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Shri Shaki l Hamid Sheikh Versus Asstt. Commissioner of Income Tax – 22 (3) , Mumbai

2016 (12) TMI 243 - ITAT MUMBAI

Penalty u/s. 271(1)(c) - non declearion of short term capital gain on sale of land - assessee has claimed that the assessee has sold agricultural land - Held that:- The plea of the assessee that the land is an agricultural land lacks merit and is not borne out of the records and the assessee during assessment accepted that the land is not agricultural land but an industrial land. Thus, this explanation offered by the assessee that the said land was an agricultural land and hence not exigible to .....

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see held industrial land which was sold during the impugned assessment year and the land is not eligible for depreciation as per scheme of the Act . Thus, the contention of the assessee that the assessee reduced the sale consideration from the Block of asset is also not borne out from the records as on perusal of the financial statement of the financial year ended 31-03-2008 reveals that there was not block of asset created by the assessee for the land held by the assessee and this land was show .....

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e between full value of consideration as determined by DVO of ₹ 35.75 lacs and the actual sales consideration of ₹ 31.20 lacs as the same was brought to tax owing to deeming fiction created by Section 50-C of the Act and no evidence has been brought on record by the Revenue that any onmoney in excess of actual sale consideration of ₹ 31.20 lacs was actually received by the assessee which was not declared and disclosed to the Revenue in the return of income filed with the Revenu .....

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r the assessment year 2008-09, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 22.06.2011 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 271(1)(c) of the Income Tax Act,1961 (Hereinafter called the Act ). 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- Penalty u/s. 271(1)(c) of the Act. 1. The learned CIT( .....

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Capital Gains from sale of Agricultural Land was exempt and Assessee is regularly paying Income Tax and therefore penalty u/s. 271(1)(c) of ₹ 4,50,368/- may be deleted. 2. The learned CIT(A) erred in upholding the order of A.O. levying penalty u/s. 271(1)(c) of the Act of ₹ 4,50,368/- on addition u/s. 50C of ₹ 13,25,000/- being difference between stamp duty value and agreement value without appreciating that Sec. 50C is a deeming provision and addition u/s. 50C does not amount .....

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d a land at Baramati for a consideration of ₹ 39 lacs. The assessee was asked to explain the source of this investment during quantum assessment proceedings u/s 143(3) r.w.s 143(2) of the Act. During the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of the Act, the assessee submitted that the assessee had purchased a piece of land for a consideration of ₹ 22.50 lacs in the preceding year and the same was sold for a total consideration of ₹ 31.20 lacs during the impu .....

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ring the year was ₹ 31.20 lacs while the stamp duty valuation as adopted by registering authority was ₹ 1.398 crores and matter was also referred to the DVO by the AO u/s 50C(2) of the Act , and the DVO valued the fair market value of land at ₹ 35.75 lacs u/s 50C(2) of the Act. Thus, the value as determined by DVO was lower than the value adopted by stamp duly valuation authorities for the said land, the value as determined by the DVO of ₹ 35.75 lacs was adopted by the AO .....

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ideration by the AO for computing capital gains chargeable to tax, which was not received by the assessee and the difference of ₹ 4.55 lacs was an unrealized consideration. The assessee submitted that the difference of ₹ 4.55 lacs was added to the income of the assessee by the AO in quantum assessment proceedings u/s 143(3) of the Act which was not accepted by the assessee. The assessee submitted there were no concealment of income or inaccurate particulars furnished by the assessee. .....

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h were not disclosed by the assessee in the return of income filed with Revenue would not have been detected. The contention of the assessee during the assessment proceedings that he was under the belief that tax is not leviable on agricultural land and hence he did not disclose the said capital gains in the return of income filed with the Revenue can also be not accepted as there is a column in the return of income under which exempt income is required to be disclosed. The assessee failed to di .....

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4,50,363/- was levied by the AO u/s 271(1)(c) of the Act , being 100% of the tax sought to be evaded by the assessee, vide penalty order dated 22-06-2011 passed by the AO u/s 271(1)(c) of the Act 4. Aggrieved by the penalty order dated 22-06-2011 passed by the A.O. u/s. 271(1)(c) of the Act, the assessee filed first appeal before the ld. CIT(A). 5. Before the ld. CIT(A) , the assessee submitted that the land which was purchased by the assessee was purely agricultural land and the sale of the ag .....

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y the assessee were situated under Grampanchayat area and the land was cultivated regularly by the assessee himself being farmer and agricultural income was disclosed regularly. It was submitted that since the land sold and purchased was purely agricultural land and the profit earned was reinvested in purchase of agricultural land at ₹ 39 lacs, there was no question of capital gains been chargeable to tax. It was submitted that these facts were never taken into consideration by the AO. The .....

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rs of capital gains in the original return of income as well as in the revised return of income filed with the Revenue, hence, penalty u/s 271(1)(c) of the Act is leviable as the assessee has concealed the particulars of income relating to capital gains earned by the assessee even till assessment was framed by the AO. The ld. CIT(A) observed that the assessee sold the land for a consideration of ₹ 31,20,000/- on 15.02.2008 , and stamp duty valuation adopted by registering authorities was a .....

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ssessee that the assessee failed to disclose the capital gains by omission or oversight or that it was bonafide mistake or technical or venial breach of the law. The contention of the assessee that it was an agricultural land and hence exempt from capital gains under section 54B of the Act or that the assessee reinvested the profit earned in another agricultural land was not accepted by the ld. CIT(A) as the assessee could not provide any details of such land being agricultural land and also det .....

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Act and confirmed the penalty of ₹ 4,50,368/- so levied by the A.O. , vide appellate orders dated 02/09/2013. 6.Aggrieved by the appellate orders dated 02/09/2013 passed by the ld. CIT(A) , the assessee is in appeal before the Tribunal. 7. The ld. Counsel for the assessee contended that penalty was levied u/s 271(1)(c) of the Act for concealment of particulars of income w.r.t. capital gains on sale of agricultural land. It was submitted that the quantum assessment framed by the AO u/s 143 .....

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tween the DVO valuation and actual sale consideration as the DVO value is deemed as full consideration for chargeability to capital gains tax owing to deeming fiction of Section 50C of the Act. The ld. Counsel submitted that the assessee was under a belied that he had sold agricultural land and the assessee was under the bonafide belief that capital gains arising thereon are exempted from capital gain tax u/s 54B of the Act. It was submitted that the land sold was an industrial land and reinvest .....

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that assesse is buying land regularly and disclosure has been made in the balance sheet.It was submitted that the sale consideration of the land was reduced from the Block of the Asset for the next year i.e. financial year 2008-09. It was also submitted that the land was purchased from the same person(s) to whom this land under consideration was sold and hence the assessee was under a bonafide belief that the land was exchanged , the assessee did not disclose and pay capital gain on the sale of .....

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ta) and submitted that no penalty u/s 271(1)(c) of the Act can be levied as there is no concealment of income. 8. The ld. D.R. submitted that the A.O. had made enquiries about the source of purchase of land during the year and then the AO came to know that the assessee has sold some land of which capital gains were not offered for taxation by the assessee. Full opportunity was given by the DVO while computing the market value of the land. 9. We have considered the rival contentions and also peru .....

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ll as revised return of income filed by the assessee with the Revenue. The assessee has claimed that the assessee has sold agricultural land and did not declare the short term capital gains on the bonafide belief that being capital gains arising on sale of agricultural land are exempt from tax. The assessee in quantum assessment proceedings have submitted that as per latest information above area is declared as Industrial land area by Government of Maharashtra and the area of village is declared .....

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nt dated 29-02-2008 with respect to sale of land being survey no. 32 Hissa No 3/27/6 admeasuring 00H, 06R means total area 2600 square meters lying being situated within the limits of industrial area in the village Kondhva Budruk , Pune , MIDC area (page 87/pb) and it is clearly stated in the development agreement dated 29-02-2008 as under(page 91/pb) :- AND WHEREAS :- The said properties are not under cultivation . It is a barren land there is no source of water. The said property is under Indu .....

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y that the said land being under MIDC and a barren land having no source of water is not under cultivation , to take it out of ambit from the penalty provisions u/s 271(1)(c) of the Act. The plea of the assessee that the assessee has reduced the sale consideration of the said land from the Block of the asset is again and hence capital gains were not declared is again devoid of merits. The concept of Block of Asset is for the assets which are eligible for depreciation. The Block of Asset is defin .....

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iation is prescribed;] ***** ***** The assessee held industrial land which was sold during the impugned assessment year and the land is not eligible for depreciation as per scheme of the Act . Thus, the contention of the assessee that the assessee reduced the sale consideration from the Block of asset is also not borne out from the records as on perusal of the financial statement of the financial year ended 31-03-2008 reveals that there was not block of asset created by the assessee for the land .....

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for the financial year 2008-09 in the paper book filed with the tribunal. Thirdly , the said plea lacks merit as the concept of Block of asset is for the depreciable assets. The assessee has taken another plea that the land was sold to the same person from whom the new land was purchased and hence the assessee was under a belief that there is an exchange of land which is not exigible to tax again lacks merit because of the clear definition of the word transfer u/s 2(47) of the Act in relation to .....

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r the provisions and scheme of the Act as contained in Section 2(47) of the Act which is exigible to tax under Chapter IV-E of the Act. In any case the assessee entered into two different agreements for sale and purchase of land and also the consideration were paid and received in monetary terms at the time of purchase and sale of two different land s and it was not an exchange of land. The assessee claimed that the DVO valuation of ₹ 35.75 lacs was substituted by actual sales consideratio .....

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tion and actual consideration unless it is shown by the Revenue that the assessee has not shown the actual sale consideration correctly and on-money in excess of actual sales consideration was received by the assessee which was not declared to the Revenue in the return of income filed with the Revenue relying on the decision of Hon ble Calcutta High Court in the case of CIT v. Madan Theatres Limited (2014) 44 taxmann.com 382(Cal.)/ (2013) 260 CTR 75(Cal.) and decision of the tribunal in the case .....

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e between actual sale consideration of ₹ 31.20 lacs and the purchase price of the land of ₹ 22.50 lacs and to that extent of difference between the actual sale consideration and the purchase price , we confirm and sustain the penalty levied by the A.O. u/s 271(1)(c) of the Act on the tax sought to be evaded by the assessee as there was a concealment of particulars of income with respect to the capital gains earned by the assessee to the extent of difference between the actual sale co .....

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