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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed the Appeal against the impugned Order dated 30.6.2016 of Ld. CIT(A)-2, Noida pertaining to assessment year 2007-08. The ground raised in the Assessee’s appeal reads as under:-
1. That on the facts and in the circumstances of the appellant’s case the Ld. CIT(A) has erred both on facts and in law in upholding penalty under section 271(1)(c) in absence of any material on record to prove concealment or furnishing of inaccurate particulars of income.
2. That on the facts and in the circumstances of the appellant’s case the Ld. CIT(A) has erred in law in upholding penalty under section 271(1)(c) imposed on the addition / surrender made merely by virtue of deeming provisions of section 50C without appreciating the law that the deeming provisions of section 50C does not ipso facto attract the penalty u/s. 271(1)(c).
That on the facts and in the circumstances of the appellant’s case the ld. CIT(A)_ has erred in law in upholding penalty under section 271(1)(c) on the amount of Rs. 41,087/- inadvertently claimed by the appellant on account of free hold expenses. That the appellant craves leave to add, amend or alter any of the grounds of appeal.
2. The brief facts of the case are that the assessee filed its return of income on 07.12.2007 declaring total income of Rs. 1,24,450/-. The AO finalized the assessment vide order dated 31.12.2009 under section 143(3) of the I.T. Act at an assessed income of Rs. 17,32,776/- after making addition of Rs. 16,08,326/-. This also included an addition of Rs. 11,28,485/ - on account of difference in indexed cost of acquisition of property sold by the Assessee. Aggrieved, the Assessee filed Appeal before the Ld. First Appellate Authority against the issue of cost of acquisition. According to the Assessee, indexation should have been taken from 01.04.1981 as against the year adopted by the AO i.e. 1996-97. The Ld. CIT(A-l), Noida passed appeal order under section 250 of the Act on 21.04.2014 in which he held that as per the provisions of section 49(i) of the Act, the period of holding the asset has to be determined by including the period for which the said asset was held by the previous year and indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the Asset. He, therefore, directed the AO, to re-compute the capital gains of the assessee accordingly. The Appeal effect was given by the AO by order dated 10.06.2014 in which the income of the assessee was recomputed and revised total income was arrived at Rs. 6,04,290/ - as against returned income of Rs. 1,24,450/-.
The AO, thereafter, imposed penalty u/s 271(l)(c) of the Act on account of disallowance of capital gains and addition on account of claim of free hold expenses. Aggrieved by order of the AO, the instant Appeal filed before the Ld. CIT(A), who vide his impugned order dated 30.6.2016 has been upheld the action of the AO of imposing the penalty. 3. Now the Assessee is aggrieved against the impugned order and filed the present appeal before the Tribunal.
At the threshold, Ld. Counsel of the Assessee has stated that the issues involved in the present appeal are squarely covered by the ITAT, ‘D’ Bench, Mumbai decision dated 22.12.2010 passed in (AY 2006-07) in the case of Renu Hingorani vs. ACIT, Mumbai. In this behalf, he filed the copy of the said decision and requested that by following the same reasoning, the penalty in dispute may be deleted and accordingly, the appeal of the assessee may be allowed.
On the contrary, Ld. Sr. DR relied upon the orders of the authorities below.
I have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A) and the decision referred by the Ld. Counsel of the assessee in the case of Renu Hingorani vs. ACIT, Mumbai passed in (AY 2006-07) dated 22.12.2010. I find considerable cogency in the assessee’s counsel in relying upon the aforesaid decision of the ITAT, New Delhi. For the sake of clarity, I am reproducing the finding given vide para no. 8 to 9 at pages 5 to 6 of the ITAT, Mumbai decision dated 22.12.2010 in the case of Renu Hingorani vs. ACIT, Mumbai passed in ITA No. 2210/Mum/2010 (AY 2006-07) 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 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 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 by the Stamp Valuation Authority would not be a conclusive assessee agreed for addition on the basis of valuation made 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 Vis
Reliance Petroproducts Pvt.Ltd (supra), the penalty levied u/s 271(1)( c) is not sustainable. The same is deleted.
The appeal of the assessee is allowed.” 7. After perusing the aforesaid decision of the ITAT, Mumbai, I am of the considered view that the issues in dispute are squarely covered by the aforesaid decision, because the facts and circumstances of the present case are exactly similar and identical to that of case of Renu Hingorani vs. ACIT Mumbai (Supra). Therefore, respectfully following the aforesaid decision dated 22.12.2010 of the ITAT, ‘D’ Bench, Mumbai passed in (AY 2006-07) in the case of Renu Hingorani vs. ACIT, Mumbai, the penalty in dispute is deleted and accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the Assessee is allowed. Order pronounced in the Open Court on 13/02/2017.