ASST CIT 14(1), MUMBAI V. SUNLAND METAL RECYLING, MUMBAI

ITA 6454/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8317 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 30-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2011
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE
• Assessee Lawyers: NEIL PHILIP SHRI VIMAL PUNMIYA
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; ,OA ,OA ,OA ,OA JH CH JH CH JH CH JH CH- -- - VKJ VKJVKJ VKJ- -- - CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; DS LE{K DS LE{K DS LE{K DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.6454/MUM/2011 ASSESSMENT YEAR: - 2008-09 ASST. COMMISSIONER OF INCOME TAX 14(1), 202, 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. V S. ` M/S SUNLAND METAL RECYCLING ROOM NO. 13, 1 ST FLOOR, ANAND BUILDING, 24, ANANTWADI, FANASWADI, MUMBAI 400 002. APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER DATED 7-7- 2011 OF CIT(A) ARISING FROM THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT. THE REVENUE HAS RAISED SOLITARY GRO UND AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND, THE LD. CIT(A) HAS ERRED ON THE FACT AS WELL AS IN LAW IN C ANCELLING THE PENALTY U/S 271(1)(C) LEVIED AT RS. 22,12,069/- IG NORING THE FACT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS I N RESPECT OF VALUE ADOPTED FOR COMPUTATION OF CAPITAL GAIN IN VIEW OF THE MANDATORY PROVISION OF SECTION 50C OF THE ACT. REVENUE BY SHRI NEIL PHILIP ASSESSEE BY SHRI VIMAL PUNMIYA DATE OF HEARING 19.11.2014 DATE OF PRONOUNCEMENT 10-12-2014 M/S SUNLAND METAL RECYCLING 2 | P A G E 2. THE BRIEF FACTS RELEVANT TO THE LEVY OF PENALTY A RE THAT THE ASSESSEE HAD TRANSFERRED / SOLD OFFICE PREMISES TO ITS SISTER CO NCERN FOR A SALE CONSIDERATION OF RS. 1.55 CRORES. THE ASSESSING OFFI CER CONSIDERED THE FULL SALE CONSIDERATION AS PER STAMP DUTY AUTHORITY VALUA TION AT RS. 2,00,08,000/- IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 50C OF INCOME TAX ACT. ACCORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION TO THE SHORT TERM CAPITAL GAIN. SUBSEQUENTLY, THE ASSESSING OFFICE R INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR LEVY OF PENALTY AGAINS T THE ADDITION MADE TO THE SHORT TERM CAPITAL GAIN AND LEVIED A PENALTY OF R S. 22,12,069/- BEING 100% OF TAX SOUGHT TO BE EVADED, VIDE ORDER DATED 30. 09.2010.. 3. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFIC ER BEFORE CIT(A). THE CIT(A) HAS DELETED THE PENALTY BY FOLLOW ING THE VARIOUS DECISIONS OF THIS TRIBUNAL ON THE POINT AND HELD THAT T HERE IS NO CONCEALMENT OF ANY PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. 4. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND CON SIDERED THE RELEVANT MATERIAL ON RECORD . THE LD. DR HAS RELIED U PON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT WHEN THE PROVISIO NS OF SECTION 50C ARE APPLICABLE IN THE CASE OF THE ASSESSEE THEN COMP UTING THE SHORT TERM CAPITAL GAIN DE HORS THE SECTION 50C AMOUNTS TO FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS CONCEALMENT OF PAR TICULARS OF INCOME LIABLE FOR LEVY OF PENALTY. ON THE OTHER HAND, THE LD. AUTHOR IZED REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED ALL THE REL EVANT DETAILS AS WELL AS RECORDS INCLUDING THE SALE AGREEMENT, WHEREIN, THE SA LE CONSIDERATION WAS AGREED UPON BETWEEN THE PARTIES AND ACTUALLY REC EIVED BY THE ASSESSEE, M/S SUNLAND METAL RECYCLING 3 | P A G E THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER I N THE SHORT TERM CAPITAL GAIN BY INVOKING THE DEEMING PROVISIONS OF SEC TION 50C OF THE INCOME TAX ACT DOES NOT ATTRACT THE PENAL PROVISIONS OF SECTION 271(1)(C). IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOL LOWING DECISIONS:- (I) RENU HINGORANI VS. ACIT (ITA NO. 2210/MUM/2010 (II) CIT VS. MADAN THEATRES LTD. ( CAL. HC) GA NO. 684 OF 2013, ITAT NO. 62 OF 2013 (III) SHRI CHIMANLAL MANILAL PATEL VS. ACIT (ITA NO. 508/AHD/2010) (IV) SHRI C BASKER VS. ACIT (ITA NO. 998/MDS/2012) (V) SHRI C VIJAYAKUMAR ( ITA NO. 998/MDS/ 2012 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD, WE NOTE THAT IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING THAT THE SALE CONSID ERATION DISCLOSED BY THE ASSESSEE IS NOT ACTUAL AMOUNT RECEIVED AS PER THE AGREEMENT OF SALE. THE ADDITION WAS MADE BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C WHEREBY THE FULL VALUE OF CONSIDERATION WAS ADOPTED A S PER THE VALUATION OF THE STAMP DUTY AUTHORITY FOR LEVY OF STAMP DUTY. THE CIT(A) AFTER CONSIDERING ALL THE FACTUAL MATRIX OF THE CASE HAS DE LETED THE PENALTY IN PARA 5 AS UNDER:- 5. ON CAREFUL CONSIDERATION OF THE ARGUMENTS OF TH E LD. A.R. AND FACTS STATED IN ASSESSMENT ORDER AND PENALTY ORDER AND DU LY CONSIDERING THE APPLICABLE LEGAL POSITION AND ALSO FACTUAL MATRIX O F THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE'S GRIEVANCE IS LE GALLY SUSTAINABLE ON MERITS. IT IS UNDISPUTED THAT AS SOON AS THE AO POI NTED OUT THE APPLICABILITY OF SECTION 50C, THE ASSESSEE AGREED F OR ADDITION AND PAID TAX IMMEDIATELY. IT IS ALSO UNDISPUTED THAT ALL THE PAR TICULARS AND MATERIAL M/S SUNLAND METAL RECYCLING 4 | P A G E FACTS WERE FURNISHED BY THE ASSESSEE EITHER ALONG W ITH RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. TH ERE IS NO CONCEALMENT OF ANY PARTICULARS ON THE PART OF THE A SSESSEE. THE AO HAD NOT DOUBTED GENUINENESS AND VALIDITY OF THE DOCUMEN TS PRODUCED BEFORE HIM AND SALE CONSIDERATION RECEIVED BY THE ASSESSEE . ON THE CONTRARY, FACTS OF THE CASE THAT THE OFFICE PREMISES WERE TRA NSFERRED TO SISTER CONCERN ITSELF PROVES THAT THERE WAS NO CASE TO DO UBT THE SALE CONSIDERATION SHOWN IN THE AGREEMENT AS SUBMITTED B Y THE ASSESSEE, 70% SHARE IN THE TRANSFEREE COMPANY IS HELD BY THE NEAR EST FAMILY MEMBERS OF THE PARTNERS I.E. SON, WIFE OR FATHER AND THEREFORE IT CAN NOT BE BELIEVED THAT SALE CONSIDERATION IN EXCESS OF SALE CONSIDERA TION SHOWN IN AGREEMENT MIGHT HAVE PASSED. IT SEEMS THAT BASIC PU RPOSE OF TRANSFER WAS TO CHANGE OWNERSHIP OF OFFICE PREMISES FROM ONE GROUP CONCERN TO OTHER GROUP CONCERN AND NOT TO EARN ANY PROFIT/GAIN FROM TRANSFER. HAD IT BEEN TRANSFERRED TO OUTSIDERS THERE MIGHT BE A C ASE OF SUSPICION. WHICH IS NOT SO IN THE INSTANT CASE. EVEN OTHERWISE MERE SUSPICION IS NOT SUFFICIENT TO LEVY PENALTY. THERE SHOULD BE SOME MA TERIALON RECORD TO ESTABLISH THAT ACTUAL SALE CONSIDERATION RECEIVED B Y THE ASSESSEE WAS MUCH MORE THAN THE SALE CONSIDERATION SHOWN IN THE SALE AGREEMENT. THE FACTS AND ISSUE OF THE INSTANT CASE ARE IDENTICAL W ITH THE FACTS AND ISSUE OF THE CASE OF RENU HINGORANI VS. CIT. ON CAREFUL CONS IDERATION OF THE SAID DECISION OF THE HON'BLE JURISDICTIONAL ITAT, IMMEDI ATELY TRANSPIRES THAT THE SAID DECISION IS SQUARELY APPLICABLE IN THE CAS E OF THE ASSESSEE. EVEN OTHERWISE THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT LTD. AN D ALSO HON'BLE HIGH COURT OF PUNJAB AS PREFERRED BY THE LD. AR ARE SQUA RELY APPLICABLE. THE CIT(A) BEING SUBORDINATE AUTHORITY TO THE JURISDICT IONAL ITAT IS BOUND TO FOLLOW THE DECISION OF THE HON'BLE JURISDICTIONAL I TAT ON THE IDENTICAL FACTS. ACCORDINGLY, IN VIEW OF DCISION OF HON'BLE J URISDICTIONAL ITAT OF MUMBAI IN THE CASE OF RENU HINGORANI VS. ACIT DISCU SSED ABOVE, THE PENALTY LEVIED BY THE AO IS NOT SUSTAINABLE IN THE LIGHT OF THE FACTS OF THE CASE, HENCE THE SAME IS DELETED. 6. AS IT IS CLEAR THAT THE ASSESSEE HAS DISCLOSED ALL RELEVANT DETAILS AS WELL AS DOCUMENTS IN SUPPORT OF ITS COMPUTATION OF SHORT TERM CAPITAL GAIN BY TAKING INTO CONSIDERATION THE ACTUAL SALE CONSIDERATI ON RECEIVED BY THE ASSESSEE. THE FACT OF ACTUAL SALE CONSIDERATION RECE IVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER BUT THE AD DITION WAS MADE SIMPLY BY APPLYING THE DEEMING PROVISIONS OF SECTION 5 0C. THEREFORE, IN VIEW OF THE VARIOUS DECISIONS AS RELIED UPON BY THE L D. AUTHORIZED M/S SUNLAND METAL RECYCLING 5 | P A G E REPRESENTATIVE AS WELL AS BY THE CIT(A), WE DO NOT F IND ANY ERROR IN THE IMPUGNED ORDER OF CIT(A) IN DELETING THE PENALTY LEV IED U/S 271(1)(C). 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DAY OF NOVEMBER 2014 SD/- SD/- ( B.R.BASKARAN ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 10-11 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI