DCIT, Jaipur V. JUGAL KISHORE GARG, Jaipur

ITA 898/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99310 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 143(3); 50C; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 898/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 . THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR. CUKE VS. SHRI JUGAL KISHORE GARG, 27, AGRASEN COLONY, BRAHMPURI KA KHURRA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABBPG 4020 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07.09.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/09/2015. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FROM THE ORDER OF LD. CIT (A), CENTRAL, JAIPUR DATED 07.10.2013 FOR THE A.Y. 2006-07. THE GROUNDS RAISED IN THE APPEAL ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. CIT (APPEALS)(C), JAIPUR HAS ERRED IN DELETING THE PENALTY OF RS. 10, 94,116/- IMPOSED BY THE AO U/S 271(1)(C) AS THERE WAS SUFFICIENT CIRCUMSTAN TIAL EVIDENCE TO PROVE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF THE TRANSFER OF PROPERTY THROUGH COLOURABLE DEVICE AND HAD CONCEALE D HIS TRUE TAXABLE INCOME. 2 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT (A)(C), JAIPUR HAS ERRED IN DELETING THE PENALTY OF RS. 10,94,116/ - IMPOSED BY THE AO U/S 271(1)(C) WHEN QUANTUM ADDITION HAD BEEN CONFIR MED BY THE CIT (A)(C) ORDER DATED 16.03.2011, AGAINST WHICH APPEAL FILED BY THE ASSESSEE IS PENDING BEFORE ITAT. 2. IN THIS CASE ASSESSMENT FOR A.Y. 2006-07 WAS COMP LETED UNDER SECTION 143(3) OF THE IT ACT ON 22.12.2008 AT A TOTAL INCOME OF RS. 92,74,330/-. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS TRANSFERR ED TWO PROPERTIES VIZ. SHOP NO. 232 & 233 AT GANPATI PLAZA, JAIPUR BY WAY OF TRA NSFER OF SHARE HOLDING AND DECLARED CAPITAL GAIN OF RS. 50,205/- AND RS. 31,03 3/-. THE ASSESSEE DETERMINED CAPITAL GAIN ON THE BASIS OF SHARE CAPITAL AND INDE XED COST THEREOF. THE AO TOOK THE DEEMED SELLING PRICE OF RS. 44,38,280/- (RS. 26 ,04,280/- + RS. 18,34,000/-) AFTER REDUCING UNSECURED LOANS AGAINST THE SAID PRO PERTIES THEN DETERMINED DEEMING SELLING PRICE PER SHARE AFTER REDUCING INDE XED COST OF SHARES CALCULATED CAPITAL GAIN OF RS. 18,22,665/- AND RS. 6,67,033/- SHOP NO. 232 & 233 RESPECTIVELY AFTER DEDUCTING UNSECURED LOANS FROM T HE DEEMED SELLING PRICE BASED ON DLC RATE. AFTER GIVING SET OFF OF CAPITAL GAIN ALREADY DECLARED (RS. 50,205/- + 31,033/-) THE AO COMPUTED SHORT CAPITAL GAIN AND MADE ADDITION OF RS. 24,08,460/- (17,72,460 + 6,36,000). 2.1. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) HA D BEEN INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME RES ULTING IN CONCEALMENT OF INCOME. THE AO GAVE SHOW CAUSE NOTICE ON 25.05.2011 TO THE ASSESSEE BEFORE 3 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. IMPOSING PENALTY UNDER SECTION 271(1)(C) AS THE ADD ITION HAS BEEN CONFIRMED BY THE LD. CIT (A). THE ASSESSEE ALSO REPLIED BEFORE TH E AO WHICH HAS BEEN REPRODUCED BY THE AO AT PAGE 3 OF THE PENALTY ORDER . THE SUBMISSIONS MADE BY THE ASSESSEE HAVE BEEN CONSIDERED BUT FOUND LEGALLY UNTENABLE. ALL THE OBJECTIONS RAISED BY THE ASSESSEE HAS ALREADY BEEN DEALT BY THE LD. CIT (A) AND ELABORATELY DISCUSSING THE SAME HAS SUSTAINED THE A DDITION. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF T HE OBSERVATIONS MADE BY LD. CIT (A), THE AO HELD THAT PROVISIONS OF SECTION 271( 1)(C) OF THE IT ACT ARE CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE. THUS HE MAD E THE ASSESSEE LIABLE FOR PENALTY FOR CONCEALMENT OF INCOME TO THE EXTENT OF RS. 24,08,660/- BY FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE IMPOSED PENALTY AT RS. 10,94,116/- UNDER SECTION 271(1)(C). 3. BEING AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO HAD ALLOWED THE APPEAL AND DE LETED THE PENALTY BY OBSERVING AS UNDER :- 4.4. I HAVE CAREFULLY PERUSED THE QUANTUM ORDER, PENALTY ORDER AND THE SUBMISSIONS OF THE AR AND CONCUR WITH THE SU BMISSIONS OF THE AR ON THE FOLLOWING GROUNDS : I) THE FACTS OF THE CASE ARE THAT THE APPELLANT WAS A SH ARE HOLDER OF THE COMPANY UNIQUE PROPCON PVT. LTD. OUT OF THE 10000 SHARES THE APPELLANT WAS HOLDING 6000 SHARES A ND THE 4 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. BALANCE SHARES WERE BEING HELD BY SMT. JAIMALA AGARWA L (1100 SHARES), MAHENDRA KUMAR AGARWAL (2600 SHARES) AND 400 SHARES BY OTHERS. THE COMPANY TRANSFERRED ALL THE SHARES TO ANOTHER CO MPANY M/S. MARUDHARA PROPCON PVT. LTD. AT RS. 16.30 PER S HARE. THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS. 31, 033/- AT INDEX COST PRICE OF RS. 11.12/-. II) THE AO HELD THIS TO BE A CASE OF TRANSFER OF PROPERT Y AT LESS THAN THE MARKET PRICE AND AFTER TAKING THE DLC RATE COMPUTED THE SHORT TERM CAPITAL GAIN IN THE HANDS OF THE ASS ESSEE AT RS. 24,08,460/-. III) THE MATTER CAME UP FOR ADJUDICATION BEFORE HON. ITAT IN THE CASE OF OTHER SHARE HOLDER NAMELY SMT. JAIMALA AGAR WAL. HON. ITAT BY ITS ORDER ITA NO. 465/JP/2011 FOR A.Y. 2006- 07 GAVE A FINDING IN FAVOUR OF THE ASSESSEE BY ITS ORDER DA TED 2.2.2012. THE HON. ITAT GRANTED RELIEF IN THE CASE OF JAIMALA AGARWAL VIDE ITS ORDER SUPRA WHILE MAKING THE FOLLOWIN G OBSERVATIONS : 4. AFTER CONSIDERING THE ORDERS OF THE AUTHORITIES BELOW AND THE SUBMISSIONS OF THE ASSESSEE, WE FIND THAT TH E ADDITION MADE BY AO WHICH IS CONFIRMED BY LD. CIT (A) HAS NO L EG TO STAND. ASSESSEE HAS SOLD THE SHARES OF A COMPANY AN D NOT THE LAND OF THAT COMPANY. THEREFORE, BY TAKING INTO CONS IDERATION OF THE LAND VALUE OWNED BY THAT COMPANY MAKING ANY A DDITION IN THE HANDS OF THE ASSESSEE, IN OUR VIEW IS NOT JUS TIFIED. THERE IS NO PROVISION UNDER THE IT ACT THAT VALUE OF LAND OWNED BY A COMPANY WHOSE SHARES HAS BEEN GIVEN TO AN Y PERSON AND IN THE HAND OF THAT PERSON ANY CAPITAL G AIN CAN BE ASSESSED ON THE BASIS OF LAND OR OFFICE SOLD BY THE COMPANY. IF ANY ADDITION CAN BE MADE THAT CAN BE MADE ON THE BA SIS OF VALUE OF THOSE SHARES OR TAKING INTO CONSIDERATION THAT THE SALE 5 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. CONSIDERATION SHOWN BY ASSESSEE IS NOT CORRECT, IF T HERE IS ANY EVIDENCE. NO SUCH MATERIAL WAS THERE BEFORE THE AO T HAT ASSESSEE HAS SOLD THE SHARE BELOW MARKET PRICE AND, THEREFORE, IN OUR CONSIDERED VIEW THE BASIS ON WHICH THE ADDITION HAS BEEN MADE BY AO WAS NOT CORRECT AND, TH EREFORE, THE LD. CIT (A) WAS ALSO NOT CORRECT IN CONFIRMING TH E ORDER OF AO. ACCORDINGLY, WE DELETE THE IMPUGNED ADDITION MAD E AND CONFIRMED. IN VIEW OF THE FINDING IN THE QUANTUM ORDER OF OTHE R MAJOR SHARE HOLDER IN THE COMPANY IT IS SEEN THAT THE MAT TER IS COVERED ON IDENTICAL FACTS IN THE QUANTUM ORDER IN FAVOUR OF THE APPELLANT. IV) MOREOVER, THE TRANSFER OF LAND WAS MADE BY THE COMPA NY. THE COMPANY IS A SEPARATE AND DISTINCT ENTITY FROM T HE INDIVIDUAL SHARE HOLDERS. THE ADDITION U/S 50C WITH R EFERENCE OF TRANSFER OF PROPERTY FROM ONE COMPANY TO OTHER WA S REQUIRED TO BE MADE IN THE HANDS OF THE COMPANY RAT HER THAN THE INDIVIDUAL SHARE HOLDERS. V) THE BALANCE SHEETS OF THE COMPANY WAS CALLED FOR AND PRESENTED BY THE APPELLANT FOR A.YS. 2005-06 AND 20 06-07. ON PERUSAL OF THESE BALANCE SHEETS IT IS SEEN THAT THE COMPANY UNIQUE PROPCON PVT. LTD. HAD BEEN SHOWING THIS PROPE RTY AS ITS ASSET IN THE BALANCE SHEET. THEREFORE, THE ADDI TION U/S 50C IN THE HANDS OF THE COMPANY OR THE SHARE HOLDERS WOU LD NOT MERIT IMPOSITION OF PENALTY U/S 271(1)(C) UNLESS TH E AO BRINGS ON RECORD SPECIFIC EVIDENCE OF MONEY HAVING BEEN RE CEIVED BY THE SHARE HOLDERS OR THE COMPANY OVER AND ABOVE THE TRANSFER PRICE OF THE LAND. IN ABSENCE OF ANY SUCH EVIDENCE THE ADDITION MADE BY INVOKING THE DEEMING PROVISIONS UN DER SEC. 6 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. 50C WOULD NOT BE LIABLE FOR IMPOSITION OF PENALTY U/ S 271(1)(C) AS PER THE FINDING OF THE HON. ITAT, MUMBAI BENCH IN THE CASE OF RENU HINGORANI VS. ACIT, ITA NO. 2210/MUM/20 10 FOR A.YS. 2006-07 AND 22.12.2010. IN VIEW OF THE ABOVE FACTS THE LAW APPLICABLE TO THE SE FACTS THE PENALTY IMPOSED @ 200% OF TAX SOUGHT TO BE EVADE D OF RS. 10,94,116/- U/S 271(1)(C) IS DELETED. 4. AGGRIEVED, THE REVENUE IS BEFORE US. WE HAVE H EARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE AO LEVIED THE PENALTY HOLDING THAT PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT ARE CL EARLY APPLICABLE IN THE CASE OF THE ASSESSEE AS THE ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS AND CONCEALED THE INCOME. THE LD. CIT (A) HAS DELETED THE PENALTY L EVIED U/S 271(1)(C) OF THE ACT CONCURRING WITH THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. HE PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RENU HINGORANI VS. ACIT IN ITA NO.2210/MUM/2010 DATE D 22.12.2010 FOR THE ASSESSMENT YEAR 2006-07. THE TRIBUNAL IN QUANTUM MA TTERS IN THE CASE OF THE ASSESSEE IN ITA NO. 463/JP/2011 VIDE ORDER DATED 27 .01.2014 HAS ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION. S INCE THE ADDITION MADE BY THE AO, NO LONGER SURVIVES, NO PENALTY IS LEVIABLE ON T HE ASSESSEE U/S 271(1)(C) OF THE ACT. THE LD. CIT (A) ALSO DELETED THE PENALTY IM POSED @ 200% OF TAX SOUGHT TO BE EVADED OF RS. 10,94,116/- UNDER SECTION 271(1 )(C) OF THE ACT AFTER 7 ITA NO. 898/JP/2013 A.Y. 2006-07. DCIT VS. SHRI JUGAL KISHORE GARG, JAIPUR. DISCUSSING THE MATTER AT LENGTH. IN VIEW OF THE ABO VE FACTS, WE UPHOLD THE ORDER OF THE LD. CIT (A). 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/09/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/09/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CENTRAL CIRCLE-2, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- SHRI JUGAL KISHORE GARG, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.898/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. 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