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2020 (10) TMI 652 - AT - Income TaxPenalty u/s 271(1)(c) - LTCG determination - CIT(A) has quashed the penalty order in view of the fact that the A.O. did not specify the limb under which penalty proceedings are initiated - HELD THAT - CIT(A) has adopted stamp duty valuation fixed by the stamp authority for the year relevant to the assessment year 2008-09 to determine the Fair Market Value of the property transferred by the assessee. There should not be any dispute that the details relating to guideline value fixed by the stamp authorities are available in the public domain and the Ld CIT(A) has adopted the Fair market value pertaining to the year under consideration, while the AO had adopted the value pertaining to AY 2010-11. Hence, we do not find merit in the contentions of revenue. A.O. did not specify the limb under which penalty proceedings are initiated and also did not strike off the inapplicable portion in the penalty notice. CIT(A) followed the decision rendered by the jurisdictional High Court in the case of Manjunatha Cotton Ginning Factory Ltd. 2013 (7) TMI 620 - KARNATAKA HIGH COURT . No reason to interfere with the orders passed by ld. CIT(A) in quashing the penalty order.
Issues Involved:
1. Determination of long-term capital gains in quantum assessment proceedings. 2. Violation of Rule 46A by the CIT(A). 3. Penalty proceedings under Section 271(1)(c) of the Income Tax Act. Detailed Analysis: 1. Determination of Long-Term Capital Gains in Quantum Assessment Proceedings: The revenue challenged the CIT(A)'s decision regarding the computation of long-term capital gains for the assessment year 2008-09. The primary points of contention were: - The area of land transferred was determined by the CIT(A) to be 1,05,850 sq.ft., based on the rectification deed and the fact that the land in Schedule 3 was not allotted. - The fair market value (FMV) per sq.ft. was taken as ?350 by the CIT(A), based on the stamp duty valuation for the relevant assessment year, contrary to the AO's valuation of ?600 per sq.ft. applicable to AY 2010-11. - The indexed cost of acquisition was proportionately calculated for the transferred land. The CIT(A) confirmed the transfer of land on 27.08.2007, making the capital gains taxable in AY 2008-09. The CIT(A) computed the sale consideration and indexed cost of acquisition, resulting in a long-term capital gain of ?2,76,37,846, providing a relief of ?2,83,48,069 to the assessee. The Tribunal upheld the CIT(A)'s findings, noting that the revenue did not provide substantial evidence to counter the CIT(A)'s determinations. 2. Violation of Rule 46A by the CIT(A): The revenue argued that the CIT(A) violated Rule 46A by admitting new evidence without giving the AO an opportunity to be heard. However, the Tribunal found that the CIT(A) had relied on publicly available stamp duty valuation rates, which were relevant to AY 2008-09. Furthermore, these rates were already brought to the AO's notice during reassessment proceedings. Thus, the Tribunal dismissed the revenue's contention of Rule 46A violation. 3. Penalty Proceedings under Section 271(1)(c) of the Income Tax Act: The CIT(A) quashed the penalty proceedings, citing the AO's failure to specify the exact charge under Section 271(1)(c) and not striking off the inapplicable portion in the penalty notice, following the Karnataka High Court's decision in CIT vs. Manjunatha Cotton & Ginning Factory Ltd. The revenue argued that the Karnataka High Court did not consider Section 292B, which saves procedural errors. The Tribunal, however, upheld the CIT(A)'s decision, noting that the jurisdictional High Court in a recent case reaffirmed the principles laid down in Manjunatha Cotton & Ginning Factory Ltd. and dismissed the revenue's appeal. Conclusion: The Tribunal confirmed the CIT(A)'s order in quantum assessment, finding no merit in the revenue's contentions and upheld the quashing of penalty proceedings due to procedural lapses by the AO. Consequently, both the revenue's appeals and the assessee's cross-objection were dismissed.
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