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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: MS. PADMAVATHY S & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order of Learned Commissioner of Income Tax (Appeals) – 29, Mumbai [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 27.07.2023 for the A.Y. 2015-16 wherein the penalty has been imposed u/s 271(1)(c) of the Act.
The brief facts of the case are that, the assessee is an individual and during the year under consideration, he has sold land at Ghodbundre Road, District Thane, in which he had 7.75% share. The land was shown to have been sold at a consideration of Rs. 4,00,00,000/- vide sale agreement dated 13/05/2008, out of which the assessee claimed to have received his share amount of Rs. 31,00,000/- being 7.75% of the total consideration as his share in the sale consideration and on this sale consideration capital gain was determined at Rs.23,78,861/- by the assessee. For the purposes of charge of the stamp duty, the stamp duty valuation authorities valued the fair market value of the property on the date of sale at Rs. 19,40,58,400/- as against shown in the sale deed at Rs.40,00,000/-. The AO asked the assessee to explain as to why the above fair market value of the property determined by the stamp valuation authorities at Rs. 19,40,58,400/- should not be applied as per provisions of section 50C for the purposes of working of the capital gains. The assessee objected to the above market value determined by the stamp valuation authorities and requested the AO to refer the matter to the Valuation Officer of the Department. Accordingly the Page | 2 matter was referred to the Valuation Officer for determination of the fair market value of property on the date of sale. The Valuation Officer submitted its valuation vide report dated 23/12/2011 and determined the fair market value of the property in question at Rs. 13,02,34,650/-. On the basis of the above market value determined by the Valuation Officer of the Department, the capital gains arising to the assessee on its share in the sale of property was determined at Rs. 68,69,278/- and taxed accordingly. Thereafter the assessment in this was completed at an income of Rs. 69,47,140 against the returned income of Rs. 77,863/-. The penalty proceedings u/s. 271(1)(c) of the Act were initiated.
3. The assessee contested the penalty proceedings before the AO after receiving the statutory notice and by filing his response dated 01.06.2012, it was argued before the AO that the addition was made only due to the special provisions of section 50C of the Act, which are deeming provisions and there is no proof on record that the assessee had received more than the agreement value specified in the sale agreement. Therefore the penalty under section u/s. 271(1)(c) was not leviable. The AO did not agree with the contentions of the assessee and observed that it was the case of filing inaccurate particulars of income at the time of filing return of income and Page | 3 there was a deliberate attempt on the part of the assessee to defraud the revenue and to avoid the payment of due taxes and a penalty of Rs. 15,14,231/- u/s 271(1)(c) of the Act was imposed on the assessee for the year under consideration.
The said order of the AO was challenged before the Ld. CIT(A) who vide impugned order dated 22.07.2013 has dismissed the appeal of the assessee and confirmed the order of AO.
Aggrieved by the impugned order, the assessee preferred the appeal before us raising the following grounds:-
1) On the facts and in the circumstances of the case and in law the Ld. CIT(A) ought to have deleted the penalty of Rs. 15,14,231/- u/s 271(1)(c) of the Act.
2) The appellant craves leave to add, amend or delete any ground(s) of appeal before or during the course of hearing of the appeal.
We have heard Ld. AR who argued on behalf of the assessee that all the particulars furnished were correct and accurate and there was nothing incorrect because the difference arose not out of any details furnished but because of valuation, which in no case can amount to furnish the inaccurate particulars of income. Ld. AR relied on the judgment of Hon’ble Bombay High Court in the case of Fortune Hotels and Estates (P.) Ltd. (52 taxmann.com 330). It was further argued that the entire consideration has been invested in Bonds and the exemptions claimed u/s 54F has also been allowed, therefore the question invoking the provisions of section 50C itself does not arise at all as has been held by the Coordinate Bench of ITAT Jaipur in the case of Prakash Karnawat vs. ITO, Jaipur (16 taxmann.com 357). It is therefore, Ld. AR submitted, that the appeal be allowed and penalty be deleted.
On the other hand, Ld. DR submitted that this is a fit case for imposing penalty u/s 271(1)(c) of the Act because in such cases, the penalty need to be imposed mandatorily otherwise each and every assessee will escape payment of tax by adopting a value of sale consideration, knowingly below the stamp duty value determined by the State authorities and shall successfully escape the assessment unless and until the scrutiny of assessment is carried out by the Income Tax Department. Ld. DR further supported the judgment of AO as well as Ld. CIT(A) and prayed for dismissal of appeal.
We have considered the rival submissions and perused the material placed on record. We have noticed as to how Ld. CIT(A) has rejected the contentions of the assessee and the relevant observation of the impugned order of Ld. CIT(A) in para 9 to 13 are reproduced below for the purpose of ascertaining the facts and the contentions of the parties:-
9. During the course of appellate proceedings, the AR of the appellant vide written submissions dated 19/07/2013 has argued in the matter as under:-
"The Assessing Officer has not brought on record, any evidence to prove that the appellant received consideration more than the agreement value. As against the agreement of Rs.4 crores the stamp duty value adopted was Rs.19.40 crores. After disputing the value the matter was referred to the District Valuation Officer who computed fair market value at Rs. 13.02 crores without considering the impact of the various ponding cases.
It is submitted that the valuation is only an estimation and the Assessing Officer must bring on record the receipt of higher consideration by the appellant. In absence of this Tevying penalty is not justified. Penalty levied u/s.271(1)(c) r.w.s. 50C was deleted by the Mumbai Tribunal in the matter of Renu Hingorani vs ACIT (2011) (ii) ITCL 89.
We therefore submit that apart from a very high stamp duty/Valuation Officer estimation there is nothing on record to show that the income has either been concealed or inaccurate particulars have been filed.
We request your Honour to kindly delete the penalty levied u/s.271(1)(c) and oblige."
10. The above arguments of the appellant have been considered but there is no merit in the above arguments, and in my opinion, the AO has correctly imposed the penalty in this case. From the perusal of the facts and circumstances of the case, it can be observed that the appellant had acted dishonestly initially and filed the inaccurate particulars of its income by stating that the sale value of the property is at Rs. 4,00,00,000/- and at the same time paying the stamp duty at the fair market value of the property at Rs. 19,40,58,400/- determined by the stamp valuation authorities. Therefore at the time of paying the Stamp Valuation duty, the appellant knew very well that the fair market value of the property sold has been determined at Rs.19,40,50,400/- by the stamp valuation authorities. The provisions of section 50C are unambiguous and applicable in such cases and the value of the property could be taken at the value determined by the stamp valuation authorities. At the request of the appellant the matter was referred to the Valuation Officer for determination of the fair market value of the property in question to meet the end of the justice. Even after referring the valuation of the property in question to the departmental valuation officer, the fair market value of the property was arrived at Rs. 13.02 crores by the Valuation Officer and accordingly the capital gains have been determined at Rs. 68,69,278/- against the capital gains determined and returned by the appellant at Rs. 23,78,861/-. These facts clearly proves the fact of filing the inaccurate particulars of income by the appellant at the time of filing of the return of income for the year under consideration. The appellant had acted dishonestly by filing the wrong particulars of income by not declaring the correct amount of capital gains in respect the property sold him. The correct picture emerged after the Valuation Officer determined the fair market value of the property at Rs. 13,02,34,650/-and the reference was made at the instance of the appellant and there is no escape for the appellant after the receipt of report of the Valuation Officer in the matter. The report of the Valuation Officer has clearly established that by taking the value of the property at Rs. 4,00,00,000/- for arriving at the capital gains at the time of filing of the return of income, the appellant was trying to defraud the revenue by Page | 7
avoiding the payment of due taxes. Such an act of the appellant is an act of filing inaccurate particulars of income and defrauding the revenue by not paying the due taxes and make the appellant liable for penalty u/s 271(1) (c).
The contention of the appellant that the AO has made addition on estimated basis by invoking the deeming provisions of section 50C, is not correct. The AO has adopted the value of the property in question after ascertain the fair market value from the Valuation Officer, who is a technical person to give decisions in such matters and the decisions given by him are on the basis of laid down norms and procedure in such matters and the valuation arrived at him thereafter is binding. The valuation done by the Valuation Officer and adopted by the AO for calculating the capital gains is based on accepted methods and the valuation done is not an estimation as contended by the AR of the appellant.
12. In view of the facts and circumstance mentioned above, I am in agreement with the reasons cited by the AO in the penalty order dated 28/06/2012 in the case of the appellant for the year under consideration i.e. A.Y. 2009-10. The action of the AO imposing penalty u/s 271(1)(c) of the Income Tax Act. 1961 in the case of the appellant amounting to Rs. 15,14,231/-is hereby confirmed.
13 In result, the appeal of the appellant is dismissed.
9. It is evident from the above extracted part of impugned order that Ld. CIT(A) has not categorically dealt with the contentions of the assessee wherein it was argued that the AO has not brought on record any evidence to prove that the assessee received consideration more than the agreed value of sale deed. It was also contended before the Ld. CIT(A) that the valuation is only an estimation and the AO must bring on record the evidence of receipt of higher consideration by the assessee and in the absence of material, levying penalty is not justified. The AO as well as Ld. CIT(A) were of the opinion that the case of the assessee was covered within the provision of section 271(1)(c) explanation 1.
10. The coordinate Bench of ITAT in the case of Brizo Reality Company Pvt. Ltd. (ITA No. 2941/Mum/2023) dated 09.01.2025 has held as under:
What is concealment of income or inaccurate particulars of such income as contemplated by Section 271(1)(c), has been explained by the Hon'ble Supreme Court in the case of the CIT Vs. Reliance Petro Products (P.) Ltd. as reported in 322 ITR 158 wherein it has been held as under: -
"A glance at the provision of s. 271(l)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the s. 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Therefore, it is obvious that it must be shown that the conditions under s. 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income."
It is evident from the above judgment that making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Even in the case in hand, the assessee has filed the return of income on the basis of receiving the sale consideration of the long term asset. Admittedly, no material has been brought on record to show that the assessee has received more consideration than the mentioned in the sale deed of the land. It is settled principle of law based on Indian Evidence Act that an agreement or contract reduced into writing, as sale deed in this case, is a documentary proof of the facts mentioned therein and no oral evidence is permissible to vary the terms and conditions agreed. However, the revenue was at liberty to establish the facts by way of evidence or material to establish attending circumsatances, on the basis of preponderance of probability to establish the facts of receiving more consideration by the assessee than mentioned in the sale deed. In other words, there is no material brought on record during the assessment proceedings or no circumstances has been established to show that the sale consideration of the total land received by the sellers was more than 4 crores of which the assessee was shareholder of 7.75% share.
11. The assessee has also placed reliance the judgment of Hon’ble Bombay High Court in the case of Fortune Hotels and Estates (P.) Ltd. (supra) wherein it was held as under:-
Heard Mr.Vimal Gupta, learned Senior Counsel appearing in support of this Appeal, which impugns the order of the Income Tax Appellate Tribunal dated 30.09.2011 allowing the Assessee's Appeal and deleting the penalty under Section 271(1)(c) of the Income Tax Act, 1961. Mr. Vimal Gupta submits that the substantial question of law which arises for determination and consideration is whether, the Tribunal was right in holding that the penalty cannot be imposed with reference to addition of deemed income under Section 50C of the Income Tax Act, 1961. Mr.Vimal Gupta relies upon the judgment of the Honourable Supreme Court in the case of Chuharmal v. CIT [1988] 172 ITR 250/38 Taxman 190 (SC).
2. Upon perusal of the order passed by the Tribunal in its entirety and noting the peculiar facts pertaining to the Assessee we are of the view that the question as posed before us and the contentions advanced need not be gone into in any further details. The admitted factual position and which the Tribunal noted is prevailing throughout. The Assessee was the owner of the office premises at Nariman Point, Mumbai and he sold the same during the year previous to the Assessment Year 2004-2005 and sale consideration was Rs.2 crores. The Assessing Officer noted that the market value adopted by the Registrar of Assurances for levy of stamp duty was Rs.3,72,42,000/-. In view thereof by taking recourse to Section 52C(2) the Assessing Officer called upon the Assessee to show cause as to why the full value of consideration received on transfer should not be adopted as per the stamp valuation. The Assessee insisted that the question of valuation of the property should be referred to the Departmental Valuation Officer. That was so referred and the report was submitted by the Valuation Officer dated 27.12.2006 determining the market value of the property at Rs.2,70,03,920/-. The Assessee maintained that the value of Rs.2 crores is actual sale consideration received by it. However, this was not accepted and the difference between the consideration received and determination of the Valuation Officer was declared as tax liability.
To this extent there is no dispute and what later on followed was the imposition of penalty. The Tribunal held that this cannot be taken as a case of furnishing inaccurate particulars of income inasmuch as there was a registered sale deed and there was consideration mentioned therein. That ground was raised and therefore, the document was forwarded to the Valuer and for determination of the value, by itself would not mean that the Assessee had furnished inaccurate particulars of income or has concealed the income. In these peculiar circumstances the imposition of penalty was not justified, is the conclusion drawn. The larger question posed for our consideration by Mr. Vimal Gupta really does not arise in the peculiar facts of the case. We leave that question and contentions based thereon open for being canvassed in an appropriate case. The Tribunal's order even if containing any reference to some deeming provision will not preclude or prevent the Revenue from raising such contentions. With this clarification and finding that the Tribunal's order does not raise any substantial question of law that we proceed to dismiss the Appeal. It is, accordingly, dismissed. No costs.
We have noticed after analyzing the facts in hand and applying the law laid down by Hon’ble Bombay High Court in the case of Fortune Hotels Page | 12 and Estates (P.) Ltd. (supra) and on the basis of ratio of Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products (P) Ltd. (supra), the case of the assessee is squarely covered by the ratio of these 2 cases on the basis of finding of Hon’ble Bombay High Court as well as Hon’ble Apex Court as mentioned above. We are of the considered opinion that the lower authorities were misconceived while resorting to the provision of section 50C of the Act for considering the fair market value (FMV) of the property at Rs. 13,02,34,650/- as determined by the Valuation Officer and in the absence of any material having been brought on record to show the actual consideration amount was not the amount of Rs. 4 crores received for the total sale of the land in question. Hence, we are of the considered opinion that it is not a case of furnishing inaccurate particulars of income by the assessee and the penalty levied u/s 271(1)(c) of the Act is not attracted in this case.
For the above reasons, the impugned order of Ld. CIT(A) is not legally sustained, accordingly the order of Ld. CIT(A) is set aside and the penalty imposed by AO is hereby deleted. Resultantly, the ground raised by the assessee is allowed.
In the result, the appeal is accordingly allowed in the above terms.
Order pronounced in the open court on 05.03.2025.