Case Law Details
1. During the year under consideration the assessee had sold his 50% sharein the property of plots of land bearing City Survey No.4645, 4643 & 4606 admeasuring 604 sq. meters, 13.07 sq. meters and 65.06 sq. mters respectively to Mrs. Varakshini C. Shetty in the Village Mira, Tal: Thane for a sale consideration of Rs.4,50,000/-. The said plot of land was valued for Stamp Duty purposes at Rs.15,89,000/-. Applying section 50C of Income Tax Act, 1961 (the Act) the difference between sale price and Stamp Duty value was considered for the purpose of computation of capital gain. On such difference impugned concealment penalty has been levied, which is calculated at Rs.2,27,800/- being 100% of the tax sought to be evaded. The levy of penalty has been confirmed by Ld. CIT(A).
2. At the time of hearing it was submitted by Ld. AR that this issue is covered by the decision of ITAT Mumbai Benches in the case of Renu Hingorani vs. ACIT vide order dated 22/12/2010 in ITA No.2210/Mum/2010, wherein penalty levied under section similar circumstances was cancelled with the following observations:
“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 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(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”.
Copy of the aforementioned order was placed on record and was also given to Ld. DR. Ld. AR further referred to the decision of Ahmedabad Bench , which is dated 22/6/2012 in ITA No.508/Ahd/2010, wherein also similar penalty was deleted with the following observations:
5. We have heard the rival contentions and perused the material on record. It is a fact that the addition has been made by the AO in the revisionary proceedings. The addition has been made on the basis of provisions cf section 50C. It is not the case of the AO that the assessee has received consideration over and above than that declared in the sales deed. The AO has not disputed the consideration received by the assessee. The addition has been made on the basis of deeming provisions of section 50C. The assessee has furnished all the facts of sale, documents/ material before the AO. The AO has not doubted the genuineness of the documents/ details furnished by the assessee. Only because the assessee agreed to the additions because of the deeming provisions it cannot be construed to be filing of inaccurate particulars on the part of the assessee. The assessee agreed to addition on the basis of valuation made by the stamp valuation authority cannot be a conclusive proof that the sale consideration as per the sale agreement is deemed to be incorrect and wrong. In view of these facts we are of the considered view that penalty cannot be levied on the basis of deeming provision. We accordingly delete the same.
Ld. AR further referred to the decision of CIT vs. Madan Theatres Ltd., 260 CTR (Cal) 75, wherein also Hon’ble Calcutta High Court upheld the order of Tribunal vide which penalty levied on similar issue was deleted with the following observations:
3. The Revenue preferred an appeal. The learned Tribunal dismissed the appeal holding, inter alia, as follows:
Thus obviously, it is only on account of deeming provisions of s. 50C, the AO has made the addition by adopting the sale consideration of Rs. 5,19,77,000, being the value adopted for the purpose of stamp valuation. The Revenue has also not shown as to how the assessee could he held to have actually received this amount which is in excess of the amount of Rs. 2,51. 50,000. It has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. In any case, the issue is also now squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Renu Hingorani (supra). In the circumstances, respectfully following the decision of the Co-ordinate Bench of this Tribunal in the case of Renu Hingorani (supra) as also on account cf the fact that the Revenue has not been able to dislodge the findings of the learned CIT(A) that the bona fides of the assessec are genuine, the findings of the learned CIT(A) stand confirmed. In the circumstances, the al)peal of 11w Revenue is dismissed.
4. Mr. Niaumuddin, learned advocate appearing for flu’ Revenue, contended that the assessee had a choice to dispute the valuation on the basis of the deemed value, but the assessee did not take that opportunity. The assessee had a choice or he could have litigated. The fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings under s. 271(1)((c) started. The Revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him.
5. We are, as such, of the opinion that there is no scope to admit the appeal since the same does (sic. -not) raise any question of law, substantial or otherwise.
The appeal is, therefore, rejected.
Thus, it was submitted by Ld.AR that impugned penalty should be deleted.
These are direct decisions on the issue which pertain to addition made on application of section 50C. According to decision of Hon’ble Calcutta High Court in the case where addition is made on account of application of section 50C and Revenue failed to produce any evidence to the effect that assessee has actually received more amount than that shown by it on the sale of property then penalty under section 271(1)(c) cannot be levied. Therefore, where addition is made on account of application of section 50C and there is no material on record to show that assessee had received more amount than that shown by it on sale of property then penalty under section 271(1)(c) cannot be levied. In the present case also no such case has been made by the Revenue.
We have admire the legal system of our country. Stamp duty is based on the fair market value of the property and the seller/buyer has to pay the stamp duty as per that, else, papers will go the under-value cell for disposal. But mere payment of the stamp duty for a higher value, by itself cannot be considered as concealment of income. Welcome judgement.