FOR RS. 1,000/- AT RS. 8.54 PER SQ. MTRS. AS AGAINST THE ABOVE SALE INSTANCES, THE REGISTERED VALUER IN HIS REPORT DATED 18-12-2003 AD OPTED LAND RATE FOR COST OF ACQUISITION AS ON 1-4-1981 @ RS 1, 230/- PER SQ, MTRS, DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE COPY OF READY RECKONER AND THE CIRCULAR DATED 3-10- 1989 WAS OBTAINED FROM THE JT. SUB-REGISTRAR, PUNE. AS PER THE SAID CIRCULAR, THE VALUE OF THE LAND IN THE YEAR 1981 WA S 40% OF THE VALUE IN 1989, I.E. 40% OF RS. 1,000/- PER SQ. MTR. IN OTHER WORDS, AS PER THE SAID CIRCULAR, THE FAIR MARKET VA LUE COMES TO RS. 400 PER SQ. MT. ONLY. MARKET INFORMATION WAS AL SO GATHERED AND IT WAS REVEALED THAT IN THE YEAR 1981, THE RATE OF LAND AT DHABNORI VILLAGE, WHICH WAS OUTSIDE THE MUN ICIPAL CORPORATION AREA WERE NOT SO HIGH AND THE LAND IN Q UESTION WAS NOT EVEN IN THE RESIDENTIAL ZONE IN THE YEAR 19 81. IN THIS 4 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 BACKGROUND, DY. DIRECTOR OF INCOME-TAX (INVESTIGATI ON) UNIT 1, PUNE ALSO CONDUCTED ENQUIRIES AND ALSO SUMMONED U/S 131 OF THE ACT, SHRI YASHWANT SADASHIV PATHAK, REGISTERED VALUER, AND HIS STATEMENT WAS ALSO RECORDED ON 10-12-2007 F OR HIS EXPLANATION AND COMMENTS ON THE VALUATION ADOPTED B Y HIM. IT WAS SEEN FROM THE FOLLOWING FACTS, THAT THE VAL UATION ADOPTED BY THE SAID REGISTERED VALUER WAS UNREALIST IC AND WITHOUT ANY SCIENTIFIC BASIS. (A) THE VALUER COULD NOT EXPLAIN AS TO WHY THE RATE OF BUILDING HAS BEEN ADOPTED AT RECKONER RATES, WHICH ARE APPLICABL E FOR THE NEW BUILDINGS, WHEREAS THE BUILDING IN QUESTION WAS DIL APIDATED AND CONSTRUCTED IN THE YEAR 1959-60, WHICH HAD HARDLY A NY VALUE. (B) THE CONSTRUCTED AREA WAS HARDLY 5.87% OF THE TO TAL AREA OF LAD; (C) EVEN IN THE SALE AGREEMENT, THERE WAS NO ASSIGN MENT OF ANY SALE CONSIDERATION TO THESE STRUCTURES; (D) THE PURCHASER HAD DEMOLISHED THE SAID BUILDING TO DEVELOP THE LAND, WHICH FURTHER SUGGESTS THAT THE STRUCTURE WAS OF NO VALUE; (E) EVEN THOUGH THE VALUER HAD ADOPTED RECKONER RAT ES FOR LAND AND BUILDING OF GROUND FLOOR, UPPER FLOOR, COMMERCI AL AND RESIDENTIAL QUARTERS FOR TAKING AVERAGE RATE, BUT I T WAS ADMITTED BY HIM IN THE STATEMENT THAT THERE WAS NO UPPER FLOOR. (F) THE RECKONER RATES FOR 1989 WERE FOR NEW BUILDI NGS AND NOT FOR THE OLD CONSTRUCTIONS; (G) THE BUILDINGS CONSTRUCTED WERE IN VILLAGE DHANO RI (WHICH WAS OUTSIDE PMC LIMIT IN 1981), WHEREAS THE RATES ADOPT ED BY VALUER WERE FOR LAND AND BUILDING CONSTRUCTED WITHIN THE M UNICIPAL LIMITS; (H) THE VALUER ADOPTED THE RATE OF THE NEW COMMERCI AL RCC BUILDING WHEREAS IN THE CASE OF ASSESSEE, IT WAS ME RELY A FACTORY SHED WITH A/C SHEET ROOFING WHICH IN ANY WAY NOT CO MPARABLE; (I) THE VALUER HAD INCREASED THE AVERAGE RATE ARBIT RARILY WITHOUT ANY REFERENCE TO ANY COMPARABLE CASES; 5 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 (J) THE VALUER HAD ADMITTED THAT HE HAD NOT REFERRE D TO ANY ACTUAL SALE INSTANCE, EITHER OF 1981 OR OF 1989 TO SUPPORT THE VALUATION OF LAND DONE BY HIM BY ADOPTING LAND AND BUILDING METH OD BY APPLYING THE RECKONER RATES. 4. WITH REGARD TO VALUATION, THE ASSESSING OFFICER MADE THE VALUATION AT THE RATE OF RS. 1230/- PER SQ. MT. WHI CH WAS CONFIRMED BY THE CIT(A). IN FURTHER APPEAL BY THE ASSESSEE, THE TRIBUNAL DECIDED THE ISSUE AS UNDER: 20. LET US DISCUSS THE VALUE OF ASSESSEES LAND IN THIS BACKGROUND. THE LAND OF ASSESSEE WAS BEING USED AS INDUSTRIAL/COMMERCIAL UNIT AND SITUATED IN PRIME LOCATION. THE ASSESSEE'S LAND WAS BOUND TO FETCH A MUCH HIGHER PRICE COMPARED TO THE OTHER NON-PMC LANDS IN DHANORI AREA. WITHOUT PREJUDICE TO THE ABOVE, THE RATE OF RS. 400/- PER SQ. MTR. WA S THE MINIMUM LAND RATE AND CONSIDERING THE ABOVE FACTORS, THE SAID LAND OF THE ASSESSEE OUGHT TO HAV E BEEN VALUED AT MUCH HIGHER RATE AS ON 1-4-1981 BEING IN PMC LIMITS AND HAVING BENEFITS OF ALL INFRASTRUCTURES AND ALL CIVIL AMENITIES. 21. COMING TO THREE SALE INSTANCES RELIED UPON BY THE A .O., THE STAND OF THE ASSESSEE WAS THAT THE LANDS RELIE D BY A.O WERE NOT COMPARABLE TO THE LAND OWNED BY THE ASSESS EE, HENCE THERE WAS NO QUESTION OF DETERMINING THE FMV ON THE BASIS OF THOSE LANDS. THE ASSESSEE HAS RAISED VARIOUS CONTE NTIONS TO BRING OUT DISTINCTION BETWEEN THE THREE INSTANCES A ND THE ASSESSEES CASE IN ITS REPLY PLACED AT PAGES 146 TO 150 AS DISCUSSED ABOVE WHICH WAS NOT DULY CONSIDERED BY TH E A.O. THE A.O HAS NOT DISPUTED THE FACT THAT THE COMPARAB LE CASES RELIED UPON BY THE A.O WERE OUTSIDE THE PMC LIMIT. UNEQUAL 6 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 SHOULD NOT BE TREATED EQUALLY. THE VALUE OF LAND S ITUATED IN PMC LIMIT IS CERTAINLY HIGHER THAN ONE OUTSIDE MUNI CIPAL LIMITS IN DHANORI AREA. THE LAND IN MUNICIPAL LIMIT HAS BE NEFIT OF INFRASTRUCTURE SUCH AS SEWERAGE, WATER, ELECTRICITY ROAD SECURITY ETC. SO ITS VALUE HAS TO BE HIGHER. A.O H AS DISCUSSED THE SALE INSTANCES OF RS. 247/- BUT IGNORED THE SAM E WHILE REACHED TO CONCLUSION WHEREBY VALUE OF LAND @ 15.23 PER SQ. MTR AS ON 1-4-1981. THIS REFLECTS THE APPROACH OF A.O AS WELL AS CIT(A). 22. WE ALSO FIND THAT THE SAID COMPARED PLOTS WE RE SMALL IN SIZE AND UNDEVELOPED, ZONING WAS NOT AVAILABLE AND WERE AROUND 3 TO 4 KMS AWAY FROM THE ASSESSEES LAND. T HE SAID PLOTS WERE IN INTERIOR PART OF DHANORI VILLAGE AND NOT HAVING BENEFIT OF DEVELOPMENT IN TERMS OF WATER, DRAINAGE, ELECTRICITY AND OTHER INFRASTRUCTURE FACILITIES BEING OUTSIDE P MC LIMITS. THE A.O HAS NOT JUSTIFIED ITS STAND AS TO HOW THE S AID THREE LANDS WERE COMPARABLE WITH THE ASSESSEES LAND. CO PIES OF THE SALE DEEDS OF THE SAID THREE COMPARABLE INSTANCES W ERE PLACED IN THE PAPER BOOK. ACCORDING TO THE SAID SALE DEED S, IT IS CLEAR THAT THE SAID LANDS WERE WITHIN THE GRAM PANCHAYAT OF DHANORI VILLAGE ONLY WHILE THE ASSESSEES LAND IN Q UESTION WAS ALREADY IN CONCERN MUNICIPAL LIMITS AT RELEVANT POI NT OF TIME. IN VIEW OF ABOVE COMPARISON BETWEEN BOTH WAS NOT JU STIFIED FOR PURPOSE OF VALUATION AT RELEVANT POINT OF TIME. EQ UAL SHOULD BE TREATED EQUALLY AND UNEQUAL SHOULD NOT BE TREATE D EQUALLY. 23. FURTHER, THE SALE INSTANCES OF THE PROPERTIES IN ALL FOUR DIRECTIONS SHOULD BE TAKEN INTO CONSIDERATION TO AR RIVE AT CONCLUSION OF THE AVERAGE VALUE OF THE PROPERTY. HO WEVER, IN THIS CASE THE COMPARABLE CASES HAVE BEEN TAKEN WHIC H ARE SITUATED IN ONLY ONE SIDE OF ASSESSEES PROPERTY AN D THAT TOO 7 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 AWAY FROM THE CENTER OF PUNE MUNICIPAL CORPORATION. IT IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. WE FIND THAT IN THE CASE OF MRS. KAILASH SUNEJA AND OTHERS REPORTED AS 231 ITR 318 (DEL) THE HONBLE DELHI HIGH COURT HELD AS UNDER: 'HELD, ACCORDINGLY, THAT THE APPROPRIATE AUTHORITY HAD ACTED IN AN ARBITRARY FASHION IN ARRIVING AT THE FAIR MARKET VALUE IN ALL THE CASES. SALE INSTANCES OF PROPERTIES COMPARABLE WITH THE SUBJECT PROPERTIES HAD NOT BEEN TAKEN INTO ACCOUNT AND PROPERTIES SITUATE FAR AWAY FROM THE SUBJECT PROPERTIES HAD BEEN TAKEN INTO CONSIDERATION AND THE ADDITIONS AND DEDUCTIONS WERE MADE WITHOUT ANY PROPER BASIS. NO REASONABLE BASIS HAD BEEN ADOPTED IN ANY OF THE CASES IN FIXING THE FAIR MARKET VALUE. IN SOME OF THE CASES COULD BE APPROPRIATE AUTHORITY DISCHARGE THE INITIAL BURDEN. IN ALL THE CASES THERE WAS NO DIFFERENCE IN THE CONSIDERATION OF THE MATERIALS BY THE APPROPRIATE AUTHORITY AT THE TIME OF THE ISSUE OF NOTICE AND THE PASSING OF FINAL ORDERS. ALL THE ORDERS WERE LIABLE TO BE QUASHED. THE APPROPRIATE AUTHORITY HAD TO ISSUE NO OBJECTION CERTIFICATES TO THE PARTIES IN ALL THE CASES, AS REQUESTED BY THEM IN THE APPLICATION IN FORM NO. 37-I. THIS STRENGTHENS OUR VIEW THAT THE THREE SALE INSTANCES RELIED BY THE A.O WERE NOT COMPARABLE WITH THE ASSESSEE'S LAND AND HENCE THE ADOPTING THE RATES AS PER THESE INSTANCES 8 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 FOR DETERMINING FAIR MARKET VALUE OF PROPERTY IS NOT JUSTIFIED AND CONTRARY TO THE FACTS ON RECORD. 24. WITHOUT PREJUDICE TO THE ABOVE, WE FIND THAT THERE WAS NOT MUCH OF A DEVELOPMENT OUTSIDE THE PUNE CORPORATION LIMITS AND THE BASIC FACILITIES INFRASTRUCTURE LIKE ROADS, DRAINAGE, DRINKING WATER SUPPLY, ETC. WERE ABSENT OUTSIDE PMC LIMIT THOUGH FALLING IN SAME REVENUE ESTATE I.E. DHANORI. SO SAM E COULD NOT BE COMPARED WITH THE ASSESSEES LAND FOR THE PURPOSE OF ADOPTING FAIR MARKET VALUE AS ON 1-4 - 1981 SO AS TO COMPUTE CAPITAL GAIN WITH REGARDS TO PROPERTY IN QUESTION. WE ALSO FIND THAT ON PAGE 17 OF THE ASSESSMENT VIDE PARA 8.2 THE A.O OBSERVED AS UNDER: 'FURTHER; IN VIEW OF THE CLAIM OF THE ASSESSEE THAT THE LAND IN QUESTION IS 26 ACRES FULLY DEVELOPED AND SANCTIONED ETC. THIS OFFICE HAS MADE AN ATTEMPT TO OBTAIN SALE INSTANCES OF BIGGER PROPERTIES FROM THE SRO OF THE AREA CONCERNED. THE DEPARTMENT COULD LAY HAND ON A COPY OF AGREEMENT OF SALE DATED 2010-1990, WHICH WAS SUBSEQUENTLY REGISTERED ON 19-3-1999. THIS INSTANCE WAS OBTAINED AS IT WAS DEVELOPED BY A SOCIETY ON BIGGER LAND. THIS AGREEMENT IS EXECUTED ON 20-10-1990 BETWEEN SHRI RAJKUMAR JITRAM AGARWAL (PURCHASER THROUGH PARTNER OF M/S. SHREE GURUKRIPA DEVELOPERS) AND SMT. SHEELA SHAM PARANJAPE (SELLER) FOR ONE PLOT OF LAND (IN A BIG LAYOUT) ADMEASURING 469 SQ. MTRS FOR A CONSIDERATION OF RS. 2,90,000/- AT RS. 618 PER SQ. MT. THE AGREEMENT IS REFERRED IN THE FINAL REGISTERED DOCUMENT DATED 19-3-1999 GOING BY THE GUIDELINES IN READY RECKONOR AND CIRCULAR 9 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 DATED 3-10-1989 THE RATE PER SQ. MT WILL WORK OUT TO RS. 247/- FOR THE YEAR 1981. THUS THE RATES SHOWN IN READY RECKONER AND CIRCULAR DATED 3-10- 1989 AT RS 1000/- IN THE YEAR 1989 ARE ALSO ON THE HIGHER SIDE. A COPY OF THE SALE INSTANCE WAS ALSO MADE AVAILABLE TO THE ASSESSED COMPANY ON 24-12-2007 FOR ITS COMMENTS/EXPLANATION THEREON.' AS DISCUSSED EARLIER THIS IS ONE OF THE INSTANCES DISCUSSED BY THE A.O BUT NOT TAKEN INTO CONSIDERATION BY HIM. IT SHOWS THAT THREE INSTANCES REFERRED TO ABOVE DID NOT CONSTITUTE PROPER COMPARABLES. FROM THE ABOVE WE FIND THAT THE A.O OBTAINED AN AGREEMENT FOR SALE OF BUILDING WHICH WAS DATED 20-10-1990 AND THE SAME WAS REGISTERED ON 19-31999. AS PER THE SAID AGREEMENT, THE CONSIDERATION WAS FIXED AT RS. 2,90,000/- IN 1990 WHICH WORKED OUT TO RS. 618/- PER SQ. MTR. 1990. THE A.O APPLIED THE PROVISIONS OF THE CIRCULAR ISSUED BY THE TOWN PLANNING DEPARTMENT AND DISCOUNTED THE RATE TO ARRIVE AT THE RATE OF RS. 247/- PER SQ. MTR. AS IN 1981 FOR THE SAME LAND. IT IS IMPORTANT TO NOTE THAT THE FOURTH SALE INSTANCE WHICH WAS POINTED OUT BY THE A.O. HIMSELF WAS OF RS. 247/- PER SQ.MTR. IT INDICATE THAT THE EARLIER THREE INSTANCES CONSIDERED BY THE A.O WERE NOT AT ALL COMPARABLE AND OUGHT TO HAVE BEEN REJECTED. THE FOURTH SALE INSTANCE WAS AROUND 1.5 KMS. AWAY FROM THE ASSESSEE'S LAND IN DHANORI VILLAGE OUTSIDE THE PMC LIMIT WHILE THE OTHER THREE INSTANCES WERE ABOUT 3-4 KMS FROM 10 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 THE ASSESSEE'S LAND AS COULD BE MADE OUT FROM SITE PLAN SUBMITTED ON BEHALF OF ASSESSEE AND PLACED AT PAGE NO. 14 OF PAPER BOOK. THE FOURTH SALE INSTANCE NOTED BY THE A.O INDICATED THAT IN DHANORI VILLAGE ITSELF, THE DEVELOPMENT WAS BETTER TOWARDS THE ASSESSEE'S LAND. THIS IS PROVED FROM THE FACT THAT WITHIN 1.5 KMS FROM THE EARLIER THREE SALE INSTANCES, THE LAND RATES COULD INCREASE FROM RS.15/-PER SQ. MTR. TO RS. 247/- PER SQ. MTR. I.E. ABOUT 16 TIMES AND IF THAT BE SO, THE ASSESSEE'S LAND WAS FURTHER 1.5 KMS FROM THIS LAND HAVING THE MARKET RATE OF RS. 247/- PER SQ. MTR. IN THIS WAY, THE FMV OF THE ASSESSEE'S LAND COULD BE ABOUT AT LEAST 15 TIMES OF RS. 247/-. IN VIEW OF THE ABOVE, THE RATE ADOPTED BY THE A. O. CANNOT BE ACCEPTED BECAUSE IT IS DEVOID OF CONCEPT OF EQUALLY WHICH IS BASIS F PRINCIPLES OF NATURAL JUSTICE. PRINCIPLE OF NATURAL JUSTICE IS STRENGTH OF PROGRESSIVE SOCIETY. WITHOUT PREJUDICE TO ABOVE, EVEN THE FOURTH SALE INSTANCE OF RS. 247/ - PER SQ. MTR. WAS FOR LAND OUTSIDE PMC LIMIT IN 1981 IN DHANORI VILLAGE AND IT CANNOT BE CONSIDERED TO BE COMPARABLE WITH THE ASSESSEE'S LAND. AT THE SAME TIME WE FIND THAT THE ESTIMATE OF FMV AS MADE BY THE REGISTERED VALUER ON BEHALF OF ASSESSEE AT RS. 1230/- PER SQ. MTR. IS ALSO ON HIGHER SIDE. 25. REGARDING BUILT UP STRUCTURE, WE FIND IT UNDIS PUTED THAT LAND IN QUESTION HAD OLD BUILT UP AREA AS WELL . WE FIND THAT IN CASE OF G.R. RADHAKRISHNAN VS. APPROPR IATE 11 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 AUTHORITY (249 ITR 690 (MAD), THE HONBLE MADRAS HI GH COURT HAS HELD AS UNDER. 'HELD, THAT WHEN TWO THINGS ARE SOUGHT TO BE COMPARED, IT IS NECESSARY THAT THE THINGS ARE IN FACT COMPARABLE. WHEN PLOTS WITH BUILDINGS THEREON ARE COMPARED, THE BUILDINGS CANNOT BE TREATED AS SCRAP, IRRESPECTIVE OF THEIR AGE, THE AMOUNT INVESTED IN PUTTING UP THE CONSTRUCTION, THE PRESENT DEPRECIATED VALUE AND THE POTENTIAL FOR FURTHER USE OF THE BUILDING. FOR THE PURPOSES OF ASCERTAINING THE VALUE OF THE LAND ON WHICH THE BUILDING HAD BEEN PUT UP, NORMALLY THE DEPRECIATED VALUE OF THE BUILDING IS REQUIRED TO BE DEDUCTED FROM THE TOTAL CONSIDERATION PAID FOR THE PROPERTY. THE EXCEPTION WOULD BE CASES WHERE IT IS CLEARLY ESTABLISHED THAT THE PRICE PAID FOR THE PROPERTY IS IN FACT THE PRICE PAID FOR THE LAND AND SCRAP VALUE OF THE BUILDING. THE APPROPRIATE AUTHORITY ACTED PERVERSELY IN TREATING THE VALUE OF THE BUILDING ON THE AUCTIONED PROPERTY AS SCRAP FOR THE PURCHASE OF VALUING THE LAND, EVEN IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE PERSONS WHO BOUGHT THE PROPERTY BOUGHT IT WITH AN INTENTION OF COMPLETELY DEMOLISHING THE BUILDING. THE ORDER WAS NOT VALID AND WAS LIABLE TO BE QUASHED. ' IN THIS BACKGROUND WE FIND THAT VALUE OF PROPERTY HAVING STRUCTURE, EVEN THOUGH OLD ONE SHOULD BE VALUED HIGHER THAN VACANT LAND FOR THE PURPOSE OF CONCLUDING FMV FOR COMPUTATION OF CAPITAL GAINS. IT SHOWS THAT PROPERTY HAVING 12 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 LEGAL CONSTRUCTION IS POTENTIAL FOR RAISING RESIDENTIAL OR COMMERCIAL CONSTRUCTION AS THE CASE MAY BE. THIS ADVANTAGE WAS NOT AVAILABLE TO LAND OF DHANORI REVENUE ESTATE SITUATED OUTSIDE THE PMC LIMITS AT RELEVANT POINT OF TIME. SO COMPARISON OF RATE INSTANCES OF LAND OF DHANORI REVENUE ESTATE FALLING OUTSIDE THE PMC LIMITS IS NOT JUSTIFIED. WE ALSO FIND THAT I N THE CASE OF VIJAY KUMAR M. SHAH VS. DCIT (126 TTJ 910) THE ASSESSEE HAD ADOPTED THE FMV AT RS. 2200/- PER SQ.FT. AS ON 1-4-1981 ON THE BASIS OF REGISTERED VALUER'S REPORT AS AGAINST RS. 1,154/ - PER SQ.FT. BY DEPARTMENTAL VALUER. IT WAS HELD THAT WHEN THE GAP IS UNBRIDGEABLE, THE AVERAGE OF THE TWO I.E. RS. 2200 + 1154 / 2 = 1677 WAS HELD REASONABLE. THE A.O SHOULD MAKE REFERENCE TO THE VALUER WHEN HE DISAGREES WITH THE VALUATION OF THE ASSESSEE. IN THIS VIEW, OF ABOVE LEGAL DISCUSSIONS, HE A.O WAS NOT JUSTIFIED IN REJECTING THE ASSESSEE'S CLAIM OF FMV AS ON 1-4- 1981 AT RS. 1,230/- PER SQ.MTR. WE ALSO FIND THAT UNDER THE STAMP DUTY ACT IN VIEW OF SECTION 2(NA) THE STAMP DUTY VALUATION AS ADOPTED HAD TO BE CONSIDERED AS MINIMUM FMV BECAUSE CONSIDERATION AS PER THE AGREEMENT IS HIGHER THAN THE STAMP DUTY VALUATION, THE SAME IS THE MARKET VALUE AS PER SECTION 2(NA). IN THE PRESENT CASES, THE LAND BEING IN PMC LIMIT ALTHOUGH IN REVENUE ESTATE OF DHONORI VILLAGE HAD TO BE CONSIDERED AS MUCH BETTER LOCATED LAND THAN THE OTHER LANDS IN DHANORI VILLAGE WHICH ARE OUTSIDE PMC LIMIT AS THEY WERE AWAY FROM THE MAIN ROAD I.E. PUNE ALANDI ROAD. 13 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 ACCORDINGLY, IF THE STAMP DUTY AUTHORITIES HAD FIXED RS. 400/- PER SQ. MTR. AS MINIMUM FMV IN 1981 FOR LAND IN GENERAL IN REVENUE ESTATE OF DHANORI VILLAGE, THE ASSESSEES LAND HAD TO BE VALUED AT MUCH HIGHER A PRICE. THIS VIEW IS SUPPORTED BY THE FACT THAT IN 2004-05 WHEN THE ASSESSEE SOLD ITS PIECES OF LAND, THE MARKET VALUE WAS ALMOST DOUBLE THE STAMP DUTY VALUATION AT THE RELEVANT TIME WHICH IS EVIDENT FROM FACT THAT THE CIT(A) ON PAGE 12 OF HIS ORDER NOTED THAT THE ASSESSEE RECEIVED RS. 7.28 CRORES AS AGAINST RS. 3.09 CRORES STAMP VALUATION IN SALE DEED DATED 1-4-2004 AND RS. 16 CRORES AS AGAINST RS. 9.82 CRORES STAMP VALUATION AS PER SALE DEED DATED 28-3-2005 THIS SHOWS THAT THE MINIMUM FMV OF RS. 400/- PER SQ.MTR. AS ON 1-4-1981 AS PER STAMP DUTY VALUATION COULD BE INCREASED IN SAME PROPORTION FOR ARRIVING REASONABLE FMV OF ASSESSEES LAND AT RELEVANT POINT OF TIME. TAKING OF ALL FACTS AND CIRCUMSTANCES FMV OF LAND IN QUESTION WOULD BE REASONABLE AT @ RS. 665/- PER SQ. MTR. AS ON 1-4-1981. A.O IS DIRECTED TO COMPUTE THE CAPITAL GAIN ACCORDINGLY. 5. BEFORE THE TRIBUNAL PASSED AN ORDER, THE ASSESSI NG OFFICER LEVIED PENALTY U/S 271(1)(C) FOR THE YEAR U NDER CONSIDERATION. THE TOTAL PENALTY LEVIED WAS RS. 9,59,31,626/- WHICH WAS 200% OF THE TAX SOUGHT TO B E EVADED, SAME WAS CONFIRMED BY THE CIT(A) WHICH HAS BEEN OPPOSED ON BEHALF OF THE ASSESSEE. 14 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 5. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFI CER HAS LEVIED THE PENALTY ON THE GROUND THAT THE ASSES SEE HAD NOT FILED THE RETURN AND IT WAS ONLY BECAUSE OF THE INFORMATION RECEIVED FROM ANNUAL INFORMATION RETURN THAT THE ASSESSEE HAD SOLD THE LAND. THE ASSESSING OFFIC ER HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE THAT THERE W AS LONG TERM CAPITAL LOSS AND SATED THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME. THE CIT(A) HAS A LSO CONFIRMED THE STAND OF THE ASSESSING OFFICER. ACCOR DING TO THE CIT(A), THE VALUE OF THE LAND ADOPTED BY THE AS SESSEE WAS UNREALISTIC AND WITHOUT ANY BASIS AND HENCE HE HAS STATED THAT THE ASSESSEE HAS FALSELY ADOPTED HIGHER VALUE OF LAND AND THEREBY REDUCED ITS INCOME. THE LEARNED A R SUBMITTED THAT THE ASSESSEE HAS SOLD THE LAND AT DH ANORI AND FOR THE PURPOSES OF SECTION 48, IT HAD ADOPTED THE FMV OF THE SAID LAND AT RS. 1,230/- PER SQ. MTR AS ON 1 -4-1981 ON THE BASIS OF THE REPORT OF THE REGISTERED VALUER . AS AGAINST THE CLAIM F THE ASSESSEE, THE ASSESSING OFF ICER CONSIDERED THREE SALE INSTANCES AND COMPUTED THE FM V AS ON 1-4-1981 AT RS. 15.23 PER SQ MTR. HOWEVER, THE TRIBUNAL HAS HELD THAT THE SALE INSTANCES RELIED UP ON BY THE ASSESSING OFFICER ARE NEITHER CORRECT NOR COMPA RABLE TO THE ASSESSEES LAND. AFTER CONSIDERING THE VARIOUS FACTORS INVOLVED THE TRIBUNAL STATED THAT AS PER THE STAMP DUTY AUTHORITIES THE FMV OF THE LAND WAS RS. 400/- PER S Q. MTR AND SINCE THIS VALUATION WAS FOR THE ENTIRE DHANORI VILLAGE, THE TRIBUNAL HELD THAT THE RS. 665/- WOULD BE THE F AIR MARKET VALUE OF THE SAID LAND. THE LEARNED AR SUBM ITTED THAT THE ISSUE REGARDING THE FMV OF THE LAND WAS A DEBATABLE ONE AND IT WAS A MATTER OF ESTIMATE. THE TRIBUNAL HAS NOTED THAT THE ASSESSEE SOLD THE LAND FOR A CONSIDERATION WHICH WAS MORE THAN DOUBLE THE STAMP DUTY VALUATION. HENCE, ONE CAN ARGUE THAT EVEN RS. 800/- PER 15 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 SQ. MTR COULD BE ALLOWED AS A FMV. THE LEARNED AR SUBMITTED THAT THE ISSUE INVOLVED IS A MATTER OF ES TIMATE AND ON SUCH ESTIMATED ADDITION, NO PENALTY IS LEVIA BLE. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAD ADOPTED THE RATE ON THE BASIS OF REPORT OF GOVERNME NT APPROVED VALUER. IT WAS FURTHER SUBMITTED THAT WHE N AN EXPERT IN THE FIELD HAD CERTIFIED THE FMV AT A PART ICULAR RATE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN H OLDING THAT THE ASSESSEE HAS MALA FIDELY ADOPTED HIGHER RA TE FOR REDUCING ITS TAX AND HENCE THERE IS NO REASON TO LE VY PENALTY U/S 271(1)(C) OF THE ACT. UNDISPUTEDLY THE ASSESSEE HAD NOT FILED THE RETURN FOR THE YEAR UNDER CONSIDE RATION FOR VARIOUS REASONS DISCUSSED ABOVE. IT IS PERTINEN T TO NOTE THAT THE LAND WAS SOLD BY THE ASSESSEE SUBSEQUENTLY . THE ASSESSEE OFFERED THE CAPITAL GAIN ON THE BALANCE PA RT OF THE LAND IN A.Y. 2008-09. FURTHER, BEFORE RECEIPT OF A NY NOTICE FOR A.Y. 2005-06, THE ASSESSEE HAD PAID ADVANCE TAX IN RESPECT OF THE LONG TERM CAPITAL GAIN FOR A.Y. 2008 -09. IT IS FURTHER POINTED OUT THAT THE ASSESSEE HAD PAID TOTA L ADVANCE TAX OF RS. 4.50 CRORES AND OUT OF WHICH RS. 1.50 CRORES WAS PAID IN JUNE 2007 BEFORE RECEIPT OF ANY NOTICE FROM THE ASSESSING OFFICER. THIS SHOWS THAT THE AS SESSEE HAD NO INTENTION TO CONCEAL ITS INCOME AS OTHERWISE , IT WOULD NOT HAVE PAID ADVANCE TAX ON THE LONG TERM CA PITAL GAIN ARISING FROM THE SALE OF THE BALANCE PORTION O F THE LAND. BECAUSE OF BONAFIDE REASONS, THE ASSESSEE CO ULD NOT FILE THE RETURN AND SECONDLY, THE ASSESSEE HAD COMP UTED LONG TERM CAPITAL LOSS AND HENCE, BY NOT FILING ANY RETURN, THE ASSESSEE HAS LOST THE CHANCE OF CARRY FORWARD O F THE LOSSES. THE LEARNED AR