ITO, NEW DELHI vs. SH. AJAY SHARMA, NEW DELHI

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ITA 995/DEL/2016Status: DisposedITAT Delhi23 November 2017AY 2010-116 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee had disclosed all material facts and that the addition under Section 50C was based on a deeming provision, not on evidence of concealed income or inaccurate particulars. Therefore, the penalty was not justified.

What were the facts?

The assessee sold an industrial plot and declared short-term capital gains based on the sale deed consideration. The AO made an addition under Section 50C based on the stamp duty valuation, which was higher than the sale consideration, and levied penalty under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when addition is made solely based on the deeming provisions of Section 50C without any evidence of concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 50C,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCHES “B” : DELHI

Before: SHRI BHAVNESH SAINI & SHRI L.P. SAHU

Hearing: 23.11.2017Pronounced: 23.11.2017

This appeal by Revenue has been directed against the order of the Ld. CIT(A)-10, New Delhi, dated 30th January, 2014, for the A.Y. 2010-2011, challenging the cancellation of penalty under section 271(1)(c) of the I.T. Act, 1961, on account of addition made under section 50C of the I.T. Act.

2.

Briefly, the facts of the case are that assessee has sold industrial plot at Neemrana, Phase-II, Bahror, District Alwar

2 ITA.No.995/Del./2016 Shri Ajay Sharma New Delhi. (Rajasthan). The assessee has declared short term capital gain of Rs.19,59,668. The assessee has declared the sale consideration at Rs.1,27,50,000 vide sale deed executed dated 11th March, 2010. The document shows that stamp duty was paid at Rs.1,83,02,910 as reflected in the AIR information as against sale consideration of Rs.1,27,50,000 and there is a difference of Rs.55,52,910. Thus the provisions of Section 50C of the I.T. Act were found attracted in this case. The A.O. accordingly made addition of Rs.55,52,910 on account of difference and taken as additional short term capital gain and added to the income of the assessee. The A.O. vide separate order levied the penalty under section 271(1)(c) of the I.T. Act.

3.

The assessee explained before the Ld. CIT(A) that A.O. has applied deeming provisions of Section 50C of the I.T. Act and made addition being difference between sale consideration as per sale deed and valuation made by the Stamp Valuation Authority. The Valuation of Stamp Valuation Authority is not a conclusive evidence of actual fair market value of the property. The A.O. has not brought any evidence on record by which it can be established that assessee has received more than the amount shown to have received as per the 3 ITA.No.995/Del./2016 Shri Ajay Sharma New Delhi. sale deed. The assessee disclosed all the material facts before A.O.

Therefore, it is not a case of levy of penalty. The assessee relied upon the decision of Hon’ble Kolkata High Court in the case of CIT vs. Madan Theatres Ltd., 260 CTR 75. The Ld. CIT(A) reproduced the judgment in the impugned order and found that penalty have been levied on account of addition made by applying the deeming provisions of Section 50C of the I.T. Act, which could not be construed as furnishing of inaccurate particulars or concealing the particulars of income. It was further found that for applying the provisions of Section 50C, it is not necessary for the A.O. to examine whether actually the assessee has received anything over and above the amount mentioned in the sale deed because the addition is made by applying the deeming provision of Section 50C of the Act. There are no positive evidence to indicate receipt of any money over and above what is stated in the sale deed. The assessee disclosed all the relevant facts before A.O. Therefore, penalty was cancelled.

4.

The Ld. D.R. relied upon the decision of Hon’ble Delhi High Court in the case of Zoom Communications 327 ITR 510 and 4 ITA.No.995/Del./2016 Shri Ajay Sharma New Delhi. submitted that even by applying deeming provisions under section 50C of the I.t. Act, penalty is leviable.

5.

On the other hand, the Learned Counsel for the Assessee, reiterated the submissions made before the authorities below and relied upon the decision of the Hon’ble Kolkata High Court in the case of CIT vs. Madan Theatres Ltd., (supra).

6.

After considering the rival contentions, we do not find any merit in this appeal of the Revenue. The assessee has disclosed all the relevant facts of sale of the property to the Revenue Department.

The assessee declared the sale consideration of Rs.1,27,50,000 as

per sale deed and also offered the short term capital gain for taxation.

1.

The A.O. however, applied the deeming provisions of Section 50C of the I.T. Act, for the purpose of making the addition. Thus, the A.O. did not bring any positive evidence on record to show that assessee has concealed particulars of income or furnished any inaccurate particulars. The valuation of the Stamp Valuation Authority is not a conclusive evidence of receipt of the money by assessee over and above what is recorded in the sale deed. The A.O. has not brought any concrete evidence of concealment of income in the order. The 5 ITA.No.995/Del./2016 Shri Ajay Sharma New Delhi. A.O. at the stage of assessment, simply applied the deeming provisions of Section 50C of the I.T. Act without bringing any evidence on record for concealment of income or furnishing inaccurate particulars by the assessee. In the absence of any positive evidence with respect to concealment of income, there were no justification for the A.O. to levy penalty in the matter. The Hon’ble Kolkata High Court in the case of CIT vs. Madan Teatres Ltd., (supra), on identical facts, dismissed the departmental appeal in which it was held as under :

“Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property.”

7.

Considering the above discussion in the light of the order of the Ld. CIT(A), no interference is called for in the matter. It may also be noted here that Ld. CIT(A) discussed some other small additions also on which penalty have been cancelled. However, during the course of arguments, no arguments have been made by the Ld. D.R. on the same and even the same are not challenged in 6 ITA.No.995/Del./2016 Shri Ajay Sharma New Delhi. the grounds of appeal. In view of the above, departmental appeal stands dismissed.

8.

In the result, appeal of the Department is dismissed.

Order pronounced in the open Court.

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