Subhash Rambhu Pawar, Ahmednagar V. Income-tax Officer,

ITA 612/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0536 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 05-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Sale consideration of property below Jantri Value; Deemed to accrue or arise in india
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.612/PN/2016 #& & / ASSESSMENT YEAR : 2011-12 SHRI SUBHASH RAMBH A U PAWAR, S.NO.150, MALPANI HOUSE, INDIRA GANDHI MARG, NEW NAGAR ROAD, SANGAMNER 422 605 DIST. AHMEDNAGAR PAN :AMSPP4645C . / APPELLANT V/S ITO, WARD - 3 , AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI P.L. KUREEL / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF CIT(A)-II, PUNE DATED 04-01-2016 FOR THE ASSESSMENT YE AR 2011-12, WHEREBY THE PENALTY OF RS.88,440/- LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961, (HEREINAFTER REFERRED TO AS THE ACT) HAS BEEN CONFIRMED BY THE CIT(A). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECO RDS ARE : THE ASSESSEE IS A SALARIED PERSON. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING TOTAL IN COME OF RS.1,46,810/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. / DATE OF HEARING :26.10.2016 / DATE OF PRONOUNCEMENT:28.10.2016 2 ITA NO.612/PN/2016 THE AO ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.7,59,320/ - BY MAKING ADDITION OF RS.6,12,513/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN ARISING FROM SALE OF PLOT. THE ASSESSEE HAD PURCHASED PLOT FOR RS.49,65,372/- AND SOLD THE SAME FOR A CONSIDERATION OF RS. 55,75,885/-. THE ASSESSEE IN HIS RETURN OF INCOME HAD NOT OFFERED SHORT TERM CAPITAL GAIN ARISING FROM SALE OF THE SAID PLOT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS TH E AO INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT, AS THE CONSIDERATION RECEIVED BY THE ASSESSEE WAS LESS THAN THE READY RECK ONER RATE ADOPTED BY THE STAMP VALUATION AUTHORITY. THE AO FURTH ER DISALLOWED PENALTY/INTEREST OF RS.1,64,766/- PAID BY THE ASSE SSEE ON ACCOUNT OF STAMP DUTY. AFTER MAKING ADDITION OF RS.6,12,513 /-, PENALTY PROCEEDINGS WERE INITIATED U/S.271(1)(C) FOR CONCEALING THE PARTICULARS OF INCOME. THE ASSESSEE DID NOT FILE APPEAL AG AINST THE QUANTUM ADDITION. THE AO VIDE ORDER DATED 25-07-2014 LE VIED PENALTY OF RS.88,440/- U/S.271(1)(C) OF THE ACT. 3. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AGAINST TH E LEVY OF PENALTY U/S.271(1)(C). THE ASSESSEE SPECIFICALLY AGITATED LEVY OF PENALTY ON THE ADDITIONS MADE U/S.50C AND THE AMOUNT OF RS.1,64,776/- PAID BY THE ASSESSEE ON ACCOUNT OF DELAY IN REGISTRATION. THE CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE LEVY OF PENALTY. AGGRIEVED BY THE ORDER OF CI T(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED THE LAND ALO NG WITH ONE SHRI SHIVAJI SUKHADEO AHER. THE SHARE OF THE ASSESSEE IN THE LAND WAS 50%. THE TOTAL SALE CONSIDERATION OF THE LAND WAS RS.1,12,00,000/-. ACCORDINGLY, RS.56 LAKHS CAME TO THE SHAR E OF 3 ITA NO.612/PN/2016 ASSESSEE. THE LD. AR OF THE ASSESSEE ADMITTED THAT THE ASSESSEE HAD NOT DISCLOSED THE SHORT TERM CAPITAL GAIN FROM SALE OF LAND IN HIS RETURN OF INCOME. THE LD. AR CONTENDED THAT NO PENALTY IS LEVIABLE IN RESPECT OF THE ADDITION MADE U/S.50C OF THE ACT AS THER E IS NO CONCRETE EVIDENCE