Shivaji Sukhadeo Aher, Ahmednagar V. Income-tax Officer,

ITA 611/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1642 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDER
• Keywords: Sale consideration of property below Jantri Value; Salary income; Deemed to accrue or arise in india
• Section: 50C

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.611/PN/2016 % % / ASSESSMENT YEAR : 2011-12 SHRI SHIVAJI SUKHADEO AHER, S.NO.150, MALPANI HOUSE, INDIRA GANDHI MARG, NEW NAGAR ROAD, SANGAMNER 422605 DIST. AHMEDNAGAR PAN NO.ABFPA1954M . / APPELLANT V/S ITO, WARD-3, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI ABHIJIT HALDER, JCIT / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 02-12-2015 OF THE CIT(A)-2, PUNE RELATING TO THE A SSESSMENT YEAR 2011-12. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN BY TH E ASSESSEE THEY ALL RELATE TO THE LEVY OF PENALTY OF RS.99,658/- U/S.27 1(1)(C) BY THE AO AND CONFIRMED BY THE CIT(A). / DATE OF HEARING :05.07.2016 / DATE OF PRONOUNCEMENT:13.07.2016 2 ITA NO.611/PN/2016 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND DERIVES INCOME FROM SALARY. HE FILED HIS RETURN OF INCOME ON 31- 07-2011 DECLARING TOTAL INCOME OF RS.2,15,010/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT AS PER THE AIR INFORMATION, THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY FOR RS.1,17,71,00 0/- ON 19- 04-2010. FROM THE VARIOUS DETAILS FURNISHED BY THE ASS ESSEE, HE OBSERVED THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND WIT HIN NASHIK MUNICIPALITY LIMIT AT MAUJE PATHARDI FOR A CONSIDERATION OF RS.1,12,00,000/- (GOVT. VALUATION RS.1,17,71,000/-) ALONG WITH SHR I SUBHASH RAMBHAU PAWAR. IT WAS FURTHER NOTED BY THE A O THAT THE ASSESSEE HAS MADE AGREEMENT TO SALE VIDE AGREEMENT DA TED 26-12- 2007 FOR RS.56 LAKHS. THE SALE DEED WAS REQUIRED TO BE M ADE BEFORE 31-03-2008 BY COMPLETING SOME CONDITIONS. IF THE SAME IS NOT COMPLETED THERE WAS CONDITION OF CHARGING OF INTEREST @15% TILL THE DATE OF REGISTERED SALE DEED. THE SALE DEED OF THE SAID P ROPERTY WAS MADE ON 19-04-2010 AND AS PER THE CONDITION THE ASSES SEE HAS PAID INTEREST OF RS.12,67,482/-. ACCORDINGLY, THE ASSESSEE WO RKED OUT THE CAPITAL GAIN OF RS.4,47,247/- BY DEDUCTING THE STAMP DUTY O F RS.4,74,381/-, COST OF PURCHASE RS.36,95,890/- AND INTEREST COST OF RS.12,67,482/- FROM THE SALE CONSIDERATION OF RS.58,85,500/-. 4. THE AO NOTED FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS CLAIMED STAMP DUTY AS PER THE C ONDITION OF AGREEMENT AT RS.4,74,381/- WHICH INCLUDES PENALTY OF RS.1,64 ,766/-. SINCE PENALTY CANNOT BE ALLOWED AS DEDUCTION FROM THE SALE CONSIDERATION THE AO ASKED THE ASSESSEE TO EXPLAIN AS T O WHY THE SAME SHOULD NOT BE DISALLOWED. THE ASSESSEE AGREED FOR THE S AID DISALLOWANCE. THE AO ACCORDINGLY COMPUTED THE CAPITAL GAIN AT RS.6,12,513/-. HOWEVER, HE NOTED THAT THE ASSESSEE HAD NOT SHOWN 3 ITA NO.611/PN/2016 THIS SHORT TERM CAPITAL GAIN IN THE RETURN OF INCOME. THE AO, THEREFOR E, ASKED THE ASSESSEE TO EXPLAIN WHY THE SHORT TERM CAPIT AL GAIN OF RS.6,12,513/- SHOULD NOT BE TREATED AS CONCEALED INCOME A ND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HE ALSO ASKED THE AS SESSEE TO EXPLAIN AS TO WHY PENALTY U/S.271(1)(C) OF THE ACT SHOULD NOT BE INI TIATED. IN RESPONSE TO THE SAME, THE ASSESSEE IN HIS EXPLANATION AG REED FOR THE SAID ADDITION OF RS.6,12,513/- ON ACCOUNT OF SHORT TERM CA PITAL GAIN. THE AO ACCORDINGLY DETERMINED THE TOTAL INCOME OF THE AS SESSEE AT RS.8,27,523/- BY MAKING ADDITION OF RS.6,12,513/- TO THE RETU RNED INCOME ON ACCOUNT OF SHORT TERM CAPITAL GAIN. 5. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDINGS U/S.2 71(1)(C) OF THE I.T. ACT. IT WAS ARGUED THAT PENALTY IS NOT JUST IFIED SINCE ADDITION HAS BEEN MADE BY INVOKING PROVISIONS OF SECTION 50 C OF THE I.T. ACT. 6. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION G IVEN BY THE ASSESSEE AND LEVIED PENALTY OF RS.99,658/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 7. IN APPEAL THE LD.CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. WHILE DOING SO, HE OBSERVED THAT THIS IS NOT A CASE WHERE SIMPLY SECTION 50C WAS INVOKED BUT ON THE OTHER HAND IT IS A C ASE WHERE CAPITAL GAIN ITSELF WAS NOT DISCLOSED AT ALL IN THE RETURN. T HE SAME WAS DETECTED ONLY DURING THE COURSE OF ASSESSMENT PROCEED INGS. SINCE THERE WAS NO SCOPE FOR ANY SAVING THE ASSESSEE ACCEPT ED THE ADDITION. RELYING ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN T HE CASE OF SHANTI SWARUP BHATNAGAR VS. CIT REPORTED IN 279 ITR 45 1, THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DURGA TIM BER WORKS VS. CIT REPORTED IN 79 ITR 63 AND THE DECISION OF HONBLE 4 ITA NO.611/PN/2016 SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT R EPORTED IN 358 ITR 593 THE LD.CIT(A) HELD THAT THE ASSESSEE IS LIABLE FOR CONCEALING PARTICULARS OF INCOME WITH REGARD TO INCOME FROM CAPITAL GAIN AND THEREFORE THE AO IS FULLY JUSTIFIED IN LEVYING PENALTY. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE PENALTY LEVIED BY THE AO AND UPHELD BY THE CIT(A). HE SUBMITTED T HAT NO PENALTY IS LEVIABLE IN RESPECT OF THE ADDITION MADE BY INVOK ING THE PROVISIONS OF SECTION 50C SINCE NO CONCRETE EVIDENCE WAS FOUND THAT THE ASSESSEE HAS RECEIVED ANY AMOUNT OVER AND ABOVE THE AGREEMENT PRICE. FURTHER, LEVY OF PENALTY ON DISALLOWANCE OF PENALTY PA ID ON ACCOUNT OF STAMP DUTY CHARGES WAS NOT AT ALL JUSTIFIED S INCE THE CLAIM MADE BY THE ASSESSEE WAS A DEBATABLE ONE AND TWO OPIN IONS ARE POSSIBLE. HE SUBMITTED THAT THE ASSESSEE HAS PAID AN AM OUNT OF RS.1,64,766/- TO THE REGISTRAR OF STAMP DUTY ON ACCOUNT OF DELAY IN REGISTRATION OF THE SALE DEED. THE ABOVE AMOUNT WAS CLAI MED AS A DEDUCTION WHILE COMPUTING THE CAPITAL GAIN. HE SUBMITTED TH AT THE VALUATION FOR STAMP DUTY PURPOSE WAS RS.1,17,71,000/- WHER EAS THE SALE DEED WAS MADE FOR RS.1,12,00,000/-. THE SHARE OF THE ASSESSEE IN THE SAID PROPERTY BEING 50% HE HAS RECEIVED AN AMOUNT OF RS.56 LAKHS. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF SHRI SUNIL DATTATRAYA TAKLE VS. ITO VIDE ITA NO.1586/PN/2013 ORDER DATED 25-03-2015 HE SUBMITTED T HAT THE TRIBUNAL, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF FORTUNE HOTELS AND ESTATES PVT. LTD. HAS HELD T HAT FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT THE SALE PROCEEDS DEC LARED IN THE 5 ITA NO.611/PN/2016 SALE DEED WILL BE CONSIDERED FOR COMPUTING THE LONG TERM CA PITAL GAIN. HE ACCORDINGLY SUBMITTED THAT PENALTY CAN BE LEVIED ONLY TO THE EXTENT OF THE AMOUNT MENTIONED IN THE SALE DEED AND NOT AS PER THE DEEMING PROVISION OF SECTION 50C OF THE I.T. ACT. 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SI DES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE ASSESSE E SOLD HIS IMMOVABLE PROPERTY FOR A CONSIDERATION OF RS.1,12,00,000/- ALONG WITH SHRI SUBHASH RAMBHAU PAWAR WHEREAS THE GOVERNMENT VA LUATION FOR STAMP DUTY PURPOSE WAS RS.1,17,71,000/-. THE SHARE OF TH E ASSESSEE FOR THE ABOVE PROPERTY IS 50%. WE FIND THE ASSESSEE HAS NOT DECLARED ANY SHORT TERM CAPITAL GAIN FOR WHICH THE AO DETERMINED SUCH SHORT TERM CAPITAL GAIN AT RS.6,12,513/- AND THEREAFTER LEVIED PEN ALTY OF RS.99,658/- ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOM E WHICH HAS BEEN UPHELD BY THE CIT(A). IT