Rajesh G. Kapadia, Mumbai vs Assessee

BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं ी संजय गग , या यक सद य के सम

आयकर अपील सं./I.T.A.No.6189/Mum/2013 ( नधा रण वष / Assessment Year : 2008-09)

Shri Rajesh G Kapadia, बनाम/ Asstt.Commissioner of Income C/o Rajesh G Kapadia and Vs. Tax -11(3), Associates, 4th Floor, th 6F, 6 floor, Court chambers, Aayakar Bhavan, 35, New Marine Lines, M.K.Road, Mumbai-400020 Mumbai-400020 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AGKPK1402G

अपीलाथ ओर से / Appellant by Shri Jitendra Sanghavi यथ क# ओर से/ Respondent by Shri Love Kumar

सन ु वाई क# तार'ख / Date of Hearing : 10.3.2015 घोषणा क# तार'ख /Date of Pronouncement :10.3.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The appeal filed by the assessee is directed against the order dated

7.8.2013 passed by Ld CIT(A)-20, Mumbai and it relates to the assessment

year 2008-09.

2 ITA. No.6189Mum/2013

2. The assessee is aggrieved by the decision of ld. CIT(A) in confirming

the penalty of Rs.1,20,503/- levied by the AO under section 271(1)( c ) of

the Income Tax Act, 1961( the Act).

3. The ld. counsel appearing for the assessee submitted that the

assessee has sold two properties and declared capital gains arising thereon

as his income. The AO noticed that the market value adopted by the Sub-

Registrar for stamp duty purpose was more than the sale consideration

shown in the conveyance deed. Accordingly, by invoking the provisions of

section 50C of the Act, the AO adopted the value, as determined by the

Sub-Registrar for stamp duty purposes, as the sale consideration and

accordingly computed the Long Term Capital Gains (LTCG). The same

has resulted in an addition of Rs.5,46,250/- to the total income, on which

the AO levied penalty u/s 271(1)(c of the Act.

4. The ld. counsel submitted that the addition made under section 50C

of the Act would not give rise to the charge of either concealment of

particulars of income or furnishing of inaccurate particulars of income and

hence, the tax authorities are not justified in levying the penalty u/s

271(1)(c) of the Act. In this regard, the ld.AR placed reliance on the

following case laws:

a) CIT V/s Madan Theatres Ltd -44 Taxmann.com 382 (Cal. High Court)

b) Renu Hingorani V/s ACIT -ITA No.2210/Mum/2010 (Mumbai Tribunal)

c) Shri Chimanlal Manilal Patel V/s ACIT- ITA No.508/Ahd/2010 (Ahmd Tribunal) 3 ITA. No.6189Mum/2013

d) ACIT V/s M/s Sunland Metal Recycling-ITA No.6454/Mum/2010 (Mumbai Tribunal)

5. On the contrary, the ld. DR strongly supported the orders of

authorities below.

6. We have heard the parties and perused the record. We notice that

the Co-ordinate Bench of the Mumbai Tribunal in the case of Renu

Hingorani V/s ACIT in ITA No.2210/Mum/2010 AY2006-07) dated

22.12.2010 has considered an identical issue and held that the addition

made by invoking the provisions of section 50C of the Act would not give

rise penalty u/s 271(1)(c) of the Act. For the sake of convenience, we

extract below the operative portion of the order passed by the Tribunal in

the above said case:

"8. We have considered the rival content ions 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 and the valuation made by the Stamp Valuation Authority. Thus, the addition has been made by the AO by applying the provisions of sect ion 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 cal led 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 4 ITA. No.6189Mum/2013

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 V/s Reliance Petroproducts Pvt .Ltd (supra), the penalty levied u/s 271(1)( c ) is not sustainable. The same is deleted."

7. In the instant case also the impugned addition has arisen on

account of application of provisions of deeming section 50C of the Act.

Accordingly, consistent with the view taken by the Co-ordinate Bench of

the Tribunal (referred supra), we hold that the penalty levied u/s 271(1)(c)

of the Act in the instant case is liable to be deleted. Accordingly, we set

aside the order of ld.CIT(A) on this issue and direct the AO to delete the

penalty.

8. In the result, the appeal filed by the assessee is allowed.

Pronounced accordingly in the open court on 10th March, 2015 in the presence of both the parties.

घोषणा खल ु े यायालय म+ ,दनांकः10th March, 2015 को क# गई ।

sd sd

(संजय गग /SANJAY GARG) ( बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER

मुंबई Mumbai:10th March,2015. व. न.स./ SRL , Sr. PS 5 ITA. No.6189Mum/2013

आदे श क !"त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आय5 ु त(अपील) / The CIT(A)- concerned

4. आयकर आयु5त / CIT concerned

5. 6वभागीय त न8ध, आयकर अपील'य अ8धकरण, मंब ु ई/ DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER,

true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील'य अ8धकरण, मुंबई /ITAT, Mumbai