Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 912/JP/2014
PER SHRI KUL BHARAT, JM.
This appeal by the assessee is directed against the order of ld. CIT (A)-II,
Jaipur, dated 07.10.2014 pertaining to A.Y. 2010-11. The Assessee has raised the
following grounds of appeal:-
“1) That on facts and circumstances of the case as well as in law, the ld. CIT(A)-II, Jaipur has grossly erred in confirming the penalty imposed u/s 271(1){c} of the IT Act, 1961 by the ld. ITO Ward 4(1), Jaipur at Rs. 1869410/- without establishing case of concealment & furnishing of inaccurate particulars of income. Thus the penalty so imposed deserves to be quashed. 2) That on the facts and in the circumstances of the case as well as in law, the ld. CIT(A)-II, Jaipur has committed a gross error of law and facts in coming to the conclusion that there is huge difference between the stated sale consideration and the DLC rate, the levy of penalty u/s 271(1){c} of the IT Act, 1961 is justified, whereas valuation as per section 50-C of the IT Act, 1961 is deemed provision for computation of Long Term Capital Gain & as such it cannot be the basis for levy of
2 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
penalty u/s 271(1){c} of the IT Act. Thus penalty so imposed by the ld. ITO Ward 4(1), Jaipur at Rs. 1869410/- & confirmed by the ld. CIT(A)-II, Jaipur deserved to be deleted. 3) That on the facts and circumstances of the case the ld. CIT(A)-II, Jaipur has grossly erred in not appreciating that the valuation as per section 50-C of the IT Act, 1961 may be deemed to be the sale consideration for purpose of computation of Long Term Capital Gain, but cannot be the basis for levy of penalty U/s 271(1){c} of the IT Act, 1961. Thus penalty so imposed U/s 271(1){c} of the Act, the ld. ITO & confirmed by the ld. CIT(A)-II, Jaipur deserves to be cancelled. 4) That on facts and circumstances of the case as well as in law, the ld. CIT(A)-II, Jaipur and also ld. Assessing Officer Ward 4(1), Jaipur have wrongly held that all the facts material to the computation of income have not been disclosed by the appellant, whereas the appellant has neither concealed any facts consciously nor has furnished incorrect particulars deliberately. The ld. Assessing Officer Ward 4(1), Jaipur ha wrongly taken the shelter of section 50-c of the IT Act, 1961, which is deeming provision & same cannot be taken basis for levy of penalty u/s 271(1){c} of the IT Act, 1961. Thus, penalty so imposed deserved to be quashed. 5) That the appellant craves leave to add or amend any grounds of appeal before the date of hearing.”
Only effective ground of this appeal is against confirming the penalty levied
by the Assessing Officer.
Briefly stated the facts of the case are that the assessment was framed under
section 143(3) of the IT Act, 1961 (hereinafter referred to as the Act) vide order
dated 30.11.2012. While framing the assessment, the AO noticed that the assessee
as per the ITS data sold immovable property amounting to Rs. 1,16,71,800/- it was
observed by the Assessing Officer, that the Assessee had declared sale consideration
of Rs. 39 lakhs and accordingly calculated capital gain thereon. The Assessing
Officer however adopted the sale consideration of Rs. 1,07,40,030/- on the basis of
DLC rate by invoking the provision of Section 50C. The Assessing Officer also
initiated penalty proceedings u/s 271(1)(c) on the ground of concealment.
Subsequently, the Assessing Officer levied penalty u/s 271(1)(c) vide order dated
3 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur. 29th May, 2013. Aggrieved by this, the Assessee preferred an appeal before ld.
CIT(A), who after considering the submissions dismissed the appeal.
