SENGODA GOUNDER HUF, SALEM,SALEM vs. DCIT, CIRCLE-1, SALEM, SALEM

“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.

The CIT(A) erred in confirming the penalty levied under sec.271(1)(c) ofRs.5,16,640.

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/-.

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.

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.

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.

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 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.

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.

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