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Harilal Mulukchand Mehta Versus ITO Ward 19 (1) (3) , Mumbai

2017 (11) TMI 793 - ITAT MUMBAI

Levy of penalty u/s. 271(1)(c) - capital gain computation - difference in cost of acquisition adopted - AO did not accepted the cost of acquisition as on 01.04.1981 as adopted by the assessee and relied on the “Indian Valuers Directory & Reference Book”, to incorporate the market value of the property of Mumbai as on 01.04.1981 - Held that:- Hon’ble Supreme Court in the case of Dilip N Shroff vs. JCIT [2007 (5) TMI 198 - SUPREME Court ] on the issue of capital gain on the basis of the valuer’s r .....

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o the disputed penalty is levied only because the opinion of registered valuer is not accepted or some other expert gives another opinion, is not by itself sufficient for arriving at a conclusion that the assessee had furnished inaccurate particulars of income attracting penalty u/s 271(1)(c). Assessee has chosen to obtain the opinion of a registered valuer and the registered valuer has arrived at his opinion on certain basis. While he making the valuation report, disclosed all particulars. Ther .....

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of Income Tax (Appeals) - 30, Mumbai [in short CIT(A)] in appeal No.CIT(A)-30/ITO-19(1)(3)/IT-63/12-13 dated 10.12.2013. The assessment was framed by the Income Tax Officer-Ward 19(1)(3), Mumbai,(in short ITO or AO) for A.Y. 2009-10, vide his order dated 28.03.2012, u/s. 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The penalty under dispute was levied by the ITO Ward 19(1)(3), Mumbai u/s. 271(1)(c) of the Act vide his order dated 24.09.2012. 2. .....

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rm capital loss ₹ 4,37,37,000 and assessed income ₹ 8,94,480 + long term capital gain ₹ 59,06,980. The learned Commissioner of Income-tax, Appeals has wrongly upheld levy of penalty ₹ 1,13,29,5007- on the basis of deemed concealed income ₹ 4,99,97,8017- against tax evaded ₹ 14,12,189 (tax payable as per return of income ₹ 1,87,901 and tax assessed ₹ 16,00,090) The learned Commissioner of Income-tax, Appeals has wrongly concluded that appellant has .....

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377; 6,95,79,000/- and assessee s 1/3rd share was at ₹ 2,31,93,000/- . The assessee computed Long term capital gain after taking the cost of acquisition as on 01.04.1981 at ₹ 1.15 crores being 1/3rd share of this property. Accordingly, he computed the indexed cost of acquisition as on the date of sale at ₹ 6,69,30,000/- and declared Long term capital loss of ₹ 4,37,37,000/-. The Assessing Officer during the course of assessment proceedings in the case of other co-owner Sh .....

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Chandrakant Malukchand Mehta was assessed accordingly. Subsequently, the assessee s case was re-opened by issuing of notice u/s. 148 of the Act on the same reasoning. The assessee in response to the said notice filed return of income as per the cost of acquisition as on 01.04.1981 taken by the other co-owner Shri Chandrakant Malukchand Mehta and re-worked capital gains as ₹ 59,06,980/-. However, Ld. AO, finally computed the capital gain as ₹ 62,60,801/- by substituting the cost of a .....

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,801/- and taxed accordingly. No appeal was filed against the quantum addition by the assessee. The Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act for furnishing of inaccurate particulars of income as well as for concealment of income vide para 4.2 of the assessment order, observing as under: 4.2 Since, in the original return of income filed by the assessee, the assessee tried to conceal income by furnishing inaccurate particulars of cost of acquisition of property by .....

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return of revised income. Therefore, penalty proceedings u/s. 271(1)(c) are being initiated separately for furnishing inaccurate particulars and concealment of income. The Assessing Officer levied penalty u/s. 271(1)(c) of the Act observing as under: 14. Coming to the merit of imposition of penalty, it is to be said that section 271(1)(c) of the Income-tax Act, 1961 is attracted where in the case of any proceedings under the Act, the Assessing Officer is satisfied that any person has concealed .....

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,500/- and the maximum penalty leviable is ₹ 3,39,88,500/-. Considering the facts of the case, I am satisfied that the penalty of ₹ 1,13,29,500/- be levied. I, therefore, hereby direct the assessee Viz. Shri Harilal Malukchand Mehta to pay a sum of ₹ 1,13,29,500/- (Rupees one crore thirteen lakhs twenty nine thousand five hundred only ) as and by way of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 read with explanation of the Income-tax Act, 1961. 4. Aggrieved the assesse .....

