ITO, WARD- 2, Buldhana V. SHRI DHRUPATRAO BHAGWAN SAWALE, Buldhana

ITA 90/NAG/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2172 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 90 /NAG/20 1 5 ASSESSMENT YEAR: 20 10 - 11 THE INCOME TAX OFFICER WARD - 2, AAYAKAR BHAWAN, NR. RAILWAY S TATION, KHAMGAON, BULDHANA - 444303 VS. SHRI DHRUPATRAO B. SAWALE CHAITANYAWADI, BULDHANA - 443001 PAN : - A RS P S0980J (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A.R.NINAWE , DR RESPONDENT BY SHRI MUKESH AGRAWAL SHRI UMAND AGRAWAL, AR DATE OF HEARING: 0 9 - 0 6 - 201 6 DATE OF PRONOUNCEMENT: - 16 / 0 6 /2016 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT (APPEALS) DATED 2 3 . 12 .201 4 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11 . ISSUE RAISED IS THAT THE LD. CIT(A) ER RED IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT AN AMOUNTING TO RS.12,79,080/ - . 2. IN THIS CASE THE ASSESSEE DURING THE ASSESSMENT YEAR HAD SOLD A PROPERTY AT MUMBAI ON 22/12/2009 FOR A VALUABLE CONSIDERATION OF RS.70,00,000/ - (RS.SEVENTY LACS ONLY) . THE STAMP DUTY VALUATION OF THE PROPERTY WAS RS.17644700/ - . 3. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS ACCEPTED THE VALUATION AS ADOPTED FOR THE PURPOSE OF STAMP DUTY AND OFFER ED THE ADDITIONAL INCOME AS PER THE PROVISION OF SECTION 50C AND THE SAME HAS BEEN ACCEPTED BY THE LEARNED INCOME TAX OFFICER, KHAMGAON AND PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED. 2 ITA NO. 90 /NAG/201 5 4 . INCOME TAX OFFICER ALSO LEVIED THE PENALTY OF RS.12,79,080/ - IN THE PENALTY PROCEEDINGS. 5 . UPON ASSESSEES APPEAL TH E LD. CIT(A) NOTED TH E FAC T AS UNDER: - 6 .1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS SOLD A FLAT IN SUBHADRA CO - OP. HOUSING SOCIETY, WORLI, MUMBAI - 10 FOR A CONSIDERATION OF RS.70 LAKHS AS AGAINST THE ST AMP D UTY VALUATION OF RS .1. 77 CRORES. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE HOUSE PROPERTY WAS SOLD ON 29.12.2009 FOR RS.50 LAKHS AND THE SALE CONSIDERATION WAS INVESTED IN A NEW RESIDENTIAL HOUSE PURCHASED ON 11.02.2010 FOR RS.58,95,440/ - . THE ASS ESSEE CONTENDED THAT THE TRANSACTION OF SALE AND PURCHASE OF THE HOUSE PROPERTIES WERE NOT REFLECTED IN THE ORIGINAL RETURN OF INCOME AS THE ENTIRE SALE PROCEEDS OF THE HOUSE SOLD WERE INVESTED IN PURCHASING A NEW HOUSE PROPERTY IN THE SAME FINANCIAL YEAR AND A SALE DEED OF PURCHASE OF THE NEW HOUSE PROPERTY WAS SUBMITTED BEFORE THE AO, DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT, THUS, ARGUED THAT S I NCE THE ENTIRE SALE CONSIDER ATION WAS INVESTED IN PURCHASE OF A NEW HOUSE, HE WAS UNDER BONA FIDE BELIE F THAT THE SALE TRANSACTION IS NOT CHARGEABLE TO CAPITAL G AINS. THE AO, HOWEVER, NOTICED THAT THE STAMP DUTY VALUATION OF THE PROPERTY SOLD WAS RS.1,77,02,000/ - AS AGAINST THE SALE VALUE OF RS.50 LAKHS, HENCE INVOKED THE PROVISIONS OF SEC.50C AND CHARGED T HE CAPITAL GAINS TO THE TUNE OF RS.62,35,116/ - ON WHICH THE MINIMUM PENALTY U/S 271 (1) (C) LEVIED WORKED OUT TO RS.12,79,080/ - . THUS, THE AO HAS CONCLUDED THAT THE DIFFERENCE BETWEEN THE AGREEMENT VALUE AND THE VALUE DETERMINED FOR THE PURPOSE OF STAMP DU TY VALUATION AMOUNTS TO BE CONCEALMENT AND HAVING FURNISHED INACCURATE PARTICULARS AND ACCORDINGLY LEVIED THE P ENALTY U/S 271(1)(C)OF THE ACT. 6 . THEREAFTER THE LD. CIT(A) HELD AS UNDER : - 6.2 IT IS NOT DISPUTED THAT THE APPELLANT HAS INVESTED RS.58,95 ,440/ - IN A NEW ASSET BEING A RESIDENTIAL HOUSE WITHIN THE STIPULATED TIME, HENCE THE ENTIRE SALE CONSIDERATION ON SALE OF A HOUSE PROPERTY FOR RS.50,00,000/ - IS ELIGIBLE FOR DEDUCTION U/S 54 OF THE ACT. IT IS ALSO A FACT EMANATED FROM THE RECORDS THAT THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES IN RESPECT OF BOTH THE PROPERTIES BEING SALE AND PURCHASE OF THE HOUSE, EXCEEDS THE AGREEMENT VALUE. THE STAMP DUTY VALUATION FOR HOUSE SOLD IS RS.1,77,02,000/ - AS AGAINST THE AGREEMENT VALUE OF RS.50,00,000/ - . SIMILARLY, THE STAMP DUTY VALUATION FOR THE HOUSE PURCHASED IS RS.L,76,44,700/ - . THUS, IF THE STAMP DUTY VALUATION OF BOTH PURCHASE AND SALE DEEDS ARE TAKEN INTO CONSIDERATION, THEN THE DIFFERENCE WORKS OUT TO BE VERY NEGLIGIBLE. HOWEVER, DESPITE THE FA CT THE APPELLANT HAS PAID THE CAPITAL GAINS ON RS.62,35,116/ - BEING THE DIFFERENCE BETWEEN THE VALUE OF SALE DEED AND THE VALUE DETERMINED BY THE VALUATION AUTHORITIES FOR THE PURPOSE OF DETERMINING STAMP DUTY VALUATION, WITHOUT ANY DISPUTE. THEREFORE, FUR THER LEVY OF PENALTY ON THE APPELLANT IS NOT JUSTIFIED. 3 ITA NO. 90 /NAG/201 5 7.0 FURTHER THAT, THOUGH THE TRANSACTIONS OF SALE AND PURCHASE WERE NOT REFLECTED IN THE RETURNS FILED BY THE APPELLANT UNDER BONA FIDE BELIEF THAT AS HE HAS INVESTED THE WHOLE SALE CONSIDERATION IN PURCHASE OF A NEW HOUSE, BUT THE RELEVANT DOCUMENTS WERE SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. SECTION 50C IS A DEEMING PROVISION WHICH PROVIDES THAT IN CASE OF ANY DIFFERENCE BETWEEN THE ACTUAL SALE CONSIDERATION AND THE VALUE DETERM INED FOR THE PURPOSE OF STAMP DUTY VALUATION, THE VALUE DETERMINED FOR THE STAMP VALUATION PURPOSES SHALL BE DEEMED TO BE VALUE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS U/S 48 OF THE ACT. THEREFORE, PRIMA - FACIE THERE IS NO CONCEALMENT EMBEDDED IN TH E TRANSACTION OF SALE AND PURCHASE OF THE PROPERTY. THEREFORE, THE LEVY OF PENALTY IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 7 . AGAINST ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE LD. CIT(A) IN THIS CASE HAS PASSED A REASONABLE ORDER. WE AGREE WITH LD. CIT(A) THAT SINCE ON THE BASIS O F PRICE RECEIVED ON THE SALE OF PROPERTY AND THE AMOUNT INVESTED IN THE PURCHASES OF NEW PROPERTY , NO CAPITAL AGAINST TA X WAS LEVIBLE , THE ASSESSEE CAN BE S AID TO BE IN A BONA FIDE BE LIE F THAT THERE WAS NO NECESSITY TO SUBMIT A RETURN FOR THE SAID TRANSACTION. FURTHERMORE, THE LD. CIT(A) HAS RIGHTLY HELD THAT I F DEEMING FICTION IS INVOKE D THE STAMP VALUE DEEM ING PURCHASE PR ICE OF THE PROPERTY PURCHASE FULLY COVERS THE CAPITAL GAIN. ON THAT ACCOUNT ALSO ASSESSEE S CONDUCT CANNOT BE SAID TO BE CONTUMACIOUS . 8 . FURTHERMORE, WE FIND THAT ADDITIONAL TAX HAS BEEN FOUND P AYABLE ARISING ONLY UPON INV OKING THE DEEMING PROVISION OF S ECTION 50C . THE ASSESSEE HA S DULY AGREED AND PA ID THE TAX . IN SUCH CIRCUMSTANCES IN OUR CONSIDERED OPINION ASSESSEE CANNOT BE SUBJECTED TO THE RIGOUR S PENALTY U/S.271 (1)(C) OF THE I.T. ACT. FOR THIS PROPOSITION WE PLACE RELIANCE UPON THE DECISION OF HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. FORTUNE HOTEL AND ESTATES PVT. LTD., IN ITA NO.1164 OF 2012 VIDE ORDER DATED 26 TH SEPTEMBER 2014 AND ALSO HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT VS. MADAN TEATRES LTD., 260 CTR 0075. IN THIS CASES IT WAS HELD THAT MERE LY INVOCATION OF PROVISION OF SECTION 50C CANNOT GIVE RISE TO LEVY OF PENALTY U/S .271(1)(C) ON ACCOUNT OF THE ADDITION MADE U NLESS REVENUE HAS SHOWN AS TO HOW ASSESSEE COULD BE HELD TO HAVE ACTUALLY RECEIVED THE 4 ITA NO. 90 /NAG/201 5 DEEM ED A MOUNT. IN THIS CASE THE REVENUE HAS NOT DISCHARGED THE ONUS OF SHOWING THAT ASSESSEE HAS ACTUALLY RECEIVED THE DEEMED AMOUNT. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS , WE DO NOT FIND ANY INFIRMITY IN THE ORDER LD. CIT(A). ACCORDINGLY WE UPH OLD THE SAME. 9 . I N THE RESULT , T HIS APPEAL FILED BY THE REVENUE IS STANDS DISMISSED . ORDER PRONOU NCED IN THE OPEN COURT ON THIS 16 TH DAY OF JUNE , 2016 SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : - NAGPUR DATED: - 16 / 0 6 /2016 COPY FORWARDED TO : 1. SHRI DHRUPATRAO B. SAWALE CHAITANYAWADI, BULDHANA - 443001 2. THE INCOME TAX OFFICER WARD - 2, AAYAKAR BHAWAN, NR. RAILWAY STATION, KHAMGAON, BULDHANA - 444303 3. C.I.T. - I, NAGPUR 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR M.B.BODKHE/SR.P.S./A.M. SIR