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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘C’ MUMBAI
Before: Shri Joginder Singh, & Shri Rajesh Kumar
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 30.10.2015 of the Ld. First Appellate Authority, Mumbai in deleting the penalty levied in the relation to Transfer Pricing Adjustment made of Rs.70,03,106/- u/s.92CA(3) of the Income Tax Act, 1961 (hereinafter the Act), by holding that the conduct of the assessee satisfies both the conditions given in Explanation 7 to Section 271(1)(c) of the Act, i.e. good faith and due diligence, without appreciating the fact that the TPO had made the adjustment after detailed discussion and further erred in deleting the penalty levied in the relation to short term capital gains on sale of building u/s.50 of Rs.5,60,71,987/- by holding that the Assessing Officer had not brought any material which could prove that extra money was received by the assessee company on sale of asset.
2. During hearing, the Ld.DR, Shri Rajat Mittal defended the penalty imposed by the Ld.Assessing Officer. On the other hand, Shri Dhanes Bafna along with Apurva Shah and Ms.Forum Mehta, Ld.Counsel for the assessee explained that quantum was set aside by the Tribunal to file of the TPO and the Ld.CIT(A) placed reliance upon the order of A.Y.2003-04 which was sent to TPO. Our attention was invited to page 7(para 3.4) of the order. It was submitted that the Tribunal for A.Y.2003-04, identically deleted the penalty. This factual matrix was not controverted by the Ld.DR.
2.1 We have considered the rival submissions and perused the material available on record. Before adverting further, we are expected to analyse the order of the Tribunal dated 27.07.2016 (ITA No.7922&7033/Mum/2010), (ITA No.5261 & 2414/Mum/2014) in the case assessee itself for A.Y.2003- 04, 2004-05 and also 2007-08 (ITA No.195/Mum/2012), (ITA No.5671 & 5846/Mum/2013 for A.Y. 2008-09). It is noted that the Tribunal for A.Y.2003-04 deleted the penalty imposed u/s.271(1)(c) of the Act (para 21) levied on account of transfer pricing adjustment. As far as two additions relating to COE3 related expenses and David Beckham advertising campaign expenses are concern the Tribunal in quantum proceedings restored the matter back to the file of the TPO (para 22) by holding that the imposition of penalty u/s.271(1)(c) was not proper. The order of the Ld.CIT(A) in deleting the penalty was upheld by the Tribunal.
2.2 If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel and the conclusion drawn in the order of the Tribunal dated 27.07.2016 (supra), if kept in juxtaposition and analyzed, we find that the Ld.CIT(A) has broadly relied upon the decision for A.Y.2003-04. The Tribunal while adjudicating the order for A.Y.2003-04 deleted the penalty (para 20 & 21) (page 19 & 20 of the order). Thus, following the reasoning content in the aforesaid order of the Tribunal, in the case of assessee itself, we delete the penalty.
3. The next ground pertains to deleting the penalty levied in relation to short term capital gains on sale of building u/s.50 of the Act of Rs.5,60,71,987/- is concerned. The assessee sold certain buildings, being depreciable asset, for a sum of Rs.20,64,09,897/- and the net sale proceeds were reduced from the respective Block of Assets. The stamp duty valuation authority valued the property at Rs.25,04,97,069/-. The Ld.AO considered this value as sale proceeds u/s.50C and computed the short term capital gain at Rs.5,60,71,987/-. The Ld.Counsel for the assessee relied upon the decision in the case of Renu Hingorani vs. ACIT (ITA No.2210/M/2010) order dated 22.12.2010. This factual matrix was not controverted by the Revenue.
3.1 We have considered the submissions of Ld.DR and perused the material available on record. Under the facts discussed hereinabove, it also noted that Hon'ble Jurisdictional High Court in the case of CIT vs. M/s.Fortune Hotels and Estates Pvt.Ltd.,(ITA No.1164 of 2012) vide order dated 26.09.2014 held as under.
“1. Heard Mr.Vimal Gupta, learned Senior Counsel appearing in support of this Appeal, which impugns the order of the Income Tax Appellate Tribunal dated 30.09.2011 allowing the Assessee’s Appeal and deleting the penalty under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) Act, 1961. Mr.Vimal Gupta submits that the substantial question of law which arises for determination and consideration is whether, the Tribunal was right in holding that the penalty cannot be imposed with reference to addition of deemed income under Section 50C of the Income Tax Act, 1961. Mr.Vimal Gupta relies upon the judgment of the Honourable Supreme Court in the case of Chuharmal V/s Commissioner of Income Tax reported in 172 ITR 250(SC).
Upon perusal of the order passed by the Tribunal in its entirety and noting the peculiar facts pertaining to the Assessee we are of the view that the question as posed before us and the contentions advanced need not be gone into in any further details. The admitted factual position and which the Tribunal noted is prevailing throughout. The Assessee was the owner of the officer premises at Nariman Point, Mumbai and he sold the same during the year previous to the Assessment Year 2004-2005 and sale consideration was Rs.2 crores. The Assessing Officer noted that the market value adopted by the Registrar of Assurances for levy of stamp duty was Rs.3,72,42,000/-. In view thereof by taking recourse to Section 52C(2) the Assessing Officer called upon the Assessee to show cause as to why the full value of consideration received on transfer should not be adopted as per the stamp valuation. The Assessee insisted that the question of valuation of the property should be referred to the Departmental Valuation Officer. That was so referred and the report was submitted by the Valuation Officer dated 27.12.2006 determining the market value of the property at Rs.2,70,03,920/-. The Assessee maintained that the value ofRs.2 crores is actual sale consideration received by it. However, this was not accepted and the difference between the consideration received and determination of the Valuation Officer was declared as tax liability.
To this extent there is no dispute and what later on followed was the imposition of penalty. The Tribunal held that this cannot be taken as a case of furnishing inaccurate particulars of income inasmuch as there was a registered sale deed and there was consideration mentioned therein. That ground was raised and therefore, the document was forwarded to the Valuer and for determination of the value, by itself would not mean that the Assessee had furnished inaccurate particulars of income or has concealed the income. In these peculiar circumstances the imposition of penalty was not justified, is the conclusion drawn. The larger question posed for our consideration by Mr.Vimal Gupta really does not arise in the peculiar facts of the case. We leave that question and contentions based thereon open for being canvassed in an appropriate case. The Tribunal’s order even if containing any reference to some deeming provision will not preclude or prevent the Revenue from raising such contentions. With this clarification and finding that the Tribunal’s order does not raise any substantial question of law that we proceed to dismiss the Appeal. It is, accordingly, dismissed. No costs.”
3.2 Considering the aforesaid decision of the Tribunal and also of the Hon'ble Jurisdictional High Court (order dated 26.09.2014), we are of the view that there is an evidence that the assessee sold the depreciable asset for Rs.20,64,09,897/- and the stamp duty valuation authority adopted the value of Rs.25,04,97,069/-. The Ld.AO levied penalty u/s.50C on the difference between these two figures. In view of the aforesaid decisions, we are of the view that penalty cannot be imposed by applying the deeming provisions of section 50C of the Act as there was no evidence that the assessee actually received the amount adopted by the stamp duty valuation authority. It is not the case that the assessee concealed its income or furnished inaccurate particulars of such income. The ratio laid down from Hon'ble Apex Court in Reliance Petro Products Pvt. Ltd., 322 ITR 158 (SC) supports our view.
Thus, we do not any infirmity in the conclusion drawn by the Ld.CIT(A).
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 25/10/2017.