Bhavya Anant Udeshi, Hyd, Hyderabad V. ITO, (International Taxation)-I, Hyderabad, Hyderabad

ITA 565/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98531 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY GANDHI
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.565/HYD/2015 ASSESSMENT YEAR 2008-2009 BHAVYA ANANT UDESHI HYDERABAD 500 034 PAN AALPUB8857A VS. THE INCOME TAX OFFICER (INTERNATIONAL TAXATION)-I, HYDERABAD 500 004. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. AJAY GANDHI FOR REVENUE : MR. PRABHAT KUMAR GUPTA DATE OF HEARING : 2 3 .0 7 .2015 DATE OF PRONOUNCEMENT : 04 . 0 9 .2015 ORDER PER SAKTIJIT DEY, J.M. THE AFORESAID APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.02.2015 OF LD. CIT(A)- X, HYDERABAD DATED 26.02.2015 CONFIRMING PENALTY IMPOSED UNDER SECTION 271(1)(C) OF AN AMOUNT OF RS.50,91,600 FOR THE A.Y. 2008-2009. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE AN INDIVIDU AL IS A NON-RESIDENT INDIAN. FOR THE ASSESSMENT YEAR U NDER CONSIDERATION ASSESSEE HAD FILED HER RETURN OF INCO ME ON 31.07.2008 DECLARING INCOME OF RS.3,18,567 WHICH INCLUDED SHORT TERM CAPITAL GAIN OF RS.3,06,625 FRO M SALE OF SHARES AS WELL AS SALE OF IMMOVABLE PROPERTY AT 2 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. HYDERABAD. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, IT WAS NOTICED BY THE A.O., THOUGH, THE ASSESSEE HA S DECLARED SALE CONSIDERATION AS PER THE SALE DEED AT RS.1 LAKH, HOWEVER, FOR THE PURPOSE OF STAMP DUTY, THE REGISTERING AUTHORITY OF THE STATE GOVERNMENT HAD V ALUED THE PROPERTY AT RS.2,55,50,000. THE A.O. THEREFORE, INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, COMPLETED THE ASSESSMENT IN THE CASE OF THE ASSESSE E BY COMPUTING CAPITAL GAIN AT RS.2,54,58,000. BEING AGG RIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERR ED APPEAL BEFORE THE LD. CIT(A). THE CIT(A) HAVING CON FIRMED THE CAPITAL GAIN DETERMINED BY THE A.O., ASSESSEE C ARRIED FURTHER APPEAL BEFORE THE ITAT. HOWEVER, THE ITAT A LSO UPHELD THE VIEW OF THE DEPARTMENTAL AUTHORITIES IN APPLYING PROVISIONS OF SECTION 50C FOR COMPUTATION OF CAPITAL GAIN. IN THE MEANWHILE, A.O. ISSUED A NOTIC E TO THE ASSESSEE REQUIRING HIM TO SHOW CAUSE AS TO WHY PENA LTY UNDER SECTION 271(1)(C) OF THE ACT SHALL NOT BE IMP OSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME FOR THE REASON THAT THE ASSESSEE HAS KNOWINGLY/DELIBERATELY DISCLO SED THE SALE CONSIDERATION OF PROPERTY AT A LESSER RATE THAN WHAT WAS DETERMINED BY THE REGISTERING AUTHORITY. THOUGH, ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE REBUTTED THE ALLEGATION MADE BY THE A.O. AND SUBMIT TED THAT ASSESSEE HAS FURNISHED ALL MATERIAL PARTICULAR S RELATING TO SALE TRANSACTION OF PROPERTY BY FURNISH ING SALE DEEDS AND ALL OTHER DOCUMENTS FOR THE CONSIDERATION OF THE A.O. AND THE DETERMINATION OF THE CAPITAL GAIN IS O NLY BY APPLYING THE PROVISIONS OF SECTION 50C BY ADOPTING THE 3 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. VALUE DETERMINED BY THE SRO FOR STAMP DUTY PURPOSE AS DEEMED SALE CONSIDERATION, IT CANNOT BE SAID THAT A SSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE A.O. HOWEVER, DID NOT FIND MERIT IN THE EXPLANATION OF T HE ASSESSEE. AFTER REJECTING THE SAME, THE A.O. PROCEE DED TO PASS AN ORDER UNDER SECTION 271(1)(C) OF THE ACT IM POSING PENALTY FOR AN AMOUNT OF RS.50,91,600 BEING 100% OF THE TAX SOUGHT TO BE EVADED. BEING AGGRIEVED OF THE PEN ALTY ORDER, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CI T(A). THE LD. CIT(A) ALSO CONFIRMED THE LEVY OF PENALTY B Y ENDORSING THE A.OS VIEW THAT ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF INCOME. BEING AGGRIEVED, ASSESSEE IS BEFORE US. 3. THE LEARNED A.R. SUBMITTED BEFORE US THAT THERE BEING NO CONCLUSIVE EVIDENCE BEFORE THE A.O. TO PROVE THE FACT THAT ASSESSEE HAS RECEIVED ANY AMOUN T OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE S ALE DEED IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY CANNOT BE CONSIDERED AS THE AMOUNT RECEIVED BY THE ASSESSEE. THE A.R. SUBMITTED THAT THE PROVISION OF SECTION 50C BE ING A DEEMING PROVISION, IT CANNOT BE USED FOR THE PURPOS E OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). LEAR NED A.R. SUBMITTED, THE ASSESSEE HAVING FURNISHED ALL M ATERIAL FACTS IN THE COURSE OF ASSESSMENT PROCEEDING LIKE C OPY OF SALE DEED, OTHER CONNECTED DOCUMENTS, THERE IS NO MATERIAL ON RECORD TO SHOW THAT ASSESSEE HAS FURNIS HED 4 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. INACCURATE PARTICULARS OF INCOME. IN SUPPORT OF HIS CONTENTION, LEARNED A.R. RELIED UPON THE FOLLOWING DECISIONS : 1. RENU HINGORANI, MUMBAI VS. ACIT, RANGE 19(3), MUMBAI ORDER DT.22.12.2010 IN ITA.NO.2210/MUM/2010 2. SHRI CHIMANLAL MANILAL PATEL, SURAT VS. ACIT, CIR.6 , SURAT ORDER DT.22.06.2012 IN ITA.NO.508/AHD/2010 3. ACIT 14(1), MUMBAI VS. M/S. SUNLAND METAL RECYCLING, MUMBAI ORDER DT.10.12.2014 IN ITA.NO.6454/MUM/2011 4. SHRI C. BASKER, KARUR VS. THE ACIT, CIRCLE - II, TRICHY ORDER DT.12.10.2012 IN ITA.NO.997/MDS/2012 & 998/MDS/2012. 5. JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MADAN THEATRES LTD., GA.NO.684 OF 2013 DATED 14.05.2013. 4. THE LEARNED D.R. ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE HAVING FURNISHED INACCURATE PARTI CULARS WITH REGARD TO THE VALUE OF THE PROPERTY BEING AWAR E OF THE FACT THAT THE STAMP VALUATION AUTHORITY HAS VALUED THE PROPERTY AT RS.2,55,00,000 FOR STAMP DUTY PURPOSE H AS SHOWN THE VALUE AT LESSER AMOUNT FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. THEREFORE, TO THAT EXTENT, THERE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED D.R. FURTHER SUBMITTED THAT THE COMPUTATION OF CAPITAL GAIN BY APPLYING THE PROVISIONS OF SECTION 50C IN THE CASE OF THE ASSESSEE HAVING BEEN UPHELD BY THE ITAT, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS JU STIFIED. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECO RD. AS 5 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. CAN BE SEEN FROM THE FACTS AND MATERIALS ON RECORD, WHILE THE ASSESSEE COMPUTED CAPITAL GAIN ON THE BASIS OF SALE CONSIDERATION MENTIONED IN THE REGISTERED SALE DEED , THE A.O. COMPUTED THE CAPITAL GAIN BY INVOKING THE PROV ISIONS OF SECTION 50C OF THE ACT AS THE REGISTERING AUTHOR ITY OF THE STATE GOVERNMENT HAS VALUED THE PROPERTY FOR TH E PURPOSE OF STAMP DUTY AT RS.2.55 CRORES. THOUGH, IT MAY BE A FACT THAT THE ITAT WHILE DECIDING ASSESSEES Q UANTUM APPEAL HAS UPHELD APPLICATION OF SECTION 50C OF THE ACT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN BUT THAT ITSELF WILL NOT LEAD TO THE CONCLUSION THAT ASSESSE E EITHER HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. AS CAN BE SEEN FROM THE LANGUAGE OF SECTION 50C IT IS A DEEMING PROVISI ON. IN A CASE WHERE A.O. FINDS THAT THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITY FOR THE PURPOSE OF STAMP DUTY IS MORE THAN THE CONSIDERATION CLAIMED TO HAVE BEEN RECEIVED BY THE PARTY, THEN THE VALUE ADOPTED BY TH E SRO SHALL BE DEEMED TO BE THE CONSIDERATION RECEIVED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THUS, FOR APPLICATION OF SECTION 50C OF THE ACT, IT IS NOT NECESSARY FOR THE A.O. TO EXAMINE WHETHER ACTUALLY ASSESSEE HAS RECEIVED ANYTHING OVER AND ABOVE THE AMOUNT MENTIONED IN THE SALE DEED AS HE SIMPLY HAS TO GO BY THE VALUATION