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Before: SHRI AMIT SHUKLA & SHRI ASHWANI TANEJAShri Ghevarchnd G Jain
O R D E R Per ASHWANI TANEJA, AM
This appeal has been filed by the revenue against the order of Commissioner of Income-tax (Appeals) [hereinafter called ld.CIT(A)”] dt 19-08- 2014 passed against the penalty order u/s 271(1)(c) dated 29th July, 2013 for A.Y. 2010-11 on the following grounds:
“1. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting the penalty u/s271(1)(c) of the Income
Tax Act of Rs.11,38,909/· without appreciating the facts that by not adopting the sales consideration as per statutory provisions uls.50C of the I. T. Act, the assessee has furnished inaccurate particulars of capital gain by declaring short term loss of Rs.3, 12,8201· whereas as per DVO report, capital gain was assessed at Rs.39, 13,382/- by the A.O. This was clear case of concealment of income and furnishing inaccurate" particulars of income. The assessee had accepted the Assessing Officer's decision in quantum appeal and no appeal was filed against such order. "
The solitary issue raised in this appeal is whether CIT(A) has rightly deleted the penalty of Rs.11,38,909 on the ground that addition made upon the income returned under the head capital gain on account of enhancement of sales consideration because of application of deeming provisions of section 50C did not lead to concealment of income or furnishing of inaccurate particulars of income.
During the course of hearing, it was submitted by the ld.DR that impugned transaction of sale of flat was not disclosed by the assessee in its return of income and that addition made by the Assessing Officer u/s 50C was accepted by the assessee and no quantum appeal was filed, and therefore, penalty was rightly levied by the Assessing Officer and wrongly deleted by the ld.CIT(A).
Per contra, it was submitted by the ld.counsel of the assessee that it has been wrongly mentioned by the Assessing Officer in the assessment order that transaction of sale of flat was not disclosed by the assessee in the return. It was submitted that the said transaction gave rise to short term capital loss and the same has been duly disclosed in the return of income. It was further submitted by him that addition to the sales consideration was made by applying the provisions of section 50C and income assessed on deemed basis cannot be said to be income concealed by the assessee and, therefore, no penalty could have been levied. In support of this proposition he placed reliance on the following judgments: 1.322 TAXMAN 481 (BOM) CIT VS. FORTUNE HOTELS AND ESTATES PVT. LTD 2. RENU HINGORANI VS. ACIT 3. 260 CTR 75 (CAL.) CIT VS. MADAN THEATRES LTD - 4. 33 CCH 647 (AHD) CHIMANLAL MANIAL PATEL VS. ACIT - 5. 38 TAXMAN.COM 47 (ALLAHABAD) CIT VS. DEEWAN TOURISM LTD 5. We have gone through the facts of this case. On the basis of orders passed by the lower authorities and evidences brought before us, it is noted by us that the assessee had disclosed in its return short term capital loss of Rs.3,12,820 on sale of flat Nos 103-104 at Tardeo (impugned flats) and this amount was computed as per the details given in the computation sheet as under:
Sale price Rs. 46,00,000 Cost price Rs. 49,12,820 Short term capital loss Rs.3,12,820 It is further noticed by us that during the course of assessment proceedings the assessee had furnished complete details including the sale deeds, etc. on the basis of which the Assessing Officer proceeded to make addition u/s 50C. Thus, allegation of the ld.DR that this transaction was not disclosed by the assessee is factually incorrect on the face of it and was made simply to mislead the bench that too without making proper verification of the records.
Now coming to the merits of the addition the facts are clear. During the course of assessment proceedings, the Assessing Officer referred the matter to the valuation officer for valuing the fair market value of the property as on the date of sale, i.e. 27-07-2009. The valuation was made at Rs.83,13,982. Accordingly, the Assessing Officer adopted the sale value u/s 50C at Rs.83,13,982 as against actual sale consideration disclosed by the assessee. Accordingly, the capital gin was recomputed by the Assessing Officer taking the sale consideration as valued by the valuation officer. Thus, it is a case where income has been computed on deemed or estimate basis by applying the deeming provisions of section 50C. It has been held by Hon’ble Bombay High Court in the case of CIT vs Fortune Hotels & Estates Pvt Ltd (supra) that if the income has been returned by the assessee on the basis of sale value mentioned in the sale deed, then, if different value has been determined by the authority, that by itself, would not mean that assessee had concealed the income or has furnished inaccurate particulars of income and levy of penalty was held to be unjustified, under such circumstances. Similar view has been taken by co- ordinate bench in the case of Renu Hingorani (supra). Relevant observations from the judgment are reproduced below:
“8. We have considered the rival contentions and relevant record. We find that the AO had made addition of Rs.9,OO,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 but the addition is made purely on the basis of deeming 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 sale agreement. Thus it does not amount to concealment of 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 assessee agreed for addition on the basis of valuation made by the Stamp Valuation Authority would not be a conclusive 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.”
Similarly, Hon’ble Calcutta High Court in the case of CIT vs Madan Theatres Ltd 260 CTR 75 took the similar view by holding that where the sale consideration was taken on deemed basis and revenue did not produce any iota of evidence that assessee actually received one paise more than the amount shown to have been received by him then it was not fit case for levy of penalty because it was on account of deeming provisions of section 50C in which the Assessing Officer had made the addition by adopting sale consideration being the value adopted for stamp valuation. Under these circumstances, no case is made out by the Assessing Officer for concealment of income or furnishing of inaccurate particulars of income.
Thus, taking into account facts and circumstances of the case and clear legal position as discussed above, we find that levy of penalty was not justified in this case, and therefore, the ld.CIT(A) has rightly deleted the same and therefore, no interference is called for therein and therefore, ground raised by the revenue is dismissed.
In the result, revenue’s appeal is dismissed.