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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV, JM & SHRI PRADIP KUMAR KEDIA, AM
आदेश / O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-5 dated 02.02.2015 arising in the penalty order dated 07.03.2013 passed by Assessing Officer under section 271(1)(c) of the Act.
The assessee in the instant case claims to have inherited a house property at Ahmedabad from her father-in law who is stated to have purchased it in 1966. The assessee sold the said residential house property
ITA.No. 719/Ahd/2015 Assessment year 2008-09 - 2 – vide sale deed dated 03.04.2007. While determining the capital gain on sale of the aforesaid residential property, the fair market value (FMV) as on 01.04.1981 was taken at Rs. 35,94,252/-. The assessee also inter alia also claimed cost of improvement of Rs. 6,11,149/- during assessment year 1998- 99 & 1999-2000 (its indexed cost work out at Rs. 9,55,999/-). Return filed by the assessee was subjected to scrutiny assessment. During the course of assessment proceedings, the Assessing Officer noticed that the registered valuer had inspected the said property on 20.06.2006. Based on search report, the Assessing Officer took a view that cost of improvement claimed separately by the assessee has already been included in the valuation report and therefore cannot be allowed separately. Hence the cost of improvement of Rs. 9,55,999/- claimed by the assessee was rejected while computing the assessed income u/s. 143(3). The disallowance of cost of improvement was upheld by the Ld. CIT(A) in the quantum proceedings. The findings of the Ld. CIT(A) were not challenged before the ITAT.
As a sequel to the quantum proceedings, the Assessing Officer also imposed penalty of Rs. 3,24,950/- u/s. 271(1)(c) of the Act for wrong claim of cost of improvement. The Ld. CIT(A) in first appeal also confirmed the aforesaid action of the Assessing Officer in imposing penalty.
Aggrieved by the imposition of penalty and confirmation thereof by the Ld. CIT(A), the assessee has preferred appeal before the Tribunal.
The Ld. Authorized Representative for the assessee Mr. S.N. Divatia submitted that the Revenue has misdirected itself in law and on facts in invoking penalty proceedings u/s. 271(1)(c) on a mere rejection of claim of cost of improvement when the said claim was genuine and supported by
ITA.No. 719/Ahd/2015 Assessment year 2008-09 - 3 – evidence. The Ld. A.R. submitted that the claim of cost of improvement was rejected by the Assessing Officer on technical reasons of valuation adopted by the valuer which the assessee did not know. The Ld. A.R. further submitted that in any view of the matter, the perusal of valuer’s report shows that the land rate was adopted of 1981 and cost of construction in the year 1981 was at Rs. 1500/-. The Learned A.R. contended that all the relevant materials were duly disclosed to the Assessing Officer. The Learned A.R. accordingly pleaded that the fact situation does not call for any imposition of onerous penalty.
Learned Departmental Representative on the other hand relied upon the order of the Assessing Officer and Ld. CIT(A). In this regard the Learned Departmental Representative contradicted the claim of the assessee that all the relevant supporting evidences regarding incurring of expenditure was furnished before the Assessing Officer to support the cost of improvement to property as claimed. The Ld. D.R. thus harped on lack of corroboration.
We have carefully considered the rival submissions and perused the orders of the authority below. The limited controversy is maintainability of imposition of penalty on account of lower incidence of tax claimed based on incorrect claim of cost of improvement on the property. It is the case of the Revenue that the cost of improvement claimed is not supportable by independent evidence and the valuer’s report for determining the fare market value includes the cost of improvement and therefore the assessee ought not to have claimed cost of improvement while determining cost of acquisition for the purposes of capital gains. In this regard we find that the assessee has given list of names of parties to whom payments have been made who are mainly steel traders and mason workers, painters and sanitary fitting cost etc.
ITA.No. 719/Ahd/2015 Assessment year 2008-09 - 4 – The cost of improvement relates to assessment year 1998-1999 & 1999-2000 which are nearly 10 years old. The property has been brought in 1966. Some improvement of this nature in the intervening period cannot be entirely ruled out therefore the benefit of doubt must go to the assessee while 10 years old bills could not be produced by a senior citizen assessee particularly having regard to the strictier nature of penalty proceedings. An averment by the registered valuer for exclusion of cost of improvement may help in framing the quantum assessment but cannot be seen as a conclusive force for establishing concealment of income per se. Thus we do not see any falsity per se in the claim of the assessee beyond doubt under the circumstances. We are of the view that discretion vested with the Assessing Officer while imposing the penalty ought to have been exercised in favour of the assessee. Therefore the penalty imposed u/s. 271(1)(c) requires to be cancelled.
In the result appeal of the assessee is allowed. Order pronounced in the Court on 10/01/ 2018 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mukul Dated, 10 /01/2018 आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, सहायक पंजीकार (Asstt.Registrar) आयकर अपील�य अ�धकरण ITAT, Ahmedabad