INCOME TAX OFFICER, CHANDIGARH vs. M/S JAGTU MAL KUNDAN LAL, CHANDIGARH

आदेश/Order PER ANNAPURNA GUPTA, A.M. : The present appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-I, Chandigarh (in short CIT (A) dated 13.2.2017 passed u/s 250 (6) of the Income Tax Act, 1961 (in short ‘Act’), deleting the penalty levied u/s 271(1)(c) of the Act.

the capital gains at a value of Rs.8,31,99,000/-.The CIT(A)

confirmed the addition so made, but the ITAT set aside the

order of the AO with a direction to refer the matter to

District Valuation Officer(DVO). The DVO enhanced the value

from Rs.15.27 crores to Rs.20.80 crores, but the AO again

adopted the lower value as per law and not the one given by

the DVO and recomputed the value of capital gain at the

same figure of Rs.8,31,99,000/-. The assessee again filed

appeal against the second assessment order, which was

again confirmed by the CIT(A), Chandigarh in the second

order. However the CIT(A), allowed the assessee some relief

by adopting the indexed cost of 2005-06 as against 2003-04

as had been adopted by the Assessing Officer. In the

meanwhile, the Assessing Officer imposed concealment

penalty u/s 271(l)(c) of the Act. The A.O held that since the

assessee had not disclosed the stamp duty of the value of

the property, the particulars of income filed by the assessee

were not the correct. Referring to the provision of 50C of the

Act, the A.O. held that as per the said provision it was

obligatory on the assessee to have disclosed the stamp duty

value of the property, and having failed to do so had not

disclosed the correct particular of income and was thus

liable to penalty u/s 271 (1)(c) of the Act.

addition made to his income was only on account of the

deeming provisions of section 50C of the Act, which was not

of the nature which could lead to the levy of penalty since

the assessee had neither faulted on facts nor on law. The

Ld.CIT(A), after considering the asssessees submission,

deleted the penalty levied holding that there was no clear

cut establishment of concealment based on actual receipt of

consideration over and above the value stated in the

registration of the asset and that the addition was merely on

basis of deeming provision of section 50C of the Act.

his order is as under:

“3.4 I have considered the arguments of the appellant and perused the penalty order, the assessment order and the appeal order of the Ld.CIT(A), Chandigarh. I have also studied the various judgements relied upon by the appellant. The facts of the case are that the appellant adopted a particular value with respect to the sale price of the property. The Assessing Officer considered a second value with respect to the property based on standard circle rates fixed by the local administration to ensure payment of stamp duty. The valuation officer adopted a third value based on an estimate. There is no clear cut establishment of concealment based on actual receipt of consideration over and above the value stated in the registration deed of the appellant. If any addition has been made it is only on the basis of deeming provisions and fiction created by section 50C of the Act. Appellant has not been held to have filed inaccurate particulars of income or shown to have concealed income. Merely because addition has been made and finalized on the basis of an estimate fixed by revenue administration does not mean that there is a case made out for imposition of penalty u/s 271(1)(c0 .The judgement of the Hon’ble Supreme Court in the case of Reliance Petro Products Ltd.(supra) & Price Water House Coopers Pvt.Ltd.(supra) and also several other judgements quoted by the Ld.Counsel for the appellant are applicable in this particular case. The penalty made u/s 271(1)© of the Act is, therefore, cancelled. Ground of appeal taken by the appellant is allowed.”

before us.

the order of the AO. Our attention was drawn to the findings

of the AO as reproduced in para 3.1 of the CIT(A)s order as

under:

“Keeping in view the above facts and circumstances, the submission of the assessee has been considered and found not tenable. Because the assessee has disclosed capital gain on the basis of registered value and failed to disclosed the vital fact that the value as per stamp duty is more than the registered value Therefore, the facts and particulars show in return is misleading. During the course of asstt. Proceedings, the assessee has never come forward to disclosed the vital fact that the value as per stamp duty valuation is more than the registered value. The department has made enquiry from the registrar to enquire about the value as per stamp duty valuation and after enquiry from the registrar, assessee has given plea that the market value at the time of agreement was less than the registered value. The department has referred the matter to valuation cell for verifying the facts that the market value is less than the collectorate value. However, the valuer has determined the market value at Rs.20,79,55,4007- as against value of Rs.15,26,49,0007- as per stamp Valuation. Authority. Now the question arises whether the assessee has shown the correct particular of income in the income tax return filed and issue is debatable, the answer is no as the assessee has not disclosed the value as per stamp duty valuation and simply has taken the. sale consideration shown in registration deed. In case the assessee has disclosed the valuation as per stamp duty valuation and then take the value as per registration deed then it can be said that the assessee has shown correct particular of income. However, the assessee has declared only the value shown as per registration deed and deliberately concealed the value as per Stamp duty valuation and therefore he has not correctly disclosed the particular of income which is the vital fact for levying the penalty. If assessee has not disclosed the complete information which he is required to disclosed in income tax return filed by him and

which has effected the determination of income as per the Act, then he cannot be spared on account of debatable or unsustainable claim. Had the assessee disclosed both value i.e value taken for the purpose of stamp duty or value disclosed in registration deed, then definitely he would not be liable for penalty, in that circumstances we can safely say that it is a case of debatable issue not the case of in correct particular of income. In instant case, the particular of income is not correct as assessee has failed to disclose the value as per stamp duty valuation. The provision of section 50C has been enacted by Finance Act 2002, w.e.f. 01.04.2003 which put obligation, on assessee to take the value which has been taken for the purpose of stamp duty in case the consideration received is less than the value which _ is taken for the purpose of stamp duty. Sub- Section 2 of Sections 50C give discretion to AO to refer the matter to valuation cell in exceptional circumstances. The assessee has never disclosed in the return of income the consideration received but is less than the value taken for the purpose of stamp duty and therefore, the assessee failed to disclose the correct particular of income and therefore, he is liable to penalty to disclose the incorrect particular of income.” 7. Referring to the above Ld.DR contended that it was

obligatory on the assessee to have disclosed the stamp duty

value of the property and not having done so, the Assessing

Officer had rightly levied penalty u/s 271(1)© of the Act, for

concealing/ furnishing inaccurate particulars of income.

CIT(A) and further reliance was placed on the following

decisions in support of the CIT(A)’s order.

• Commissioner of Income-Tax Vs. Madan Theatres Ltd. Reported at [2013] 260 CTR 75(Calcutta) • Commissioner of Income-Tax Vs. Fortune Hotels and Estates (P.) Ltd. Reported at [2014] 52 taxmann.com 330(Bombay)

• Shri C Vijaykumar Vs. The Assistant Commissioner of Income-Tax, Trichy bearing ITA No. 997/Mds/2012 for A.Y. 2007-08 Vide Order Dated 12.10.2012 • Renu Hingorani Vs. ACIT Range 19(3) Mumbai bearing ITA No. 2210/Mum/2010 for A.Y. 2006- 07 Vide Order Dated 22.12.2010 • Shri Chimalal Manilal Patel Vs. ACIT, Cir 6, Surat bearing ITA No. 508/Ahd/2010 for A.Y. 2006-07 Vide Order Dated 22.06.2012 • DCIT, Circle-4(l), New Delhi Vs. M/s Japfa Comfeed India bearing ITA No. 813/Del/2011 for A.Y. 2007-08 Vide Order Dated 30.06.2011. 9. We have heard the rival contentions and perused the

orders of the authorities below as also the case laws referred

before us. We do not find any merit in the present appeal.

Undisputedly penalty u/s 271(1)© of the Act has been levied

in the present case on the addition made to the capital

gains earned by the assessee on sale of property, by

substituting the value of sale consideration received by the

assessee with the stamp duty value of the property, as per

the provisions of section 50C of the Act. The actual

consideration received is not disputed. In fact the DVO ,to

whom the valuation of the property had been referred to the

by the AO, had determined a different fair market value of

the property. But despite the same, the AO had substituted

the stamp duty value of the property applying the provisions

of section 50C of the Act. Therefore, we agree with the

Ld.CIT(A) that there is no clear cut establishment of

concealment over and above the sale consideration received

and it is only on account of the deeming provisions of

section 50C that addition has been made to the income of

the assessee. In such facts and circumstances ,we agree with

the Ld.CIT(A), that the assessee cannot be said to have filed

any inaccurate particulars of income or for that matter

concealed any particulars of income for levying penalty u/s

271(1)(c) of the Act. The reliance placed by the Ld.Counsel

for the assessee on various case laws as cited above is apt

wherein in identical facts and circumstances, it was held

that no penalty was leviable on addition made by invoking

the provisions of section 50C of the Act. In the case of

Madan Theatres (supra) the Hon’ble Calcutta High Court

upheld the deletion of penalty levied on addition made to

capital gains earned by substituting the stamp duty value of

the property as per the provisions of section 50 C of the

Act,holding as under:

“4.Mr. Niaumuddin, learned Advocate appearing for the Revenue, contended that the assessee had a choice to dispute the valuation on the basis of the deemed value, but the assessee did not take that opportunity. The assessee had a choice or he could have litigated. The fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings under Section 271(1)(C) started. The revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him. 5. We are, as such, of the opinion that there is no scope to admit the appeal since the same does raise any question of law, substantial or otherwise”

The Hon’ble High Court of Bombay also deleted identical

penalty levied ,in the case of Fortune Hotels(supra) holding

as under:

“2.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 office 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 of Rs.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.

CIT(A),deleting the penalty levied of Rs.75,25,415/-.The

appeal filed by the Revenue is therefore dismissed.

Order pronounced in the Open Court.

Sd/- Sd/- संजय गग� अ�नपणा� ग�ता (ANNAPURNA GUPTA) (SANJAY GARG ) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member �दनांक /Dated: 17th October, 2018 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :

आदेशानसार / By order,

सहायक पंजीकार/ Assistant Registrar