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1,15,00,000/- was taken as cost of acquisition in the computation of LTCG. The appellant thus declared LTCL of ₹ 4,37,37,000/- on sale of the property, instead of LTCG of ₹ 62,60,801/-. On the contrary, another co-owner of the same property in his case, on the basis of valuation report dtd.19.3.2009 of the same valuer, M/s J.V. Udani, declared his 1/3rd share in the cost of acquisition of the above property at ₹ 68 lac, that is 1/3rd of ₹ 2,05,00,0007- and declared long t .....

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igble in the case of the appellant. 6.2 In so far as the reliance placed by the appellant on various court decisions are concerned, the same are not applicable to the facts of the case of the appellant discussed above. On the contrary, the decisions relied upon by the AO to levy penalty in the case of the appellant are found to be more applicable. Besides, I place reliance on the hon'ble Supreme Court's decision in Civil Appeal No.9772 of 2013, in the case of Mak Data Pvt Ltd, wherein th .....

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h the facts and circumstances of the case. The assessee has disclosed Long term capital loss of ₹ 4,37,37,000/- on sale of property and for this he has arrived at the cost of acquisition as on 01.04.1981 on the basis of the valuer s report of approved valuer J V Udnani dated 19.03.2009 and 1/3rd share of the assessee worked out at Rs.. 1.15 crore. After applying indexation provisions, the cost of acquisition as on 01.04.1981 was computed at ₹ 6,69,30,000/-. Subsequently, it was found .....

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on 01.04.1981 as adopted by the assessee and relied on the Indian Valuers Directory & Reference Book , to incorporate the market value of the property of Mumbai as on 01.04.1981 as written by Shri Santosh Kumar [Architect, Government Registered Valuer for Land & Building] & Shri Sunit Gupta [M Val. (RE), government registered Valuer for Real Estate], who has based the valuation as on 01.04.1981 on the basis sale instances for Mumbai. The assessee has also not objected to the assessm .....

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luer other than a registered valuer also. In the instant case, the assessee had chosen to obtain the opinion of a registered valuer. 92. The registered valuer has arrived his opinion on certain basis. He while making the valuation report, disclosed all the particulars. He disclosed that he had chosen to the index value method. He did not rely upon any sale instance. He might have referred to the valuation of the property as mentioned in a local newspaper. But it is not in dispute that he did not .....

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982, wherein the land was valued at about ₹ 1,823 per sq. ft. A valuation was to be arrived at as on April 1, 1981. He picked up a figure of ₹ 897 per sq. ft. No reason had been assigned in support thereof. No other or further sale instances had been given. We do not know as to whether any other sale instances were available. He merely stated that such valuation had been arrived at after taking into account the time size- shape, time gap, location-situation and also the factors like .....

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rms of a statutory scheme, 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. 95. It is of some significance that in the standard pro forma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assess .....

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00] 2 SCC 718). 97. We have, however, noticed hereinbefore that the Income-tax Officer had merely held that the assessee is guilty of furnishing of inaccurate particulars and not of concealment of income; which finding was arrived at also by the Commissioner of Income-tax and the Income-tax Appellate Tribunal. 98. In K. C. Builders v. Asst. CIT [2004] 2 SCC 731, this court formulated the following questions for consideration (page 567) : 8. On the above pleadings and facts and circumstances of t .....

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(c) Whether the High Court was justified in dismissing the criminal revision petition vide its impugned order ignoring the settled law as laid down by this court that the finding of the Appellate Tribunal was conclusive and the prosecution cannot be sustained since the penalty after having been cancelled by the complainant following the Income- tax Appellate Tribunal's order no offence survives under the Income- tax Act and thus the quashing of the prosecution is automatic? (d) Whether the .....

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record? 99. In K. C. Builders (supra), this court noticed the dictionary meaning of the explanation and held (page 565) : 4. The respondent/assessing authority treated the difference between the income as per original return and revised income as concealed income. The Assistant Commissioner of Income-tax levied penalties under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') for all the aforesaid four assessment years. Accordingly, penalty proceedings .....

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al Solicitor General, however, submitted that although on the facts of the case the decision rendered is correct the view of the court that unless there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable on the part of the assessee to conceal his income so as to evade Income-tax thereon may not be correct. As at present advised, we do not intend to go into the said question; as in the facts and circumstances of the case, there ar .....

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