RAJPAL H. CHHABRA, MUMBAI V. ITO 19(3)(2), MUMBAI

ITA 5517/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIYA
• Keywords: Fair market value; Difference of opinion; Valuation report

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5517/MUM/2012 ASSESSMENT YEAR. 2007-08 RAJPAL H. CHHABRA 302, WHITE ORCHID PALI ROAD, BANDRA (W) MUMBAI 400 050 VS. ITO-19(3)(2) PIRAMAL CHAMBERS LOWER PAREL, MUMBAI - 400013. PAN: AAAHR0518Q APPELLANT RESPONDENT A SSESSEE BY SHRI. SNEHAL SHAH RE VENUE BY SHRI DEEPAK SUTARIYA ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.6.2012 OF CIT(A) ARISING FROM PENALTY ORDER PASS ED U/S 271(1)(C) OF INCOME TAX ACT FOR A.Y. 2007-08. THE ASSESSEE HAS R AISED FOLLOWING GROUNDS IN APPEAL:- THE APPELLANT OBJECTS TO THE ORDER DATED 25/6/2012 PASSED BY INCOME TAX OFFICER, WARD 19(3)(2), MUMBAI PASSED U/S 271(1 )(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2007-08 ON THE FO LLOWING AMONGST OTHER GROUNDS: 1. THE LD. ASSESSING OFFICER HAS INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C) OF RS. 4,51,530/- ON ACCOUNT OF LONG TERM CAPITAL GAINS WITHOUT APPRECIATING THE FACTS OF THE CASE IN THE R IGHT PERSPECTIVE. 2. THE GROUND OF APPEAL IS WITHOUT PREJUDICE TO THE OT HER DATE OF HEARING 04 .02.2014 DATE OF PRONOUNCEMENT 0 7 - 03 - 2014 2 2. THE ASSESSEE HAS SHOWN LONG TERM CAPITAL LOSS O F RS. 3,61,076/- ON SALE OF IMMOVABLE PROPERTY BY TAKING A FAIR MARKET VALUE AS ON 01.04.1981, RS. 19,84,120/-. THE AO FOUND THAT THE FAIR MARKET VALUE AS ON 01.4.1981 WAS COMPUTED BY TAKING THE RATE OF RS. 2,000 SQ. MT. WHEREAS AS PER DIRECTORY & REFERENCE BOOK OF INDIAN VALUERS INCORPORATING MARKET VALUE OF PROPERTY IN MUMBAI, T HE VALUE OF LAND SITUATED IN THE SAME AREA IS ONLY VALUED AT RS. 112 PSQ FT. AS ON 01.4.1981. ACCORDINGLY, THE AO ADOPTED FAIR MARKET VALUE OF TH E PROPERTY AS ON 01.4.1981 AT RS. 14,44,635/- ONLY AGAINST RS. 19,84 ,120/- AND ASSESSED THE CAPITAL GAIN AT RS. 20,02,345/-. THE AO HAS ALS O INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C) AND L EVIED THE PENALTY OF RS. 4,51,530/- AT THE RATE OF 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF THE INCOME ADDED BY THE AO TOWARDS LONG TERM CAPITA L GAIN. THE ASSESSEE CHALLENGED THE ACTION OF THE AO IN LEVYING PENALTY BEFORE CIT(A) BUT COULD NOT SUCCEED. 3 BEFORE US, THE LD AR OF THE ASSESSEE SUBMITTED TH AT THE ADDITION IN QUESTION HAS BEEN MADE BY THE AO BY TAKING A DIFFER ENT FAIR MARKET VALUE AS ON 01.04.1981 WHICH CANNOT BE THE BASIS FOR LEVY OF PENALTY. HE HAS FURTHER SUBMITTED THAT THE FAIR MARKET VALUE AS ON 01.04.1981 WAS CONSIDERED BY THE ASSESSEE ON THE BASIS OF VALUATIO N REPORT OF THE REGISTERED VALUER M/S N.M. MULEY & COMPANIES. THE A SSESSEE HAD DULY CLARIFIED THE BASIS OF THE VALUE OF THE PROPERTY AS THE VALUATION REPORT. THE AO DISPUTED THE VALUATION REPORT BUT DID NOT REFER THE SAME TO THE DVO AND TOOK THE FAIR MARKET VALUE OF THE PROPERTY AS O N 01.04.1981 ON THE BASIS OF THE REFERENCE BOOK WRITTEN BY SHRI SANTOSH KUMAR AND SHRI SUNIT GUPTA. THE LD. AR HAS FORCEFULLY CONTENDED THAT WHE N THE ASSESSEE HAS EXPLAINED ALL THE RELEVANT FACTS AND THE BASIS ON W HICH THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 TAKEN BY THE ASSESSEE BEING THE VALUATION REPORT OF A REGISTERED VALUER THEN THE NO N ACCEPTANCE OF THE SAID VALUATION BY THE AO CANNOT BE SAID TO BE A DELIBERA TE FALSE EXPLANATION LEADING TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. THE CLAIM OF THE ASSESSEE REGARDING FAIR MARKET VAL UE IS BONAFIDE AS IT WAS BASED ON THE VALUATION REPORT OF THE REGISTERED VAL UER, THEREFORE, THE VALUATION BASED ON THE EXPERTS OPINION WHICH WAS NO T ACCEPTED BY THE AO AND TOOK A DIFFERENT VIEW WHICH DOES NOT AMOUNT OF MAKING A FALLS OR MALAFIDE CLAIM. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIONS:- 3 I) BRITTANIA INDUSTRIES (238 ITR 57) II) ACIT VS. DHARIYA CONSTRUCTION CO. (328 ITR 515) (SC) III) DILIP N. SHROFFS CASE (291 ITR 519) (SC) AND SUBMITTED THAT DVOS REPORT IS MERELY AN EXPRES SION OF OPINION AND ON THE BASIS OF OPINION AND ESTIMATES NO PENALTY U/S 271(1)(C) IS LEVIABLE. ACCORDINGLY, THE LD AR HAS URGED THAT THE PENALTY L EVIED U/S 271(1)(C) MAY BE DELETED. 4. ON THE OTHER HAND LD DR HAS RELIED UPON THE ORDE RS OF AUTHORITIES BELOW AND SUBMITTED THAT THE VALUATION REPORT RELIE D UPON BY THE ASSESSEE WAS WITHOUT ANY BASIS AS NO INSTANCE OF SALE AND PU RCHASE WAS RECORDED. HOWEVER THE VALUE ADOPTED IN THE VALUATION REPORT I S DISPROPORTIONATELY HIGHER THAN THE RATES IN LOCALITY PREVAILING AS ON 01.04.1981. THE AO HAS TOOK THE RATES FROM THE INDIAN VALUERS DIRECTORY A ND REFERENCE BOOK WHICH IS A PUBLIC DOCUMENT, THEREFORE, THE CLAIM OF THE A SSESSEE WAS FOUND INCORRECT AND FALSE. 5. HAVING CONSIDERED THE RIVAL SUBMISSION AS WELL A S RELEVANT MATERIAL ON RECORD, WE FIND THAT THE AO MADE AN ADDITION ON LONG TERM CAPITAL GAIN BY TAKING A DIFFERENT FAIR MARKET VALUE AS ON 01-04 -1981. THERE IS NO DISPUTE THAT THE ASSESSEE HAS COMPUTED THE CAPITAL GAIN/LOSS BY TAKING THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AS IT WAS VALUED BY A REGISTERED VALUER, THEREFORE, THE CLAIM OF THE ASSE SSEE WAS DULY SUPPORTED BY THE VALUATION REPORT OF THE REGISTERED VALUER WH O IS AN EXPERT IN THE FIELD. THE AO REJECTED THE VALUATION OF THE ASSESSE E BY RELYING UPON THE INDIAN VALUERS DIRECTORY AND REFERENCE BOOK WRITTE N BY MR. SANTOSH KUMAR AND MR. SUNIT GUPTA. IT IS TO BE NOTED THT THE VALU ATION OF A PARTICULAR/ UNDERLYING PROPERTY MAY DIFFER FROM THE GENERAL RAT E PREVAILING IN THE AREA DEPENDING UPON THE LOCATION, SIZE, ADVANTAGE AND DI SADVANTAGE ATTACHED TO THE PARTICULAR PLOT OF LAND AND THEREFORE, THER E WAS ALWAYS A SCOPE OF VARIATION IN THE MATTER OF VALUATION. THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF REFERENCE BOOK WITHOUT REFERRING TH E VALUATION TO DVO. EVEN OTHERWISE, THE MATTER OF VALUATION IS HIGHLY S UBJECTED AND THE OPINION OF TWO EXPERTS VARY IN MOST OF CASES. THUS THE ADDI TION IS PURELY BASED ON 4 DIFFERENCE OF OPINION. THE ASSESSEE HAS UNDISPUTEDL Y DISCLOSED THE BASIS OF VALUATION OF FAIR MARKET VALUE ADOPTED AS ON 01.04. 1981. IT IS PERTINENT TO NOTE THAT THE FAIR MARKET VALUE AS ON 01.04.1981 IS ALWAYS DETERMINED BY CONSIDERING THE INSTANCE OF SALE AND PURCHASE IN TH E AREA AND BY MAKING CERTAIN ADJUSTMENT. EVEN BY TAKING THE UTMOST CARE WHILE DETERMINING THE VALUE. IT NEED NOT NECESSARILY GIVE THE ACTUAL VALU E OF THE PROPERTY AS ON 01.04.1981. SINCE THE ACTUAL COST OR VALUE OF THE P ROPERTY IS BASED ON THE OPINION, THEREFORE, ANY ADDITION MADE ON THE BASIS OF DIFFERENCE OF OPINION AND ESTIMATE WOULD NOT AUTOMATICALLY LEAD TO THE CO NCLUSION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS RELIED UPON THE VARIOUS DECISIONS WHEREIN IT HAS BEEN HELD THAT THE REPORT OF THE DVO IS MERELY AN EXPRESSION OF OPINION AND ON THE BASIS OF OPINION A ND ESTIMATES PENALTY CANNOT BE LEVIED U/S 271(1)(C) AS THE CONCEALMENT H AS NOT BEEN PROVED IN SUCH A SITUATION. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY U/S 271(1)( C) IS NOT WARRANTED IN RESPECT OF THE ADDITION BASED ON DIFFERENT FAIR MAR KET VALUE AS ON 01.04.1981 WHEN THE ASSESSEE HAS SUBSTANTIATED ITS CLAIM BY THE VALUATION REPORT OF A REGISTERED VALUER. HENCE THE PENALTY U/ S 271(1)(C) IS DELETED AND THE APPEAL IS ALLOWED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 /03/20 14 SD/- SD/- (SANJAY ARORA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 07 /03/2014 SKS SR. P.S