IS THE SUBMISSION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS RECEIVE D AN AMOUNT OF RS.56 LAKHS BEING HIS 50% SHARE IN THE SAID PROPERTY AND THEREFORE THE SALE CONSIDERATION SHOULD BE CONSIDERED AT RS.56 LAKHS AS AGAINST RS.58,85,500/- TAKEN BY THE AO ON THE BASIS OF THE VALUAT ION FOR STAMP DUTY PURPOSES. FURTHER, NO PENALTY IS LEVIABLE ON A CCOUNT OF DISALLOWANCE OF PENALTY OF RS.1,64,766/- SINCE ALLOWABILITY OF THE SAME IS A DEBATABLE ISSUE. THUS, ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, WHILE THE ASSESSEE IS LIABLE FOR PENALTY ON ACCOUNT OF SUPPRESSION OF SHORT TERM CAPITAL GAIN, HOWEVER, THE SAME SHOULD BE 6 ITA NO.611/PN/2016 RESTRICTED TO THE AMOUNT DETERMINED ON THE BASIS OF TH E ACTUAL SALE CONSIDERATION, I.E. RS.56 LAKHS AND NOT RS.58,85,500/- AND DED UCTION OF RS.1,64,766/- BEING PENALTY. 12. SO FAR AS THE LEVY OF PENALTY ON ACCOUNT OF THE DIFFEREN CE BETWEEN ACTUAL SALE CONSIDERATION AND VALUE AS PER PROVIS IONS OF SECTION 50C IS CONCERNED, WE FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SUNIL DATTATRAYA TAKLE (SUPRA) FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF F ORTUNE HOTELS AND ESTATES PVT. LTD. HAS OBSERVED AS UNDER : 9.1 SO FAR AS THE LEVY OF PENALTY WITH REFERENCE TO ADDITION OF DEEMED INCOME U/S.50C IS CONCERNED, WE FIND THE HONBLE BOMB AY HIGH COURT IN THE CASE OF FORTUNE HOTELS AND ESTATES PVT. LTD., (SUPR A) HAS UPHELD THE DECISION OF THE TRIBUNAL WHERE THE TRIBUNAL HAS HELD THAT PENALTY CANNOT BE IMPOSED WITH REFERENCE TO ADDITION OF DEEMED INCO ME U/S.50C OF THE I.T. ACT. THEREFORE, TO THIS EXTENT WE CONCUR WITH THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE AND HOLD THAT FOR LEVY OF PENAL TY U/S.271(1)(C) OF THE I.T. ACT, THE SALE PROCEEDS DECLARED AT RS.75 LAKH S WILL BE THE CONSIDERATION FOR COMPUTATION OF THE LONG TERM CAPIT AL GAIN AS AGAINST RS.1,06,30,000/- SUBSTITUTED BY THE LD.CIT(A). 13. SINCE IN THE INSTANT CASE ALSO THE AO HAS COMPUTED T HE PENALTY ON ACCOUNT OF THE DEEMING PROVISION OF SECTION 50C BY CON SIDERING THE SALE CONSIDERATION AT RS.58,85,500/- AS AGAINST THE ACTUAL CONSIDERATION OF RS.56 LAKHS, THEREFORE, RESPECTFULLY FOLLOWING T HE DECISION OF THE TRIBUNAL CITED (SUPRA) WE HOLD THAT FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT THE SALE PROCEEDS DECLARED AT RS.56 LAKHS WILL BE CONSIDERED FOR COMPUTATION OF LONG TERM CAPITAL GAIN A S AGAINST RS.58,85,500/- CONSIDERED BY THE AO AND CIT(A). 14. SO FAR AS THE ALLOWABILITY OF RS.1,64,766/- AS DEDUCTION FR OM THE SALE CONSIDERATION ON ACCOUNT OF PENALTY PAID TO REGISTRAR OF STAMP DUTY ON ACCOUNT OF DELAY IN REGISTRATION OF THE SALE DEED IS CONCERNED, 7 ITA NO.611/PN/2016 WE ARE OF THE OPINION THAT THE SAME IS A DEBATABLE ISSUE. DISALLOWANCE OF THE SAME MAY BE JUSTIFIED IN QUANTUM PROCE EDINGS BUT THE SAME IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALT Y. IN THIS VIEW OF THE MATTER, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE PENALTY BY SUBSTITUTING RS.56 LAKHS AS AGAINST RS.58,85,500/- AS SALE CONSIDERATION AND ALSO ALLOW RS.1,64,766/- BEING PENALTY PAID TO THE REGISTRAR OF STAMPS FOR DELAY IN REGISTRATION AS DEDUCTION FOR COMPUTING THE SHORT TERM CAPITAL GAIN. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOW ED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-07-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 13 TH JULY , 2016. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT(A)-2, PUNE 4. % S / THE PR.CIT-I, PUNE 5. ( ++, , , , IQ.KS / DR, ITAT, A PUNE; 6. 0 / GUARD FILE. / BY ORDER , ( + //TRUE COPY// 23 + , / SR. PRIVATE SECRETARY ,, IQ.KS / ITAT, PUNE