FURTHER SUBMITTED THAT THERE WERE VARIOUS LIABILITIES ON THE ASSESSEE LIKE SALES TAX, PROVIDENT FUND, BANK LOAN AND INTEREST, LABOUR PAYMENTS ETC. WHICH WERE DIRECTLY PAID BY THE PURCHASER TO THE RESPECTI VE 16 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 PARTIES AND SUCH PAYMENTS SHOULD BE ALLOWED AS A BUSINESS LOSS. IF ONE CONSIDERS SUCH PAYMENTS MADE TOTALING TO RS. 7.90 CRORES THERE WAS NO POSITIVE I NCOME AT ALL. IN VIEW OF THIS, THERE WAS NO REASON TO LEVY THE PENALTY. FURTHER, THE VALUATION OF THE LAND IS A M ATTER OF ESTIMATE AND IF RS. 1,050/- PER SQ. MTR IS ALLOWED, THERE WOULD NOT HAVE BEEN ANY CAPITAL GAIN. THE LEARNED A R FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NO T REFER THE MATTER TO THE DVO. RELIANCE HAS BEEN PLACED ON THE DECISION OF HIMACHAL PRADESH HIGH ?COURT IN THE CAS E OF CIT VS. RAGHUNATH SINGH THAKUR (304 ITR 268) WHEREI N IT HAS BEEN HELD THAT IF THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DO THE VALUE ADOPTED BY THE ASSESSEE SHOULD BE ACCEPTED AND THE ASSESSING OFFICER HAS NO POWER TO DISTURB THE SAME. UNDER THE CIRCUMSTANCES, THE LEA RNED AR SUBMITTED THAT THE VALUATION MADE BY THE ASSESSI NG OFFICER ITSELF WAS INCORRECT AND NOT JUSTIFIED. IN VIEW OF THESE FACTS, THE LEARNED AR SUBMITTED THAT THE PENA LTY LEVIED BY THE ASSESSING OFFICER BE DELETED. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDER OF THE CIT (A) WHO HAS CONFIRMED THE ORDER OF THE A.O LEVYING THE PENA LTY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T ON THE GROUND THAT THE ASSESSEE HAS REDUCED THE INCOME BY WAY OF CAPITAL GAIN ON SALE OF LAND AT SURVEY NO. 44, DHAN ORI AND FURNISHED INACCURATE PARTICULARS THEREOF. ACCORDIN G TO THE LEARNED DR THE ASSESSEE HAS INFLATED THE MARKET VAL UE OF THE PROPERTY SOLD AS ON 1-4-1981 AND THEREBY REDUCE D THE CAPITAL GAIN ON THE SAME. IN THIS BACKGROUND, THE LEARNED DR SUPPORTED THE ORDER OF THE CIT(A). 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE A SSESSEE HAS SOLD ITS LAND AT DHANORI, PUNE. THE ASSESSEE W AS 17 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 ENGAGED IN THE BUSINESS OF MANUFACTURING BISCUITS A ND CHOCHOLATES AND STATED TO HAVE CLOSED ITS BUSINESS ACTIVITIES FROM 1996 ONWARDS DUE TO VARIOUS PROBLEM S, MANUFACTURING LOSS, CONTROL OVER ADMINISTRATION AND IT WAS NOT RUNNING THE ADMINISTRATION PROPERLY AND WAS NOT HAVING ALL RECORDS SO AS TO FILE THE RETURNS FOR A. Y. 2005-06 AT RELEVANT PART OF TIME. HOWEVER VARIOUS QUERIES WERE RAISED BY THE ASSESSING OFFICER WITH REGARDS TO CAP ITAL GAIN AND AFTER REJECTING THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE, THE ASSESSING OFFICER CONSIDERED THE CAP ITAL GAIN OF RS.22,93,91,745/- WHICH WAS CONFIRMED BY THE CIT (A). IN SECOND APPEAL AND THE TRIBUNAL VIDE ITS ORDER DA TED 6 TH SEPTEMBER 2010 IN ITA NO. 1568/PN/2008 DIRECTED TH E ASSESSING OFFICER TO COMPUTE THE CAPITAL GAIN BY TA KING FMV OF THE LAND AT RS. 665/- PER SQ. MTR AS ON 1-4- 1981. IN CONSEQUENTIAL ORDER, THE LONG TERM CAPITAL GAIN HAS BEEN REVISED BY THE ASSESSING OFFICER AT RS. 8,39,82,576 /-. THUS, THE ASSESSING OFFICER DETERMINED THE FMV OF T HE LAND AT RS. 665/- PER SQ. MTR AS AGAINST RS. 15.23 PER S Q. MTR ALLOWED BY THE ASSESSING OFFICER AS AGAINST RS. 123 0/- PER SQ. MTRS AS CLAIMED BY THE ASSESSEE. THE BASIS OF PENALTY IS NON-ACCEPTANCE OF THE LONG TERM CAPITAL LOSS BY THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A) . ACCORDING TO THE ASSESSING OFFICER, THE VALUE OF TH E LAND ADOPTED BY THE ASSESSEE WAS UNREALISTIC AND WITHOUT ANY BASIS. HE STATED THAT THE ASSESSEE HAS ADOPTED THE HIGHER VALUE OF THE LAND AND THEREBY REDUCED THE INCOME. ACCORDINGLY, THE ABOVE SAID FMV OF THE PROPERTY WAS ADOPTED AT RS. 15.23 PER SQ. MTRS AS AGAINST THE CL AIM OF THE ASSESSEE AT RS. 1230/- PER SQ MTRS FOR THE PURP OSE OF COMPUTATION OF CAPITAL GAIN. NOW, THE FMV AS STATE D ABOVE, HAS BEEN HELD TO BE REASONABLE AT RS. 665/- PER SQ. MTRS. IN FACT THE FMV OF THE LAND HAS BEEN THE SUB JECT 18 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 MATTER OF PENALTY WHICH WAS, ACCORDING TO THE ASSES SEE, IS DEBATABLE AND RIGHTLY SO, BECAUSE THE TRIBUNAL HAS ALSO TAKEN THE MARKET VALUE WITH REGARDS TO FMV. THE AD OPTION OF FMV IS A MATTER OF ESTIMATE. IT MAY VARY PERSON TO PERSON AND ADOPTING THE PARTICULAR FMV AT THE ADVIC E OF APPROVED VALUER CANNOT BE THE SOUND BASIS FOR INVOK ING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. AS EXP LAINED ABOVE, THE ASSESSEE COULD NOT FILE THE RETURN IN TI ME. SAME THING WAS EXPLAINED BEFORE THE ASSESSING OFFICER TH OUGH NOT ACCEPTED BY THE HIM AT THE RELEVANT POINT OF TI ME. THE ASSESSEE WAS TRYING TO GIVE EXPLANATION WITH REGARD S TO NON-FILING OF THE RETURN AND TO JUSTIFY ITS CLAIM O F FMV IN THE COMPUTATION OF CAPITAL GAIN. SO THERE IS NOTHI NG ON RECORD TO SUGGEST THAT THE ASSESSEE HAD ANY INTENTI ON TO CONCEAL THE INCOME. THIS VIEW GETS STRENGTH FROM T HE FACT THAT THE ASSESSEE HAD PAID ADVANCE TAX ON THE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF THE BALANCE P ORTION OF THE LAND. SO, THE ASSESSEE WAS PREVENTED BY REASON ABLE CAUSE FOR NOT FILING THE RETURN OF INCOME IN TIME. THE ASSESSEE BONAFIDELY CLAIMED THE CAPITAL GAIN IN QUE STION. THIS VIEW GETS STRENGTH FROM THE JUDGMENT OF THE HI MACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. RAGHUNATH SINGH THAKUR (304 ITR 268) WHEREIN IT HAS BEEN STATED THA T IN CASE THE ASSESSING OFFICER DOES NOT REFER THE MATTE R TO THE DVO, THE VALUE ADOPTED BY THE ASSESSEE SHOULD BE AC CEPTED THE ASSESSING OFFICER. IN THIS BACKGROUND, THE AS SESSEE WAS UNDER BONAFIDE IMPRESSION THAT THE FMV ADOPTED BY IT FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN IS JUSTIFIED. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) HAS HELD THAT EVEN IF THE ASSESSEE MAKES AN INCORRECT CLAIM IN LAW, SAME CANNOT BE STATED THAT THE ASSESSEE HAS CONCEALED ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. CLAUSE (C) OF 19 ITA NO. 495/PN/2010 SATHE BISCUIT & CHOCOLATE A.Y. 2005-06 SECTION 271(1) CATEGORICALLY STATES THAT THE PENALT Y WOULD BE LEVIABLE IF THE ASSESSEE CONCEALS PARTICULARS OF HIS INCOME OF FURNISHES INACCURATE PARTICULARS THEREOF. MOREOVER, THE VALUATION BY APPROVED VALUER OR OTHER WISE IS A MATTER OF ESTIMATE. UNDER FACTS AND CIRCUMSTANCE S, WE HOLD THAT THE PENALTY IS NOT JUSTIFIABLE IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF COMPUTATION OF CAPITAL GAIN ON SALE OF LAND AT DHANORI. THE SAME IS DIRECTED TO B E DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN ON 20 TH MARCH 2012. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER SD/ - SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 20 TH MARCH 2012. ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT III PUNE 4. CIT(A)-II PUNE 5. THE D.R, ITAT PUNE BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, PUNE.