Itxa/1267/2011 Of The Commissioner Ofincome Tax -V Pune v. Subhash Raghunath Waghere

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1267 OF 2011 WITHINCOME TAX APPEAL NO.1211 OF 2011 The Commissioner of Income Tax-V, Pune..Appellant.V/s.Shri Subhash Raghunath Waghere..Respondent. Mr. Vimal Gupta, Sr. Advocate with Padma Divakar, for the Appellant in both the matters.None for the Respondent in both the matters. P.C:- CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 11[th] JANUARY, 2013. In these Appeals for Assessment Years 2003-2004 and 2004-2005, the Revenue has raised the following question of law for consideration of this Court. “(I)Whether on the question of law, the Hon'ble ITAT, Pune has erred in restricting the penalty levied by the A.O. and confirmed by the CIT(A) to the income returned by the assessee in response to notice u/s. 147 without considering the fact that the above return was filed after Survey u/s. 133A was conducted at the premises of the assessee? (II)Whether on the question of law the Hon'ble ITAT Pune has erred in overlooking the provisions of Explanation 4(b) to sec. 271(1)(c) whereby the operative word for levy of penalty is “total income assessed” and not “total income returned/filed?” (III)Whether on the question of law the Hon'ble ITAT was justified in misinterpreting the provisions of sec. 50C whereby no claim was made by the assessee before the Assessing Officer stating that the value adopted or assessed by the stamp Valuation Authority exceeds the fair market Value of the property as on the date of transfer ?”. 2The Respondent-Assessee is an agriculturist who has transferred by way of sale his lands along with his brothers to a firm where his brother is a partner. Thereafter, during the survey proceedings, it was revealed that the taxable income by way of capital gain out of the transfer of the land by the Respondent-Assessee had not been disclosed as no return was filed. In response to a notice under Section 148A of the Income Tax Act, 1961 (hereinafter referred as “the said Act”), the Respondent filed his return of income, disclosing the capital gains on sale of lands. The Assessing Officer completed the assessment by revising the cost of acquisition and by adopting the value as per the registration authorities of the State Government for the purpose of computation of capital gain. The Assessing Officer also modified the actual cost as on 1[st ]April, 1981. The Assessee accepted the same so as to avoid the litigation. 3However, thereafter, the Assessing Officer initiated proceedings under Section 271(1)(c) of the Act and imposed the penalty upon the Respondent-Assessee. 4Being aggrieved, the Respondent-Assessee filed an Appeal before the CIT(A). However, CIT (A) confirmed the order of the Assessing Officer. In Second Appeal, the Tribunal, in the impugned order dated 24[th ]February, 2010 held that so far as the addition made on account of indexed cost is concerned is not correct as the same is not in accordance with the ratio of the Special Bench decision of the Tribunal in the matter of Manjula J. Shah in ITA No.7315/MUM/2007. In the above circumstances, the Tribunal held that in view of the aforesaid decision on merits, the Assessee would have succeeded in case the decision of the Assessing Officer in question was challenged. Further the Tribunal held that the additions made on account of deemed provision of Section 50-C of the Act on the values as per the registration authorities are based on ad-hoc workings and therefore, any addition under these provision does S.R.JOSHI3 of 5 3 of 5 3 of 5 not pin pointedly unearth concealment of income. The Tribunal held that the guideline values of Registration department is inconclusive and the additions made on that behalf by the Assessing Officer is also not justified. Consequently, the Tribunal held that these values cannot be relied upon and in support relied upon the order of the Tribunal in the matter of Prakash Chandra Nahar, reported in 110 TTJ page 886 wherein it was held that in such cases the assessee cannot be held guilty on account of furnishing incorrect particulars. In view of the above, the Tribunal concluded that no penalty is imposable on the basis of the additions made by the Assessing Officer during reassessment proceedings over and above, the return of income declared by the Assessee in the return filed in response to notice under Section 148 of the said Act. 5In view of the above, it is clear that the Tribunal had come to a finding that the additions made during the reassessment proceedings were not justified on merits. Consequently, penalty in such a case cannot be sustained. In these circumstances, we find that the order of the Tribunal in setting aside the penalty to the extent of the additions made by the Assessing Officer in the reassessment proceedings cannot be faulted with. 6In view of the above finding of fact, no substantial question of law arises. Accordingly, appeal is dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)