ADOPTED BY THE SRO. HOWEVER, AS FA R AS IMPOSITION OF PENALTY IS CONCERNED, THERE MUST BE P OSITIVE EVIDENCE BEFORE THE A.O. TO CONCLUDE THAT ASSESSEE HAS RECEIVED THE AMOUNT AS VALUED BY SRO FOR STAMP DUTY PURPOSE. UNLESS THERE ARE POSITIVE EVIDENCE TO INDI CATE 6 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. RECEIPT OF ON MONEY TO THE EXTENT OF VALUATION MADE BY SRO BY THE ASSESSEE, PENALTY UNDER SECTION 271(1)(C ) CANNOT BE IMPOSED. FURTHER, IN THE PRESENT CASE AS IS EVIDENT FROM THE MATERIALS ON RECORD, THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING HAS FURNISHED ALL NECESSARY AND RELEVANT DOCUMENTS RELATING TO THE TRANSACTION OF THE PROPERTY IN QUESTION INCLUDING REGISTERED SALE DEED. THE ASSESSEE HAS NOT SUPPRESS ED ANY MATERIAL FACT FROM THE NOTICE OF THE A.O. IN THESE CIRCUMSTANCES, THE IMPOSITION OF PENALTY UNDER SECT ION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCUR ATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, IN OUR VIEW, IS NOT APPROPRIATE. THE ITAT, MUMBAI BENCH IN THE CASE OF RENU HINGORANI, MUMBAI VS. ACIT, RANGE 19(3 ), MUMBAI (SUPRA) WHILE CONSIDERING IDENTICAL NATURE O F DISPUTE, DELETED THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT BY HOLDING AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELEVANT RECORD. WE FIND THAT THE AO HAD MADE ADDITION OF RS.9,00,824/- BEING DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SALE AGREEMENT AND THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY. THUS, THE ADDITION HAS BEEN MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE AO HAS NOT QUESTIONED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE BUT THE ADDITION IS MADE PURELY ON THE BASIS OF DEEMING PROVISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDING THAT THE ACTUAL SALE CONSIDERATION IS MORE THAN THE SALE CONSIDERATION ADMITTED AND MENTIONED IN THE SALE AGREEMENT. THUS IT DOES 7 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT FACTS, DOCUMENTS/MATERIAL INCLUDING THE SALE AGREEMENT AND THE AO HAS NOT DOUBTED THE GENUINENESS AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT FURNISHED CORRECT PARTICULARS OF INCOME. MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION ON THE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTHORITY WOULD NOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THIS AGREEMENT WAS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION BECAUSE OF THE DEEMING PROVISIONS DOES NOT IPSO FACTO ATTRACT THE PENALTY U/S 271 (1)(C). HENCE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VIS RELIANCE PETROPRODUCTS PVT.LTD (SUPRA), THE PENALTY LEVIED U/S 271 (1)(C) IS NOT SUSTAINABLE. THE SAME IS DELETED. 5.1. THE PRINCIPLES LAID DOWN IN OTHER DECISIONS RELIED UPON BY LD. A.R. ALSO EXPRESS SIMILAR VIEW. FOLLOWING THE CONSISTENT VIEW EXPRESSED IN THE DECI SIONS REFERRED TO ABOVE, WE ARE OF THE OPINION THAT IMPOS ITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE P RESENT CASE IS NOT VALID. ACCORDINGLY, WE DELETE THE PENAL TY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 8 ITA.NO.565/HYD/2015 BHAVYA ANANT UDESHI, HYDERABAD. ORDER PRONOUNCED IN THE OPEN COURT ON 04.09. 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 04 TH SEPTEMBER, 2015 VBP/- COPY TO : 1. BHAVYA ANANT UDESHI, HYDERABAD 500 034. C/O. GANDHI & GANDHI, CHARTERED ACCOUNTANTS, 1002, PAIGAH PLAZA, BASHEERBAGH, HYDERABAD 500 063. 2. THE INCOME TAX OFFICER (INTERNATIONAL TAXATION) - I, 3 RD FLOOR, INCOME TAX TOWERS, MASABTANK, HYDERABAD 500 004. 3. CIT(A) X, HYDERABAD. 4. CHIEF CIT (IT) (SZ), BENGGALURU 5. CIT - ( IT & TP ), HYDERABAD 6. D.R. ITAT A BENCH, HYDERABAD. 7. GUARD FILE