TaxTMI 
TaxTMI 
2015 (11) TMI 1129
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....iled to appreciate that the assessee had filed inaccurate particulars which he was not able to explain during the assessment and penalty proceedings (refer para 10 of ITAT's order against quantum appeal)." For AY 2005-06: "Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) was justified in deleting penalty levied u/s.271(1)(c) of the Income Tax Act 1961 of Rs. 3,09,253/- without appreciating that the assessee has taken excessive cost value of the land without any evidence in order to reduce its capital gain tax liability. The Ld. CIT(A) further failed to appreciate that the assessee had filed inaccurate particulars which he was not able to explain during the assessment and penalty proceedings (refer para 10 of ITAT's order against quantum appeal)." First we take up ITA N0 936/M/2014, AY 2004-05: 2. The brief background of these cases is that, penalty u/s 271(1)(c) was levied with regard to the addition made by the AO in the assessment proceedings on the ground that value, as on 01.04.81, of the land sold by it during the year under consideration, was excessive and was inflated by the assessee with a view to reduce capital gain tax liability. Th....
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....on the basis of estimation only. This addition was not confirmed by the Ld. CIT(A) as it is, and an addition of a different amount was made by him. Further, no DVO's report was obtained by the AO before making the addition. Thus, rates have been adopted by the AO on the basis of some general inquiries, and no concrete material has been used by the AO for determining value of the land as on 1-4-81. It was further submitted that no appeal was filed by the Revenue against the order of the Ld. CIT(A), thus, the Revenue is also not clear as to the quantum of income to be assessed in hands of the Assessee, on account of capital gain arising on sale of impugned land. It has been further stated that detailed reply was filed before the AO during the penalty proceedings which is available at pages no. 35 to 41 of the paper book, the penalty has been levied without considering the reply of the assessee and therefore, it is not only contrary to law and facts but in violation of principles of natural justice also. It was further submitted that the charge fixed for levy of penalty viz. whether there was concealment of income or furnishing of inaccurate particulars of income, is not clear, theref....
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....at the assessee has furnished all the material facts including report from a Registered Valuer, who is recognized for the purpose of valuation of property and as such could not be said that the Assessee had 'mens rea', which is the 'sine qua non' for imposition of penalty. The assessee also referred to the decision of the Hon'ble Supreme Court in the case of Dilip N. Shroff, 291 ITR 519. 5.2. The AO without referring to the reply submitted in response to penalty notice dated 13.03.2012, passed an exparte order stating that "the assessee has not furnished any explanation in response to penalty notice" and relying on the Supreme Court decision in the case of K.P. Madhusudanan vs. CIT 251 ITR 99 concluded that the assessee has not discharged the onus and as such imposed penalty. 5.3. In appeal against the penalty order, the assessee had made detailed submission before the Ld CIT(A) by its letter dated 13.07.2013. It was stated that the valuation was done by the Registered Valuer which was originally accepted by the AO in the order passed u/s 143(3), which in reassessment order was determined at Rs. 3,36,63,120/-, and in first appeal, it was reduced by the Ld. CIT(A) to Rs. 2,23,95,5....
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....ty. In the penalty proceedings, the assessee is given chance to show that why the penalty be not imposed with reference to the addition made or confirmed in the quantum proceedings. If the assessee succeeds in explaining his case, then no penalty can follow and vise versa. It is, therefore, amply clear that the confirmation of the addition by the Tribunal in quantum proceedings cannot, straightaway, mean that the penalty be automatically levied. In the penalty proceedings, after the explanation is received from the assessee, it is for the AO make out a case, clearly, as to whether there has been concealment of income or furnishing of inaccurate particulars of income on the part of the assessee. Let us, further analyse the situations, wherein, as per law, penalty can be levied. The necessary ingredients for attracting the explanation to section 271(1)(c) are as follows: (a) if a person fails to offer the explanation, or (b) he offers the explanation which is found by the authorities to be false, or (c) the person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been discl....
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....se notice was responded to by the registered valuer, who challenged the assumptions made by the AO. Vide his letter dated 23rd December, 2010, the registered valuer pointed out various discrepancies in the assumptions made by the AO. The registered valuer contended that "the three sales instances reported by AIR unit are not of buildable plot or of authorized structures along with land, having proper accesses and other services such as electricity, water supply, drainage etc. " and that these house "are not situated in the vicinity or on the road on which the land under valuation fronts". The assessing officer was clearly not impressed with these arguments, and he rejected the valuation report. He made a reference to the DVO for valuation of the land as on 01.04.1981, but as the DVO's report was not received by him, he proceeded to adopt the circle rates as on 01.04.1989 which was Rs. 4.5 lakhs per hectare for plots, exceeding area of 20 ACRE. This value thus came to Rs. 4.18 per square feet. The assessing officer made a further adjustment of 40% of value, as the valuation was to be adopted as on 01.04.1981. The value so arrived at Rs. 1.67 per square feet was then enhanced by 50% ....
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....the facts of this case, we can say that even if a duty may be enjoined on the assessee to make correct disclosure of income, but if such disclosure is based on the opinion of an expert, who is otherwise also a registered valuer, having been appointed in terms of a statutory scheme, then only because his opinion is not accepted or some other expert gives another opinion, the same by itself may not be sufficient for arriving at a conclusion that the assessee has furnished inaccurate particulars of income. Hence, in our considered opinion, penalty cannot be levied in the facts and circumstances of this case, especially when the quantification of the income itself does not have strong pillars to stand. 5.7. Lastly, the Ld Counsel has further contended that the assessee's appeal before the Bombay High Court has been admitted on question of law and also on facts. It is, therefore, clear that the additions in respect of which penalty was confirmed have been accepted by the jurisdictional high court leading to substantial question of law. When the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable. The admission of su....