Shri C Basker Vs. ACIT (ITAT Chennai) ITA No. 997/Mds/2012, 997/Mds/2012, Date of pronouncement : 12.10.2012
In scrutiny proceedings, the Assessing Officer took cognizance of the fact that the assessee had sold immovable property on 30.11.2006, in which he was having 1/2 share and the other 1/2 share belonged to his brother namely Shri C. Vijayakumar [assessee’s connected case I.T.A. No. 998/Mds/2012] and the assessee in his revised return dated 04.06.2008 had declared the sale consideration of Rs. 28,54,200/- for the purpose of computing capital gains. The Assessing Officer noted from the ITS details that the immovable property was valued at Rs.95,40,000/-. The assessee clarified before the Assessing Officer that the said value as noticed by the Assessing Officer was only the guideline value for the purpose of stamp fees and registration. The Assessing Officer did not accept the assessee’s explanation and by invoking section 50C(2) of the “Act”, adopted deemed sale consideration as Rs. 95,40,000/-
He also initiated penalty proceedings. The assessee did not file any appeal against the application of guideline value by the AO. The AO levied penalty u/s. 271(1)(c) of the Act inter alia on the ground that but for information obtained by him from AIR data, correct capital gains would have escaped assessment as the assessee failed to disclose the same either in original return of income or in the revised return of income filed subsequently.
Aggrieved by the levy of penalty, the assessee preferred an appeal to the CIT(A) who upheld the action of the AO.
Aggrieved, the assessee preferred an appeal to the Tribunal.
The moot issue before us as it arises for consideration in the instant case is whether the CIT(A) has rightly confirmed the penalty imposed under section 271 (1)(c) of the “Act” by the Assessing Officer merely on the ground that as per the guideline value adopted under section 50C(2) of the “Act”, the actual sale price of the assessee’s property sold turned out to be less than guideline value resulting in addition during assessment proceedings?
It emerges from the record that the assessee had filed revised return of income which was processed under section 143(1) of the “Act” by the Assessing Officer and the assessment was finalized under section 143(3) of the “Act” vide order dated 21.12.2009 (supra). This whole chronology of the events makes it clear that the assessee’s revised return stood duly accepted and finalized by the Assessing Officer. The only addition made by the Assessing Officer was that the consideration as disclosed by the assessee qua the property sold was found to be less than the guideline value, which was Rs.95,40,000/- instead of Rs.28,54,200/- as mentioned by the assessee. The same ultimately lead to the addition under section 50C(2) (supra). On the same basis, the Assessing Officer issued penalty notice, which culminated in imposition of penalty in question. It is not the case of the Revenue that the assessee had received any consideration over and above what was disclosed. In our opinion, the mere fact that the Assessing Officer had invoked section 50C(2) of the “Act” and adopted guideline value for computing capital gains ignoring what was disclosed by the assessee ipso facto cannot be the sole basis for imposing penalty. It transpires that the assessee is not guilty of furnishing any false and inaccurate particulars regarding the valuation of the property sold for the purpose of computing capital gains. We notice that in case law of Renu Hingorani vs. ACIT (supra), the Coordinate Bench of ITAT Mumbai Bench has held that penalty merely on the basis of invoking section 50C(2) of the “Act” cannot be sustained.
Although not cited by any of the parties, we also deem it appropriate to refer here the case law of the Hon’ble Supreme Court as reported in K.V. Varghese vs. ITO (1981) 131 ITR 597, wherein it held that for the purpose of computation of capital gains under section 52 of the “Act”, it has to be necessarily proved that the assessee had received the amount more than what is declared or disclosed as consideration. Their Lordships had also been pleased to observe that the burden on such cases is on the Revenue. When we apply the ratio of the above said case law qua the facts of the present case, we find that there is no allegation against the assessee of any understatement of the value of the property sold. Hence, we hold that section 50C(2) is only a deeming provision which cannot be taken as to be an understatement for the purpose of imposing penalty.