SENGODA GOUNDER HUF, SALEM,SALEM vs. DCIT, CIRCLE-1, SALEM, SALEM
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MANJUNATHA. G & SHRI MANOMOHAN DAS
आदेश / O R D E R
PER MANOMOHAN DAS, J.M: This appeal by the assessee is directed against the order of the learned Commissioner of Income-Tax, National Faceless Appeal Centre, (NFAC) Delhi [CIT(A) dated 29-09-2023vide which he confirmed the penalty under section 271(1)(c) of the Act (hereinafter “the Act”) levied by the ld. AO vide order dated 12-12-2019.
ITA No.1179/Chny/2023 :- 2 -: 2. The grounds of appeal of the assessee are as under:
“1. The order of the Commissioner of Income Tax(Appeals) dismissing the appeal is contrary to law, erroneous and unsustainable on the facts of the case. 2. The CIT(A) erred in confirming the penalty levied under sec.271(1)(c) ofRs.5,16,640. 3. The CIT(A) was not justified in holding that the value of the property as on 01.4.1981 for computation of capital gains, estimated by the ITAT at Rs.150000 per acre as against the declared value by assessee of Rs.215000 per acre would amount to concealment of income by assessee. 4. The CIT(A) failed to appreciate that the assessee had computed the value of property as on 1.4.1981 based on a proximate sale instance in 1985 and that the ITAT had estimated the value, though the method of assessee was not rejected and hence confirming the penalty is wholly unjustified and untenable in law. 5. The CIT(A) was not justified in confirming the penalty without considering the submissions of assessee in its entirety and erroneously concluding that the assessee has not demonstrated as to why penalty should not be levied. 6. The CIT(A) ought to have considered the decisions of the Supreme Court and Madras High Court referred in the submissions and seen that the assessee cannot be imputed with concealment of income and there was no case for levy of penalty under sec.271(1)(c) of the Act.”
The brief facts of the case are that an ancestral property belongs
to Sri Sengoda Gounder was sold by his legal heirs Shri S. Rajamani,
Shri S. Natarajan, S. Kannan and Smt. Jaya for a consideration of
Rs.1,00,10,000/- on 01-03-2010 in favour of two different persons. As
the sold property was a HUF property, the return of income for the AY
2010-11 was filed in the name of Shri Sengoda Gounder HUF by his
legal heirs on 24-09-2013 admitting total income of Rs. 18,42,150/-.
ITA No.1179/Chny/2023 :- 3 -: Since, the return of income was filed belatedly, hence, the same was
lodged. The returned income of Rs. 18,42,150/- includes the capital
gain of Rs. 17,45,290/-.
The assessee while computing the capital gain had adopted fair
market value of the property as on 01-04-1981 at Rs. 13,06,125/- i.e.,
Rs.2,14,948/- per acre whereas the guideline value as per the
Registration Department is 25,000/- per acre. The Registration
Department vide letter dated 28-02-2013 made available under a
reference from the Revenue and the assessment was reopened
u/s.148 of the Act after prior approval of the Principal Commissioner of
Income-Tax, Salem on 28-10-2016.
The ld. Assessing Officer [AO] on the basis of the guideline value
received from the Registration Department, computed the long term
capital gain and proposed to bring the amount computed by him to tax
net. Accordingly, the ld. AO asked the assessee to file his reply
thereon. In response, the assessee filed his objection to the proposal
of the ld. AO. The assessee vide his objection tried to defend his
computation of long term capital gain made by him. The ld. AO
however, rejected the objection of the assessee and vide order dated
12-12-2019 made an addition of Rs. 60,57,962/- to the total income of
the assessee.
ITA No.1179/Chny/2023 :- 4 -: Being aggrieved, the assessee filed 1st appeal before the ld. 6.
CIT(A). The ld. CIT(A) vide order dated 31-01-2019 dismissed the
appeal of the assessee.
Being aggrieved, the assessee filed appeal in ITA
No.817/Chny/2019 before the Tribunal. The Hon’ble Tribunal after
considering the case of the assessee vide order dated 10-05-2019
partly allowed the appeal of the assessee. The Hon’ble Tribunal
estimated Rs. 1,50,000/- per acre as value of the property.
The ld. AO has complied with the order of the Hon’ble Tribunal
dated 10-05-2019. However, he initiated penalty proceedings against
the assessee by issuing a notice u/s 271(1)(c) of the Act and finally
vide order dated 12-12-2019 levied a penalty of Rs.5,16,640/- upon
the assessee.
Aggrieved, the assessee filed appeal before the ld. CIT(A). The
ld. CIT(A) vide order dated 29-09-2023 dismissed the appeal of the
assessee. The ld. CIT(A) observed that the assessee taken the rate of
property on the basis of appreciation of gold rate and the Hon’ble ITAT
granted part relief to the assessee.
Aggrieved, the assessee has filed the present appeal before the
Tribunal.
ITA No.1179/Chny/2023 :- 5 -: 8. Heard the representatives of both the parties and perused the
materials on record.
The Ld. AR reiterated the submissions made before the ld.
CIT(A). The Ld. AR submitted that the assessee relied on the valuation
report issued by a valuer approved by the Income Tax-Department.
The Ld. AR further submitted that the Hon’ble Tribunal had estimated
the fair market value of the property at Rs. 1,50,000/- per acre against
the guideline value relied on by the ld. AO. On the other hand, the Ld.
Sr. D.R supports the order of the ld. Lower authorities.
We have carefully considered the submissions of both the
parties. We observe that the assessee’s claim on the valuation of the
property as well as the guideline value adopted by the ld. AO did not
accept by the Hon’ble Tribunal. The Hon’ble Tribunal estimated the fair
market value of the property at Rs.1,50,000/- per acre against the
guideline value of Rs. 25,000/- as was provided by the Registration
Department to the Revenue.
We observe that assessee’s claim on the fair market value
cannot be termed as concealment of income. Assessee’s claim was
based on the valuation report of an approved valuer. As the valuer is
an approved valuer, his report is generally reliable. Therefore, we are
ITA No.1179/Chny/2023 :- 6 -: of the view that the assessee did not conceal any income. The basis of
the assessee’s claim is the report of the approved valuer. Further,
differences of opinion will always be there regarding the fixation of
value of a particular property. Showing of different value of a particular
property by different valuers is not uncommon. It is possible.
Therefore, there were different opinions on the assessee’s matter and
for different opinions penalty cannot be levied on the assessee.
Further, the decision of the Hon’ble jurisdictional Madras High
Court in the case of Mrs. Thulasiammal vs. CIT (2000) 158 CTR 5
(Mad), which is relied on by the asseessee held that, the guide line
values of Registration Department has evidentiary value and they are
intended to give information or instruction to the registering authorities
but the guidelines would not establish the market value of the land.
The Hon’ble Madras High Court in the case of CIT vs. Apsara
Talkies 155 ITR 303 (Mad) held that, a valuation estimate, without
more, cannot justify a finding of concealment.
The Hon’ble Supreme Court in the case of CIT vs. Reliance
Petroproducts Pvt. Ltd. 322 ITR 158 (SC) held that making an
incorrect claim in law cannot tantamount to furnishing inaccurate
particulars.
ITA No.1179/Chny/2023 :- 7 -: 15. We observe that the aforesaid decisions of the Hon’ble Madras High Court and Hon’ble Supreme Court fully covers the case of the assessee and accordingly, we direct to delete the penalty levied u/s. 271(1)(c) of the Act upon the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 15th March, 2024.
Sd/- Sd/- (मंजुनाथ. जी) (मनोमोहन दास) (Manjunatha. G) (Manomohan Das) �ाियक सद�/Judicial Member लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�ई/Chennai, �दनांक/Dated 15th March, 2024. EDN/-
आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ*/Appellant 2. +,थ*/Respondent 3. आयकर आयु-/CIT 4. िवभागीय +ितिनिध/DR 5. गाड( फाईल/GF
