2009 (2) TMI 258 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - Guilty of furnishing inaccurate particulars or concealment - HELD THAT - It is admitted that assessee has inherited the property and no cost had been incurred by her on acquisition. The assessee had obtained the valuer's report for the fair market value of the property as on 1st April, 1981. The AO, on the other hand, has adopted the value obtained from Sub-Registrar's office. Hon'ble jurisdictional High Court in the case of Thulasimani Ammal vs. CIT 1999 (9) TMI 956 - MADRAS HIGH COURT held that, guideline values of Registration Department has evidentiary value and cannot be regarded as conclusive evidence. Hence, from this exposition, it is clear that guideline value is not conclusive proof. If the AO prefers the value obtained from Sub-Registrar's office, it cannot be said that the assessee is guilty of furnishing inaccurate particulars or concealment so as to attract penalty u/s. 271(1)(c). Revenue's reliance upon s. 50C - Assessee claims before any AO that the value adopted or assessed by the stamp valuation authority under sub-s. (1) exceeds the fair market value of the property as on the date of transfer - It is clear that the section is applicable in cases where stamp duty has been paid for transfer. Moreover, this section also postulates that the fair market value may be different from the value adopted by the registration authority and in such cases, procedure for reference to valuation cell is provided. Hence, this section is neither applicable nor it is the case of the Revenue that any reference to valuation cell has been made or that the AO has obtained independent instances of comparable sales in that period, of that area. Therefore, if the assessee has accepted addition, it cannot be said that the assessee is guilty of furnishing inaccurate particulars or concealment. Hence, we affirm the order of CIT(A). Appeal filed by the Revenue is dismissed.

Summary

Issues:
- Deletion of penalty under section 271(1)(c) of the IT Act.

Analysis:
1. Background: The case involves an appeal by the Revenue against the order of CIT(A)-VIII, Chennai, regarding the deletion of penalty levied under section 271(1)(c) of the IT Act for the assessment year 2004-05.

2. Facts: The assessee, a 93-year-old lady, sold property to M/s Ankur Foundations (P) Ltd. for Rs. 6.4 crores. Discrepancies arose in the fair market value as on 1st April, 1981, with the AO adopting a lower value than what the assessee claimed based on a registered valuer's report.

3. AO's Disagreement: The AO conducted inquiries and disagreed with the fair market value provided by the assessee, leading to the imposition of a penalty under section 271(1)(c) for allegedly claiming a higher value to reduce capital gains.

4. CIT(A)'s Decision: The CIT(A) held that there was no deliberate withholding of information by the assessee and that the valuation was based on bona fide belief and the report of a registered valuer. The CIT(A) emphasized that discrepancies in valuation do not necessarily imply concealment or inaccurate particulars.

5. Appellate Tribunal's Analysis: The Appellate Tribunal noted that the assessee had inherited the property and obtained a valuer's report for the fair market value, while the AO relied on the Sub-Registrar's office value. The Tribunal cited precedent to show that guideline values are not conclusive proof, and discrepancies in valuation methods do not automatically warrant a penalty.

6. Legal Precedents: The Tribunal referenced legal precedents to clarify that the case did not warrant the application of section 50C of the IT Act, which deals with discrepancies in property valuation for stamp duty purposes. The Tribunal affirmed the CIT(A)'s decision, stating that the assessee's acceptance of the addition did not amount to concealment or furnishing inaccurate particulars.

7. Conclusion: The Appellate Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty under section 271(1)(c) of the IT Act. The Tribunal emphasized that discrepancies in valuation methods and acceptance of additions do not automatically imply concealment, especially in cases where guideline values are not conclusive proof.

This detailed analysis highlights the key aspects of the legal judgment, including the factual background, arguments presented by both parties, legal interpretations, and the final decision rendered by the Appellate Tribunal.