ITO 19(1)(3), MUMBAI vs. CHANDRAKANT M MEHTA, MUMBAI

PER AMARJIT SINGH, JM:

This is an appeal filed against the order dated 04.12.2013 of learned Commissioner of Income Tax (Appeals)-30, Mumbai [hereinafter referred to as the “CIT(A)”] for the assessment year 2009-10 wherein the deletion of the penalty by the learned CIT(A) has been challenged by the revenue.

property by virtue of return filed on 27.07.2009. The appellants sold ⅓rd share in the property of plot bearing CTS No. E/498 at Bandra (W), Mumbai by virtue of agreement dated 23.09.2008 entered between assessee and one Farheen Kadawala, who was buyer of the property or agreement value of Rs.2,00,00,000/-. The appellant has sold his ⅓rd share in the mentioned property on the value of Rs.66,66,666/-. The appellant took the sale value to the tune of Rs.2,00,00,000/- for computing the Long Term Capital Gain because of the acquisition of the said property as on 01.04.1981 so far as the ⅓rd share of the property of the assessee was concerned the same was valued at Rs.61,50,618/- on the basis of valuation report of the Government approved valuer. The indexation cost of the property was worked out to the tune of Rs.3,97,70,000/-. Capital loss to the tune of Rs.1,92,09,998/-. The Assessing Officer did not accepted above said valuation and calculated the valuation with the rate prescribed by the Indian Valuers Directory & Reckoner which indicated at Rs.61,50,618/-. The ⅓rd share of the property was computed to the tune of Rs.20,50,206/- On the basis of agreement dated 23.09.2008 Long Term Capital Gain was computed to the tune of Rs.62,60.801/-. Thereafter, the Assessing Officer initiated the penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961( in short “the Act”). Income Tax Appellate Tribunal has passed the judgement in case cited as Renu Hingorani Vs. ACIT Rg. 19(3) decided on 22.12.2010. In the said law it is held that:

“8. We have considered the rival contentions and relevant record. We find that the AO had made addition of Rs.9,00,824/- being difference between the sale consideration as per sale agreement 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 / materials 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 sales 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 V/s. Reliance Petroproducts Pvt. Ltd. (Supra), the penalty levied u/s. 271(1)(c) is not sustainable. The same is deleted.”

Order pronounced in the open court on 11th March, 2016. (AMARJIT SINGH) (D.KARUNAKARA RAO) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 11th March, 2016 MP MP MP MP आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant