Shri Suresh Thakorbhai Patel L/h. of late Thakorbhai Ichchubhai Patel, Surat V. The Income Tax Officer, Ward-3(4), Surat

ITA 567/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1991 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 148; 271(1)(c); 50C

Judgement Text

SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 1 OF 10 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO. 567/AHD/2015 / ASSESSMENT YEAR : 2008-09 SHRI SURESHBHAI THAKORBHAI L/H OF LATE SHRI THAKORBHAI ICHHUBHAI, SAT BUNGALOW , ADAJAN CHAR RASTA SURAT- 395009 PAN:AACHT6049L VS. INCOME TAX OFFICER, WARD- 3(4) SURAT APPELLANT /RESPONDENT /ASSESSEE BY SHRI SAPNESH SHETH, CA /REVENUE BY SHRI DILIP KUMAR, SR. D.R. / DATE OF HEARING: 09.10.2018 /PRONOUNCEMENT ON 26.10.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-2, SURAT [IN SHORT CIT(A)] SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 2 OF 10 DATED 26.12.2014 PERTAINING TO ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN FROM THE PENALTY ORDER DATED 27.06.2013 PASSED BY THE INCOME TAX OFFICER, WARD-3 (4), SURAT (IN SHORT THE AO) UNDER SECTION 271(1)(C) OF INCOME TAX ACT,1961(IN SHORT THE ACT). 2. THE SOLE GROUND RELATES TO CONFIRMING OF PENALTY OF RS.1,54,410/- LEVIED UNDER SECTION 271(1) (C) OF THE ACT ON THE ADDITION MADE ON ACCOUNT OF LONG-TERM CAPITAL GAIN OF RS. 8,59,570. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 22.10.2012 DECLARING TOTAL INCOME OF RS.8,59,570 IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT WHICH INCLUDED LONG- TERM CAPITAL GAIN OF RS. 8,56,058 AND PAID TAXES OF RS. 3,22,410. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY ON WHICH LONG-TERM CAPITAL GAIN OF RS. 8,56,058 WAS OFFERED TO TAX ON THE BASIS OF PROVISIONS OF SECTION 50C OF THE ACT. THIS AMOUNT HAS BEEN ALREADY DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT OF THE ACT. THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN REPLY TO SHOW-CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C), IT WAS EXPLAINED BY THE SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 3 OF 10 ASSESSEE THAT THE CASE WAS REOPENED ON THE BASIS OF THAT STAMP DUTY VALUATION OF THE PROPERTY WAS MORE THAN THE SALE CONSIDERATION DISCLOSED IN SALE DEED. THE ASSESSEE HAS FURNISHED ALL THE FACTS OF THE SALE, DOCUMENTS/MATERIAL BEFORE THE AO, WHO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE DID NOT DISCLOSE LONG-TERM CAPITAL GAIN VOLUNTARILY AS RETURN WAS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT, HENCE, PENALTY OF RS. 1,54,410 WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 4. BEING, AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). HOWEVER, LD. CIT (A) OBSERVED THAT THE APPELLANT HAS NOT FILED RETURN OF INCOME AND THE RETURN WAS FILED IN COMPLIANCE TO NOTICE UNDER SECTION 148 OF THE ACT. THEREFORE, TRANSACTION IN PROPERTY HAS NOT BEEN SHOWN AS NO RETURN WAS FILED. THEREFORE, DISCLOSURE MADE IN RETURN IS NOT VOLUNTARY AS HELD IN MAK DATA (P.) LTD. VS. CIT [2013] 358 ITR 593(SC) / [2013] 38 TAXMANN.COM 448(SC). THE AO CAN VERIFY THE RETURN OF INCOME WHETHER THE RETURN OF INCOME IS CORRECT OR NOT. SINCE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AS INCOME CHARGEABLE TO TAX HAS SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 4 OF 10 ESCAPED ASSESSMENT , THEREFORE, THE AO HAS RIGHTLY LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE PROVISIONS OF SECTION 50C (2) ALLOWS THE ASSESSEE TO CHOOSE ACTUAL SALE CONSIDERATION IF THE ASSESSEE CONVINCED ABOUT FAIR MARKET VALUE OF PROPERTY BEING SAME AS CONSIDERATION ACTUALLY RECEIVED. HOWEVER, THE ASSESSEE HAS SUO-MOTO DISCLOSED LONG-TERM CAPITAL GAIN AS PER PROVISION OF SECTION 50C (1) AT RS. 