Case Law Details
Dipakkumar Ishwarlal Panchal Vs ITO (ITAT Ahmedabad)
Admittedly the concealment/furnishing of inaccurate particulars of income, for which act penalty under section 271(1)(c) in the present case has been levied, related to the income added as per the provisions of section 56(2)(x) of the Act. More particularly on account of the fact that actual consideration paid for purchase of a property was less than its stamp duty value. It is not the case of the Revenue that the assessee was actually found to have paid any amount over and above actual purchase price of the asset. Moreover section 56(2)(x) of the Act, under which the addition has been made, is a deeming provision only. Further, we have noted that the assessee had given reasons for the property not being capable of fetching the jantri value. There is no finding by the Revenue to the effect that the explanation of the assessee was false or not bona fide. In fact no effort /inquiry or investigation has been made by the Revenue to verify the explanation of the assessee. The surrender made by the assessee of the deemed income has been accepted as such by the Revenue. The assessee had given this explanation, and thereafter surrendered the balance amount to buy peace of mind; meaning thereby that he had accepted the addition under protest; though not in substance agreeing to the proposition of law under which the addition has been made.
In the facts and circumstances, where the assessee had objected to the invocation of section 56(2)(x) of the Act in its case for the purpose of making addition and had given a reason for the same, which the Revenue has not found to be false or not bona fide and in any case the addition having been made on account of deeming fiction, the assessee having not been found to have actually made any payment in excess of the such price, we are of the view that the assessee cannot be said to have concealed or furnished inaccurate particulars of income so as to attract levy of penalty under section 271(1)(c) of the Act amounting to Rs.1,18,965/-.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax (Appeals)-3, Ahmedabad [hereinafter referred to as “CIT(A)”] dated 10.9.2020 confirming the levy of penalty for concealing/furnishing inaccurate particulars of income ,under section 271(1)(c) of the Income Tax Act, 1961 (“the Act” for short) and pertaining to Asst.Year 2016-17.
2. Effective ground of appeal raised by the assessee reads as under:
“On the facts read with the explanation of the assessee during the course of assessment proceedings as well as considering the penalty reply, there was not justification for levy of penalty of Rs.1,18,965/- under section 271(1)(c) of the Act either factually or legally.”
3. As transpires from orders of the authorities below, penalty was levied on account of addition made amounting to Rs.3,85,000/- to the income of the assessee on account of a property purchased by the assessee for consideration less than its stamp duty value ,as per the provisions of section 56(2)(x) of the Act. The jantri value /stamp duty value of the property purchased by the assessee being Rs.67,27,000/-, and the consideration actually paid by the assessee being Rs.48 lakhs. The assesses share in the property being 20% ,difference in the aforestated values to this extent therefore , amounting to Rs.3,85,000/-, was added to the income of the assessee and penalty levied thereon u/s 271(1)© of the Act for concealing/furnishing inaccurate particulars of income, @ 100% of the tax sought to be evaded thereon amounting to Rs.1,18,965/-
4. Before us, the contention of the ld.counsel for the assessee against levy of penalty was that the assessee had given an explanation why jantri value could not be so substituted for the purchase price of the asset, pointing out that the land was compromised for several reasons being situated at the end of the village with a high tension wire running over it and the area being of not much use. That considering the fact that litigation against the stamp duty valuation would entail much cost ,the assessee had accepted the stamp duty value and to buy peace of mind had not agitated the addition made in income tax proceedings also. He contended that his explanation was reasonable enough, and was not found to be false by the Revenue. Our attention was drawn to the same as reproduced at page no.3 of the CIT(A) as under:
“…… I have to state that 20% of above was paid Rs.48,000/- but as per “Jantri” of state government I have paid stamp duty for our shares of value of Rs.67,27,000/-. This is due to the reason that on our land high tension wire is going only land as well as the land is at the end of the village and hence the value of land is less than “Jantri value”.
I have already explained to the sub-registrar (stamp authority) but he was bound by stamp duty Act and charged higher stamp duty as per jjantri value while our purchase value is less than “Jantri” value. I don’t want to go in litigation as value of the land may increase value and hence I compromise and paid the duty as per “Jantri value”.
Now for the peace of mind I agree to pay tax on Rs.3,85,000/-because I don’t want to go any litigation kindly add this amount of Rs.3,85,000/- and do not impose any penalty because I co-operate with department for peace of mind.
Kindly note that in our purchase of other 3 plot of land has not such problem there is no difference of purchase of land and “jantri” value.
Further, in response to penalty notice the assessee made submission dated 02/04/2019 and 25/04/2019. In submission dated 02/04/2019 pointed out that penalty is not warranted because the jantri value is unreasonably high as the land is at the remote area , high tension wire is going over land which is very dangerous and the the area is without much use and land is not situated in good location and is not proper as per vastu sastra and all these factors have bearing on the value of the land sold and out of oversight the enhanced share on account of jantry value remained to be added to total income and as soon as during course of scrutiny the mistake was noticed the assessee immediately offered difference of Rs. 3,85,000/- as addition to the income and no appeal against the said land has been filed and the assessee has also paid the tax on 09/01/2019 for peace of mind and to avoid any further litigation. When these factors affecting the value of land were before the A.O. he should have referred the matter to the valuation officer as provided in the section 50C itself. He has also relied upon various Decisions for not levying penalty as there is no concealment of income or furnishing of inaccurate particulars of income. In the submission dated 25/04/2019 same facts have been narrated by the assessee and has also relied upon various decisions for non levy of penalty as the conduct and explanation of the assessee is bona fide.
Further, he contended that in any case, the addition had been made on account of deeming provision and there was no finding by the Revenue that the assessee had actually paid any amount over and above the purchase price of the asset.
It was contended therefore that the assessee could not be charged with having concealed/furnished any inaccurate particulars of income so as to levy penalty u/s 271(1)(c) of the Act. In this regard, he relied on the decision of Co-ordinate Bench of the ITAT, Ahmedabad in the case of Shri Chimanlal Manilal Vs. ACIT, ITA No.508/Ahd/2010 order dated 22.6.2022. Copy of the order was placed before us.
5. On the other hand, the ld.DR relied on the order of the authorities below, stating that the assessee had not disclosed all facts relating to the income and had not given any bona fide explanation to the same, and therefore, penalty had been rightly levied.
6. We have heard both the parties. Admittedly the concealment/furnishing of inaccurate particulars of income, for which act penalty under section 271(1)(c) in the present case has been levied, related to the income added as per the provisions of section 56(2)(x) of the Act. More particularly on account of the fact that actual consideration paid for purchase of a property was less than its stamp duty value. It is not the case of the Revenue that the assessee was actually found to have paid any amount over and above actual purchase price of the asset. Moreover section 56(2)(x) of the Act, under which the addition has been made, is a deeming provision only. Further, we have noted that the assessee had given reasons for the property not being capable of fetching the jantri value. There is no finding by the Revenue to the effect that the explanation of the assessee was false or not bona fide. In fact no effort /inquiry or investigation has been made by the Revenue to verify the explanation of the assessee. The surrender made by the assessee of the deemed income has been accepted as such by the Revenue. The assessee had given this explanation, and thereafter surrendered the balance amount to buy peace of mind; meaning thereby that he had accepted the addition under protest; though not in substance agreeing to the proposition of law under which the addition has been made.
7. In the facts and circumstances, where the assessee had objected to the invocation of section 56(2)(x) of the Act in its case for the purpose of making addition and had given a reason for the same, which the Revenue has not found to be false or not bona fide and in any case the addition having been made on account of deeming fiction, the assessee having not been found to have actually made any payment in excess of the such price, we are of the view that the assessee cannot be said to have concealed or furnished inaccurate particulars of income so as to attract levy of penalty under section 271(1)(c) of the Act amounting to Rs.1,18,965/-.
The penalty so levied of Rs.1,18,965/- is deleted.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 31st August, 2022 at Ahmedabad.
