Case Law Details

Case Name : DCIT Vs Trans Freight Containers Ltd. (ITAT Mumbai)
Appeal Number : ITA no.2337/Mum./2016
Date of Judgement/Order : 24/02/2017
Related Assessment Year : 2009-10
Courts : All ITAT (4238) ITAT Mumbai (1416)

In the instant case, there is a registered sale deed and the consideration mentioned therein has not been proved to be wrong by the AO. The addition has been made invoking the deeming provisions of section 50c of the Act. There is no finding that the actual sale consideration is more than that mentioned in the sale agreement. The appellant had furnished all the relevant documents called for by the AO. The AO has not doubted or disproved the validity of the documents. Thus there can be no case that the appellant has concealed any income or furnished any inaccurate particulars. Therefore, penalty u/s 271(1)(c) of the Income Tax Act, 1061 of Rs.50,26,4961- is hereby deleted.

Detailed Facts and Analysis is as follows :-

1. Brief facts of the case leading to the levy of penalty in this case are as under;

i) During the year under consideration, the appellant has sold 2 pieces of land at Vashivali admeasuring 50,450 sq. mtrs. for a total consideration of Rs.1,71,50000/-, the stamp duty value as per agreement amounts to Rs.992,76,000/-. The appellant had obtained valuation report of the said land from the government approved registered valuer M/s. Rajesh Shah Engineers & Consultants Pvt. Ltd. (‘registered valuer) who determined the fair market value of the said land at Rs.1,64,51.900/-.

ii) Accordingly, at the time of filing the return, the appellant, on the basis of the above valuation report, has adopted the actual sales consideration i.e. Rs.1,71,50,000/- for the purpose of computation of capital gains under the Act. The Assessing Officer in the Order passed u/s. 143(3) of the Act made an addition of Rs.8,21,26,000/- being the difference between stamp duty value and value adopted by the appellant by invoking the provisions of section 50C of Act and initiated penalty proceedings for furnishing of inaccurate particulars of income and concealment of income. The Assessing Officer also referred the valuation of the land in dispute to Department Valuation Officer as per provisions of section 50C of the Act who valued the property at Rs. 3,45,86,000/-.

iii) The appellant preferred an appeal against the said addition before the Commissioner of Income-tax (Appeals). The CIT(A) vide order dated 23/5/2012 partly allowed the appeal by granting part relief to the appellant in respect of addition made u/s 50C of the Act by accepting the value determined by the DVO. Thus, the addition made u/s 50C by CIT(A) was reduced from Rs.8,21,26,000/- to Rs.1,74,36,000/- (i.e. Ps. 3,45,86,000/- less Rs. 1,71,50,000/-).

iv) After receiving the Order of the CIT(A), the appellant was asked to show cause as to why penalty should not be levied u/s. 271(1)(c) for furnishing inaccurate particulars of income and concealment of income – (i) capital gain u/s. 50C of Rs.1,74,36,000/- and (ii) suppression of sale value of Rs.1,66,876/-. The appellant made submission which was duly considered by the assessing officer The assessing officer initiated penalty proceedings and vide order dated 28.03.2014 levied penalty u/s 271(1)(c) of the Act of Rs.34,87,200/- in respect to above addition on the basis that appellant has furnished inaccurate particulars of income and concealed its income. The assessing officer calculated the penalty in the penalty order at Rs.34,87,200/-.

2. Against above order assessee appeared before the learned CIT­A. Ld. CIT-A deleted the penalty holding as under;

i) This ground of appeal pertains to the imposition of penalty u/s 271(1) Income Tax Act, 1961 for an amount of Rs.59,26,496/-. It is not in dispute that the appellant had furnished copies of sale agreement for the impugned land for a total of Rs.1,71,50,000/- during assessment proceedings. The appellant had also given valuation report of an approved valuer determining the FMV at Rs.1,64,51,900/-. The AO had made addition of Rs.8,21,26,000/- u/s 50C of the Act. This was subsequently reduced by Ld. CIT(A) to Rs.1,74,36,000/- based on the report of the DVO who determined the FMV at Rs. 3,45,86,000/-.

ii)      It is seen that in the instant case, there is a registered sale deed and the consideration mentioned therein has not been proved to be wrong by the AO. The addition has been made invoking the deeming provisions of section 50c of the Act. There is no finding that the actual sale consideration is more than that mentioned in the sale agreement. The appellant had furnished all the relevant documents called for by the AO. The AO has not doubted or disproved the validity of the documents. Thus there can be no case that the appellant has concealed any income or furnished any inaccurate particulars.

iii)       I find that the ratio laid down in the case of CIT vs Fortune Hotels and Estates Pvt. Ltd. [2014] 52 taxmann.com 330 by Hon’ble Bombay High Court, by ITAT Bombay in the case of ACIT vs. Sunland Metal Recycling (ITA No.6454/Mum/2011) and by Hon’ble Supreme Court in Dilip N. Shroff V JCIT, Special Range, Mumbai (291 ITR 519) apply with full force to the facts and circumstances of this case. Therefore, penalty u/s 271(1)(c) of the Income Tax Act, 1061 of Rs.50,26,4961- is hereby deleted. This ground of appeal is allowed.

Held by ITAT

3. Against above order revenue is in appeal before us.  We have heard both the counsel and perused the records. We find that the issue involved is squarely covered in favour of the assessee by the decision of Hon’ble jurisdictional High Court in the case of CIT Vs M/s fortune hotels and estates private limited in ITA number 1164 of 2012. Vide order dated 26/9/2014 the Hon’ble jurisdictional High Court has upheld the ITAT finding that in case of addition by invoking provisions of section 50C, penalty under section 271(1)C is not sustainable.

4. We find that in the present case also assessee has furnished the registered sale deed. The assessing officer has made the addition by invoking deeming provisions of section 50 C. No case has been made out of any incriminating document etc. being found. In such situation assessee cannot be held guilty of furnishing of inaccurate particulars of income or concealment of income. Further more the conduct of the assessee cannot be held to be contumacious so as to warrant levy of

penalty. This proposition is also supported by the decision rendered by the larger bench of Hon’ble apex court in the case of Hindustan steel Ltd vs state of Orissa 83 ITR 26.

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