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PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee under Section 253 of Income-tax Act is directed against the order of ld. CIT(A)-51, Mumbai dated 28.11.2016 for Assessment Year 2006-07, which in turn arises from the penalty levied by Assessing Officer under section 271(1)(c) of the Act dated 13.03.2015. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the levy of penalty U/s 271(1)(c) of the Income Tax Act, 1961 amounting to Rs. 5,00,000/- on the ground or grounds as contained in the appellate order or otherwise.
2. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in not deciding all the grounds raised
in the Grounds of appeal and thereby erred in confirming the levy of penalty on the ground or grounds as stated in the appellate order or otherwise.
3. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the levy of penalty despite the fact that the Ld. Assessing Officer has passed the order levying penalty u/s 271(1)(c) more than once.
4. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the levying of penalty despite the fact that the order passed by Mum 2017-Dr. Prakash D. Samant the Ld. Assessing Officer is barred by limitation as per the provisions of section 275 of the Income Tax Act, 1961. 2. Brief facts of the case are that a search and seizure action was carried out in the Samant Group on 30.05.2007. The assessee is the main person of the Samant group. Consequent to the search action notice under section 153A dated 4th October 2007 was served upon the assessee to file return of income. The assessee in response to the notice under section 153A dated 4 October 2007, filed his return of income on 1st November 2007 declaring total income at Rs. 20,49,222/-. In the return of income filed in response to the notice under section 153A the assessee disclosed additional income of Rs. 14 lakh on the basis of seized document and the assets found during the course of search. The assessee claimed to have earned long-term capital gain on sale of tenancy right of Rs. 14 lakhs. The Assessing Officer while passing the assessment order under section 143(3) rws 153A made the addition of Rs. 20,27,250/- on account of long term capital gain on the basis of valuation by Government Valuer. On appeal before Commissioner (Appeals) the addition was upheld. And on further appeal the addition was upheld by Tribunal in its order dated 28.03.2014. The Assessing Officer initiated the penalty on the addition made by Assessing Officer of Rs. 20,27,250/-. In reply to the show cause notice, the assessee contended that the tenancy right is taxable only at the time of sale of property or at the time right is transferred or surrendered. The issue is debatable and penalty should not be imposed. The contention of the assessee was not accepted by 2 Mum 2017-Dr. Prakash D. Samant Assessing Officer holding that he issue is not debatable as the tenancy right is a capital asset and the amount received on transfer or relinquishment of tenancy is capital receipt within the meaning of section 45 of the Act. The Assessing Officer concluded that the 100% tax sought to be evaded on escaped income is Rs. 4,54,915/- and the amount of 300% tax sought to be evaded is Rs. 1364745/-. The Assessing Officer levied the penalty of Rs. 5,00,000/- in his order dated 13.03.2015. On appeal before Commissioner (Appeals) the penalty order was sustained. Therefore, further aggrieved by the order of learned Commissioner (Appeals) the assessee has filed present appeal before us.
We have heard the submissions of the learned authorised representative (AR) of the assessee and learned departmental representative (DR) for the revenue and perused the material available on record. The learned AR of the assessee submits that the penalty order passed by Assessing Officer is barred by limitation as prescribed under section 275 of the Act. The learned AR further submits that Tribunal passed the order on the quantum assessment appeal on 28.03.2014. The Assessing Officer passed the order of penalty only on 13th March 2015. The Assessing Officer ought to have passed order within six months from the order of Tribunal. The learned AR further submits that order of Tribunal was served upon the revenue on 7th May 2015. The assessee has obtained proof of service of order of Tribunal from the registry of Tribunal by making an application under the provisions Mum 2017-Dr. Prakash D. Samant of Right to Information Act. The assessee was provided proof of service of order of Tribunal upon the Revenue vide letter (order) dated 20th May 2015 informing that the order of Tribunal dated 28.03.2014 was served upon the revenue on 7th May 2014 and therefore, the order of penalty is barred by period of limitation as prescribed under section 275 of the Act.
In alternative submission the learned AR submits that even on merit the order of penalty is not sustainable. It was submitted that the coordinate bench of the Tribunals and DCIT Vs. Trans Freight Containers Ltd. in dated 24 February 2017 held that when the Assessing Officer made addition by invoking the provision of section 50C, in such situation assessee cannot be held guilty of furnishing inaccurate particulars of income or concealment of particulars of income. Further in DCIT Vs. Indian Extradition Ltd in ITA No. 5758/Mumbai/2016 dated 22nd November 2017 held that the addition made on account of difference of sale condition consideration as per the provision of section 50C cannot be a basis for levying penalty under section 271(1)(c) .
On the other hand the learned AR for the revenue supported the order of lower authorities. The ld. DR further submits the Assessing Officer in para 7 of his order of penalty, has clearly brought on record that the assessee claimed the long term capital gain on relinquishing the tenancy right and claimed ownership right of property by making payment of meagre amount of Rs. 36,000/-. However, the fair market value as per the Government ITA No. 1166 Mum 2017-Dr. Prakash D. Samant Valuer is Rs. 20,62,250/- and the Assessing Officer made addition of Rs. 20,27,250/- towards long term capital gain.
We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also gone through the order of Tribunal in assessee’s case in quantum assessment proceeding in dated 28th March 2014. The additions on account of long term capital gain were confirmed by the Tribunal. There is no dispute that the Assessing Officer made the addition of long-term capital gain by invoking the provisions of section 50C. The coordinate bench of Tribunal in Trans Freight Containers Ltd. (supra) while considering almost identical facts held that the Assessing Officer made the addition by invoking the main provision of section 50C, held as under:
8. We find that in the present case also the assessee has furnished the registered sale deed. The Assessing Officer has made the addition by invoking deeming provision of section 50C. No case has been made out any incriminating document et cetera being found. In such situation assessee cannot be held guilty of furnishing inaccurate particular of income or concealment of income. Furthermore the conduct of assessee cannot be held to be contumacious so as to warrant levy of penalty. This proposition is supported by the decision rendered by the larger bench of Hon’ble Apex Court in case of the Hindustan Steel Ltd versus state of Orissa 83 ITR 26.
Further the coordinate bench in Indian Extraction Ltd (supra) on similar facts held as under:
“ 6. Having heard both the sides, we find merits in the arguments of the assessee for the regions that the infection provided under section 50C for computation of capital gain cannot be extended to the provisions of section 271(1)(c) so as to 5 Mum 2017-Dr. Prakash D. Samant levied penalty for furnishing inaccurate particulars of income. This legal propulsion was supported by the decision of Hon’ble Bombay High Court in case of CIT Versus Fortune Hotels and Estate Private Ltd 232 Taxman 481(Bom) wherein it was observed that in term of section 50C, higher sale consideration of property determined by DVO did not by itself amount to furnishing of inaccurate particulars of income so as to levy penalty under section 271(1)(c). The Hon’ble Calcutta High Court in case of CIT versus Madan Theatres Ltd (supra) observed that actual amount received from sale of property was offered for taxation. It was only on the basis of deemed consideration that the proceeding under section 271(1)(c) was initiated. The revenue had failed to produce any iota of evidence that the assessee actually received more than the amount shown to have received by him. The Hon’ble Supreme Court in case of CIT Versus Reliance Petro Product Versus CIT 322 ITR 158(SC) observed that merely because the assessee had claimed the expenditure which was not accepted or was not acceptable to the revenue that itself would not attract the penalty under section 271(1)(c). In this case, admittedly, the AO has levied penalty on the addition made toward in the computation of long-term capital gain of the income tax act. Therefore, considering the facts and circumstances of the case and respectfully following the ratio of law discussed above, we are of the view that penalty cannot be levied under section 271(1)(c) for addition made on account of difference of for sale consideration as per the provisions of section 50C of the Act.”
Considering the above referred discussion and the legal position, we find that the Assessing Officer was not justified in levying the penalty under section 271(1)(c) of the Act. Hence, the penalty levied by Assessing Officer under section 271(1)(c) of Rs. 5,00,000/- is deleted. Therefore, we accept the alternative submission of the assessee. Since we have deleted the penalty on the alternative submission of the assessee, hence the discussion on the other submissions of ld. AR for the assessee related with passing of Mum 2017-Dr. Prakash D. Samant penalty order beyond the period of limitation has become academic. In the result the grounds of appeal raised by assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 26/09/2018.