Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI G.S.PANNUShri Rajeev Arora,
The captioned appeal filed by the assessee pertaining to assessment year 2005-06 is directed against an order passed by CIT(A)-39, Mumbai dated 01/09/2014, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 28/12/2007.
In this appeal, the solitary issue raised by the assessee is with regard to penalty imposed under section 271(1)(c) of the Act of Rs. 3,89,931/-.
(Assessment Year : 2005-06) 3. In brief, the relevant facts are that the appellant is an individual, who filed the return of income declaring total income at Rs.76,990/-, which was subject to a scrutiny assessment whereby the total income has been assessed at Rs.30,93,530/-. The relevant point for my consideration is the difference between the assessee and Revenue with regard to the determination of long term capital gain on account of the sale proceeds of land and factory building of a partnership firm –M/s. Indian Metal Forgings & Rolling Mills. It has been explained that assessee was a 20% shareholder in the said firm and the capital gains returned were based on the sale consideration actually received, whereas the Assessing Officer applied the provisions of section 50C of the Act and adopted the full value of the consideration being the value adopted by the Stamp Valuation Authority, which was higher than the actual consideration received. The resulting difference worked out at Rs.30,16,538/-, whereby assessee’s share came to Rs.62,58,200/-. The aforesaid amount has been considered by the Assessing Officer to be exigible for levy of penalty under section 271(1)(c) of the Act on the ground that assessee had furnished inaccurate particulars of income to that extent. Hence, the Assessing Officer levied penalty of Rs.3,89,931/- being100%of the tax sought to be evaded on such income. The CIT(A) has also affirmed the action of the Assessing Officer and, hence, the appeal of the assessee before the Tribunal.
Before me, the Ld. Representative for the assessee vehemently pointed out that the entire addition is based only on a deeming provision of section 50C of the Act and that there is no actual evidence to suggest that any consideration over and above the stated
(Assessment Year : 2005-06) consideration has been received by the assessee. It was, therefore, contended that penalty proceedings under section 271(1)(c) of the Act are not attracted in the present situation. In this connection, he has relied upon the following decisions:-
1. 1. Bhavya Anant Udeshi vs. ITO, dt.04/09/2015 2. ACIT vs. M/s. Sunland Metal Recycling, ITA No.6454/Mum/2011 dated 10/12/2014.
3. Harish Voovaya Shetty vs. ITO 18(2), ITA No.6383/Mum/2012 dated 03/07/2014.
4. Sathe Buiscuit & Chocolate Co. Ltd. vs. DCIT,(2013) 30 taxmann.com 89 (Pune –Trib).
5. On the other hand, Ld. Departmental Representative has not contested the factual matrix brought out by the assessee, but pointed out that the difference between the returned and assessed income justifies the levy of penalty under section 271(1)(c) of the Act.
I have carefully considered the rival submissions. Section 271(1)(c) postulates that penalty can be levied only in two situations, namely, that assessee has concealed the particulars of income or that the assessee has filed inaccurate particulars of income. In the present case, the charge made by the Assessing Officer is that assessee has furnished inaccurate particulars of income on account of capital gain, inasmuch as, the final income has been determined by application of section 50C of the Act. Section 50C of the Act permits the Assessing Officer to adopt the value adopted the by Stamp Valuation Authority as the full value of the consideration instead of the stated actual consideration. The aforesaid has resulted in difference between the (Assessment Year : 2005-06) reported and the assessed income which has been made the subject matter of levy of penalty under section 271(1)(c) of the Act. Factually speaking, there is no material to suggest that the actual consideration declared by the assessee was under-reported, whereas it is only on application of section 50C of the Act that the actual sale consideration has been disregarded. In this context, it would be appropriate to note that at the time of filing of return of income the computation of capital gain furnished by the assessee cannot be said to be lacking in bona- fides, because it was indeed based on actual sale consideration received. Even in the context of application of section 50C of the Act sub-section (2) of section 50C of the Act itself provides that if the assessee is not satisfied with the value adopted by the Stamp Valuation Authority, he can raise an objection and the Assessing Officer may refer the matter for valuation to the District Valuation Officer. Therefore, mechanics of section 50C of the Act itself show that it is intended for the purpose of computing capital in a given situation, and not to establish any concealment or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. The deeming fiction of section 50C of the Act cannot be extended to cover the provisions of section271(1)(c)of the Act, which ostensibly are to be independently satisfied on the basis of a positive material or evidence. In the present case, the only reason for difference between the returned and the assessed income is application of section 50C of the Act, and there is no material to suggest that assessee has received any sale consideration over and above the amount stated. 6.1 The Mumbai Bench of the Tribunal in the case of Renu Hingorani vs. ACIT, in order dated 22/10/2010 has (Assessment Year : 2005-06) considered an identical situation, wherein penalty was levied on an addition, which was purely based on the application of section 50C of the Act. The Tribunal after considering the ratio of the judgment of the Hon'ble Supreme Court in the case of CIT v. Reliance Petro-products Ltd., 322 ITR 158 (SC) found it fit to delete the levy of penalty. Further, the decisions relied upon by assessee before us also support the plea of the assessee that levy of penalty under section 271(1)(c) of the Act is not warranted in the context of the present situation. Following the aforesaid discussions, I hereby set-aside the order of the CIT(A) and direct the Assessing Officer to delete of Rs.3,89,931/- imposed under section 271(1)(c) of the Act.