Tarabai Kotumal Pahlajani, Mumbai vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM AND SHRI D. KARUNAKARA RAO, AM

आयकर अपील सं./I.T.A. No.2459 /Mum/2012 ( नधा रण वष / Assessment Year : 2004-05 Smt. Tarabai Kotumal बनाम/ A.C.I.T. 14(2), Pahlajani, Earnest House, Vs. 9, Bherumal Bhavan, 2 n d floor, Mogal Lane, Nariman Point, Mahim, Mumbai 400 021. Mumbai -400 016. थायी ले खा सं . /PAN : AABPP4753C (अपीलाथ /Appellant) .. ( यथ / Respondent)

Appellant by Shri Nishit Gandhi Respondent by Shri Neil Philip (D.R)

ु वाई क तार ख / Date of Hearing सन : 06-05-2015 घोषणा क तार ख /Date of Pronouncement : 10-06-2015 [

आदे श / O R D E R PER VIJAY PAL RAO, J.M. :

This appeal by the assessee is directed against the order dated 15-2-2012 of ld. CIT(A)- 34, Mumbai arising from the penalty order passed u/s 271(1)(c) of the Income Tax Act, 1961 for A.Y. 2004-05.

2. The assessee has raised the following grounds of appeal:-

"1.1 The Ld. CIT (A) erred in law and on facts in upholding the order of the Assessing Officer levying penalty of Rs. 138628/- U/S 271(1)(c) of the LT. Act, 1961 on unjustifiable and untenable grounds. .

1.2 The Ld. CIT(A) failed to appreciate that having regard to law and the facts of the case the Appellant has not committed any default in terms of section 271(1)(c) of the 1. T. Act, 1961.

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1.3 The Appellant prays that the Assessing Officer be directed to delete the penalty of Rs. 138628/-levied U/S 271(1)(c) of the LT. Act, 1961."

3. During the course of assessment proceedings, the A.O. found that the assessee has sold immovable property for a sale consideration of Rs. 13,70,000/-. The A.O. also found that the Stamp Valuation Authority had valued the fair market value of the property at Rs. 17,90,085/-. Accordingly, the A.O. invoked the provisions of section 50C of the Act. The assessee objected to the applicability of section 50C on the ground that the property in question was a business asset. The A.O. did not accept the contention of the assessee and made the addition on account of short term capital gain amounting to Rs. 4,40,125/- being the difference between the consideration shown by the assessee and the valuation made by the Stamp Valuation Authority. In the quantum appeal, the ld. CIT(A) dismissed the appeal of the assessee and issue of addition of short term capital gain attained finally. The A.O. initiated penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs. 1,38,628/- being 100% of the tax sought to be evaded vide order dated 31-3-2010. The assessee challenged the action of the A.O. levying the penalty u/s 271(1)(c) by filing the appeal before the ld. CIT(A) but could not succeed.

4. Before us, the ld. Counsel for the assessee has submitted that the addition on account of sale consideration of the property in question is made by applying the deeming provision of section 50C, therefore, there is no allegation of furnishing of inaccurate particulars of income or concealment of income by the assessee in the return of income. The assessee has disclosed the actual consideration received by the assessee on sale of the property in question. Further, in the Wealth Tax Return, the assessee has shown this property as business asset which is the matter of record, therefore, the claim of the assessee is a bonafide claim that the provisions of section 50C are not applicable on the property. The ld. Counsel contended that the addition made by the A.O. by applying the deeming provision would not bring the case of the 3 ITA 2459/M/12

assessee in the category of furnishing of inaccurate particulars of income or concealment of income. He has relied upon the order of the Tribunal dated 14th August, 2013 in ITA No. 280/Mum/2012 for A.Y. 2005-06 in the case of Smt. Dipti Barai vs. ITO.

5. On the other hand, the ld. D.R. has relied upon the order of the authorities below and submitted that the addition made by the A.O. of short term capital gain attained finality, therefore, the assessee furnished inaccurate particulars of income by not disclosing the correct sale consideration of the property in question as per the provisions of the Act.

6. We have considered the rival submissions as well as relevant material placed on record. The addition of Rs. 4,40,125/- has been made by the A.O. by invoking the provisions of section 50C. It is not a case of the A.O. that the assessee has furnished inaccurate particulars of income so far as the actual amount of consideration received by the assessee. The assessee has disclosed the amount for which the assessee sold the property in question and, therefore, it is not a case of suppress of correct fact or presenting inaccurate facts regarding the sale consideration. An identical issue has been considered by the co-ordinate Bench of this Tribunal in the case of Smt. Dipti Barai (supra) in para 6 & 7 of its order as under:-

"6. Having considered the rival submissions and carefully gone through the relevant record we note that the addition has been made by the AO in the return of income of the assessee only because of the adoption of full sale consideration as per the deeming provisions of section sac. It is pertinent to note that if the addition made by the AO by invoking the provision of section sac of the Act is excluded than the remaining income does not fall under the minimum slab of income. Therefore to that extent it cannot be said that the assessee has conceded the income. We further note that this Tribunal has considered and decided this issue in a series of decisions as relied upon by the Ld. Authorised Representative. In case of Renu Hingorani Vs ACIT (supra) an identical issue has been considered and decided by the Tribunal in para 8 as under:

"8. We have considered the rival contentions and relevant record. We find that the AO had made addition of Rs.9,00,824/- being 4 ITA 2459/M/12

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(l)(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. "

7. Further a similar view has been confirmed by the Hon'ble Calcutta High Court in case of CIT Vs Madan Teatres Ltd. (supra) as well as in the other decisions relied upon by the assessee. Accordingly in view of the decisions of this Tribunal as well as Hon'ble Calcutta High Court (supra) we delete the penalty levied u/s 271(1)(c)."

Thus, it is clear that the Tribunal has been taking a consistent view that when the assessee has disclosed all relevant primary facts and details and furnished the relevant document showing the sale consideration received by the assessee, then, the genuineness of the actual sale consideration received by the assessee was not in question and the addition was made only by invoking the provisions of section 50C of the Act. Therefore, merely because the addition was made as per the deeming provision of section 50C would not ipso facto lead to the conclusion that the assessee has furnished inaccurate 5 ITA 2459/M/12

particulars of income or concealed its income. Respectfully following the earlier orders of the Tribunal (supra), we delete the penalty levied u/s 271(1)(c) of the Act.

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

Order pronounced in the open court on 10th June, 2015.

आदे श क घोषणा खल ु े #यायालय म% &दनांकः 10-06-2015. को क गई ।

Sd/- sd/- (D. KARUNAKARA RAO) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER मंब ु ई Mumbai; &दनांक Dated 10-06-2015 [ व.5न.स./ R.K. R.K , Sr. PS

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

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आय6 ु त(अपील) / The CIT(A) -25, Mumbai

4. आयकर आयु6त / CIT- -14 Mumbai

5. 9वभागीय 5त5न;ध, आयकर अपील य अ;धकरण, मुंबई / DR, ITAT, Mumbai E Bench

6. गाड? फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

स या9पत 5त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai