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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld. Commissioner of Income Tax(Appeals)-2, Aurangabad, dated 05.04.2019 for the A.Y. 2012-13 arising out of the Order u/s 271(1)(c) dated 5/12/2017. The assessee has raised the following grounds of appeal: “1. On the facts of the case and in law, it may please be held that the penalty levied u/s.271(1)(c) is null and void since the initiation of penalty proceedings and notice u/s.274 r.w.s 271(1)(C) both are without proper application of mind. - Rs.1,56,101/-
2. The ld. CIT(A) erred in confirming penalty on the capital gain amount of Rs.7,80,508/- arose due to difference between indexed cost of acquisition as on 01/04/1981 allowed by the AO in assessment as compared to that finalized in appeal by CIT(A) on basis of valuation done by DVO. The said penalty may please be deleted. Shivanand Mahadeoappa Ople [A] - Rs.1,56,101/-
3. The ld. CIT(A) is not justified in confirming penalty u/s 271(1)(C) and same may please be deleted. - Rs.1,56,101/-
4. Appellant prays to add, alter, amend and / or withdraw the ground/s during the appellant proceedings.
2. Brief facts of the case are that the Assessing officer (AO) levied penalty u/s 271(1)(c) of the Act for AY 2012-13 vide order dated 5/12/2017 of Rs.4,66,101/-. Aggrieved, by the Penalty Order the Assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) partly upheld the Penalty Order. Aggrieved by the order of the Ld.CIT(A), the assessee filed present appeal before this Tribunal.
No one had appeared on behalf of the assessee .No adjournment letter was filed by the assessee. On earlier hearing also no one appeared on behalf of the assessee and case was adjourned to 21/7/22. Therefore, we have decided this appeal based on records and submission of the ld.DR.
We have perused the records. The basic facts as understood from the order of the AO and the Ld.CIT(A) are that the assessee had not filed return of Income u/s 139(1) of the Act. The AO got information that the assessee had sold Land on 24/10/2011. Accordingly the AO issued notice u/s 148 of the Act. The Assessee filed return of Income on 6/11/2014 showing capital gain. Assessee had shown sale consideration of Rs.50,00,000/-, which was mentioned in the 2 Shivanand Mahadeoappa Ople [A] agreement. It was noted by the AO that value for the purpose of section 50C was much higher than the value shown by the assessee, hence at the request of the assessee the AO made a reference to the DVO. However, since the DVO’s report was not received in time, the AO calculated the Long term capital Gain on sale of the impugned land as under :
Sale Value as per Section 50C --------- Rs.1,46,25,000/- Index Cost of acquisition as on 1/4/81 Rs. 21,88,454/- Long Term capital gain Rs.1,24,36,546/- 4.1 While calculating the Index cost of acquisition the AO took the per sq.ft rate of Rs.6.40/- as on 1/4/81, whereas the assessee had shown it at Rs.7 per sq. ft. based on the valuation of adjacent land done by the Hon’ble Court in Compulsory acquisition.
Aggrieved by the Assessment Order the Assessee filed an appeal before the Ld.CIT(A). The CIT(A) directed the AO to calculate the capital gain taking into consideration the value decided by DVO. Accordingly, the AO calculated the LTCG. AO issued the penalty notice, and then passed the penalty order.The Penalty order was passed on the following LTCG calculation : Sale Consideration as per DVO Rs. 65,00,00/- Index Cost of acquisition as per DVO Rs. 14,29,532/- LTCG Rs. 5120468/- Actual capital gain shown by the assessee Rs. 27,89,960/- 3 Shivanand Mahadeoappa Ople [A] 5.1 Therefore, the AO treated difference of Rs.51,20,468/- – Rs.27,89,960/- = Rs.23,30,508/- as concealment.
Assessee filed an appeal against the Penalty Order before, the Ld.CIT(A). The Ld.CIT(A) directed the AO to levy the Penalty only on the difference in the cost of acquisition as on 1/4/1981 declared by the Assessee and Decided by the DVO. The DVO had decided the cost of acquisition as on 1/4/81 applying the rate of Rs.45 per sq. meter where as the Assessee had shown LTCG considering Cost of acquisition as on 1/4/81 at the rate of Rs.7 per sq.ft. The CIT(A) held that Penalty is not leviable on the deemed value of sale consideration decided by the DVO as held by Hon’ble Bombay High Court in the case of CIT vs fortune Hotel and estate Pvt Ld 232 taxmann 481. However, the Ld.CIT(A) upheld the Penalty on the difference in the cost of acquisition as on 1/4/1981 shown by the assessee and as decided by the DVO. The Ld.CIT(A) held that assessee had filed inaccurate particulars of his income and also concealed the income. Aggrieved by the order of the Ld.CIT(A) the Assessee filed appeal before this tribunal.
6.1 Thus, in this case penalty has been levied only on the basis of difference in considering cost of acquisition as on 01/04/1981. As per explanation to Section 48, the "indexed cost of acquisition" means an amount which bears to the cost of acquisition the same proportion as Cost 4 Shivanand Mahadeoappa Ople [A] Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee72a or for the year beginning on the 1st day of April, 1981, whichever is later; 6.2 Thus, where the assessee had acquired land prior to 01/04/1981, for the purpose of computation of LTCG, the index cost is calculated taking into consideration the Cost of acquisition of the land as on 01/04/1981. Thus, it is not actual cost of acquisition but an estimate. In this case the assessee calculated the cost of acquisition as on 01/04/1981 based on the Valuation done by the Hon’ble Court of the adjacent land at the time of compulsory acquisition which was Rs.7 per sq.ft, where as the DVO estimated it at Rs.45 per Sq.meter . Thus, both have done only estimation. The AO has not pointed out any specific defect in the cost of acquisition mentioned by the assessee. Rather, in the calculation of LTCG in the assessment order the AO had considered the same value. Thus, in this case the basis of valuation of cost of acquisition as on 01/04/1981 adopted by the Assessee was provided to the AO by the assessee. Thus, no inaccurate particulars were filed by the assessee qua cost of acquisition as on 01/04/1981. There was no concealment of 5 Shivanand Mahadeoappa Ople [A] Income qua cost of acquisition as on 01/04/1981. In penalty proceedings the AO has to prove that either the Assessee has concealed his income or filed inaccurate particulars of his income or both. In this case neither has been proved .In this case the Assessee arrived at the Cost of acquisition as on 01/04/1981 based on the valuation of the adjacent land done by the Hon’ble Court, thus there was a specific basis on which the assessee arrived at the value as on 01/04/1981. The AO has not observed any defects in the said approach. The AO has merely considered value adopted by DVO. Therefore, on these facts we are of the opinion that there was no concealment of income nor there was filling of inaccurate particulars by the assessee. Therefore, the penalty u/s 271(1)(c) is not maintainable in this case. Hence, the AO is directed to delete the penalty levied u/s 271(1)(c). Accordingly ground number 2 of the Assessee is allowed.
The Ground No.1 of the Assessee has not been adjudicated as the assessee had failed to file copy of the Notice u/s 274 r.w.s 271(1)(c) of the Act to demonstrate that it was issued without striking off in-applicable words. The DR also could not file it. The ld.CIT(A) has also not given any finding on this. However, we have allowed the appeal of the assessee on merit, hence this 6 Shivanand Mahadeoappa Ople [A] ground becomes academic. Thus Ground No.1 is dismissed as non-adjudicated.
Accordingly, the appeal of the assessee is partly allowed. .