THAT THE ASSESSEE HAD ACTUALLY RECE IVED ANY CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION MENT IONED IN THE AGREEMENT. THEREFORE, NO PENALTY SHOULD BE LEVIED IN RESP ECT OF ADDITION MADE ON ACCOUNT OF DEEMING PROVISIONS OF SECTION 5 0C OF THE ACT. THE LD. AR FURTHER POINTED THAT THE AUTHORITIES BE LOW HAVE FURTHER ERRED IN LEVYING PENALTY IN RESPECT OF THE AMOUNT OF RS.1,64,766/- PAID BY THE ASSESSEE ON ACCOUNT OF DELAY IN REGISTRATION OF SALE DEED. THE ASSESSEE HAD CLAIMED THE SA ID AMOUNT AS DEDUCTION WHILE COMPUTING CAPITAL GAIN. THE AO DISALLOWED THE SAME WHILE COMPUTING CAPITAL GAIN. SINCE THE ISSUE RELATING TO ALLOWABILITY OF THE SAID EXPENDITURE IS DEBATABLE, NO PENALTY S HOULD BE LEVIED THEREON. 5. THE LD. AR FURTHER POINTED THAT THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF CO-OWNER SHRI SHIVAJI SUKHADEO AH ER IN ITA NO.611/PN/2016 VIDE ORDER DATED 13-07-2016 HAS DELETED THE LEVY OF PENALTY IN RESPECT OF THE ADDITION MADE U/S.50C, AS WELL AS THE AMOUNT PAID BY THE ASSESSEE TOWARDS DELAY IN REGISTRATIO N OF SALE DEED. 6. SHRI P.L. KUREEL REPRESENTING THE DEPARTMENT VEHEMENT LY SUPPORTED THE FINDINGS OF CIT(A) IN UPHOLDING LEVY OF PENALTY U/S.271(1)(C) ON THE ENTIRE ADDITION MADE BY THE AO DURING ASSESSMENT PROCEEDINGS. THE LD. DR CONTENDED THAT THE FACTS IN THE CASE OF ASSESSEE ARE SLIGHTLY AT VARIANCE FROM THAT OF T HE CO-OWNER. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE AN D 4 ITA NO.612/PN/2016 SUSTAINING THE ORDER CONFIRMING LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE FACTS RELATING TO PURCHASE AND SALE OF LAND ARE UNDE R DISPUTE. THE LD. AR OF THE ASSESSEE HAS ADMITTED THAT THE ASSES SEE HAS NOT DISCLOSED CAPITAL GAIN ARISING FROM SALE OF LAND IN THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. THE LD. AR ASS AILED THE PENALTY ORDER ON ACCOUNT OF LEVY OF PENALTY ON THE ADDITI ON MADE UNDER DEEMING PROVISIONS OF SECTION 50C AND THE DISALLOWANC E OF THE AMOUNT OF RS.1,64,766/- PAID BY THE ASSESSEE TO THE REGIS TRAR, ON ACCOUNT OF DELAY IN REGISTRATION OF THE SALE DEED. WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE CO-OW NER OF LAND SHRI SHIVAJI SUKHADEO AHER (SUPRA) HAS DEALT WITH BOTH THE SE ISSUES. THE RELEVANT EXTRACT AND FINDINGS OF THE TRIBUNAL ARE RE PRODUCED HEREIN BELOW : 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VAR IOUS 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 VAL UATION FOR STAMP DUTY PURPOSE WAS RS.1,17,71,000/-. THE SHARE OF T HE ASSESSEE FOR THE ABOVE PROPERTY IS 50%. WE FIND THE ASSESSEE HAS NOT D ECLARED ANY SHORT TERM CAPITAL GAIN FOR WHICH THE AO DETERMINED SUCH SHORT TERM CAPITAL GAIN AT RS.6,12,513/- AND THEREAFTER LEVIED PENALTY OF RS.99,658/- ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOME W HICH HAS BEEN UPHELD BY THE CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.56 L AKHS BEING HIS 50% SHARE IN THE SAID PROPERTY AND THEREFORE THE SALE CONSIDERATION SHOULD BE CONSIDERED AT RS.56 LAKHS AS AGAINST RS.58,85,50 0/- TAKEN BY THE AO ON THE BASIS OF THE VALUATION FOR STAMP DUTY P URPOSES. FURTHER, NO PENALTY IS LEVIABLE ON ACCOUNT OF DISALLOWANCE OF PENALTY OF RS.1,64,766/- SINCE ALLOWABILITY OF THE SAME IS A DEBA TABLE ISSUE. THUS, ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, WHILE THE ASSESSEE IS LIABLE FOR PENALTY ON ACCOUNT OF SUPPRESSION OF SHORT T ERM CAPITAL GAIN, HOWEVER, THE SAME SHOULD BE RESTRICTED TO THE AMOUNT D ETERMINED ON THE BASIS OF THE ACTUAL SALE CONSIDERATION, I.E. RS.56 L AKHS AND NOT RS.58,85,500/- AND DEDUCTION OF RS.1,64,766/- BEING P ENALTY. 5 ITA NO.612/PN/2016 12. SO FAR AS THE LEVY OF PENALTY ON ACCOUNT OF THE DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION AND VALUE AS PER PROVISIONS OF SECTION 50C IS CONCERNED, WE FIND THE COORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF SHRI SUNIL DATTATRAYA TAKLE (SUPRA) FOLLOWING THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF FORTUNE HOTELS AND E STATES 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 HONB LE BOMBAY HIGH COURT IN THE CASE OF FORTUNE HOTELS AND E STATES PVT. LTD., (SUPRA) HAS UPHELD THE DECISION OF THE TRIBUNAL WHERE THE TRIBUNAL HAS HELD THAT PENALTY CANNOT BE IMPOSED WITH REFERENCE TO ADDITION OF DEEMED INCOME 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 PENALTY U/S.271(1 )(C) OF THE I.T. ACT, THE SALE PROCEEDS DECLARED AT RS.75 LAKHS WIL L 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 THE PENALTY ON ACCOUNT OF THE DEEMING PROVISION OF SECTION 50C BY CO NSIDERING THE SALE CONSIDERATION AT RS.58,85,500/- AS AGAINST THE ACTUAL C ONSIDERATION OF RS.56 LAKHS, THEREFORE, RESPECTFULLY FOLLOWING THE DEC ISION OF THE TRIBUNAL CITED (SUPRA) WE HOLD THAT FOR LEVY OF PEN ALTY 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 AS AGAINST RS.58,85,500/- CONSIDERED BY THE AO AND CIT(A). 14. SO FAR AS THE ALLOWABILITY OF RS.1,64,766/- AS DED UCTION FROM THE SALE CONSIDERATION ON ACCOUNT OF PENALTY PAID TO REGI STRAR OF STAMP DUTY ON ACCOUNT OF DELAY IN REGISTRATION OF THE SALE DEED IS CONCERNED, WE ARE OF THE OPINION THAT THE SAME IS A DEBATABLE ISSUE. D ISALLOWANCE OF THE SAME MAY BE JUSTIFIED IN QUANTUM PROCEEDINGS BUT THE SA ME IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALTY. IN THIS VI EW OF THE MATTER, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTI ON TO RECOMPUTE THE PENALTY BY SUBSTITUTING RS.56 LAKHS AS AGAINST RS.58,85,5 00/- AS SALE CONSIDERATION AND ALSO ALLOW RS.1,64,766/- BEING PENAL TY PAID TO THE REGISTRAR OF STAMPS FOR DELAY IN REGISTRATION AS DEDUCTI ON FOR COMPUTING THE SHORT TERM CAPITAL GAIN. THE GROUNDS RAISED BY TH E ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 8. SINCE, THE FACTS IN THE CASE OF ASSESSEE AND THAT OF S HRI SHIVAJI SUKHADEO AHER, CO-OWNER ARE IDENTICAL, WE FIND NO REASON TO TAKE DIFFERENT VIEW. ALTHOUGH, THE LD. DR DURING THE COURSE OF SUBMISSIONS HAS CONTENDED THAT THE FACTS IN THE PRESENT CASE ARE DIFFERENT, HOWEVER, THE LD. DR COULD NOT POINT OUT ANY PART ICULAR DIFFERENCE IN THE FACTS OF BOTH THE CASES. HENCE, BY FOLLOW ING THE 6 ITA NO.612/PN/2016 ORDER OF THE COORDINATE BENCH, WE PARTLY ACCEPT THE A PPEAL OF THE ASSESSEE IN SAME TERMS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF OCTOBER, 2016. SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER / PUNE ; DATED : 28 TH OCTOBER, 2016 . SATISH ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A) - II, PUNE 4. 5. 6. CIT-II, PUNE # &&', ', / DR, ITAT, B PUNE; , / GUARD FILE. / BY ORDER , //TRUE COPY// ./ & ' / SR. PRIVATE SECRETARY ' , / ITAT, PUNE