TMI Blog2015 (11) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the income tax law, parameters for determination of taxable income and levy of penalty are different from each other. Both should not be mixed or interchanged. The penal provisions are quasi criminal in nature, therefore these have to construed and applied strictly. Penalty can be levied by the AO, only and only, if, the AO is able to establish that case of the Assessee falls within the framework of the penal provisions, and as per the given parameters. If we examine the facts of this case, we can say that even if a duty may be enjoined on the assessee to make correct disclosure of income, but if such disclosure is based on the opinion of an expert, who is otherwise also a registered valuer, having been appointed in terms of a statutory scheme, then only because his opinion is not accepted or some other expert gives another opinion, the same by itself may not be sufficient for arriving at a conclusion that the assessee has furnished inaccurate particulars of income. Hence, in our considered opinion, penalty cannot be levied in the facts and circumstances of this case, especially when the quantification of the income itself does not have strong pillars to stand. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), wherein part relief was given to the Assessee on the computation part only. Ld CIT(A), neither accepted the rate as was adopted by the AO nor as was claimed by the assessee and he recomputed the taxable amount of capital gain. The Assessee had claimed the amount of capital gain of ₹ 46,48,295/-. The AO had assessed the same at ₹ 3,34,72,902/-, whereas the Ld. CIT(A) worked out the same at ₹ 2,23,95,570/-. The revenue accepted the order of Ld. CIT(A), whereas the assessee contested the matter further in second appeal before the Hon ble ITAT, in the quantum proceedings. The Tribunal dismissed the appeal of the assessee and confirmed the order of the Ld. CIT(A). Thereafter, penalty proceedings were initiated by the AO and penalty was levied on the amount of capital gain as was recomputed by the Ld. CIT(A), minus, the amount of capital gain as was shown by the assessee in the return of income i.e. ₹ 1,77,47,275/--( Rs. ₹ 2,23,95,570/- minus ₹ 46,48,295/-). Levy of this penalty was contested by the Assessee before Ld. CIT(A), but same was confirmed. Being aggrieved the assessee has filed appeal before the Tribunal, against the order of Ld CIT(A), c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced in this regard on the judgments of Hon ble Gujarat High Court in the case of New Sorathia Eng. Co vs CIT 282 ITR 642. Lastly; it was submitted that quantum appeal against the order of Hon ble Tribunal has been filed by the assessee before Hon ble High Court and the same has been admitted by the Hon ble High Court, copy of the order of Hon ble High Court has been placed in the paper book at page no.7 8. Reliance was placed in this regard on the judgment of Hon ble Bombay High Court in the case of CIT vs. Nayan Builders Developers (P) Ltd. 368 ITR 722, for the proposition that once appeal is admitted by the High Court, it shows that the issue involved is disputed, it involves question of law and two views are possible on the issue involved therein, and therefore, under such circumstances penalty should not be levied. 5. We have heard both the sides very carefully and gone through the orders of lowers authorities as well as material placed before us for our consideration and judgments relied upon by both the parties. The brief facts of the case are that the assessee filed its return of income on 30.07.2004 declaring capital gain of ₹ 46,48,295/- on sale of 38,670/- s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation by the AO was determined with the reference to agricultural land in which case the value is low as per ready reckoner against industrial land being non agricultural. In appeal, the value was arrived at by comparing the assessee s land with reference to double room tenements for ground storied temporary chawls with bricks and mud wall, located in slum area without proper access and cannot be called as authorized development, and that the ownership of the land mentioned in one of the documents is that of Zopadi and no electric supply . It was submitted that the assessee had given the explanation based on cogent and reliable evidence. Thus, the initial onus shifted on the Revenue to show that the amount in question constituted the income and not otherwise. It was also submitted the High Court has admitted the appeals by order dated 12.03.2013, both on the question of law as regard reopening and also on determination of capital gain. Hon ble High Court has admitted the appeal on the following question of law and facts: (i) Whether the Appellant Tribunal is correct in law in upholding the validity of notice issued under section 148(1), when the same was issued without reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disclosed by him. If the case of an assessee falls in any of these three ingredients, then the deeming provision comes into play and the amount added or disallowed in computing the total income is considered as the income in respect of which particulars have been concealed for the purpose of clause (c) of such section (1) of section 271 and the penalty becomes leviable. If the assessee successfully comes out of the above three constituents, then he cannot be deemed to have concealed the particulars of his income with reference to the amount added or disallowed in the assessment order. 5.5. Let us now, analyse facts of the case and explanation of the assessee, in the assessment proceedings as well as in penalty proceedings. As per facts on record, the assessee firm had sold industrial land vide two agreements dated 30.04.2004 along with structures threon to one M/s. Sidhi Real Estate Developers for a total consideration of ₹ 5,06,70,000/-. The land was purchased in 1966 and the assessee was entitled to adopt its fair market value as on 01.04.1981 as its cost. Accordingly, the assessee adopted the fair market 01.04.81 on the basis of the report given by its registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1.67 per square feet was then enhanced by 50% on account of the fact that the land was for use as a non-agricultural land. The value as on 01.04.1981 was thus arrived at ₹ 2.51 per square feet. Accordingly, cost of acquisitions of land was taken at by adopting the value at ₹ 2.51 as on 01.04.1981 and then applying the indexation. It was in this background that the additions were made to the capital gains disclosed by the assessee. The Ld CIT(A) confirmed the action of the assessing officer in principle, but restricted the valuation to the highest rate which comparable sale instances took place rather than taking average of the same. The Tribunal sustained the order of Ld. CIT(A). 5.6. In the aforesaid facts and circumstances of the case, and keeping in view the nature of addition made by the AO, quantum of which was modified by the Ld CIT(A), and in view of the explanations given by the assessee and the penalty order passed by the AO, it is seen that the necessary conditions for invoking explanation 1 of section 271(1)(c) are missing. Both of the lower authorities have determined the rates of land, by adopting some basis. The AO had accepted the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the addition is certainly debatable. The admission of substantial question of law by the Hon ble High Court lends credence to the bona fides of the claim made by the assessee. Once it turns out that the claim of the assessee could have been considered as per law and is not completely debarred at all, the mere fact of confirmation of addition would not per se lead to the imposition of penalty. 5.8. Hence, in view of the aforesaid discussion and facts circumstances of the case and legal position as discussed above, it is held that penalty has been rightly deleted by the Ld CIT(A), order of Ld CIT(A) is confirmed, and ground raised by the Revenue is dismissed. Now we take up ITA N0 937/M/2014, AY 2005-06: 5.9. It is noted that Ld CIT(A) has simply followed his order for AY 2004-05, for deleting the penalty, on the ground that facts of AY 2004-05 and 2005-06, are identical. The ground raised by the Revenue also, is identical, in this year. Thus, facts and issue remaining the same, we follow our order for confirming the order of Ld CIT(A) in deleting the penalty and dismissing the ground raised by the Revenue. 5.10. In the result, both the appeals of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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