The Commissioner of Income Tax-9 vs Vijayjyot Seats Pvt. Ltd.

This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 20th March, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal) for the Assessment Year 2007-08. By the impugned order, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)], deleting penalty imposed upon the Respondent-Assessee under Section 271 (1)(c) of the Act.

The Appellant has raised the following question of law for our consideration:

"Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the CIT(A)''s order, cancelling the penalty u/s. 271 (1)(c) of the I.T. Act, amounting to Rs. 10,20,710/- without appreciating the fact that the assessee, while computing capital gains, has failed to take into account the value of the property as per stamp duty value, as required u/s. 50C of the I.T. Act, 1961?"

The Respondent-Assessee filed return of income for the Assessment Year declaring a loss of Rs. 1.38 Crores. In its return of income, the Respondent claimed the sale consideration on sale of factory, building and land at Kalol for Rs. 1.55 Crores as reflected in the agreement. The Assessing Officer did not accept the sale consideration in view of Section 50C of the Act and adopted the sale consideration at Rs. 2 Crores being the stamp duty valuation of the property as deemed consideration received on sale of the property. The Respondent-Assessee did not challenge the order passed in the assessment proceedings as even after the addition, it had a net loss.

In the penalty proceedings, the assessee pointed out that as depreciation was being taken on the payment at Kalol, they were of the view that it would be covered by Section 50 of the Act. However, the Assessing Officer was not satisfied with the explanation offered and held that the Respondent had filed return of income with inaccurate particulars, thus warranting a penalty under Section 271(1)(c) of the Act. In appeal, the CIT(A) cancelled the penalty imposed under Section 271(1)(c) of the Act, inter alia, holding that all particulars with regard to the sale of the property at Kalol were furnished along with return of income including the stamped agreement for sale. Thus in view of the decision of the Supreme Court in Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd., AIR 2010 SC 1881 : (2010) 230 CTR 320 : (2010) 3 JT 88 : (2010) 3 SCALE 1 : (2010) 11 SCC 762 : (2010) 3 SCR 510 : (2010) 189 TAXMAN 322 -penalty was deleted on the ground that merely because a claim is rejected would not warrant imposition of penalty.

On further appeal by the Revenue, the Tribunal by the impugned order upheld the finding of the CIT(A) by holding that the higher stamp duty valuation of the land and the building sold by the assessee was clearly indicated in the agreement which was filed along with return of income. Thus, there was a complete disclosure of income and there were no inaccurate particulars filed so as to attract under Section 271(1)(c) of the Act. Thus, following the decision of the Apex Court in Reliance Petro Products (supra), the impugned order upheld the order of the CIT(A), deleting the penalty.

The grievance of the Revenue is that the Respondent-Assessee had in respect of the another property at Pune sold during the subject Assessment Year, had adopted the stamp duty valuation as provided under Section 50C of the Act. Thus, the Respondent-Assessee not adopting the value under Section 50C of the Act in respect of Kalol property would attract penalty under Section 271(1)(c) of the Act.

Mr. Sheth, learned Counsel appearing for the Respondent, had pointed out that they have adopted Section 50C of the Act in respect of property at Pune as the same was not used for business (depreciable asset) and, therefore, not covered by Section 50 of the Act. So far as the property at Kalol was concerned, it was depreciable asset which would be governed by Section 50 of the Act and Section 50C of the Act would have no application. This was a view taken at the time filing the return of income.

We find that in the present case, the Respondent-Assessee has made a complete disclosure inasmuch as the higher stamp duty valuation was indicated in the agreement filed along with the Return of Income. Thus, it is not a case of submitting/ furnishing inaccurate particulars. In view of the above, both CIT(A) as well as the Tribunal have come to concurrent findings of fact that no inaccurate particulars have been furnished by the Respondent-Assessee in respect of the sale of its property at Kalol. Thus, the impugned order passed by the Tribunal by following the Apex Court''s decision in Reliance Petro Products (supra), cannot be faulted with, as it is a settled position.

Accordingly, no substantial questions of law arises for our consideration. Appeal dismissed. No order as to costs.