SMT. VARSHABEN R. MAVANI,SURAT vs. THE INCOME TAX OFFICER, WARD-3(3)(4), SURAT

The sole Ground relates to confirming of penalty of Rs. 14,27,775/- levied under section 271(1)(c) of the Act by not following ratio of judgement of tribunal in the case of Addl. CIT V. Chimanlal Manilal Patel in A.T.A: No. 508/Ahd/2o10 & Haresh P Shah V ITO in A.TA. No. 2154/Ahd/2010. 3 Briefly stated facts are that the assessee has filed return of income on 04.08.2010 declaring total income of Rs.4,71,480 and assessment was assessed under section 143 (3) at Rs. 53,- 39,680 by making addition of Rs.47,19,974 u/s.50C of the Act: The AO also initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. In reply to show-cause notice under section 274 read with section 271(1)(c), it was explained by the assessee that he assessee has Varshaben R Mavani v. ITO 3(3)(3)Surat /LT.A No: 559/Ahd/2015/10-I| Page 2of 4 furnished all the facts of the sale, documents /material before the AO, who has also not doubted the genuineness of the documents. Only because the assessee agreed to the additions because of the deeming provisions, it cannot be construed to be filing of inaccurate particulars on the part of the assessee. Further, the assessee had bona fide and strong belief at that time of filing of return of income that the valuation of property by Stamp Value Authority could not be the fair market value of the property of such property as adopted by Stamp Duty Authorities was more than the fair market value of such property nor the AO has brought on record which suggests that the assessee has received the amount over and above the fair market value declared in the sale deed of such property. However the AO was of the view that the assessee did not bring on record any evidence to show that the valuation done by the stamp valuation authority was not correct: These facts were suppressed and not disclose quarterly and fully during the filing of return of income The provisions of section 271 (1) (c) also include deemed income: In view of this facts, the levied penalty of Rs. 14,27 775. 4. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). However, Ld. CIT (A) observed that once the Explanation 1B applied to the amount added or disallowed to becomes leemed concealment. Under section 50 € (1) of the Act, the stamp duty valuation is to be taken as deemed consideration for the purposes of section 48, unless the assessee exercises options under section 50C(2). In the present case, the assessee has not disclosed that the stamp duty valuation exceeded the agreement value of the property even after the issue of notice under section 143 (2). Therefore, the penalty imposed by the AO was confirmed. 5 Being, aggrieved the assessee filed this appeal before the Tribunal. The ld. Counsel for the assessee submitted the provisions of section 50C (2) allows the assessee to choose actual sale consideration if the assessee convinced about fair market value of property being same as consideration actually received However , the AO invoked provision of section 50C and made addition of Rs. 47,19,974, therefore, the assessee cannot be held to have concealed the income of furnished inaccurate particulars of income. The ld. AR submitted that it was only of the basis of the deemed consideration that proceeding under section 271(1)(c) were started The Revenue has failed to produce any iota of evidence that the assessee had actually received one paisa more than the Varshaben R Mavani v. ITO 3(3)(3)Surat /L.T.A No: 559/Ahd/2015/10-I| amount shown to have been received by him. Thus, penalty order was liable to set-aside_ The ld. AR further relied in the case of Chimanlal Manilal Patel v. Addl. CIT [2012] 33CCH 0647 (Ahmedabad- Trib) where it was held that no penalty can be levied where the AO has not doubted the genuineness of the documents details furnished by the assessee and the additions have been made only on the basis of deeming provisions of section 50C of the Act: The ld. AR supported his view by placing reliance in the case of & Haresh P. Shah v. ITO in E.T.A. No. 2154/Ahd/2010. 6. Per contra, the ld. Sr D.R. supported the order of CIT (A) and referred para 9 of appellate order to contend failure of the assessee to disclose stamp duty valuation in computation of total income put a question mark on bona fides of the assessee_ Therefore, the assessee deemed to have concealed the particulars of income under Explanation 1B of section 271(1)(c) of the Act: 7. We have heard the rival submissions of both the parties and perused the material available on record. A perusal of the assessment order and penalty order reveals that the AO has made addition simply by applying the deeming provisions of section 50C (1). The perusal of the assessment order reveals that the AO has made addition based on facts as disclosed by the assessee in the return of 4n income and during the course of assessment proceedings. We find that the assessee has furnished all relevant facts; copy of sale deed and actual sale consideration received as per agreement of sale_ It is also undisputed fact that that the assessee agreed for addition due to applicability of provision of section 50C due small amount involved and not disputed the same or agitated before Appellate Authorities. The assessee furnished all particulars. It is not the case of the AO over and above the disclosed sale consideration in the agreement: Therefore, the penalty cannot be levied merely because that it was not acceptable to the AO. Where the explanation is bonafide and all the facts relating to the same have been disclosed, penalty is not leviable: The ld. AR further relied on the decision of Co-ordinate Bench in the case of Chimanlal Manilal Patel v; Addl. CIT [2012] 33CCH 0647 Jei (Ahmedabad-Trib) wherein it was held that no penalty can be levied where the AO has not doubted e the genuineness of the documents details furnished by the assessee and the additions have been made only on the basis of deeming provisions of section 50C of the Act: It is trite law that penalty proceedings are distinct and separate proceedings from assessment proceedings. The finding recorded in the assessment order is not conclusive for deciding the imposition of penalty. It only has Varshaben R Mavani v. ITO 3(3)(3)Surat /L.T.A No: 559/Ahd/2015/10-I| Page ! 4 of 4 persuasive value: Any finding recorded in the assessment order does not mean that the penalty has to be imposed automatically. Just because Appellant' $ explanation was not found acceptable by the AO, it does not follow that that the Appellant was unable to substantiate his explanation by providing various evidences and judicial opinions. Explanation 1 to section 271(1)(c) of the Act does not therefore cover the case of the Assessee. Based on the above facts of the case; it can be held that the Assessee had made all the necessary disclosures on a bonafide belief, which is not agreeable to the AO, it will not automatically lead to a case for penalty under section 271(1)(c) of the IT Act, 1961. We are, therefore, of the considered view, that the penalty is not sustainable in law in view of the ratio laid down by the Hon'ble Supreme Court in case of CIT v Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC); [2010] 189 Taxman 322(SC) wherein it was held that merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable by the revenue, penalty under section 271(1) (c) of the Act cannot be attracted. The other various decision of Tribunals as well as High Courts as relied by the assessee are also supports its case. In the light of above discussion, the penalty levied at Rs.14,27,775 is deleted. Therefore, grounds of appeal 1 to 3 of appeal are allowed_ 8. In the result, the appeal of the assessee stands allowed: 9. The order pronounced in the open Court on 21.02.2018 Sdl- 5 (C.M: GARG) JUDICIAL MEMBER Sdl (O.P. MEENA) ACCOUNTANT MEMBER yr Surat, folic Dated: 2I 'PrVEiti Copy ` forwarded to- Assessee/AO/Pr_ CIT (A)/ITAT (DR)/Guard file of ITAT . By order Assistant Registrar , Surat 4arj5 qirpr a1a 378485 37xu T7lo, %E. ax