RAJEEV ARORA, MUMBAI V. DCIT CEN CIR 25, MUMBAI

ITA 7115/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3017 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 27-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 7115/MUM/2014 (ASSESSMENT YEAR : 2005-06) SHRI RAJEEV ARORA, 505, HILL N SEA, 72 PALI HILL, BANDRA (WEST), MUMBAI 400 050 PAN:AADPA 6192Q ... APPELL ANT VS. THE DY. COMM. OF INCOME TAX, CEN. CIR.25, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI RUTURAJ H. GURJAR RESPONDENT BY : SHRI SANTOSH MANKOSKAR DATE OF HEARING : 21/06/2016 DATE OF PRONOUNCEMENT : 29/06/2016 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2005-06 IS DIRECTED AGAINST AN ORD ER PASSED BY CIT(A)-39, MUMBAI DATED 01/09/2014, WHICH IN TURN A RISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28 /12/2007. 2. IN THIS APPEAL, THE SOLITARY ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO PENALTY IMPOSED UNDER SECTION 271(1)(C) O F THE ACT OF RS. 3,89,931/-. 2 ITA NO. 7115/MUM/2014 (ASSESSMENT YEAR : 2005-06) 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS AN INDIVIDUAL, WHO FILED THE RETURN OF INCOME DECLARING TOTAL INCO ME AT RS.76,990/-, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT WHEREBY THE TOTAL INCOME HAS BEEN ASSESSED AT RS.30,93,530/-. THE RELEVANT P OINT FOR MY CONSIDERATION IS THE DIFFERENCE BETWEEN THE ASSESSE E AND REVENUE WITH REGARD TO THE DETERMINATION OF LONG TERM CAPITAL GA IN ON ACCOUNT OF THE SALE PROCEEDS OF LAND AND FACTORY BUILDING OF A PAR TNERSHIP FIRM M/S. INDIAN METAL FORGINGS & ROLLING MILLS. IT HAS BEEN EXPLAINED THAT ASSESSEE WAS A 20% SHAREHOLDER IN THE SAID FIRM AN D THE CAPITAL GAINS RETURNED WERE BASED ON THE SALE CONSIDERATION ACTUA LLY RECEIVED, WHEREAS THE ASSESSING OFFICER APPLIED THE PROVISION S OF SECTION 50C OF THE ACT AND ADOPTED THE FULL VALUE OF THE CONSIDERA TION BEING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, WHICH WAS HIGHER THAN THE ACTUAL CONSIDERATION RECEIVED. THE RESULTING DIFFE RENCE WORKED OUT AT RS.30,16,538/-, WHEREBY ASSESSEES SHARE CAME TO RS .62,58,200/-. THE AFORESAID AMOUNT HAS BEEN CONSIDERED BY THE ASSESSI NG OFFICER TO BE EXIGIBLE FOR LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT ON THE GROUND THAT ASSESSEE HAD FURNISHED INACCURATE PARTI CULARS OF INCOME TO THAT EXTENT. HENCE, THE ASSESSING OFFICER LEVIED P ENALTY OF RS.3,89,931/- BEING100%OF THE TAX SOUGHT TO BE EVADED ON SUCH INC OME. THE CIT(A) HAS ALSO AFFIRMED THE ACTION OF THE ASSESSING OFFIC ER AND, HENCE, THE APPEAL OF THE ASSESSEE BEFORE THE TRIBUNAL. 4. BEFORE ME, THE LD. REPRESENTATIVE FOR THE ASSESS EE VEHEMENTLY POINTED OUT THAT THE ENTIRE ADDITION IS BASED ONLY ON A DEEMING PROVISION OF SECTION 50C OF THE ACT AND THAT THERE IS NO ACTUAL EVIDENCE TO SUGGEST THAT ANY CONSIDERATION OVER AND ABOVE TH E STATED 3 ITA NO. 7115/MUM/2014 (ASSESSMENT YEAR : 2005-06) CONSIDERATION HAS BEEN RECEIVED BY THE ASSESSEE. I T WAS, THEREFORE, CONTENDED THAT PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT ARE NOT ATTRACTED IN THE PRESENT SITUATION. IN THI S CONNECTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS:- 1. BHAVYA ANANT UDESHI VS. ITO, ITA NO.565/HYD/2 015 DT.04/09/2015 2. ACIT VS. M/S. SUNLAND METAL RECYCLING, ITA NO.6 454/MUM/2011 DATED 10/12/2014. 3. HARISH VOOVAYA SHETTY VS. ITO 18(2), ITA NO.638 3/MUM/2012 DATED 03/07/2014. 4. SATHE BUISCUIT & CHOCOLATE CO. LTD. VS. DCIT,(2 013) 30 TAXMANN.COM 89 (PUNE TRIB). 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS NOT CONTESTED THE FACTUAL MATRIX BROUGHT OUT BY THE AS SESSEE, BUT POINTED OUT THAT THE DIFFERENCE BETWEEN THE RETURNED AND AS SESSED INCOME JUSTIFIES THE LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. SECTION 271(1)(C) POSTULATES THAT PENALTY CAN BE LEVIED ONL Y IN TWO SITUATIONS, NAMELY, THAT ASSESSEE HAS CONCEALED THE PARTICULAR S OF INCOME OR THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF IN COME. IN THE PRESENT CASE, THE CHARGE MADE BY THE ASSESSING OFFICER IS T HAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME ON ACCO UNT OF CAPITAL GAIN, INASMUCH AS, THE FINAL INCOME HAS BEEN DETERMINED B Y APPLICATION OF SECTION 50C OF THE ACT. SECTION 50C OF THE ACT PERM ITS THE ASSESSING OFFICER TO ADOPT THE VALUE ADOPTED THE BY STAMP VAL UATION AUTHORITY AS THE FULL VALUE OF THE CONSIDERATION INSTEAD OF THE STATED ACTUAL CONSIDERATION. THE AFORESAID HAS RESULTED IN DIFFE RENCE BETWEEN THE 4 ITA NO. 7115/MUM/2014 (ASSESSMENT YEAR : 2005-06) REPORTED AND THE ASSESSED INCOME WHICH HAS BEEN MA DE THE SUBJECT MATTER OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FACTUALLY SPEAKING, THERE IS NO MATERIAL TO SUGGEST THAT THE ACTUAL CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDER-REPORTED, WHEREA S IT IS ONLY ON APPLICATION OF SECTION 50C OF THE ACT THAT THE ACT UAL SALE CONSIDERATION HAS BEEN DISREGARDED. IN THIS CONTEXT, IT WOULD BE APPROPRIATE TO NOTE THAT AT THE TIME OF FILING OF RETURN OF INCOME THE COMPUTATION OF CAPITAL GAIN FURNISHED BY THE ASSESSEE CANNOT BE SAID TO BE LACKING IN BONA- FIDES, BECAUSE IT WAS INDEED BASED ON ACTUAL SAL E CONSIDERATION RECEIVED. EVEN IN THE CONTEXT OF APPLICATION OF SE CTION 50C OF THE ACT SUB-SECTION (2) OF SECTION 50C OF THE ACT ITSELF PR OVIDES THAT IF THE ASSESSEE IS NOT SATISFIED WITH THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, HE CAN RAISE AN OBJECTION AND THE ASSESS ING OFFICER MAY REFER THE MATTER FOR VALUATION TO THE DISTRICT VALUATION OFFICER. THEREFORE, MECHANICS OF SECTION 50C OF THE ACT ITSELF SHOW TH AT IT IS INTENDED FOR THE PURPOSE OF COMPUTING CAPITAL IN A GIVEN SITUAT ION, AND NOT TO ESTABLISH ANY CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) O F THE ACT. THE DEEMING FICTION OF SECTION 50C OF THE ACT CANNOT BE EXTENDED TO COVER THE PROVISIONS OF SECTION271(1)(C)OF THE ACT, WHIC H OSTENSIBLY ARE TO BE INDEPENDENTLY SATISFIED ON THE BASIS OF A POSITIVE MATERIAL OR EVIDENCE. IN THE PRESENT CASE, THE ONLY REASON FOR DIFFERENCE BETWEEN THE RETURNED AND THE ASSESSED INCOME IS APPLICATION OF SECTION 50C OF THE ACT, AND THERE IS NO MATERIAL TO SUGGEST THAT ASSE SSEE HAS RECEIVED ANY SALE CONSIDERATION OVER AND ABOVE THE AMOUNT STATED . 6.1 THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RENU HINGORANI VS. ACIT, IN ITA NO.2210/MUM/2010 ORDER DATED 22/1 0/2010 HAS 5 ITA NO. 7115/MUM/2014 (ASSESSMENT YEAR : 2005-06) CONSIDERED AN IDENTICAL SITUATION, WHEREIN PENALTY WAS LEVIED ON AN ADDITION, WHICH WAS PURELY BASED ON THE APPLICATION OF SECTION 50C OF THE ACT. THE TRIBUNAL AFTER CONSIDERING THE RATIO O F THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANC E PETRO-PRODUCTS LTD., 322 ITR 158 (SC) FOUND IT FIT TO DELETE THE LEVY OF PENALTY. FURTHER, THE DECISIONS RELIED UPON BY ASSESSEE BEFORE US A LSO SUPPORT THE PLEA OF THE ASSESSEE THAT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT WARRANTED IN THE CONTEXT OF THE PRESENT SITUATI ON. FOLLOWING THE AFORESAID DISCUSSIONS, I HEREBY SET-ASIDE THE ORDE R OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE OF RS.3,89,9 31/- IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29/06/20 16 SD/- (G.S. PANNU) ACCOUNT ANT MEMBER MUMBAI, DATED 29/06/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI