SHAILA D SHAH,MUMBAI vs. ITO 22(2)(3), NAVI MUMBAI

PDF · subscribers
ITA 7293/MUM/2013Status: DisposedITAT Mumbai01 November 2017AY 2009-103 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a penalty under Section 271(1)(c) is not leviable on additions made solely based on the deeming provisions of Section 50C, as it does not amount to concealment of income or furnishing inaccurate particulars. The penalty was deleted following a coordinate bench's decision.

What were the facts?

The Assessing Officer (AO) made an addition to the assessee's income based on the stamp duty valuation of a property under Section 50C, which was higher than the sale consideration declared. The AO then levied a penalty under Section 271(1)(c) on this addition.

What were the issues?

Whether penalty under Section 271(1)(c) is sustainable on additions made under the deeming provisions of Section 50C of the Income Tax Act.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, E Bench, Mumbai

Before: Shri B.R. Baskaran & Shri Pawan SinghSmt. Shaila D. Shah

For Respondent: Shri V. Justin
Hearing: 01.11.2017Pronounced: 01.11.2017

This appeal has been filed by the assessee against the order of the CIT(A)-33, Mumbai dated 27.09.2013 for A.Y. 2009-10.

2.

The assessee has raised the following ground of appeal: -

1. Hon'ble CIT(A) erred in confirming the penalty of Rs.1,16,583/- u/s. 271(1)(c) without considering the merits of the case that addition was made under deeming provision of Sec. 50C of the Income Tax Act, 1961. Hon'ble CIT(A) ought to have condoned the delay in filing appeal and ought to have considered the case on merits.

3.

The brief facts of the case re that the assessee filed here return of income on 29.07.2009 declaring total income of `8,40,070/-. The assessment was completed under Section 143(3) on 28.12.2011 determining the total income at `13,81,570/-. In the return of income the assessee has claimed long term capital gain on sale of property. The assessee has shown `11,12,000/- as sale consideration. The AO adopted the value of property as stamp valuation at `32,78,000/- in accordance with the provisions of Section 50C of the Income Tax Act. The AO made

2 Smt. Shaila D. Shah addition on sale consideration as per sale agreement and the valuation of Stamp Valuation authority. The AO made addition of `7,34,107/- on account of long term capital gain. The AO levied penalty on addition of long term capital gain. The AO levied the penalty at the rate of 100% of tax sought to be evaded. The AO worked out the penalty of Rs. 1,16,583/- vide order dated 22.06.2012. On appeal before the CIT(A) the order of penalty was confirmed. Further aggrieved by the order of the CIT(A) assessee has filed the present appeal.

4.

None appeared on behalf of the assessee despite giving sufficient opportunity. Therefore, we have no option but to decide the appeal after bearing the learned D.R. and perusing the material available on record. On our specific query the learned D.R. for Revenue fairly conceded that no penalty is leviable on the addition made by the AO on the basis of value adopted by assessing officer as per provisions of Section 50C of the Income Tax Act. The learned D.R. further submitted that in the case of Renu Hingorani in similar penalty levied under Section 271(1)(c) was deleted by the Coordinate Bench of the Tribunal. We appreciate the fairness of the learned D.R. for Revenue in assisting the Bench and in bringing the correct position of law to our notice.

5.

We have considered the submissions of the learned D.R. and perused the material available on record. The AO made the addition on account of difference in the indexed cost of acquisition on the date of purchase and the stamp duty valuation. The AO made addition of `7,34,107/-. We noted that the Coordinate Bench of the Tribunal in the case of Renu Hingorani (supra) on almost similar facts deleted the penalty holding as under: -

“ 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 3 Smt. Shaila D. Shah 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 by 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 on 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 V/s Reliance Petroproducts Pvt. Ltd (supra), the penalty levied u/s 271(1)( c ) is not sustainable. The same is deleted.”

6.

Considering the decision of the Coordinate Bench as referred to above and respectfully following the same the penalty levied under Section 271(1)(c) vide order dated 22.06.2012 is deleted.

7.

In the result, the appeal filed by the assessee is allowed.

More judgments on Section 50C

All 3,223 judgments and leading authorities on Section 50C →

Recent GST High Court judgments

Search GST case law →