KASHYAP L. SHAH, MUMBAI V. ACIT CIR 19(1), MUMBAI

ITA 7616/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88699 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: AJAY C GOSALIA
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.7616/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2004-05 KASHYAP L. SHAH, KUKUL KUNG, PLOT NO. 180, LAXMI NAGAR SOCIETY, 11TH ROAD, KHAR (WEST), MUMBAI-400052. PAN:AANBPS6722L VS ACIT CIRCLE-19(1), R.NO.322, 3RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-12 ( #$ / ASSESSEE) ( %&#$ / RESPONDENT) !'( !'( !'( !'( ) ) ) ) /ASSESSEE BY :SHRI AJAY C. GOSALIA * ) / REVENUE BY :SHRI NEIL PHILIP ! ! ! ! * ** * (+ (+ (+ (+ / DATE OF HEARING :30 - 03 -2015 ,-' * (+ / DATE OF PRONOUNCEMENT :30 -03-2015 ! ! ! ! , 1961 1961 1961 1961 * * * * 254 254 254 254( (( (1 11 1) )) ) (6( 7 (6( 7 (6( 7 (6( 7 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! PER RAJENDRA,A.M. CHALLENGING THE ORDER DATED 04.10.10 OF CIT(A)-30,M UMBAI THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. (A) THE LD. CIT (APPEALS)-30 ERRED IN CONFIRMING THE LEVY OF PENALTY BY THE LD. ACIT OF 3,00,000 UPON THE APPELLANT. (B) HE ERRED IN NOT CONSIDERING THE APPELLANT'S SUB MISSIONS INCLUDING THOSE WHICH HE QUOTED IN THE BODY OF HIS IMPUGNED ORDER. (C ) HE FAILED TO APPRECIATE THAT (I) NO PENALTY COULD BE LEVIED UPON THE APPELLANT A S THE TAX SOUGHT TO BE EVADED WAS NIL. (II) THE IMPUGNED ORDER LEVYING PENALTY WAS PASSED BY THE LD. ACIT WITHOUT OBTAINING PRIOR APPROVAL OF THE ADDL. CIT AS REQUIRED UNDER S .274 (2) OF THE ACT. 2. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE T O ONE ANOTHER. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, VAR Y, MODIFY, AMEND THE ABOVE GROUNDS OF APPEAL. DURING THE COURSE OF HEARING BEFORE US.AUTHORISED R EPRESENTATIVE (AR) OF THE ASSESSEE DID NOT PRESS GROUND (C) (II).THEREFORE, SAME STANDS DISMIS SED. 2. ASSESSEE,AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 30.07.2004,DECLARING A TOTAL INCOME OF RS. 12.28 LAKHS.THE ASSESSING OFFICER (AO) COMPLETED TH E ASSESSMENT ON 28.12.2006, U/S.143(3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT R S.12.41 LAKHS.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD SHO WN LONG TERM CAPITAL GAIN (LTCG) OF RS. 9.29 LAKHS ON SURRENDER OF FLAT ONE OF B WING, SILV ER SPRING, ANDHERI, THAT HE HAD MADE PART PAYMENT OF RS. 20.70 LAKHS AS AGAINST THE TOTAL PUR CHASE COST OF 20.88 LAKHS, THAT THE BOOKING OF FLAT WAS CANCELLED FOR A SUM OF RS.33.93 LAKHS VIDE LETTER DATED 13.08.2003.THE WAS OF THE OPINION THAT IN SUBSTANCE, THE ASSESSEE HAD SOLD A FLAT RESULTING IN NET GAIN OF RS. 13.05 LAKHS, THAT THE OBJECT BEHIND THE CANCELATION WAS TO SAVE HIMSE LF FROM BURDEN OF STAMP DUTY. THE AO INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AN D WORKED OUT THE SALE CONSIDERATION OF THE FLAT BASED ON STAMP DUTY READY RECOKNER AND MARKET VALUE AT RS.44.26 LAKHS AS AGAINST THE INDEX COST OF RS.24.63 LAKHS WORKED OUT BY THE ASSESSEE. IT RE SULTED INTO LTCG OF RS.19.62 LAKHS AS AGAINST LTCG OF RS.9.29 LAKHS DISCLOSED BY THE ASSESSEE. TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA), WHO GAVE PARTIAL R ELIEF TO THE ASSESSEE INDEXATION ISSUE. 2 ITA NO. 7616/M/12 KASHYAP L. SHAH MEANWHILE,THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME VIDE HIS SHOW CAUSE NOTICE DA TED 15.03.2011.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE AO LEVIED PENALTY OF RS. 3 LAKHS, VIDE HIS ORDER DATED 29.03.2011. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY (FAA).BEFORE HIM, IT WAS ARGUED THAT ADDITION MADE UNDER THE HEAD CAPITAL GA INS DUE TO THE APPLICATIONS OF DEEMING PROVISIONS OF SECTION 50C OF THE ACT DID NOT IPSO F ACTO ATTRACTED PENALTY U/S 271(1)(C) OF THE ACT, THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAD RE CEIVED ANY SUM IN EXCESS OF RS.33.93 LAKHS DISCLOSED BY HIM IN HIS RETURN OF INCOME. THE ASSES SEE REFERRED TO THE DECISION OF THE MUMBAI ITAT IN THE CASE OF RENU HINGORANI (ITA/2210/MUM/20 10 DATED 22.12.2010).IT WAS FURTHER ARGUED THAT ASSESSEE HAD NEVER BECOME THE OWNER OF THE FLAT, THAT NO CONVEYANCE/SALE DEED WAS EXECUTED, THAT THE ASSESSEE HAD NOT MADE FULL PAYME NT TO THE BUILDER NOR HAD HE GOT THE POSSESSION OF THE FLAT FROM THE BUILDER, HE HAD ONLY A RIGHT T O BECOME THE OWNER, THAT THE ASSESSEE HAD NEITHER SOLD LAND OR BUILDING NOR BOTH AS REQUIRED FOR INVO KING THE PROVISIONS OF SECTION 50C, THAT THE ASSESSEE HAD FURNISHED ALL NECESSARY DOCUMENTS AND HAD NOT CONCEALED ANYTHING, THAT THE FIGURE OF RS.44.26 LAKHS ADOPTED BY THE AO WAS NOT BASED ON A NY DOCUMENT OR MATERIAL, THAT PROVISIONS OF SECTION 50C LAID DOWN A RULE OF EVIDENCE, THAT ASSE SSEE HAD NOT RECEIVED ANY CONSIDERATION IN EXCESS OF RS.33.92 LAKHS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE PENALTY ORDER, THE FAA HELD THAT THE ASSESSEE HAD RESORTED TO DUBIOUS MEANS TO REDUCE HI S TAX LIABILITY, THAT HE HAD PAID ALMOST TOTAL COST OF THE FLAT WITHOUT GETTING THE FLAT REGISTERE D WITH THE SOLE INTENTION TO SELL THE FLAT THEREBY AVOIDING PAYMENT OF STAMP DUTY, THAT HE WAS DEFACTO OWNER OF THE FLAT, HE HAD SOLD THE FLAT TO NEW OWNERS AT AN AGREED PRICE AS EVIDENT FROM THE CANCE LLATION LETTER, THAT HE HAD DECIDED TO SURRENDER THE BOOKING WITHOUT AN APPARENT INTENTION TO SELL T HE COST OF STAMP DUTY, THAT HE HAD FAILED WITHOUT SUFFICIENT COST TO RETURN TO TRUE AND CORRECT INCOM E LIABLE TO TAX, THAT HE HAD CONCEALED PARTICULARS OF INCOME WITH SOLE INTENTION TO REDUCE TAX LIABILI TY, THAT THE AO WAS JUSTIFIED IN LEVYING PENALTY U/S. 271(1)(C) OF THE ACT.DURING THE COURSE OF HEAR ING BEFORE US.AR SUBMITTED THAT ASSESSEE HAD NOT TAKEN POSSESSION OF THE FLAT, THAT BY CANCELLAT ION DEED FLAT IN QUESTION WAS TRANSFERRED IN SOME OTHER NAME, THAT THE ASSESSEE HAD SOLD THE FLAT FOR A PRICE WHICH WAS LESS THAN THE STAMP DUTY VALUATION, HE HAD ADMITTED THE SALE CONSIDERATION A S PER THE ACTUAL MONEY RECEIVED BY HIM, THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME, THAT THE VALUATION BY THE STAMP VALUING AUTHORITY WAS NOT A CONCLUSIVE EVIDENCE OF ACTUAL F AIR MARKET VALUE OF THE PROPERTY, HE RELIED UPON THE CASE OF MADAN LTD. THEATERS LTD.(85 CCH070 OF H ONBLE KOLKATA HIGH COURT AND THE DECISION OF 'D' BENCH OF MUMBAI ITAT OF RENU HINGOR ANI(SUPRA).DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE ALMOST SIMILAR CIRCUMSTANCES, IN THE CASE OF RENU H INGORANI(SUPRA) THE TRIBUNAL HAD DECIDED THE MATTER AS UNDER: '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 DIFFERENCE BETWEEN THE SALE CONSIDERATION AS PER SALE AGREEMENT AND THE VALUATION MADE BY THE STAMP VALUATION AUTHO RITY. THUS, THE ADDITION HAS BEEN MADE 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 IT A NO. 2210/MUM /2010 (ASSESS MENT YEARS : 2006-07) 5 QUESTIONED THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE BUT T HE ADDITION IS MADE PURELY ON THE BASIS OF DEEMING PROVISIONS OF THE INCOME TAX ACT, 1961. THE AO HAS NOT GIVEN ANY FINDING THAT THE ACTUAL SALE CONSIDERATION IS MORE THAN THE SALE CONSIDERAT ION ADMITTED AND MENTIONED IN THE SALE AGREEMENT. THUS IT DOES NOT AMOUNT TO CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE T HAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT RECORD AS CALLED BY THE AO TO DISCLOSE THE PRIMARY FACTS. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT FACTS, DOCUMENTS/MATERIAL INCLUDING THE SA LE AGREEMENT AND THE AO HAS NOT DOUBTED THE GENUINENESS AND VALIDITY OF THE DOCUMENTS PRODUCED BEFORE HIM AND THE SALE CONSIDERATION 3 ITA NO. 7616/M/12 KASHYAP L. SHAH RECEIVED BY THE ASSESSEE. UNDER THESE FACTS AND CIR CUMSTANCES, IT CANNOT 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 VALUATI ON AUTHORITY WOULD NOT BE A CONCLUSIVE PROOF THAT THE SALE CONSIDERATION AS PER THIS AGREEMENT W AS INCORRECT AND WRONG. ACCORDINGLY THE ADDITION BECAUSE 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 SUPREM E COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCTS PVT.LTD (SUPRA), THE PENALTY LEVIED U /S 271(1)(C) IS NOT SUSTAINABLE. THE SAME IS DELETED'. 9. THE APPEAL OF THE ASSESSEE IS ALLOWED. IN THE CASE OF MADAN THEATRE LTD. (SUPRA), THE HON BLE HIGH COURT HAD HELD THAT IF THE REVENUE FAILS TO PRODUCE ANY EVIDENCE THAT ASSESSEE HAD ACT UALLY RECEIVED MORE MONEY THAN THE AMOUNT SHOWN IN THE RETURN THAN CONCEALMENT PENALTY CANNOT BE LEVIED. IN THE CASE BEFORE US, THE AO AND FAA HAD OVER EMPHASIZED THE FACT THAT THE ASSESSEE HAD TRIED TO EVADE STAMP DUTY. EVEN IF, IT IS TRUE IT CANNOT BE EQUATED WITH FILING OF INACCURATE PARTICULARS OR CONCEALING THE PARTICULARS OF INCOME,IF THERE WAS ANY OMISSION OR COMMISSION ON P ART OF THE ASSESSEE WITH REGARD TO STAMP REGISTRATION ACT,THE AO CANNOT TAKE STAND THAT SALE CONSIDERATION SHOWN BY THE ASSESSEE WAS MORE THAN APPEARING IN THE REGISTERED DEED. UNTIL AND UN LESS THE FACT OR RECEIVING AMOUNT MORE THAN THE AMOUNT APPEARING IN THE DOCUMENTS PROVISIONS OF SEC TION 50C OF THE ACT CANNOT BE INVOKED. IN THE CASE UNDER CONSIDERATION THAT IS NOT THE ALLEGATION . THE CONDUCT OF THE ASSESSEE COULD BE MORALLY WRONG,BUT THAT CANNOT BE REASON FOR IMPOSING PENALT Y U/S 271(1)(C) OF THE ACT. THEREFORE, FOLLOWING THE ABOVE MENTIONED TWO DECISIONS,WE REVE RSE THE ORDER OF THE FAA. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT,AP PEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 8(9 !'( : ; * 6 VA'KR% VA'KR% VA'KR% VA'KR% < * ( =>. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH ,MARCH,2015. 7 * ,-' @ A! 30 B,2015 - * 6 E SD/ SD/- ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, A! /DATE: 30.03.2015 SK 7 7 7 7 * ** * %(F %(F %(F %(F GF'( GF'( GF'( GF'( / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT(A)/ H I , 4. THE CONCERNED CIT / H I 5. DR A BENCH, ITAT, MUMBAI / FJ6 %(! , , . . . 6. GUARD FILE/ 6 8 &F( %( //TRUE COPY// 7! / BY ORDER, K / = DY./ASST. REGISTRAR , /ITAT, MUMBAI.