Case Law Details

Case Name : The Income Tax Officer Vs. Shri Ajay Sharma (ITAT Delhi)
Appeal Number : ITA No. 995/Del/2016
Date of Judgement/Order : 23/11/2017
Related Assessment Year : 2010- 2011
Courts : All ITAT (4437) ITAT Delhi (983)

ITO Vs. Shri Ajay Sharma (ITAT Delhi)

Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property.

The assessee has disclosed all the relevant facts of sale of the property to the Revenue Department. The assessee declared the sale consideration of Rs. 1,27,50,000 as per sale deed and also offered the short term capital gain for taxation. The A.O. however, applied the deeming provisions of Section 50C of the I.T. Act, for the purpose of making the addition. Thus, the A.O. did not bring any positive evidence on record to show that assessee has concealed particulars of income or furnished any inaccurate particulars. The valuation of the Stamp Valuation Authority is not a conclusive evidence of receipt of the money by assessee over and above what is recorded in the sale deed. The A.O. has not brought any concrete evidence of concealment of income in the order. The A.O. at the stage of assessment, simply applied the deeming provisions of Section 50C of the I.T. Act without bringing any evidence on record for concealment of income or furnishing inaccurate particulars by the assessee. In the absence of any positive evidence with respect to concealment of income, there were no justification for the A.O. to levy penalty in the matter.

Full Text of the ITAT Order is as follows:-

This appeal by Revenue has been directed against the order of the Ld. CIT(A)-10, New Delhi, dated 30th January, 2014, for the A.Y. 2010-2011, challenging the cancellation of penalty under section 271(1)(c) of the I.T. Act, 1961, on account of addition made under section 50C of the I.T. Act.

Briefly, the facts of the case are that assessee has sold industrial plot at Neemrana, Phase-II, Bahror, District Alwar (Rajasthan). The assessee has declared short term capital gain of Rs. 19,59,668. The assessee has declared the sale consideration at Rs. 1,27,50,000 vide sale deed executed dated 11th March, 2010. The document shows that stamp duty was paid at Rs. 1,83,02,910 as reflected in the AIR information as against sale consideration of Rs. 1,27,50,000 and there is a difference of Rs. 55,52,910. Thus the provisions of Section 50C of the I.T. Act were found attracted in this case. The A.O. accordingly made addition of Rs. 55,52,910 on account of difference and taken as additional short term capital gain and added to the income of the assessee. The A.O. vide separate order levied the penalty under section 271(1)(c) of the I.T. Act.

3. The assessee explained before the Ld. CIT(A) that A.O. has applied deeming provisions of Section 50C of the I.T. Act and made addition being difference between sale consideration as per sale deed and valuation made by the Stamp Valuation Authority. The Valuation of Stamp Valuation Authority is not a conclusive evidence of actual fair market value of the property. The A.O. has not brought any evidence on record by which it can be established that assessee has received more than the amount shown to have received as per the sale deed. The assessee disclosed all the material facts before A.O. Therefore, it is not a case of levy of penalty. The assessee relied upon the decision of Hon’ble Kolkata High Court in the case of CIT vs. Madan Theaters Ltd., 260 CTR 75. The Ld. CIT(A) reproduced the judgment in the impugned order and found that penalty have been levied on account of addition made by applying the deeming provisions of Section 50C of the I.T. Act, which could not be construed as furnishing of inaccurate particulars or concealing the particulars of income. It was further found that for applying the provisions of Section 50C, it is not necessary for the A.O. to examine whether actually the assessee has received anything over and above the amount mentioned in the sale deed because the addition is made by applying the deeming provision of Section 50C of the Act. There are no positive evidence to indicate receipt of any money over and above what is stated in the sale deed. The assessee disclosed all the relevant facts before A.O. Therefore, penalty was cancelled.

4. The Ld. D.R. relied upon the decision of Hon’ble Delhi High Court in the case of Zoom Communications 327 ITR 510 and submitted that even by applying deeming provisions under section 50C of the I.t. Act, penalty is leviable.

5. On the other hand, the Learned Counsel for the Assessee, reiterated the submissions made before the authorities below and relied upon the decision of the Hon’ble Kolkata High Court in the case of CIT vs. Madan Theaters Ltd., (supra).

6. After considering the rival contentions, we do not find any merit in this appeal of the Revenue. The assessee has disclosed all the relevant facts of sale of the property to the Revenue Department. The assessee declared the sale consideration of Rs. 1,27,50,000 as per sale deed and also offered the short term capital gain for taxation. The A.O. however, applied the deeming provisions of Section 50C of the I.T. Act, for the purpose of making the addition. Thus, the A.O. did not bring any positive evidence on record to show that assessee has concealed particulars of income or furnished any inaccurate particulars. The valuation of the Stamp Valuation Authority is not a conclusive evidence of receipt of the money by assessee over and above what is recorded in the sale deed. The A.O. has not brought any concrete evidence of concealment of income in the order. The A.O. at the stage of assessment, simply applied the deeming provisions of Section 50C of the I.T. Act without bringing any evidence on record for concealment of income or furnishing inaccurate particulars by the assessee. In the absence of any positive evidence with respect to concealment of income, there were no justification for the A.O. to levy penalty in the matter. The Hon’ble Kolkata High Court in the case of CIT vs. Madan Theaters Ltd., (supra), on identical facts, dismissed the departmental appeal in which it was held as under :

“Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property.”

7. Considering the above discussion in the light of the order of the Ld. CIT(A), no interference is called for in the matter. It may also be noted here that Ld. CIT(A) discussed some other small additions also on which penalty have been cancelled. However, during the course of arguments, no arguments have been made by the Ld. D.R. on the same and even the same are not challenged in the grounds of appeal. In view of the above, departmental appeal stands dismissed.

8. In the result, appeal of the Department is dismissed.

Order pronounced in the open Court.

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Category : Income Tax (25512)
Type : Judiciary (10261)
Tags : ITAT Judgments (4617) section 271(1)(c) (315) section 50c (101)

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