AMZEL LTD, MUMBAI V. ASST CIT 6(1), MUMBAI

ITA 5070/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0593 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 13-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 29-06-2011
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P
• Assessee Lawyers: AJAY R SINGH
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , , BEFORE SHRI B. R. B ASKARAN , AM AND SHRI A MIT SHUKLA , J M ./ ITA NO. 5070 /MUM/201 1 ( / ASSESSMENT YEAR: 200 6 - 07 ) M/S. AMZEL LIMITED T HE CRESCENT BUSINESS PARK, UNIT NO.102, SAKINAKA TELEPHONE EXCHANGE L ANE, ANDHERI (E), MUMBAI - 400 072. / VS. A CIT - 6(1) ROOM NO.5 06 , 5 TH FLOOR AAYAKAR BHAVAN , M.K. ROAD, MUMB A I . ./ ./ PAN/GIR NO. AAAC A 3991 K ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI AJAY R. SINGH - AR / RESPONDENT BY : SHRI ASGHAR ZAIN V.P. ( DR) / DATE OF HEARING : 2 2 /04/2015 / DATE OF PRONOUNCEMENT : 22/04/2015 / O R D E R PER A MIT SHUKLA , JM : THE AFORE SAID APPEAL HAS BEEN FILED BY THE A SSESSEE AGAINST THE IMPUGNED ORDER D ATED 22.3.2011 PASSED BY THE CIT(A) - 14 , MUMBAI IN RELATION TO THE PENALTY PROCEEDING U/S . 271(1) ( C) , FOR THE ASSESSMENT YEAR 2006 - 07. 2. IN THE VARIOUS GROUNDS OF APPEAL , THE ASSESSEE HAS M AINLY CHALLENGED THE LEVY OF PENALTY OF RS.3,50,000/ - ON ACCOUNT OF APPLICATION OF PROVISIONS OF SECTION 50C INVOKED BY THE ASSESSING OFFICER O N THE VALUE 2 ITA NO. 5070 /M/1 1 AY : 0 6 - 07 OF THE PROPERTY SOLD BY THE ASSESSEE AND SHOW N UNDER THE HEAD SHORT TERM CAPITAL GAIN S . 2.1 DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD SOL D THREE IMMOVABLE PROPERTIES, WHICH WERE FORMING BLOCK OF ASSETS. WHILE COMPUTING SHORT TERM CAPITAL GAIN U/S. 50, THE ASSESSEE ADOPTED THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING SHORT TERM CAPITAL GAIN. THE PROVISIONS OF SECTION 50C WAS NOT TAKEN INTO CONSIDERATION FOR CONSIDERING THE SALE VA LUE . THE SHORT TERM CAPITAL GAIN OF RS.3 1,77,080/ - U/S. 50 WAS SHOWN IN THE FOLLOWING MANNER : - OPENING WDV OF THE BLOCK RS.22,98,596/ - ADD: ADDITIONS RS.22,26,325/ - LESS: EXPENSES INCURRED ON TRANSFER RS.(1,50,000) LESS: DEDUCTIONS FROM THE BLOCK PROPERTY SITUATED AT PUNE RS.(60,01,101) PROPERTY SITUATED AT SOLAPUR RS . (4,95,000) PROPERTY SITUATED AT KASARWADI RS.(13,55,900) ----------------- CAPITAL GAIN U/S. 50 RS.31,77,080 --------------- 2.2 AT THE TIME OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT THE CALCULATION OF CAPITAL GAIN W.R.T. SECTION 50C. IN RESPONSE, THE ASSESSEE FILED REVISED COMPUTATION STATING THAT AS PER PROVISIONS OF SECTION 50 C THE SHORT TERM CAPITAL GAIN WOULD BE INCREASED BY RS.7,76,579/ - . T HIS AMOUNT WAS ADDED BY THE A SSESSING OFFICER TO THE INCOME OF THE ASSESSEE . 2.3 IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY U/S. 271(1) ( C) , THE ASSESSEE GAVE VERY ELABORATE EXPLANATION WHICH HAS BEEN REPRODUCED AT PAGE 1 AND 2 OF THE PENALTY ORDER. HOWEV E R, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS WELL AWARE OF THE DEEMING PROVISION OF 3 ITA NO. 5070 /M/1 1 AY : 0 6 - 07 SECTION 50C AND THE REVISED COMPU TATION OF INCOME WAS FILED ONLY AFTER SPECIFIC REQUISITION BY THE ASSESSING OFFICER AS PER ORDER SHEET NOTI NG. T HUS, THE REVISED COMPUTATION HAS NOT BEEN FILED SUO MOTO. ACCORDINGLY, HE LEVIED THE PENALTY OF RS.3,50,000/ - . SUCH A LEVY OF PENALTY HAS BEEN CONFIRMED BY THE CIT(A) ON THE GROUND THAT IT WAS NOT A BONAFIDE ACT ON THE PART OF THE ASSESSEE . 3. B EFORE US, THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SALE CONSIDERATION OF THE PROPERTY SITUATED AT PUNE AND SOLAPUR WAS MARGINALLY LOWER THA N THE V ALUE ADOPTED FOR THE PURPOSE OF STAMP DUTY. T HIS IS EVIDENCED FROM THE COPY OF SALE AGREEMENT. T HUS , AT THE TIME OF FILING OF RETURN, THE SHORT TERM CAPITAL GAIN WAS TAKEN AS PER THE ACTUAL SALE CONSIDERATION. THE DIFFERENCE IN THE VALUE AS PER SALE AGREEMENT AN D AS PER VALUE U/S. 50C WAS AS U NDER : - PARTICULARS SALE CONSIDERATION (IN RS.) VALUE U/S. 50C (IN R S.) DIFFERENCE ( IN R S.) PUNE PROPERTY 60,01,101 67,61,538 7,60,437 SOLAPUR PROPERTY 4,95,000 5,11,142 16,142 TOTAL 64,96,101 72,72,680 7,76,579 3.1 T HERE WAS NO DELIBERATE ATTEMPT TO CONCEAL OR FURNISHING ANY INACCURATE PARTICULA RS , OF INCOME, BECAUSE THE ASSESSEE HAS SHOWN THE VALUE AS PER THE ACTUAL SA LE CONSIDERATION RECEIVED. T HE DEEMING PROVISION OF SECTION 50C W AS NOT ADOPTED , BECAUSE AT THAT TIME ASSESSEE WAS UNDER A B O NAFIDE BELIEF THAT SHORT TERM CAPITAL GAIN U/S. 50C HAS TO BE SHOWN AS PER THE ACTUAL SALE CONSID ERATION. IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE SALE CONSIDERATION, HE COULD HAVE REFERRED THE MATTE R TO THE DVO. IN SUPPORT, H E RELIED UPON CATENA OF CASE LAWS THAT , IF THE ASSESSEE HAD SHOWN CAPITAL GAIN ON TH E BASIS OF ACTUAL SALE CONSIDERATION AND ADDITION HAS BEEN MADE BY TAKING THE STAMP VALUE AS PER SEC TION 50C THEN NO PENALTY U/S. 271(1) (C) CAN BE LEVIED. 4 ITA NO. 5070 /M/1 1 AY : 0 6 - 07 3.2 ON THE OTHER HAND THE LD. DR STRONGLY RELIED UPON THE ORDER OF ASSESSING OFFICER AS WELL AS OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) AND SUBMITTED THAT THE ASSESSEE SHOULD HAVE FILED THE RETURN OF INCOME AND SHOWN CORRECT TAX LIABILITY AS PER PROVISIONS OF THE ACT AND FAILURE TO DO SO , DOES ATTRACT LEVY OF PENALTY U/S. 271(1) (C) . 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN OF THE ASSETS SOLD WHICH WERE FORMING PART OF THE BLOCK OF ASSETS. S UCH SHORT TERM CAPITAL GAIN WAS SHOWN U/S. 50 , WHEREIN THE ACTUAL SALE CONSIDERATION WAS ADOPTED FOR COMPUTING THE GAIN AND T AX L IABILITY. THE PROVISIONS OF SECTION 50C CREATES A DEEMING FICTION , WHEREBY THE VALUE OF THE CONSIDERATION RECEIVED ON THE SALE TRAN SACTION OF AN A S SET IS TO BE ADOPTED AS PER THE VALUATION OF STAMP DUTY. HOWEVER , SUB - SECTION (2) TO SECTION 50C , PROVIDES CER TAIN CONDITIONS WHEREBY THE VALUE SO ADOPTED AS PER STAMP DUTY CAN BE CHALLENGED OR CANNOT BE ADOPTED . T HUS, THE DEEMING PROVISION OF SECTION 50C IS SUBJECT TO CERTAIN EXCEPTIONS AND CONDITIONS. IT IS NOT A N ABSOLUTE I N TERMS OF SUB SECTION (2) OF SECTION 50C . SIMPLY BECAUSE THE ASSESSEE HAS AGREED TO OFFER THE TAX ON THE BASIS OF SECTION 50C , AFTER BEING P OINTED OUT BY THE ASSESSING OFFICER , THAT DOES NOT LEAD TO A CONCLUSIVE INFERENCE , THAT SUCH A VALUE WAS NECESSARILY TO BE ADOPTED BECAUSE THE LAW ENVISAGES THAT, IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE VALUE OF SALE CONSIDERATIO N , THEN HE OUGHT TO HAVE RE FERRED THE MATTER TO THE V ALUATION O FFICER FOR DETERMINING THE FMV OF THE SALE CONSIDERAT ION. T HE DEEMING FICTION CREATED UNDER THE STATUTE SHOULD BE R ESTR IC T ED TO THE PURPOSE FOR WHICH IT HAS BEEN CREATED AND CANNOT BE EXPANDED IN ALL KINDS OF SITUATIONS. THERE IS NO OTHER MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE H AS SUPPRESSED THE ACTUAL SALE CONSIDERATION OF THE ASSETS SOLD OR IT WAS NOT THE CORRECT VALUE . UNDER THESE FACTS AND CIRCUMSTANCES IT CANNOT BE HELD THAT THE ASS ESSEE HAD FURNISHED ANY INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED ITS INCOME. ACCORDINGLY , THE PENALTY LEVIED BY ASSESS ING OFFICER 5 ITA NO. 5070 /M/1 1 AY : 0 6 - 07 AND CONFIRMED BY THE LD. C IT (A ) IS DELETED A S THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE GROUNDS RAISED BY THE ASSESSEE , THUS STAND S ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 22 ND , 201 5. SD/ - SD/ - ( B. R. B ASKARAN ) ( AMIT SHUKLA ) ACC OUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 24 .0 4 .201 5 . . . JV , SR. PS / CO PY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MU MBAI