2001 (8) TMI 1409 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act for the assessment year 1998-99.
2. Determination of the correct cost of acquisition of the property as on 1st April 1981.
3. Difference in valuation reports between the registered valuer and the Departmental Valuation Officer (DVO).
4. Allegations of concealment of income or furnishing inaccurate particulars of income by the assessee.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):
The appeal by the assessee was directed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] confirming the penalty of Rs. 68,78,095 imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act for the assessment year 1998-99. The AO had initiated penalty proceedings based on the finding that the assessee had furnished inaccurate particulars of income by claiming a long-term capital loss instead of the actual gain.

2. Determination of the Correct Cost of Acquisition:
The AO noted discrepancies in the cost of acquisition of the property as declared by the assessee. The assessee had adopted the cost of acquisition as Rs. 2,52,00,001 as of 1st April 1981, based on a valuation report by a registered valuer. However, the AO referred the property to the DVO under Section 55A of the Act, who valued the fair market value as Rs. 1,44,92,907. This significant difference led to the reassessment of long-term capital gains.

3. Difference in Valuation Reports:
The AO observed that the registered valuer had adopted rates from a local paper, which were not considered authentic. The DVO, on the other hand, cited actual sale instances and determined the fair market value based on relevant materials. The CIT(A) concurred with the AO, noting that the registered valuer's method was unconventional and not based on accepted principles of valuation, whereas the DVO's report was more reliable.

4. Allegations of Concealment of Income:
The assessee argued that there was no concealment of income and that the difference in valuation was a matter of opinion between two valuers. The CIT(A) rejected this argument, stating that the responsibility for accuracy lies with the assessee. The valuation report by the registered valuer was found to be flawed, and the assessee's reliance on it did not absolve them of the responsibility to ensure its correctness. The CIT(A) and the AO concluded that the assessee had furnished inaccurate particulars of income, justifying the imposition of the penalty.

Conclusion:
The Tribunal upheld the orders of the Revenue authorities, agreeing that the assessee had furnished inaccurate particulars of income by relying on a flawed valuation report. The penalty under Section 271(1)(c) was deemed justified. The appeal was dismissed, reinforcing the principle that the onus is on the assessee to ensure the accuracy of the particulars of income disclosed in the return.