2015 (8) TMI 88 - HC - Income Tax

Penalty u/s. 271 (1)(c) - 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 - CIT(A) deleted penalty levy as confirmed by ITAT - Held that - 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 (2010 (3) TMI 80 - SUPREME COURT ), cannot be faulted with, as it is a settled position. - Decided in favour of assessee.

Summary

Issues Involved:
Challenge to order deleting penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2007-08.

Detailed Analysis:

1. Question of Law Raised by Appellant:
The Appellant questioned the justification of upholding the Commissioner of Income Tax (Appeals) order canceling the penalty under Section 271(1)(c) of the Income Tax Act. The issue revolved around the failure of the assessee to consider the stamp duty value while computing capital gains under Section 50C of the Act.

2. Background and Assessment Proceedings:
The Respondent-Assessee declared a loss of Rs. 1.38 Crores for the Assessment Year and claimed a sale consideration of Rs. 1.55 Crores for the sale of property. However, the Assessing Officer valued the property at Rs. 2 Crores based on stamp duty valuation under Section 50C. The Respondent did not challenge this valuation as it still resulted in a net loss.

3. Penalty Imposition and CIT(A) Decision:
In penalty proceedings, the Assessing Officer imposed a penalty under Section 271(1)(c) for inaccurate particulars in the return of income. The CIT(A) canceled the penalty, citing the disclosure of all relevant particulars including the stamped agreement for sale. The decision was based on the Supreme Court ruling that the rejection of a claim does not automatically lead to a penalty.

4. Tribunal's Decision and Appeal by Revenue:
The Tribunal upheld the CIT(A) decision, emphasizing the complete disclosure of the higher stamp duty valuation in the agreement filed with the return of income. The Tribunal found no inaccurate particulars filed to attract penalty under Section 271(1)(c) as per the Reliance Petro Products case.

5. Revenue's Grievance and Respondent's Explanation:
The Revenue contended that adopting stamp duty valuation for one property but not for another should attract penalty. The Respondent clarified that different provisions applied to each property based on their use as depreciable assets, leading to the varying valuation methods.

6. Court's Findings and Conclusion:
The Court observed that the Respondent made a full disclosure by indicating the higher stamp duty valuation in the agreement with the return of income. Both the CIT(A) and the Tribunal concurred that no inaccurate particulars were furnished. The Court dismissed the appeal, stating no substantial questions of law arose for consideration, and upheld the Tribunal's decision based on the Reliance Petro Products case.

In conclusion, the Court's judgment focused on the adequacy of disclosure by the Respondent and the applicability of penalty under Section 271(1)(c) based on the accuracy of particulars furnished in the return of income, ultimately leading to the dismissal of the appeal.