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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
PER AMARJIT SINGH, JM:
This is an appeal against the order dated 23.10.2013 passed by the learned Commissioner of Income Tax (Appeals)-31, Mumbai [hereinafter referred to as the learned “CIT(A)”] relevant to the assessment year 1994-95. ITA No.7219/Mum/13 A.Y. 1994-95
The appellant has taken following grounds of appeal:-
“1. In confirming the levy of penalty of Rs.5,69,296/- without appreciating the facts and circumstances of the appellant’s case.
In confirming the levy of penalty on a matter which involved fair market valuation as of 1.4.1981 where the appellant had relied upon a report made by a registered value.
In confirming the levy of a penalty on issue of deductibility of transfer fees which had as such been actually paid by the appellant and claimed as a cost related to the sale of property.
In passing an order on a ex-parte basis in the matter.
In confirming a penalty which was calculated at a tax rate including surcharge and cess.”
The facts of the case are that the assessee filed his return of income for A.Y.1994-95 on 24.07.1995 declaring the total income of Rs.1,50,200/-. Subsequently, the case was reopened u/s. 147 of the Income Tax Act, 1961 ( in short “the Act”) for a reason that during the F.Y. relevant to A.Y. 1994-95, the assessee had received a sum of Rs.1.36 crores on sale of flat for which the assessee did not offer the tax on the Capital Gain. These facts have been revealed at the time of survey action u/s. 133A of the Act conducted at the residential A.Y. 1994-95
premises of the assessee. During the assessment proceedings, the assessee filed his return of income for A.Y. 1994-95 declaring taxable income of Rs.80,40,390/- on 09.03.2001 as he did not file the return of income in response to notice u/s. 148 of the Act. The assessment u/s. 143(3) r.w.s. 147 of the Act was completed on 14.03.2001 assessing the total income of Rs.93,70,139/- after making certain additions / disallowances. The main additions were made on account of Long Term Capital Gain and disallowance of Short Term Capital Loss. The assessee offered the tax on the capital gain of Rs.77,55,636/- in the return of income filed on 09.03.2001. At the time of assessment proceedings, it was noticed that the assessee had opted the cost of acquisition of the said flat as on 01.04.1981 of Rs.19,37,250/- in view of the valuation report dated 05.03.2001. The Assessing Officer investigated the matter after due considering the sale of the flat in the same building during the relevant period which workout to the tune of Rs.9,84,000/- instead of Rs.19,37,250/- as taken by the assessee. The Assessing Officer disallowed the excess claim on transfer fees of Rs.4,09,833/- and Rs.1,03,909/-. Accordingly, the Assessing Officer has computed the Long Term Capital Gain to the tune of Rs.1,02,97,140/- as against Capital gain offered by the assessee amounting to Rs.77,55,636/-. Subsequently, the Hon’ble ITAT has restored the issue to the Learned CIT(A). The learned CIT(A) has confirmed the said addition made by the Assessing Officer which was again upheld by the Hon’ble ITAT. A.Y. 1994-95
Thereafter the action u/s. 271(1)(c) was initiated and notice dated 15.02.2011 was served upon the assessee, who also replied the same by virtue of letter dated 03.03.2011. The Assessing Officer has held that the assessee has failed to established the genuineness of the cost of acquisition adopted by him and claimed of unexplained transfer fees and thereby suppress the Long Term Capital by Rs.25,41,504/- hence, impose the penalty to the tune of Rs.5,69,296/-. Thereafter the said penalty was confirmed by the learned CIT(A) in the year in question. Therefore, the assessee is before us.
We have heard the arguments advanced by the learned representative of the parties and perused the records. The learned representative of the assessee has argued that the addition in question has been made by the Assessing Officer by taking the different fair market value of the flat as on 01.04.1981 and the same cannot be the base to levy the penalty, therefore, in the said circumstances the penalty order is liable to be set aside in accordance with law. On the other hand the learned representative of the Department has refuted the said contentions. Keeping in view of the argument advanced by the learned representative of the parties, it came into notice that the present case is in connection with the A.Y. 1994-95 of the assessee. In the instant case the assessee filed his original return of income in the said assessment year on 24.07.1995 declaring his total income to the tune of Rs.1,50,200/-. Subsequently, survey action u/s. 133A of A.Y. 1994-95
the Act was conducted on 23.10.1997 at the residential premises of the assessee. Assessee an individual and partner in M/s. Laxmi Exports and at the time of survey business premises were shut down. The statement of assessee was recorded and in view the statement of assessee, it came into notice that the assessee received a sum of Rs.1.36 crores on account of sale of flat which had not been offered for taxation. Beside this the assessee was having accounts in three banks and copies of banks accounts revealed total credit of Rs.2.13 crores. Thereafter the assessee filed the return of income for A.Y. 1994-95 declaring taxable income of Rs.80,40,390/- on 09.03.2001. In the said return the assessee offered the capital gain to the tune of Rs.77,55,636/- on account of sale proceeds received by him at Rs.1,36,61,100/- in respect of sale of residential flat no. 303, 3rd Floor, Prabhu Kutir Co-op. Hsg. Soc. Ltd., Altamount Road, Mumbai. The said flat was purchased from Narendra Nath Trust to which he was sole beneficiary. The said flat was purchased for Rs.52,000/- by the said Trust on 14.09.1963. Thereafter the assessee opted cost of acquisition of flat as on 04.04.1981 at Rs.19,37,250/- vide its letter dated 13.03.2001. On enquiry it was found that in the same building flat no. 402 was sold in November, 1981 for the sale consideration of Rs.6,50,000/- i.e. at the rate of Rs.588 per sq. ft. Therefore in the said circumstances the valuation report of the assessee became doubtful. Thereafter, the assessment was done estimating the cost of the flat to the tune of Rs.9,84,000/- against Rs.19,37,250/-. Accordingly, the A.Y. 1994-95
transfer fees was also deducted and the fees to the tune of Rs.1,03,909 was assessed as transfer fees which has paid to Prabhu Kutir Society. No doubt the valuation report submitted by the assessee was disbelieved by the Assessing Officer on the basis of market rate prevailing the area but it is required to seen that there can be cause to impose penalty or not. It is also required to be seen that it can be viewed as the case of concealment of particular of his income or furnishing an in accurate particulars of his income. In the instant case the assessee filed the return for the A.Y. 1994-95 on 24.07.1995 declaring total income of Rs.1,50,200/-. When the survey action u/s. 133A of the Act was taken at the residence of the assessee then it came into notice that the assessee received the sum of Rs.1.36 crores on sale of flat which he had not offered for taxation in the A.Y.1994- 95 except this an amount of Rs.2.13 crores was also found in his three bank accounts. Apparently the sale transaction of the sale of flat of the assessee was not offered as tax on Long Term Capital Gain / Short Term Capital Gain if any in the relevant assessment year. After the survey assessee offered the capital gain to the tune of Rs.77,55,636/- on account of sale proceed received by him at Rs. 19,37,250/- in respect of residential flat. It is correct that if the case of assessee is based upon only on the facts that the demand of the valuation report can be treated levy the penalty. But in this case the facts are otherwise. It is clear case of concealment of particulars of his income received on account of above mentioned flat and furnishing inaccurate A.Y. 1994-95
particulars by not disclosing the transaction in his return filed on 24.07.1995 declaring his total income to the tune of Rs.1,50,200/-. Transaction was came in to the notice after the survey report. In view of the said circumstances we are of the view that it is not the case of assessment by the Assessing Officer on the basis of valuation report or market rate infact it is the case of concealment of particulars of his income and furnishing inaccurate his particulars. Therefore finding no justifiable ground to interfere with the finding of learned CIT(A) order in question, the appeal of the assessee is hereby dismissed.
Accordingly the appeal filed by the assessee is hereby dismissed.
Order pronounced in the open court on 23rd March, 2016. (R.C.SHARMA) (AMARJIT SINGH) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : March, 2016 MP MP MP MP A.Y. 1994-95
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार /(Dy./Asstt.