ITO 11(2)(2), MUMBAI V. CHIRANJEEV LAL KHANNA, MUMBAI

ITA 6005/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88467 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: K R LAKSHMI NARAYANAN
• Keywords: Sale consideration of property below Jantri Value; Question of law; Cost of acquisition
• Section: 50C; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER ITA NO.6005/MUM/2013 (A.Y. 2005-06) INCOME TAX OFFICER 11(2)(2), ROOM NO.479, 4 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 (APPELLANT ) VS. SHRI CHIRANJEEV LAL KHANNA, 91, CHIRANJEEV, GULMOHAR CROSS ROAD NO.4, JVPD SCHEME, MUMBAI 400 049. PAN: AABPK 3888K (RESPONDENT) APPELLANT BY : SHRI NEIL PHILIP. RESPONDENT BY : SHRI K.R .LAKSHMINARAYANAN DATE OF HEARING : 26/02/2015 DATE OF PRONOUNCEMENT : 26 /02/2015 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-3, MUMBAI DATED 11/07/2013 FOR ASSESS MENT YEAR 2005-06. THE GROUNDS OF APPEAL READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CANCELING PENALTY IMPO SED U/S. 271(1)(C) ON ADDITION U/S. 50C. 2. FOR DEVELOPMENT OF OLD RESIDENTIAL HOUSE THE ASS ESSEE ENTERED INTO AN AGREEMENT WITH DEVELOPER WHO AGREED TO CONSTRUCT A DDITIONAL ACCOMMODATION FOR THE ASSESSEE OUT OF COMPENSATION PAYABLE FOR TRANSF ER OF DEVELOPMENT RIGHTS. ON ITA NO.6005/MUM/2013 (A.Y. 2005-06) 2 SUCH AGREEMENT THE CAPITAL GAIN WAS COMPUTED BY TH E AO ON THE BASIS OF STAMP VALUE OF THE PROPERTY UNDER SECTION 50C OF THE INCO ME TAX ACT,1961 (THE ACT) AND SHARE OF THE ASSESSEE WAS WORKED OUT AT RS.1,91,25, 000/- AND AFTER REDUCING THE COST OF ACQUISITION, EXEMPTION UNDER SECTION 54 AN D 54EC, ETC., CAPITAL GAIN WAS WORKED AT RS.83,64,438/- AND ON SUCH ADDITION CONCE ALMENT PENALTY OF RS.18,77,000/- WAS LEVIED. BEFORE LD. CIT(A) IT WA S SUBMITTED THAT CONCEALMENT PENALTY COULD NOT BE LEVIED ON SUCH ADDITION AND RE LIANCE WAS PLACED ON VARIOUS DECISIONS TO CONTEND THAT IN SUCH CASES NO CONCEALM ENT PENALTY COULD BE LEVIED. THE CASES RELIED UPON BEFORE LD. CIT(A) ARE AS UNDE R: SR.NO. NAME OF CASE A .Y 1. RENU HINGORANI VS. ACIT, ITA NO.2210/M/10 2006-0 7 2. FORTUNE HOTELS & ESTATES P. LTD. VS. ACIT, ITA N O.5403/M/10 2004-05 3. ACIT VS. KAMALA SANKARAN, ITA NO.4761/M/11 2006- 07 4. SHRI CHIMANLAL MANILAL PATEL VS. ACIT, ITA NO.50 8/AHM/2010 2006-07 5. CIT VS. MADAN THEATRES LTD., GA NO.684/2013 CALC UTTA HIGH COURT ORDER DATED 14/05/2013 6. BASKER VS. ACIT, ITA NO.997/MADS/12 2007-08 3. LD. DR SUBMITTED THAT THE PENALTY WAS RIGHTLY LE VIED BY AO AND IT HAS WRONGLY BEEN DELETED BY LD. CIT(A) AND HE SUBMITT ED THAT THE IMPUGNED PENALTY SHOULD BE RESTORED AND ORDER PASSED BY LD.CIT(A) SH OULD BE SET ASIDE. 4. ON THE OTHER HAND, LD. AR HAS FILED BEFORE US A PAPER BOOK CONTAINING CASE LAW AND RELIED UPON THE FOLLOWING DECISIONS: SR.NO. NAME OF CASE A .Y 1. RENU HINGORANI VS. ACIT, ITA NO.2210/M/10 1-6 2. FORTUNE HOTELS & ESTATES P. LTD. VS. ACIT, ITA N O.5403/M/10, A.Y 2004-05 7-12 3. ACIT VS. KAMALA SANKARAN, ITA NO.4761/M/11 13-16 4. SHRI CHIMANLAL MANILAL PATEL VS. ACIT, ITA NO.50 8/AHM/2010, A.Y. 2006-07 17-20 5. CIT VS. MADAN THEATRES LTD., GA NO.684/2013 CALC UTTA HIGH 21-24 ITA NO.6005/MUM/2013 (A.Y. 2005-06) 3 COURT ORDER DATED 14/05/2013 6. BASKER VS. ACIT, ITA NO.997/MADS/12 25-36 7. CIT VS. FORTUNE HOTELS & ESTATES PVT. LTD., ITA NO.1164/2012 OF BOMBAY HIGH COURT 37-40 4.1 PARTICULAR REFERENCE WAS MADE BY HIM TO THE DEC ISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. FORTUNE HOTELS & ESTATES P. LTD. VS. ACIT (SUPRA) AND SPECIAL REFERENCE WAS INVITED TO PARA-3 OF THE SAID ORDER, WHICH READ AS UNDER: 3. TO THIS EXTENT THERE IS NO DISPUTE AND WHAT LAT ER ON FOLLOWED THE IMPOSITION OF PENALTY. THE TRIBUNAL HELD THAT THIS CANNOT BE TAKEN AS A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME INAS MUCH AS THERE WAS A REGISTERED SALE DEED AND THERE WAS CONSIDERATION ME NTIONED THEREIN. THAT GROUND WAS RAISED AND THEREFORE, THE DOCUMENT WAS F ORWARDED TO THE VALUER AND FOR DETERMINATION OF THE VALUE, BY ITSELF WOULD NOT MEAN THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS CONCEALED THE INCOME. IN THESE PECULIAR CIRCUMSTANCES THE IMP OSITION OF PENALTY WAS NOT JUSTIFIED, IS THE CONCLUSION DRAWN. THE LARGER QUESTION POSED FOR OUR CONSIDERATION BY MR.VIMAL GUPTA REALLY DOES NOT ARI SE IN THE PECULIAR FACTS OF THE CASE. WE LEAVE THAT QUESTION AND CONTENTIONS BASED THEREON OPEN FOR BEING CANVASSED IN AN APPROPRIATE CASE. THE TRIBUNA LS ORDER EVEN IF CONTAINING ANY REFERENCE TO SOME DEEMING PROVISION WILL NOT PRECLUDE OR PREVENT THE REVENUE FROM RAISING SUCH CONTENTIONS . WITH THIS CLARIFICATION AND FINDING THAT THE TRIBUNALS ORDER DOES NOT RAI SE ANY SUBSTANTIAL QUESTION OF LAW THA( WE PROCEED TO DISMISS THE APP EAL. IT IS, ACCORDINGLY, DISMISSED. NO COSTS. 4.2 IT WAS FURTHER SUBMITTED THAT MUMBAI TRIBUNAL H AS BEEN TAKING CONSISTENT VIEW THAT IN SUCH CASES NO PENALTY CAN BE MADE AND REFERENCE WAS MADE TO THE DECISION MENTIONED AT SL.NO.1, SL.NO.2 AND SL.NO.3 OF THE DECISIONS PLACED IN THE PAPER BOOK. REFERENCE WAS INVITED TO PARA-8 OF THE DECISION IN THE CASE OF RENU HINGORANI VS. ACIT(SURPRA), WHICH READ AS UNDER: ITA NO.6005/MUM/2013 (A.Y. 2005-06) 4 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD . WE FIND THAT THE AC HAD MADE ADDITION OF RS.9,00,824/- BEIN G DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SALE AGREEMENT AND THE VA LUATION MADE BY THE STAMP VALUATION AUTHORITY. THUS, THE ADDITION HAS B EEN MADE BY THE AC BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE AC HAS NOT QUESTIONED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE BUT THE ADDITION IS MADE P URELY 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 NOT AMOUNT TO CONCEALMENT OF INCOME OF FURNISHING INACCURATE PAR TICULARS 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, DOCU MENTS/MATERIAL INCLUDING THE SALE AGREEMENT AND THE AO HAS NOT DOUBTED THE G ENUINENESS AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE C ONSIDERATION RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCE S, 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 VA LUATION MADE BY THE STAMP VALUATION AUTHORITY WOULD NOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THIS AGREEMENT WAS INCORRECT A ND 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 DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S RELIANCE PETRO PRODUCTS PVT.LTD (SUPRA), THE PENALTY LEVIED U/S 271(1)( C ) IS NOT SUSTAINABLE. THE SAME IS DELETED. 4.3 REFERENCE WAS ALSO MADE TO PARA-6 OF THE DECISI ON OF MUMBAI ITAT IN THE CASE OF FORTUNE HOTELS & ESTATES PVT. LTD. (SUPRA) WHICH READ AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A C OPY OF THE RETURN OF INCOME FILED BY THE ASSESSEE IS AVAILABLE AT PAGE-1 OF THE ASSESSEES PAPER BOOK. THE ASSESSEE HAS GIVEN THE COMPUTATION OF CA PITAL GAIN AT RS. NIL AND HAS FURTHER ATTACHED THE FOLLOWING NOTE: NOTE: DURING THE PREVIRN.S YEAR RELEVANT TO THE AS SESSMENT YEAR THE. ASSESSEE COMPANY HAS SOLD PREMISES 1401, AT LA HEJA CENTRE, NARIMAN POINT ,MUMBAI -21, AS PER DEED OF SALE & TR ANSFER DATED ITA NO.6005/MUM/2013 (A.Y. 2005-06) 5 21-08-2003. THE TOTAL SALE VALUE AS PER THE AGREEME NT IS RS 2. 00,00,000/-. HOWEVER, AS PER STAMP DUTY CT THE MAR KET VALUE OF PREMISES IS DETERMINED AT RS, 3,72.42,000/-. A COPY OF THE DEED OF SALE AND TRANSFER & REGISTRATION RECEIPT ARE ENCLOS ED WITH THE RETURN OF INCOME FOR YOUR REFERENCE AND RECORD. THE ASSESS EE COMPANY HAS SOLD THE PREMISES FOR RS.2,00,00,000/- AND THE CAPI TAL GAIN IS CALCULATED ON THE BASIS OF SALE VALUE AS PER AGREEM ENT DATED 2 1-08- 2003 AT THE PREVAILING MARKET RATE. HOWEVER, STAMP DUTY AUTHORITIES HAS VALUED AT RS. 3,72,42,000/- THIS IS TO PLACE ON RECORD. IT IS THUS CLEAR THAT THE ASSESSEE HAS PLACED ALL T HE FACTS BEFORE THE AO. IN THE ASSESSMENT PROCEEDINGS THERE HAS BEEN NO FINDIN G NOR IS THERE ANY MATERIAL TO SHOW THAT THE ASSESSEE RECEIVED SOMETHI NG MORE THAN A SUM OF RS. 2.00 CRORES WHICH IS THE FULL VALUE OF CONSIDE RATION RECEIVED AS PER INSTRUMENT OF TRANSFER. THUS IT IS CLEAR THAT BUT FOR THE PROVISIONS OF SECTION 50C OF THE ACT, THE IMPUGNED ADDITION FOR WHICH PEN ALTY WAS IMPOSED WOULD NOT HAVE BEEN MADE. WE ARE OF THE VIEW THAT THE CL AIM MADE BY THE ASSESSEE IN THE PRESENT CASE CANNOT BE SAID TO BE TOTALLY BA SELESS OR UNTENABLE IN LAW. WE ARE OF THE VIEW THAT THE DECISION OF THE TRIBUNA L IN THE CASE OF RENU HINGORANI (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. WE, THEREFORE, DIRECT THAT THE PENALTY IMPOSED ON THE A SSESSEE BE CANCELLED. THE APPEAL BY THE ASSESSEE IS ALLOWED. THIS DECISION IS ALSO CONFIRMED BY HONBLE BOMBAY H IGH COURT AND RELEVANT OBSERVATIONS HAVE BEEN REPRODUCED ABOVE. 