9911796707
TMI Blog2001 (8) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... he registered value Shri Uday Chande. The indexed cost was worked out at ₹ 8,34,12,000. Thus, assessee declared long-term capital loss of ₹ 34,12,000 (Rs. 8,34,12,000--Rs. 8,00,00,000) to be carried forward to the subsequent year. During the course of assessment proceedings the AO referred the property to the DVO under Section 55A of the Act to ascertain the correct cost of acquisition as on 1st April, 1981, of the property in question. The DVO in his report, dt. 27th June, 2000, valued the fair market value of the assessee's share in the property as on 1st April, 1981, at ₹ 1,44,92,907 as against ₹ 2,52,00,000 shown by the assessee. The assessee was confronted. Vide letter, dt. 24th July, 2000, it was submitted on behalf of the assessee that the valuation of 1/4th share of the assessee in the property as on 1st April, 1981, at ₹ 2,52,00,000 by the registered value is correct and that the value determined by the valuation cell is without justification of the objections raised and that the valuation shown by the assessee was on the basis of registered value 's valuation report. The AO considered the submissions of the assessee. According to him, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -operate with the Department that the assessee does not wish to go in appeal and dispute the assessment. Request was made to drop the penalty. The AO considered the above submissions. According to him, assessee has not filed appeal against the order under Section 143(3) hence computation of total income has become final. He further observed that the provisions of Section 271(1)(c) are attracted. Further, Expln. I also applied. The AO also observed that by no stretch of imagination a property in a posh locality like Walkeshwar Mumbai would have resulted in loss after substitution of an indexed cost of acquisition. The intention of the assesses in obtaining the valuation report is obviously viewed in the context of assessee having returned loss under the head 'capital gains'. He rejected the assessee's contention that there was only a difference of opinion among two value s. He further observed that the DVO has analysed in detail each of the objections raised during the course of valuation. He based his report on relevant sale instances. The AO, therefore, concluded that the assessee furnished inaccurate particulars of income in respect of the amount added under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the report of the registered value and observed that the registered value has adopted a very strange way of valuing the land after first arriving at the value of the building and deducting therefrom the value of the superstructure instead of directly calculating value of land with reference to sale instances. He further expressed the view that placing reliance by the registered value upon a newspaper is totally unacceptable and does not conform to the accepted principles of valuation. On the other hand, the DVO's report is based on specific sale instances of land. The CIT(A), therefore, concurred with the view of the AO that the assessee furnished inaccurate particulars of income and, therefore, penalty is exigible which he confirmed. This has brought the assessee before us. 7. The learned counsel for the assessee drew our attention to the valuation report dt. 25th June, 1996, of the registered value , a copy of which appears at pp. 1-10 of the paper book. He submitted that all the relevant facts and particulars regarding the property, the sale consideration, the agreement, and the valuation report had been furnished to the AO along with the return. He invited our attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly stated that sale instances are attached with the report. He invited our attention to the DVO's comments on the report of the registered value wherein the DVO stated that the registered value has simply adopted the rates published in local paper (Accommodation Times). These rates cannot be considered as authentic. The value has not based his valuation on any actual sale instances. He also pointed out that four objections were taken on the proposed valuation by the DVO which the DVO replied in his Valuation report which is evident from the report itself. Nothing has been argued before the lower authorities that the reply to the objections raised by the assessee had any flaw. The learned Departmental Representative also invited our attention to certain observations of the CIT(A) about mala fide intention on the part of the assessee to obtain the impugned registered value 's report. He concluded his arguments by submitting that the Revenue authorities were perfectly justified in imposing the impugned penalty. 10. We have given careful thought to the submissions of the parties. We have perused the orders of the Revenue authorities as also various case laws cited on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was initiated under the main provisions of Section 271(1)(c) of the Act. Perusal of the orders of the Revenue authorities would go to reveal that the impugned penalty has been imposed for furnishing inaccurate particulars of income in respect of the amount added under the head 'capital gains'. The expression has furnished inaccurate particulars used in Section 271(1)(c) has not been defined in the section or elsewhere in the Act. When an assessee furnishes his return, he is required to furnish particulars and accounts on which income returned has been arrived at. These may be the particulars as per his books of accounts if he has so maintained or any other basis upon which he has arrived at the returned figure of income. Any inaccuracy made in such books of account or otherwise which resulted in keeping of or hiding a portion of his income is punishable as furnishing inaccurate particulars of his income. It may be stated that the penalty provisions would operate when there is a failure of duty on the part of the assessee to disclose fully and truly particulars of income. The duty is enjoined upon the assessee to make a correct and complete disclosure of his income if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of income in the return under the head 'capital gain' by the assessee is certainly incorrect for which the impugned penalty is exigible. The assessee cannot take shelter under a report of a registered value which is found by the Revenue authorities to have been prepared without due regard to the accepted principles of valuation. The rules enjoin upon a registered value to make an impartial and true valuation of any asset which he is required to value. The Revenue authorities have recorded the finding that all was not well with the valuation made by the registered value and significant omissions on the part of the registered value have been brought on record inasmuch as even the sale instances relevant for the purpose of valuation had not been relied upon the registered value . The valuation made by the DVO, on the other hand, is on the basis of relevant sale instances. Records do not show that either the assessee or the registered value raised any worthwhile objection to the report furnished by the DVO. 12. Acceptance by the assessee of the value of his share of property as on 1st April, 1981, estimated in the DVO's report for computation of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty at ₹ 65,000. It was in this backdrop that the High Court held that it is essential that the assessee must be informed that penalty proceedings against him are commenced under the Explanation to Section 271(1)(c). These facts and the decision of the High Court would make it obvious that the case of the assessee before us is distinguishable wherein the AO made only an incidental reference to Expln. 1 under which an amount added in computing the total income is deemed to represent the income in respect of which particulars have been concealed. Nonetheless, the fact remains that the impugned penalty was imposed by the AO with the observation in the circumstances, the assessee is considered to have furnished inaccurate particulars of income in respect of the amount added under the head 'capital gains' . In para 12 of the appellate order the CIT(A) also recorded the finding which reads : Considering the above facts I am of the view that the appellant by way of procuring such a report and relying upon it as the basis of computation of income has furnished inaccurate particulars in terms of Section 271(1)(c) . It may be stated that after the hearing was over ..... 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