8,58,058. THEREFORE, THE ASSESSEE CANNOT BE HELD TO HAVE CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED IN THE CASE OF CIT V. MADAN THEATRES LTD. [2014] 44 TAXMANN.COM 382 (KOL) (HC) WHEREIN IT WAS HELD THAT WHERE ACTUAL AMOUNT WAS OFFERED FOR TAXATION. IT WAS ONLY OF THE BASIS OF THE DEEMED CONSIDERATION THAT PROCEEDING UNDER SECTION 271(1) (C) WERE STARTED. THE REVENUE HAS FAILED TO PRODUCE ANY IOTA OF EVIDENCE THAT THE ASSESSEE HAD ACTUALLY RECEIVED ONE PAISA MORE THAN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM. THUS, PENALTY ORDER WAS LIABLE TO SET-ASIDE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER, RELIED IN THE CASE OF CIT V. FORTUNE HOTELS AND ESTATES PVT. LTD. [2015] SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 5 OF 10 232 TAXMAN 126 (BOMBAY) WHEREIN IT WAS OBSERVED THAT T HE TRIBUNAL HELD THAT THIS CANNOT BE TAKEN AS A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME INASMUCH AS THERE WAS A REGISTERED SALE DEED AND THERE WAS CONSIDERATION MENTIONED THEREIN. THIS GROUND WAS RAISED AND THEREFORE, THE DOCUMENT WAS FORWARDED TO THE VALUER AND FOR DETERMINATION OF THE VALUE, BY ITSELF WOULD NOT MEAN THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED THE INCOME. IN THESE PECULIAR CIRCUMSTANCES THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER, CITED DECISION OF CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF ACIT V. MRS. N MEENAKSHI [2009] 125 TTJ 856 (CHENNAI) WHEREIN IT WAS HELD THAT THE ASSESSEE WAS NOT GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME MERELY BECAUSE THE AO HAS WORKED OUT HIGHER CAPITAL GAINS BY TAKING FAIR MARKET VALUE OF THE PROPERTY AS ON 1 ST APRIL ,1981, ON THE BASIS OF VALUE OBTAINED FROM SUB REGISTRAR `S OFFICE IN PREFERENCE TO THE VALUE OBTAINED BY THE ASSESSEE FROM VALURERS REPORT AND HENCE, PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED IN THE CASE OF CHIMANLAL MANILAL PATEL V. ADDL. CIT [2012] 33CCH 0647 SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 6 OF 10 (AHMEDABAD-TRIB) WHERE IT WAS HELD THAT NO PENALTY CAN BE LEVIED WHERE THE AO HAS NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS / DETAILS FURNISHED BY THE ASSESSEE AND THE ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF DEEMING PROVISIONS OF SECTION 50C OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF CIT V. RAJKUMARI VIMLA DEVI [ 2005] 279 ITR 360 (ALL). 6. PER CONTRA , THE LD. SR. D.R. SUPPORTED THE ORDER OF CIT (A) AND SUBMITTED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME AND THE RETURN WAS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT HENCE, LONG- TERM CAPITAL GAIN OFFERED IN RETURN OF INCOME IS NOT VOLUNTARY THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME HENCE, LOWER AUTHORITIES WERE JUSTIFIED IN LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER AND PENALTY ORDER REVEALS THAT THE AO HAS ACCEPTED THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT DISCLOSING THEREIN LONG-TERM CAPITAL GAIN OF RS. 8,59,570 AS SHOWN IN THE RETURN ON THE BASIS OF PROVISIONS OF SECTION 50C OF THE ACT . HOWEVER, THE AO INITIATED SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 7 OF 10 PENALTY PROCEEDINGS ON THE GROUND THAT RETURN SO FILED WAS NOT VOLUNTARILY. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS MADE ADDITION BASED ON FACTS AS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE FIND THAT THE ASSESSEE HAS FURNISHED ALL RELEVANT FACTS; COPY OF SALE DEED AND ACTUAL SALE CONSIDERATION RECEIVED AS PER AGREEMENT OF SALE. IT IS ALSO UNDISPUTED FACT THAT THAT THE ASSESSEE OFFERED LONG-TERM CAPITAL GAIN IN HIS RETURN UNDER SECTION 148 DUE TO APPLICABILITY OF PROVISION OF SECTION 50C. THE ASSESSEE FURNISHED ALL PARTICULARS. IT IS NOT THE CASE OF THE AO, THAT THE ASSESSEE HAS RECEIVED OVER AND ABOVE THE DISCLOSED SALE CONSIDERATION IN THE AGREEMENT. THEREFORE, THE PENALTY CANNOT BE LEVIED MERELY BECAUSE THAT IT WAS NOT ACCEPTABLE TO THE AO. THE RATIO OF DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. FORTUNE HOTELS AND ESTATE PVT. LTD. [2015] 232 TAXMAN 481 (MUM) (HC) IS FULLY APPLICABLE TO PRESENT CASE, WHEREIN IT WAS HELD THAT THE TRIBUNAL HELD THAT THIS CANNOT TAKEN AS A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME INASMUCH AS THERE WAS A REGISTERED SALE DEED AND THERE WAS CONSIDERATION MENTIONED THEREIN. THAT GROUND WAS RAISED AND THEREFORE, THE DOCUMENT WAS FORWARDED TO THE VALUER AND DETERMINATION OF THE SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 8 OF 10 VALUE, BY ITSELF WOULD NOT MEAN THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED THE INCOME- IN THESE PECULIAR CIRCUMSTANCES IMPOSITION OF PENALTY WAS NOT JUSTIFIED. WHERE THE EXPLANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED, PENALTY IS NOT LEVIABLE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF CHIMANLAL MANILAL PATEL V. ADDL. CIT [2012] 33CCH 0647 (AHMEDABAD-TRIB) WHEREIN IT WAS HELD THAT NO PENALTY CAN BE LEVIED WHERE THE AO HAS NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS / DETAILS FURNISHED BY THE ASSESSEE AND THE ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF DEEMING PROVISIONS OF SECTION 50C OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER, CITED DECISION OF CO-ORDINATE BENCH OF CHENNAI IN THE CASE OF ACIT V. MRS. N MEENAKSHI [2009] 125 TTJ 856 (CHENNAI) WHEREIN IT WAS HELD THAT THE ASSESSEE WAS NOT GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME MERELY BECAUSE THE AO HAS WORKED OUT HIGHER CAPITAL GAINS BY TAKING FAIR MARKET VALUE OF THE PROPERTY AS ON 1 ST APRIL ,1981 , ON THE BASIS OF VALUE OBTAINED FROM SUB REGISTRAR `S OFFICE IN PREFERENCE TO THE VALUE OBTAINED BY THE ASSESSEE FROM VALURERS REPORT AND HENCE, SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 9 OF 10 PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT PROCEEDINGS. THE FINDING RECORDED IN THE ASSESSMENT ORDER IS NOT CONCLUSIVE FOR DECIDING THE IMPOSITION OF PENALTY. IT ONLY HAS A PERSUASIVE VALUE. ANY FINDING RECORDED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE PENALTY HAS TO BE IMPOSED AUTOMATICALLY. JUST BECAUSE APPELLANTS EXPLANATION WAS NOT FOUND ACCEPTABLE BY THE AO, IT DOES NOT FOLLOW THAT THAT THE APPELLANT WAS UNABLE TO SUBSTANTIATE HIS EXPLANATION BY PROVIDING VARIOUS EVIDENCES AND JUDICIAL OPINIONS. EXPLANATION 1 TO SECTION 271(1) (C) OF THE ACT DOES NOT THEREFORE COVER THE CASE OF THE ASSESSEE. BASED ON THE ABOVE FACTS OF THE CASE; IT CAN BE HELD THAT NO PENALTY CAN BE LEVIED WHERE THE AO HAS NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS / DETAILS FURNISHED BY THE ASSESSEE AND THE ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF DEEMING PROVISIONS OF SECTION 50C OF THE ACT. WE ARE, THEREFORE, OF THE CONSIDERED VIEW, THAT THE PENALTY IS NOT SUSTAINABLE IN LAW. THE OTHER VARIOUS DECISION OF TRIBUNALS AS WELL AS HIGH COURTS AS RELIED BY THE ASSESSEE ARE ALSO SUPPORTS ITS CASE. IN THE LIGHT OF ABOVE DISCUSSION, THE SURESHBHAI THAKORBHAI O L/H F LATE THAKORBHAI V. ITO 3(4) SURAT /I.T.A. NO.567/AHD/2015/A.Y. 08-09 PAGE 10 OF 10 PENALTY LEVIED AT RS.1,54,410/- IS THEREFORE, DELETED. THEREFORE, THE SOLE GROUNDS OF APPEAL IS THUS, ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 26.10.2018. SD/- SD/- (C.M. GARG) (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT. DATED: 26 OCTOBER 2018/OPM COPY FORWARDED TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT