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Income Tax Appellate Tribunal, INDORE BENCHE, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
PER MANISH BORAD, A.M: This appeal filed by the Revenue pertaining to A.Y. 2008-09 is directed against the order of Ld. Commissioner of Income Tax(Appeals)-III, Indore, (in short ‘CIT(A)’), vide appeal No. IT- 132/15-16 order dated 28.11.2016 which is arising out of the order u/s 271(1)(c) of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on 27.03.2015 by ACIT-3(1), Indore. The Revenue has raised following grounds of appeal:
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“(i) Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in law by deleting the penalty of Rs.77,00,000/- levied by the AO u/s 271(1)(c) of the Act. (ii) Whether on the facts and in the circumstances of the case Ld. CIT(A) has erred in law by deleting the penalty of Rs.77,00,000/- levied by the AO u/s 271(1)(c) of the Act by taking the plea of deeming provisions of section 50C whereas the fair market value adopted by DVO was at Rs.4,90,59,500/- for calculating the taxable Capital Gain & cost of improvement & expenses on stamp duty were not sustained and remained unexplained.”
Briefly stated facts as culled out on the records are that the assessment u/s 143(3) of the Act completed in the case of assessee on 31.12.2010. Ld. AO assessed income of Rs.5,38,65,523/- after making various additions under the long term capital as per provisions of section 50C of the Act. The Ld. CIT(A) upheld the addition of Rs.2,32,82,887/- made by the AO. 3. Subsequently, penalty proceedings were initiated u/s 271(1)(c) and after giving due opportunity to the assesse, Ld. AO levied penalty of Rs.77,00,000/- u/s 271(1)(c) of the Act on the confirmed addition. 4. Aggrieved the assessee filed an appeal before the ld. CIT(A) and succeeded in full. 5. Now Revenue is in appeal before the Tribunal against deletion of penalty of Rs.77,00,000/- by Ld. CIT(A).
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The Ld. Departmental Representative,(DR) vehemently argued supporting the penalty order of the AO. Per contra the Ld. counsel for the assessee referring to the paper book as well as the judgments submitted that it has been consistently held that penalty u/s 271(1)(c) of the Act is not leviable when the addition is on account of presumptive taxation which in assessee’s case is u/s 50C of the Act. The ld. counsel for the assessee also submitted that sale consideration shown in the sale deed was Rs.3 crores. The Stamp Valuation Authorities adopted the value of the property at Rs.6,05,00,000/-. Thereafter, when the assessee objected for this valuation, the AO referred the matter to Departmental Valuation Officer who determined the market valuation at Rs.4,90,59,500/-. The Ld. Counsel for the assessee prayed for confirming the finding of Ld. CIT(A) for the very reason that additions were made merely on presumptive basis and assessee had duly discussed the actual sale consideration which is not in dispute by the Revenue. The ld. Counsel for the assessee referred and relied on the following judgments in addition to the finding of Ld. CIT(A): (i) CIT vs. Madan Theatres Ltd., I.T.A.T. No.62 of 2013 (High Court of Calcutta (ii) CIT vs. Fortune Hotels and Estate (P) Ltd. I.T.A. No.1164 of 2012 (High court of Bombay (iii) Bhavya Anant Udeshi vs. ITO, ITANo.565/Hyd/2015 I.T.A.T., Hyderabad (iv) CIT vs. Baroda Tin Works (1996) 221 ITR 661 (Guj)
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(v) ITO vs. Jayesh Parmaar, ITANo.279/Ind/2013, I.T.A.T. Indore (vi) DCIT vs. K. Bhanji Vanmalidas & Sons, ITANo.743/Rjt/2010, I.T.A.T., Rajkot 7. We have heard rival contentions and perused the relevant material on record placed before us. The Revenue’s sole grievance is against the finding of Ld. CIT(A) deleting the penalty of Rs.77,00,000/- levied by the Ld. AO u/s 271(1)(c) of the Act on account of the addition u/s 50C of the Act arrived on account of the difference between the sole consideration shown by the assessee at Rs.3,00,00,000/- as against the fair market value adopted by the Departmental Valuation Officer at Rs.4,90,59,500/-. Question before us is that “whether the assessee furnished inaccurate particulars of income or concealed the particulars of income while disclosing the sale consideration from sale of immovable property”.
We find that sale consideration disclosed in registered sale deed is Rs.3,00,00,000/-. The stamp valuation authorities adopted the value of property at Rs.6,05,00,000/- which was objected by the assessee during the assessment proceedings. The Ld. AO referred for valuation to the Departmental Valuation Officer. The DVO determine the fair market value at Rs.4,90,59,500/-. This is not the case of the Revenue that the assessee received consideration in cash or kind over and above the sale consideration of Rs.3,00,00,000/- shown in the registered sale deed. Additions were
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made by the Ld. AO purely on the basis of the valuation by the Department Valuation Officer.
We further find the assessee duly disclosed the transactions of sale of property and offered the capital gain for taxation. We find that the Ld. CIT(A) deleted the impugned penalty u/s 271(1)(c) of the Act observing as follows: “I have gone through the penalty order and the appellant’s contentions. The crux of the appellant’s argument is that the provisions of section 50C are deeming provisions and are therefore limited to the purpose for which they have been brought into the statute and cannot be extended for levy of penalty when the deeming provision does not provide for the same. Appellant has relied on several decisions in support of the above contention as detailed in its written submission. A perusal of the decisions established that the extant judicial position is that no penalty for concealment is leviable where addition is maede on account of deeming provision of section 50C. The Assessing Officer has however rejected the contention of the appellant holding that it is established that the assessee has furnished inaccurate particulars in respect of such income (additions confirmed by CIT(A)) and hence concealment thereof, evading the tax to extent by defrauding the interest of revenue. 5. To levy penalty u/s 271(I)(c) a finding of fact has to be recorded that the assessee had deliberately concealed the material facts. In this case the appellant
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in the computation of income had worked out the capital gain at consideration of Rs. 3, 01,00,000/ -. When the details were called for in the assessment proceedings on examination of the sale deed it was revealed that the value adopted by the Sub Registrar, Indore was Rs. 6,05,00,000/-. The assessee while filing the return of income has calculated the capital gain, considering the transaction value and has ignored the provisions of section 50C. The Assessing Officer has observed in the assessment order that while filing the return of income the assessee has deliberately calculated the capital gain considering the transaction value and as per provisions of section 50C it was the responsibility of the assessee to consider the value adopted by the Sub-Registrar, Indore as the sales consideration. From the facts on records it is seen that all the relevant details were made available by the appellant to the Assessing Officer. The Assessing Officer made a reference to the DVO who arrived at the fair market value at Rs. 4,90,59,500/- after considering the objections of the assessee. The assessee's further objections were rejected by the DVO and the assessment was completed taking the sales consideration at Rs. 4,90,59,500/ - which has been confirmed by the CIT(A). As regards the addition of Rs. 30,00,000/- as unexplained expenditure u/ s 69C the
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CIT(A) has given relief of Rs.15,00,000/- only as the assessee was unable to prove the purchase of stamp for Rs. 15,00,000/-. 5.1 While levying the penalty u/s 271(1)(c) the Assessing Officer has held that the assessee furnished/ concealed inaccurate particulars in respect of such income and failed to disclose all facts and such material in the return of income. No such adverse inference is however justified. There is no finding that the appellant has received any amount over and above the stated sale consideration. Therefore, it cannot be held that there was concealment of facts/particulars of income or submission of inaccurate particulars of income. The addition to the income which forms the basis for the penalty was only on account of apPlica7f the deeming provisions of section 50C. 5.2 The decision of Hon'ble Bombay High Court in CIT vs. Fortune Hotels and Resorts (P.) Ltd. (2014) 52 taxmann.com 330 is applicable to the facts of the case. It is held as under:- 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 was 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 7
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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. 3. 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. 8
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5.3 The Hon'ble Kolkata High Court in the case of CIT vs. Madan Theaters Ltd. (2014) 44 taxmann.com 382 has also held that when addition is made only on account of deeming provisions of sections 50C penalty is not leviable u/s 271(1)(c) in absence of any iota of evidence that the assessee has received more amount than shown by it. 5.4 Regarding the imposition of penalty on. the addition sustained on account of stamp duty the decision of jurisdictional ITAT, Indore is applicable in the case of ITO vs. Jayesh Parmar (2016) 27 ITJ 515 dated 20/09/2015 is applicable. The Hon'ble ITA upheld the decision of the CIT(A) where in it is held that penalty u/s 271(1)(c) cannot be sustained when addition is made under deeming provisions of sections 69A. The Hon'ble High Court of Gujrat in CIT vs. Baroda Tin works (1996) 221 ITR 661 (Guj.) has held that the fiction created u/s 68,69, 69A, 69B and 69C by itself cannot be extended to penalty proceedings to raise a presumption about concealment of such income. 5.5 In view of the above discussion the penalty cannot be sustained. The penalty of Rs.77,00,000/- is therefore directed to be deleted. The above grounds of the appellant are therefore allowed. .
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We also observe that the Hon'ble High Court of Calcutta in the case of CIT vs. Madan Theatres Ltd. (supra) also adjudicated a similar issue wherein penalty u/s 271(1)(c) of the Act was levied for the addition made as per provision of section 50C of the Act and Hon'ble Court observed that, “the fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings u/s 271(1)(c) started. The Revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him”. The Hon'ble court accordingly find no scope to admit the appeal since the same does not raise any question of law, substantial or otherwise.
We, therefore, respectfully following the judgment of Hon'ble Court and the Tribunal and in the given facts and circumstances of the case, are of the considered view that Ld. AO was not justified in levying the penalty u/s 271(1)(c) of the Act and the addition on which the penalty was levied was on presumptive basis by way of application of provision of section 50C of the Act and there is no material on record which could prove that the assessee received any sum over and above the sale consideration of Rs.3,00,00,000/- disclosed in the registered sale deed. Accordingly no interference is called for in the finding of Ld. CIT(A), we uphold the same.
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In the result, appeal of the Revenue stands dismissed.
Order was pronounced in the open court on 25 .05.2018.
Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; �दनांक Dated : 25/ 05/2018 ctàxÄ? P.S/.�न.स. Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Private Secretary/DDO, Indore