2016 (11) TMI 1119 - AT - Income Tax

Applicability of section 50C - Held that - We are of the considered view that the ld. CIT(A) has rightly come to the conclusion that section 50C of the Act states that value assessed by stamp duty Valuation Authority shall for the purpose of section 48 be deemed to be full value of consideration received or accruing as a result of such transfer. Thus by deeming provisions, sale consideration shall be deemed to be as value assessed by stamp duty valuation authority. Ld. CIT(A) has also appreciated that the validity of this section 50C has already been upheld by Hon ble High Courts including that of Hon ble High Court of Madras and Hon ble High Court of Bombay. Ld. CIT(A) has duly considered the submissions of assessee that section 50C is not applicable in the case of assessee and that the sale consideration shown in sale agreement should be accepted as true and fair consideration of the property. Thus we are of the considered view that the AO as well as CIT(A) were correct in applying section 50C in the facts and circumstances of the present case Nature of income - agricultural income - Held that - CIT(A) while considering the said issue has granted sufficient time to the assessee to substantiate his arguments by supporting documentary evidence/proof but even inspite of availing opportunities the assessee could not furnish any vital evidences to establish the genuineness of the agricultural income. Therefore in absence of such evidences it cannot be held that the impugned income was an agricultural income. We have carefully gone through the orders passed by CIT(A) and found that the assessee has not produced any document in support of his arguments and no new circumstance has been brought on record before us in order to controvert or rebut the findings recorded by the learned CIT (A). Moreover, there are no reasons for us to deviate from the findings recorded by the learned CIT (A). Therefore, we are of the considered view that the findings recoded by the learned CIT (A) are judicious and are well reasoned.

Summary

Issues Involved:
1. Applicability of Section 50C of the Income Tax Act, 1961.
2. Addition on account of non-genuine agricultural income.
3. Initiation of penalty proceedings under Section 271(1)(c).

Issue-wise Detailed Analysis:

1. Applicability of Section 50C of the Income Tax Act, 1961:
The primary issue revolves around the application of Section 50C, which deems the value assessed by the stamp duty valuation authority as the full value of consideration for the purpose of Section 48. The assessee argued that the sale consideration shown in the sale agreement should be accepted as the true and fair consideration of the property. However, the CIT(A) and the ITAT upheld the application of Section 50C, referencing judgments from the Hon’ble High Courts of Madras and Bombay, which validated the section's purpose to prevent tax evasion through undervaluation of property transactions. The ITAT concurred with the CIT(A) that the AO was correct in applying Section 50C, as the deeming provisions of this section were intended to substitute the real market value of the property for tax purposes.

2. Addition on account of non-genuine agricultural income:
The assessee claimed agricultural income of ?2,30,000/-, asserting ownership of agricultural land inherited from his father. However, the AO found no evidence of such land ownership or agricultural activity. The CIT(A) upheld the AO's decision, noting the absence of supporting documents like ownership proof, income and expenditure accounts, and sale bills of agricultural produce. The ITAT agreed with the CIT(A), emphasizing that without evidence, the claimed agricultural income could not be substantiated and was likely a device to camouflage unaccounted income. The ITAT found the CIT(A)'s findings judicious and well-reasoned, affirming the addition as undisclosed income.

3. Initiation of penalty proceedings under Section 271(1)(c):
The CIT(A) noted that the initiation of penalty proceedings under Section 271(1)(c) is not an appealable action. Given that the appeal on the primary issues was dismissed, the initiation of penalty proceedings was deemed justified. The ITAT upheld this view, stating that the grounds for penalty were valid based on the findings on the applicability of Section 50C and the non-genuine agricultural income.

General Grounds:
Grounds 6 and 8 were deemed general in nature and required no specific adjudication. The ITAT dismissed the appeal, affirming the decisions of the lower authorities.

Conclusion:
The ITAT upheld the CIT(A)'s order, confirming the application of Section 50C, the addition of non-genuine agricultural income as undisclosed income, and the initiation of penalty proceedings under Section 271(1)(c). The appeal was dismissed, and the order was pronounced in the open court on 21 September 2016.