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2015 (8) TMI 217 - ITAT LUCKNOW

2015 (8) TMI 217 - ITAT LUCKNOW - TMI - Levy of penalty u/s 271(1) in relation to disallowance of excess claim of interest deduction under section 24(b) - Held that:- The appellant has taken a plausible view that she was eligible for interest deduction to the extent of ₹ 150,000/-. In our view, where the claim of the appellant is not under dispute and on quantum of deduction, the appellant has taken a plausible view, the AO can differ with the said view by way of disallowing the excess cla .....

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the value adopted for determining the stamp duty by the state Government authority is considered and replaced for the actual sale consideration accrued/received by the appellant. It is not the case of the Department that the appellant has received more than the value disclosed as sales consideration and has failed to disclose the same in her return of income. Where the actual sale consideration is less than the stamp duty value and by virtue of a deeming fiction, the latter is deemed by the AO t .....

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y the sale consideration determined as per DM circle rate under the deeming provisions of section 50C, the same cannot be basis for levy of penalty under section 271(1)(C) of the Act. - Decided in favour of assessee.

Adjustment on account of cost of acquisition/improvement - Held that:- cost of acquisition and cost of improvement has been reduced from ₹ 45,76,000 to ₹ 38,32,240 resulting in disallowance of cost by ₹ 7,43,760 for want of documentary evidence. As far a .....

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or The Respondent : Shri. R K Singh, CIT D.R. ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the appellant against the order dated 23.09.2014 of the Ld. Commissioner of Income tax (Appeals) - 1, Lucknow confirming the penalty of ₹ 2,18,300 levied under section 271(1)(C) of the Income tax Act, 1961 (hereinafter called the Act ). 2. The Ld. CIT(A) while confirming the levy of penalty by the CIT has given the following finding in his ex-parte order dated 12.08.2013: I have considere .....

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rmity in the penalty order, penalty of ₹ 2,18,300 imposed by the CIT under section 271(1)CIT of the Act is upheld. 3. On perusal of the grounds of appeal, it is noted that principally, there are two grounds of appeal against the order of the Ld. CIT (A) whereby he has confirmed the levy of penalty which is now being contested before us: a) Levy of penalty in relation to disallowance of excess claim of interest deduction under section 24(b) of the Act b) Levy of penalty in relation to short .....

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on to ₹ 75000/- and thereafter penalty was levied under section 271(1)(C) of the Act. 5. During the course of the hearing, the ld. Counsel for the appellant has contended that the deduction under section 24(b) of the Act is provided to an assessee where she fulfills the requisite conditions. Further, the ld Counsel has contended that whether she is holding the property individually or jointly with other co-owners is not determinant of the quantum of deduction that will be provided to her. .....

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has merely confirmed the AO s order without any further finding. The question is where the appellant has disclosed the particulars of income in the return of income by way of determining the annual value of the house property as NIL and claiming interest deduction amounting to ₹ 150,000/- under the provisions of section 24(b) the Act, can it be said that the appellant has furnished inaccurate particulars of her income. 8. It is not in dispute that the appellant is the joint owner of the p .....

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e co-owner of the property, by claiming deduction to the tune of ₹ 150,000/- instead of ₹ 75,000/- has concealed her income or furnished inaccurate particulars of her income. 10. The second proviso of section 24(b) of the Act reads as under: Provided further that where the property referred to in the first proviso (property referred to in section 23(2)) is acquired or constructed with capital borrowed on or after April 1, 1999 and such acquisition or construction is completed within .....

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hat the AO has carried the said impression while the passing the assessment order though there is no discussion in his order. 12. However, if one were to read the above proviso to section 24(b) in context of section 22, section 23(2) read with section 26 of the Act, it appears that one has to compute the income from house property in the hands of the appellant and the determination of annual value as well as the deductions where applicable, are in the hands of the appellant whether such individu .....

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for levy of penalty. In result, the levy of penalty on account of excess claim of interest deduction u/s 24(b) of the Act is deleted. B. Levy of penalty in relation to short computation of long term capital gains 14. During the year under consideration, the appellant has sold commercial property at Belapur and has disclosed long term capital loss amounting to ₹ 12,10,870 under the head Capital Gains in her computation of income. The Assessing officer in his order passed under section 143(3 .....

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m/2012) and judgement of Hon ble Calcutta High Court in case of Madan Theatres 260 CTR 75. 16. The ld DR has placed reliance on the orders of AO and Ld CIT(A). 17. On perusal of the assessment order passed under section 143(3) of the Act, it is noted that the AO has recomputed the capital gains by making the following adjustments: As submitted by the appellant (Rs) As considered by the AO (Rs) Adjustment (Rs) Sale consideration 53,59,000 64,36,500 Sale consideration increased by ₹ 10,77,50 .....

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eration as per DM Circle rate amounting to ₹ 64,36,500, being the market value to be considered as per provisions of section 50C of the Act as against sale consideration of ₹ 53,59,000 received by the appellant. In the penalty order, the AO has mentioned that when the assessee was cornered in this regard, the assessee submitted a revised computation of income taking market value (the DM Circle rate) as full value of consideration under section 50C of the Act. The Ld. CIT(A) has merel .....

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s value as per DM value were submitted and not disputed by the AO. Further, it is noted from the copies of the submissions filed before the AO (as contained in the paperbook) whereby the appellant has stated that the calculation in the annexed sheet (computation of income) has been made on the basis of value as per DM circle rate. Later on, it is noted from the order of the AO that the appellant has not disputed the adoption of stamp duty valuation and conceded the same before the AO. Further, n .....

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bmitted all primary facts which are not disputed by the AO, it cannot be said that the appellant has concealed her income or furnished inaccurate particulars of her income. 22. Further, reference can be drawn to the provisions of section 50C of the Act. The provisions of section 50C(1) of the Act provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assess .....

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the state Government authority is considered and replaced for the actual sale consideration accrued/received by the appellant. It is not the case of the Department that the appellant has received more than the value disclosed as sales consideration and has failed to disclose the same in her return of income. Where the actual sale consideration is less than the stamp duty value and by virtue of a deeming fiction, the latter is deemed by the AO to be the full value of consideration, it cannot be s .....

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he 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 .....

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sessee. 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 .....

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of provisions of section 50C and there is no material on record to show that assessee has received more amount than that shown by it on sale of property, the penalty under section 271(1)( c) cannot be levied. 26. After detail examination of above facts and circumstances of the case, we are of the view that the provisions of section 50C are deeming provisions and there is nothing that has been brought on record by the Department that the appellant has received sale consideration higher than what .....

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