4.4 FURTHER, RELIANCE IS PLACED ON PARA-8 & 9 O F THE DECISION IN THE CASE OF ACIT VS. KAMALA SANKAR (SUPRA), WHICH READ AS UNDE R: 8. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES . ALSO PERUSED THE PENALTY ORDER AS WELL AS IMPUGNED ORDER. UNDISPUTED LY, SO FAR AS INITIAL VALUE OF THE PREMISES STATED IN THE RETURN IS CONCE RNED, IT IS RS. 81 LAKHS. THEREAFTER, THE VALUATION AUTHORITIES DETERMINED TH E VALUE OF THE PREMISES AS RS. 1,04,95,778/-. THE ASSESSEE ADMITTED THIS VALUE ALSO. ACCORDINGLY, PAID THE TAX. SINCE, THE ASSESSEE HAD EARLIER COMPUTED T HE AMOUNT OF CAPITAL GAINS ON THE ORIGINAL SALE CONSIDERATION, THEREFORE, IN V IEW OF THE REVALUATION AMOUNT; THE ASSESSING OFFICER COULD ALWAYS BE REQUE STED FOR REFERENCE TO THE VALUATION OFFICER UNDER THE PROVISIONS OF THE ACT. AS IT HAS BEEN HELD BY THE ITA NO.6005/MUM/2013 (A.Y. 2005-06) 6 LD. CIT (A), IF THE SAID THE VALUE HAD BEEN ADOPTED BY THE STAMP AUTHORITIES AS DEEMED SALE CONSIDERATION, THE VERY PURPOSE OF S ECTION 50C(2) WOULD BE DEFEATED. 9. THEREFORE, IN OUR OPINION, ACTION OF THE ASSESS EE IN DEPOSITING THE TAX PER REDETERMINED VALUE OF THE PREMISES IN HAND NEIT HER AMOUNT TO CONCEALMENT NOR IT HAS CAUSED ANY LOSS TO THE REV ENUE. THE SAME CAN ALSO NOT BE TERMED AS A CASE OF FURNISHING INACCURATE P ARTICULARS OF INCOME. THUS, IT WAS SUBMITTED THAT LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY AND HIS ORDER SHOULD BE UPHELD. 5. WE HAVE HEARD THE BOTH THE PARTIES AND THEIR CON TENTIONS HAVE CAREFULLY BEEN CONSIDERED. IN THE PRESENT CASE ALSO, APART FROM M AKING THE ADDITION ON THE BASIS OF SECTION 50C NO OTHER MATERIAL HAS BEEN BROUGHT ON R ECORD TO SAY THAT THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE WAS MORE TH AN THE CONSIDERATION STATED IN THE TITLE DEED. IN THIS VIEW OF THE SITUATION, THE DECISIONS RELIED UPON BY LD. AR WOULD BE APPLICABLE TO THE PRESENT CASE. THE RELEV ANT OBSERVATIONS FROM THOSE HAVE ALREADY BEEN REPRODUCED ABOVE. THEREFORE, F OLLOWING THE AFOREMENTIONED DECISIONS. WE DECLINE TO INTERFERE IN THE RELIEF G RANTED BY LD. CIT(A) AND THE REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/201 5 ! ' #$% & '() 26/02/2015 $ ' * + SD/- SD/- ( /CHANDRA POOJARI ) ( . . / I.P. BANSAL ) /ACCOUNTANT MEMBER / JUDICIAL EMBER MUMBAI; '( DATED 26/02/2015 ITA NO.6005/MUM/2013 (A.Y. 2005-06) 7 ! ! ! ! ' '' ' ,-. ,-. ,-. ,-. /.%- /.%- /.%- /.%- / COPY OF THE ORDER FORWARDED TO : 1. 01 / THE APPELLANT 2. ,201 / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. .4* ,-( , , / DR, ITAT, MUMBAI 6. *5 6 / GUARD FILE. !( !( !( !( / BY ORDER, 2.- ,- //TRUE COPY// 7 77 7 / 8 8 8 8 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ( . ./ VM , SR. PS