Aggrieved by this order, now, the assessee is in appeal before this Hon’ble
Tribunal. The Ld. Counsel for the assessee reiterated the submissions as made in the
written submissions. The written submissions as made by the ld. Counsel for the
assessee are reproduced as under:-
“Grounds of Appeal Nos. 01 to 04:
All of these grounds of appeal pertain to the challenge made by assessee to the imposition of penalty u/s 271(1)(c) of the Act at Rs. 18,69,410/-, therefore the same are being canvassed together for the sake of convenience.
Brief facts of the case are that, during the year under appeal, the assessee had sold an immovable property for a consideration of Rs. 39.00 lacs/- and declared capital gain of Rs. 7,72,522/- thereon. However, the value adopted u/s 50C by the Sub-Registrar for the purpose of charging stamp duty is Rs. 1,07,40,030/-. The ld. AO, accordingly, invoked the provisions of section 50C and computed the capital gain at Rs. 83,64,430/- after reducing the indexed cost of acquisition at Rs. 31,27,478/- out of the consideration determined u/s 50C of the Act for which assessee has also consented. Accordingly, an addition of Rs. 75,91,908/- was made on account of capital gain. Since the assessee has accepted the addition thus it was not challenged in appeal and due taxes were duly paid. Thereafter, the ld. AO proceeded with the pending penalty proceedings and imposed penalty u/s 271(1)(c) at Rs. 18,69,410/- on account of such addition.
It is submitted that in the instant case, the penalty u/s 271(1)(c) has been levied merely on account of the additions made by ld. AO during the course of assessment proceedings without in any manner specifying as to how those additions indicate any concealment of income on part of assessee or furnishing of inaccurate particulars of income. It is submitted that, no penalty u/s 271(1)(c) can be levied on account of additions made being the differential value of declared consideration and the value adopted by the sub-registrar for the purpose of stamp duty in terms of provisions of u/s 50C in as much as the addition so made is on account of a deeming fiction created by section 50C in as much as the addition so made is on account of a deeming fiction created by section 50C and thus, the addition being in the nature of deemed income neither amounts to concealment of income nor furnishing of inaccurate particulars of income in view of various judicial pronouncements on the issue.
4 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
It is submitted that, section 50C of the Income Tax Act, 1961 creates a legal fiction with effect of which the value of a particular property as adopted by the Stamp Valuation Authorities for stamp duty purposes is deemed to be the full value of consideration for the purpose of computing capital gain u/s 48 of the Act in spite of the fact that the actual consideration received by assessee is less than the value so deemed to be the full value of consideration. It is submitted that the actual amount received by the assesee on account of sale of the capital asset is Rs. 39,00,000/- which fact has neither been doubted by the ld. AO, nor has any effort been made to disprove the same nor any material has been brought on record by the ld. AO to show that the assessee has in any manner received any amount over and above what has been disclosed and agreed upon in the sale deed and in the return of income. With this background, it becomes clear that the assessee has truly and correctly disclosed his income and had furnished accurate particulars of income in the return of income filed by him and therefore, no inference of any concealment can be drawn against assesee merely because the value of that property has been estimated on a higher side by the Stamp Valuation Authority. Moreover, valuation of a property on a higher side cannot ipso facto lead to the conclusion that the assessee has received any consideration over and above the consideration mentioned by him in the sale deed and disclosed in the return of income, especially when there is no such allegation in the assessment order itself. Further, it has been held by Courts from time to time that no penalty can be levied u/s 271(1)(c) merely because the assesee did not voluntarily apply provisions of section 50C. Therefore, merely on account of addition made by invoking section 50C penalty u/s 271(1)(c) cannot be levied for the reason that no allegation of any concealment or understatement of sale consideration has been made either in the assessment order or in the penalty order. The above contention of assessee finds support from the following judicial pronouncements which squarely cover the case of assessee:
CIT vs. Madan Theatres Ltd., 260 CTR (Cal) 7 (Cal HC)
The revenue preferred an appeal. The ld. Tribunal dismissed the appeal holding inter alia, as follows: Thus obviously, it is only on account of deeming provisions of s. 50C, the AO has made the addition by adopting the sale consideration of Rs. 5,19,77,000, being the value adopted for the purpose of stamp valuation. The Revenue has also not shown as to how the assessee could be held to have actually received this amount which is in excess of the amount of Rs. 2,51,50,000. It is has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. In any case, the issue is also now squarely covered by the decision of the Co-ordinate Bench
5 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
of this Tribunal in the case of Renu Hingorani (supra). In the circumstances, respectfully following the decision of the Co-ordinate Bench of this Tribunal in the case of Renu Hingorani (supra) as also on account of the fact that the Revenue has not been able to dislodge the findings of the ld. CIT(A) that the bona fides of the assessee are genuine, the findings of the ld. CIT(A) stand confirmed. In the circumstance, the appeal of Revenue is dismissed.
Mr. Niaumuddin, ld. Advocate appearing for Revenue, contended that the assessee had a choice to dispute the valuation on the basis of the deemed value, but the assessee did not take that opportunity. The assessee had a choice or he could have litigated. 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 under 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.
We are, as such, of the opinion that is no scope to admit the appeal since the same does not raise any question of law, substantial or otherwise. The appeal is, therefore, rejected.
Late Smt. Urmila Tyagi, vs. ITO, Dausa ITA No. 911/JP/14 [ITAT,
Jaipur]
……. It is not the case of Revenue that the assessee has actually received any amount over and above Rs. 50 lacs and which has not reflected and offered in her return of income. It is only on account of deeming fiction created by section 50C of the Act that the AD has brought the deemed sale consideration to tax in the hands of the assessee. In our view, where a deemed sale consideration is brought to tax in the hands of the assessee under a deeming fiction, the same cannot lead to levy of penalty under section 271(1)(c) of the Act. The issue is also covered by the decision of the Hon’ble Calcutta High Court in case of Madan Theaters Ltd. and Co-ordinate Bench in case of Renu Hingorani, Chimanlal Manilal Patel. Hence, respectfully following the same, we delete the levy of penalty in respect of additions under section 50C of the Act. (APB 21)
Anita Beniwal vs. ITO, ITA No. 743/JP/2012 (ITAT, Jaipur)
6 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
We have heard the rival contentions of both parties and perused the material available on the record. The assessee had shown sale consideration at Rs. 8lacs whereas as per section 50C of the Act, the Stamp Authority has assessed the value of property at Rs. 12,35,730/-. there was difference at Rs. 4,75,658/- in the capital gain, which has been accepted by the assessee during the course of assessment proceedings. The case law referred by the assessee are squarely applicable. In this case also, there is no evidence with the revenue to prove that the assessee has received much more than reflected in the return. The addition was on account of deeming provision, therefore, we delete the penalty confirmed by the ld. CIT(A). (APB 30)
Renu Hingorani vs. ACIT, ITA No. 2210/Mum/2010 (ITAT Mumbai)
“8. We have considered the rival contentions and relevant record. We find that the AO had made addition of Rs. 9,00,824/- being difference between the sale consideration as per sale agreement and the valuation made by the Stamp Valuation Authority. Thus, the addition has been made by the AO by applying the provisions of section 50C of the Act. It is evident from the assessment order that the AO has not questioned the actual consideration received by the assessee but the addition is made purely on the basis of deeming provisions of the income Tax Act, 1961. The AO has not given any finding that the actual sale consideration is more than the sale consideration admitted and mentioned in the sale agreement. Thus, it does not amount to concealment of income or furnishing inaccurate particulars of income. It is also not the case of the revenue that the assessee has failed to furnish the relevant record as called by the AO to disclose the primary facts. The assessee has furnished all the relevant facts, documents/material including the sale agreement and the AO has not doubted the genuineness and validity of the documents produced before him and the sale consideration received buy the assessee. Under these facts and circumstances, it cannot be said that the assessee has not furnished correct particulars of income. Merely because the assessee agreed for addition one the basis of valuation made by the stamp valuation authority would not be a conclusive proof that the sale consideration as per this agreement was incorrect and wrong. Accordingly the addition because of the deeming provisions does not ipso facto attract the penalty u/s 271(1)(c). Hence, in view of the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro products Pvt. Ltd. (supra), the penalty levied u/s 271(1)(c) is not sustainable. The same is deleted.” Chimanlal Manilal patel Vs. ITO ITA No. 508/Ahd/2010 (ITAT
Ahemdabad)
7 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
We have heard the rival contentions and perused the material on record. In is a fact that the addition has been made by the AO in the revisionary proceedings. The addition has been made on the basis of provisions of section 50C. It is not the case of the AO that the assessee has received consideration over and above than that declared in the sale deed. The AO has not disputed the consideration received by the assessee. The addition has been made on the basis of deeming provisions of section 50. The assessee has furnished all the facts of sale, documents/material before the AO. The AO has not doubted the genuineness of the documents/details furnished by the assessee. 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. The assessee agreed to addition on the basis of valuation made by the stamp valuation authority cannot be a conclusive proof that the sale consideration a per the sale agreement is deemed to be incorrect and wrong. In view of these facts we are of the considered view that penalty cannot be levied on the basis of deeming provision. We accordingly delete the same. It is thus submitted that in no circumstance penalty u/s 271(1)(c) could have been levied and therefore, the penalty so levied at Rs. 81,69,410/- deserved to be deleted. ” 5. On the contrary, the ld. Departmental Representatives opposed the
submissions. However, conceded that the issue is squarely covered in favour of the
assessee by the decision of the Co-ordinate Bench in the case of Anita Beniwal in
ITA No. 743/JP/2012 and also judgement of the Hon’ble Calcutta High Court
rendered in the case CIT Vs Madan Teater Ltd. The ld. Departmental
Representatives conceded the fact that the issue is decided by the Hon’ble Tribunal
against the Revenue by following the judgment of the Hon’ble Calcutta High Court.
We have heard the rival submissions, perused the material available on
record. It is contended that the facts are identical as were in ITA No. 743/JP/2012
in the case of Anita Beniwal v/s ITO. The Co-ordinate Bench of this Tribunal decided
this issue as under:-
8 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
“We have heard the rival contentions of both the parties and perused the material available on the record. The assessee had shown sale consideration at Rs. 8 lacs whereas as per section 50 of the Act, the Stamp Authority has assessed the value of property at Rs. 12,35,730/-, there was difference at Rs. 4,75,658/- in the capital gain, which has been accepted by the assessee during the course of assessment proceedings. The case law referred by the assessee are squarely applicable. In this cae also, there is no evidence with the revenue to prove that the assessee has received much more than reflected in the return. The addition was on account of deeming provision, therefore, we delete the penalty confirmed by the ld. CIT(A).”
6.1 In the present case also, the facts are identical as in the case of Anita
Beniwal. In this case also the penalty has been levied on the basis that the actual
sale consideration was lesser than the value adopted by the Stamp Valuation
Authority. The Revenue has not brought any material on record suggesting that the
assessee had received actual consideration as adopted by the Stamp Valuation
Authority. Therefore, we do not see any reason for taking a different view as
adopted by the Co-ordinate Benches of this Hon’ble Tribunal, at the Hon’ble Calcutta
High Court in the case of CIT vs. Madan Teatres Ltd. We therefore direct the
Assessing Officer to delete the penalty.
In the result, appeal of the assessee in ITA No. 912/JP/2014 is allowed.
Order is pronounced in the open court on Monday, the 17th day of April 2017.
Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
9 ITA No. 912/JP/2014 Shri Jhabar Singh, Jaipur.
Jaipur Dated:- 17 /04/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant- Shri Jhabar Singh, Jaipur. 2. The Respondent – The ITO Ward 4(1), Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 912/JP/2014) vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत