HARISH VOOVAYA SHETTY, MUMBAI V. ITO 18(2)(1), MUMBAI

ITA 6383/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79182 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 03-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Keywords: Sale consideration of property below Jantri Value; Question of law; Wrong claim; Bonafide mistake
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.6383/MUM/2012, A.Y. 2007-08. HARISH VOOVAYA SHETTY, SUJATA REFRESHMENTS, GOKHALE ROAD JUNCTION, GOKHALE ROAD, DADAR (W), MUMBAI 400028 PAN: AAIPS 6199L (APPELLANT ) VS. THE ITO 18(2), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI SUBHASH S.SHETTY RESPONDENT BY : SHRI PI TAMBER DAS DATE OF HEARING : 03/07/20 14 DATE OF PRONOUNCEMENT : 03/07/2014 ORDER PER I.P.BANSAL, J.M, THIS APPEAL IS FILED BY THE ASSESSEE. IT IS DIREC TED AGAINST ORDER PASSED BY LD. CIT(A)-29, MUMBAI DATED 3/7/2012 FOR ASSESSMEN T YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER: 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING THE PENALTY OF RS. 2,27,800/- LEVIED U NDER SECTION 27I(1)(C) OF THE INCOME LAX ACT, 1961 BY THE ASSESSING OFFICER IS UNJUSTIFI ED, ILLEGAL AND HAD IN LAW. 2. THE ORDER PASSED BY THE EARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS REQUIRED TO BE QUASHED IN AS MUCH AS THE SAME IS PA SSED WITHOUT GIVING A PROPER OPPORTUNITY OF BEING HE TO THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) COMMITTED A GROSS ERROR OF LAW AND FACT IN COMING TO THE CONCLUSION THAT THE A PPELLANT FILED INACCURATE PARTICULARS AND THEREFORE LIABLE FOR THE IMPUGNED P ENALTY ON THE GROUND THAT IT WAS ITA NO.6383/MUM/2012, A.Y. 2007-08. 2 MANDATORY ON THE PART OF THE APPELLANT TO ADOPT THE VALUE COMPUTED BY THE STAMP AUTHORITIES AS THE SALES CONSIDERATION RECEIVED ON THE TRANSFER OF THE IMMOVABLE PROPERTY. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) COMMITTED A GROSS ERROR IN NOT APPRECIATING THAT THE VALUATION AS PER SECTION 50C MAY BE DEEMED TO BE THE SALES CONSIDERATION FOR THE PURPOSE OF COMPUTATION LONG T ERM CAPITAL GAINS BUT CAN NOT BE THE BASIS FOR LEVY OF PENALTY UNDER SECTION 271(L)( C) OF THE ACT. 2. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD HIS 50% SHARE IN THE PROPERTY OF PLOTS OF LAND BEARING CITY SUR VEY NO.4645, 4643 & 4606 ADMEASURING 604 SQ. METERS, 13.07 SQ. METERS AND 65 .06 SQ. MTERS RESPECTIVELY TO MRS. VARAKSHINI C. SHETTY IN THE VILLAGE MIRA, TAL : THANE FOR A SALE CONSIDERATION OF RS.4,50,000/-. THE SAID PLOT OF LAND WAS VALUE D FOR STAMP DUTY PURPOSES AT RS.15,89,000/-. APPLYING SECTION 50C OF INCOME TAX ACT, 1961 (THE ACT) THE DIFFERENCE BETWEEN SALE PRICE AND STAMP DUTY VALUE WAS CONSIDERED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. ON SUCH DI FFERENCE IMPUGNED CONCEALMENT PENALTY HAS BEEN LEVIED, WHICH IS CALCU LATED AT RS.2,27,800/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. THE LEVY OF P ENALTY HAS BEEN CONFIRMED BY LD. CIT(A). 3. AT THE TIME OF HEARING IT WAS SUBMITTED BY LD. AR THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT MUMBAI BENCHES IN THE CASE OF RENU HINGORANI VS. ACIT VIDE ORDER DATED 22/12/2010 IN ITA NO.2210/MUM/2010 , WHEREIN PENALTY LEVIED UNDER SECTION SIMILAR CIRCUMSTANCES WAS CANCELLED WITH THE FOLLOWING OBSERVATIONS: 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD . WE FIND THAT THE AO HAD MADE ADDITION OF RS.9,00,824/- BEING DIFFERE NCE BETWEEN THE SALE CONSIDERATION AS PER SALE AGREEMENT AND THE VALUATI ON MADE BY THE STAMP VALUATION AUTHORITY. THUS, THE ADDITION HAS BEEN MA DE 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 REC EIVED BY THE ASSESSEE BUT THE ADDITION IS MADE PURELY ON THE BASIS OF DEEMING PRO VISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDING THAT THE ACT UAL SALE CONSIDERATION IS MORE THAN THE SALE CONSIDERATION ADMITTED AND MENTIONED IN THE SALE AGREEMENT. THUS, IT DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO FURNISH ITA NO.6383/MUM/2012, A.Y. 2007-08. 3 THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT FACTS, DOCUMENTS/MAT ERIAL INCLUDING THE SALE AGREEMENT AND THE AO HAS NOT DOUBTED THE GENUINENES S AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDER ATION RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, IT C ANNOT BE SAID THAT THE ASSESSEE HAS NOT FURNISHED CORRECT PARTICULARS OF INCOME. ME RELY 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 CONSIDERATI ON AS PER THIS AGREEMENT WAS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION BECAU SE OF THE DEEMING PROVISIONS DOES NOT IPSO FACTO ATTRACT THE PENALTY U/S 271(1)( C ). HENCE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S RE LIANCE PETROPRODUCTS PVT .LTD (SUPRA), THE PENALTY LEVIED U/S 271(1)( C ) IS NOT SUSTAINABLE. THE SAME IS DELETED. COPY OF THE AFOREMENTIONED ORDER WAS PLACED ON RECO RD AND WAS ALSO GIVEN TO LD. DR. LD. AR FURTHER REFERRED TO THE DECISION OF AHM EDABAD BENCH , WHICH IS DATED 22/6/2012 IN ITA NO.508/AHD/2010, WHEREIN ALSO SIMI LAR PENALTY WAS DELETED WITH THE FOLLOWING OBSERVATIONS: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS A FACT THAT THE ADDITION HAS BEEN MADE BY THE AO IN T HE REVISIONARY PROCEEDINGS. THE ADDITION HAS BEEN MADE ON THE BASIS OF PROVISIONS O F SECTION 50C. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS RECEIVED CONSIDERAT ION OVER AND ABOVE THAN THAT DECLARED IN THE SALES DEED. THE AO HAS NOT DISPUTED THE CONSIDERATION RECEIVED BY THE ASSESSEE. THE ADDITION HAS BEEN MADE ON THE BAS IS OF DEEMING PROVISIONS OF SECTION 50C. THE ASSESSEE HAS FURNISHED ALL THE FAC TS OF SALE, DOCUMENTS/ MATERIAL BEFORE THE AO. THE AO HAS NOT DOUBTED THE GENUINENE SS OF THE DOCUMENTS/DETAILS FURNISHED BY THE ASSESSEE. ONLY BECAUSE THE ASSESSE E AGREED TO THE ADDITIONS BECAUSE OF THE DEEMING PROVISIONS IT CANNOT BE CONS TRUED TO BE FILING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. THE ASSESS EE AGREED TO ADDITION ON THE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTH ORITY CANNOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THE SALE A GREEMENT IS DEEMED TO BE INCORRECT AND WRONG. IN VIEW OF THESE FACTS WE ARE OF THE CON SIDERED VIEW THAT PENALTY CANNOT BE LEVIED ON THE BASIS OF DEEMING PROVISION. WE ACC ORDINGLY DELETE THE SAME. 3.1 LD. AR FURTHER REFERRED TO THE DECISION OF CIT VS. MADAN THEATRES LTD., 260 CTR (CAL) 75, WHEREIN ALSO HONBLE CALCUTTA HIGH CO URT UPHELD THE ORDER OF TRIBUNAL VIDE WHICH PENALTY LEVIED ON SIMILAR ISSUE WAS DELETED WITH THE FOLLOWING OBSERVATIONS: ITA NO.6383/MUM/2012, A.Y. 2007-08. 4 3. THE REVENUE PREFERRED AN APPEAL. THE LEARNED TRI BUNAL DISMISSED THE APPEAL HOLDING, INTER ALIA, AS FOLLOWS: THUS OBVIOUSLY, IT IS ONLY ON ACCOUNT OF DEEMING PR OVISIONS OF S. 50C, THE AO HAS MADE THE ADDITION BY ADOPTING THE SALE CONSIDERATIO N OF RS.5,19,77,000, BEING THE VALUE ADOPTED FOR THE PURPOSE OF STAMP VALUATION. T HE REVENUE HAS ALSO NOT SHOWN AS TO HOW THE ASSESSEE COULD HE HELD TO HAVE ACTUAL LY RECEIVED THIS AMOUNT WHICH IS IN EXCESS OF THE AMOUNT OF RS. 2,51.50,000. IT HAS ALSO NOT BEEN SHOWN AS TO WHETHER ANY CORRESPONDING ADDITION HAS BEEN MADE IN THE HANDS OF THE BUYER. IN ANY CASE, THE ISSUE IS ALSO NOW SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RENU HINGORAN I (SUPRA). IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF RENU HINGORANI (SUPRA) AS ALSO ON ACCOUNT O F THE FACT THAT THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS OF THE LEARN ED CIT(A) THAT THE BONA FIDES OF THE ASSESSEC ARE GENUINE, THE FINDINGS OF THE LEARN ED CIT(A) STAND CONFIRMED. IN THE CIRCUMSTANCES, THE AL)PEAL OF 11W REVENUE IS DISMIS SED. 4. MR. NIAUMUDDIN, LEARNED ADVOCATE APPEARING FOR F LU REVENUE, CONTENDED THAT THE ASSESSEE HAD A CHOICE TO DISPUTE THE VALUATION ON T HE BASIS OF THE DEEMED VALUE, BUT THE ASSESSEE DID NOT TAKE THAT OPPORTUNITY. THE ASSESSEE HAD A CHOICE OR HE COULD HAVE LITIGATED. THE FACT REMAINS THAT THE ACT UAL AMOUNT RECEIVED WAS OFFERED FOR TAXATION. IT IS ONLY ON THE BASIS OF THE DEEMED CONSIDERATION THAT THE PROCEEDINGS UNDER S. 271(1)((C) STARTED. THE REVENUE HAS FAILED TO PRODUCE ANY IOTA OF EVIDENCE THAT THE ASSESSEE ACTUALLY RECEIVED ONE PAISE MORE THAN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED BY HIM. 5. WE ARE, AS SUCH, OF THE OPINION THAT THERE IS NO SCOPE TO ADMIT THE APPEAL SINCE THE SAME DOES (SIC.-NOT) RAISE ANY QUESTION OF LAW, SUBSTANTIAL OR OTHERWISE. THE APPEAL IS, THEREFORE, REJECTED. THUS, IT WAS SUBMITTED BY LD.AR THAT IMPUGNED PENA LTY SHOULD BE DELETED. 4. ON THE OTHER HAND, LD. DR SUBMITTED THAT PROVIS IONS OF SECTION 50C WAS VERY MUCH PART OF THE STATUTE WHEN ASSESSEE FILED T HE RETURN AND ASSESSEE DID NOT COMPUTE HIS CAPITAL GAIN ACCORDING TO THAT PROVISIO NS. THUS, IT WAS A DELIBERATE ATTEMPT ON BEHALF OF ASSESSEE TO FURNISH INACCURATE PARTICULARS OF HIS INCOME WHICH CLEARLY ENTAIL CONCEALMENT PENALTY. LD. DR REFERRED TO THE FOLLOWING DECISIONS TO CONTEND THAT PENALTY IN SUCH CASES IS LIABLE TO BE UPHELD. ITA NO.6383/MUM/2012, A.Y. 2007-08. 5 (A) CIT VS. ZOOM COMMUNICATIONS PVT. LTD., 327 ITR 510 (B) CIT VS. ESCORT FINANCE LTD., 328 ITR 44 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IF THE RATIO OF THE DECISION RELIED U PON BY LD. AR ARE CONSIDERED THEN THEY ARE DIRECT DECISIONS ON THE ISSUE WHICH PERTAI N TO ADDITION MADE ON APPLICATION OF SECTION 50C. ACCORDING TO DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE WHERE ADDITION IS MADE ON ACCOUNT OF AP PLICATION OF SECTION 50C AND REVENUE FAILED TO PRODUCE ANY EVIDENCE TO THE EFFE CT THAT ASSESSEE HAS ACTUALLY RECEIVED MORE AMOUNT THAN THAT SHOWN BY IT ON THE SALE OF PROPERTY THEN PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. THEREFOR E, WHERE ADDITION IS MADE ON ACCOUNT OF APPLICATION OF SECTION 50C AND THERE IS NO MATERIAL ON RECORD TO SHOW THAT ASSESSEE HAD RECEIVED MORE AMOUNT THAN THAT SH OWN BY IT ON SALE OF PROPERTY THEN PENALTY UNDER SECTION 271(1)(C) CANN OT BE LEVIED. IN THE PRESENT CASE ALSO NO SUCH CASE HAS BEEN MADE BY THE REVENU E. THEREFORE, DECISION OF HONBLE CALCUTTA HIGH COURT IS A DIRECT DECISION O N THE ISSUES. 5.1 THE DECISIONS RELIED UPON BY LD. DR ARE NOT DIR ECTLY ON THE ISSUE AND DISTINGUISHABLE ON FACTS. IN THE CASE OF CIT VS. Z OOM COMMUNICATIONS PVT. LTD.,(SUPRA) A SUM OF RS.1,21,49,861/- WAS DEBITED TO ADMINISTRATIVE AND OTHER EXPENSES WHICH WAS ON ACCOUNT OF EQUIPMENT WRITTE N OFF. IT WAS EXPLAINED BY THE ASSESSEE THAT DUE TO OVER SIGHT THE SAID AMOUNT WAS NOT ADDED BACK IN THE COMPUTATION OF INCOME AND THE SAME OUGHT TO HAVE BE EN ADJUSTED IN THE BLOCK OF ASSETS. ON THESE FACTS, IT WAS HELD BY THEIR LORDS HIPS THAT IN ABSENCE OF ASSESSEE COMPANY TELLING THE AO AS TO WHO COMMITTED THE OVER SIGHT RESULTING IN FAILURE TO ADD SUCH AMOUNT WHILE COMPUTING INCOME OF THE ASSES SEE, UNDER WHAT CIRCUMSTANCES THE OVERSIGHT OCCURRED AND WHY IT WAS NOT DETECTED BY THOSE WHO CHECKED INCOME TAX RETURN BEFORE IT WAS FILED AND LATER BY THE AUDITORS OF THE ASSESSEE COMPANY, ONE CANNOT ACCEPT THE GENERAL VI EW TAKEN BY THE TRIBUNAL THAT THE MISTAKE WAS BONAFIDE MISTAKE. THUS, THE F ACTS OF THAT CASE ARE ENTIRELY ITA NO.6383/MUM/2012, A.Y. 2007-08. 6 DIFFERENT FROM THE FACTS OF PRESENT CASE AND THE RA TIO LAID DOWN IN ZOOM COMMUNICATIONS (SUPRA) CANNOT BE APPLIED TO THE FAC TS OF THE PRESENT CASE. 5.2 IN THE CASE OF CIT VS. ESCORTS FINANCE LTD.(SUP RA) THE ASSESSEE MADE FALSE CLAIM UNDER SECTION 35D WHICH WAS NOT CONSIDERED TO BE A CLAIM ON WHICH THERE COULD BE TWO OPINIONS AND THUS, THE FACTS OF THAT C ASE ARE ALSO DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 5.3 IT IS SEEN THAT THE CONTEXT IN WHICH BOTH THE D ECISIONS RELIED UPON BY LD. DRHAVE BEEN RENDERED IS ENTIRELY DIFFERENT FROM THE CONTEXT OF THE PRESENT CASE. THE LAW IN THIS REGARD IS WELL SETTLED AS HELD BY H ONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORK PVT. LTD, 198 ITR 297 (SC) THAT IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WOR D OR SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TREATED IT TO BE THE COMPLETE LA W DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIO NS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTION WHICH WERE BEFORE THIS COURT. A DECISION OF THIS COURT TAKES ITS COLOUR FROM THE QUESTION INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYING DECISION T O A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTENCE FROM THE JUDG MENT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION BY THIS COURT TO SUPPORT THEIR REASONING. 5.4 APPLYING THE AFOREMENTIONED RATIO, WHEN THERE IS A DIRECT DECISION AVAILABLE ON THE ISSUE, THEN IT WILL BE APPROPRI ATE TO FOLLOW THE SAME PARTICULARLY WHEN NO CONTRARY DECISION ON THE SAME VERY ISSUE IS CITED BY THE OPPOSITE SIDE. ITA NO.6383/MUM/2012, A.Y. 2007-08. 7 5.5 IN VIEW OF ABOVE DISCUSSIONS, RESPECTFULLY FOLL OWING THE DECISION OF HONBLE CALCUTTA HIGH COURT, WE HOLD THAT PENALTY IN THE PR ESENT CASE WAS NOT JUSTIFIED AND THE SAME IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/07/2014 ! ' #$ % &'( 03/07/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 03/07/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS