TaxTMI 
TaxTMI 
2024 (10) TMI 348
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....r and consequently, the very initiation of proceedings u/s.271(1)(c) of the Act, is not in accordance with the requirements of Section 271(1) of the Act and consequently, the order of penalty founded on the invalid initiation of penalty proceedings is liable to be cancelled. 3. The order of penalty passed u/s 271(1)(c) of the Act is bad in law as it is not discernable from the notice issued under section 274 rws 271 of the Act as to whether the penalty proceedings is initiated for furnishing of inaccurate particulars of income or concealment of income under the facts and in the circumstances of the Appellant's case. 4. Without prejudice to the above, the authorities below are not justified in levying a penalty of Rs. 96,41,529/- u/s 271(1)(c) of the Act under the facts and in the circumstances of the Appellant's case. 5. The authorities below failed to appreciate that the Appellant has neither concealed any income nor furnished inaccurate particulars of income to warrant levy of penalty and therefore, the penalty levied u/s.271(1)(c) of the Act requires to be cancelled. 6. Without prejudice to the above, the penalty levied is highly excessive....
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....ted 29-12-2016 had come to the conclusion that penalty proceedings ought to be initiated against the assessee u/s 271(1)(c) of the Act as under: "9. Penalty Proceedings: As discussed in detail in this order the assessee has concealed his particulars of income and also furnished inaccurate particulars of income. This action of the assessee amounts to Concealment of Income warranting initiation of penalty proceedings u/s 271(1)(c) of the Income Tax. Penalty Proceedings u/s 271(1)(c) are, therefore, initiated by issue of Notice u/s 274." 2.4 The learned Assessing officer then once again issued another Notice u/s 274 r.w.s 271(1)(c) of the Act on 16/01/2023 as under: "Whereas in the course of proceedings before me for the Assessment Year 2014-15, it appears to me that you have furnished inaccurate particulars of income." 2.5 The Assessee vide his detailed objections filed before the learned A.O on 21/01/2023, objected to the issuance of the two notices and also relying on the decision of the jurisdictional High Court pointed that in the absence of conclusive satisfaction in the Notices, the said Notices would be bad in law. The Assessee also in the same submissi....
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....le High Court held as under:- "12. ......an inference that the satisfaction of existence of ground under section 271(1)(c) is the sine qua non for initiation of proceedings and the penalty proceedings should be confined only to those grounds specifically stated in the notice. As recorded hereinabove, the Assessing Officer had issued notice only with regard to furnishing inaccurate particulars. Whereas the satisfaction recorded is with regard to concealment of income particulars and the very ground has been struck-off. The notice has been issued on the specific premise that assessee had furnished inaccurate particulars of income. 13. In view of the law laid down in the authorities referred by us, we are of the view that the penalty order not sustainable in law." 2.9 He submitted that the aforesaid view taken by the Hon'ble High Court was again followed in the case of M/s. SSA'S EMERALD MEADOWS reported in [2016] 73 taxmann.com 241 (Karnataka). Aggrieved by the same, the department filed an SLP before the Hon'ble Supreme Court, which has been dismissed. In view of the above, he submitted that the penalty levied on the basis of the invalid notice issued by the....
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....is subjective and is an estimation. Therefore, he submitted that there cannot be a penalty for not making an accurate estimation The very use of an estimation to determine the original cost of acquisition would preclude the imposition of penalty. 2.15 The ld. A.R. for the assessee submitted that the aforesaid addition was mainly on account of an inaccurate estimate in the fair market value as on 01/04/1981 and the assessee as such cannot be held responsible for the lapses in the valuation report furnished as the same was obtained from an independent valuer. 2.16 He submitted that the Assessee being a non-resident, did not contest the said addition only to bring a quietus to the affairs and to avoid protracted litigation with the department. He therefore submitted that the said action cannot be construed as admission of any error on part of the assessee or it cannot lead to an inference that he has concealed any income or furnished inaccurate particulars of income to warrant the levy of penalty. Hence, the penalty imposed by the learned A.O. requires to be cancelled. 2.17 He also invited our attention to the decision of the Apex Court on Dilip Shroff's case [291 ITR 519 (SC....
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....luer having been appointed in terms of a statutory scheme, 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." 2.18 He therefore requested us to appreciate that the aforesaid judgement is applicable on the facts of the case of the assessee and as such there exists no material which leads to the conclusion that there is concealment of any income and the proceedings need to be dropped. 2.19 He further relied on the judgement of the Hon'ble Supreme Court in the case of RELIANCE PETRO PRODUCTS reported in 322 ITR 158 wherein it has been held that no penalty can be levied in respect of any claim made that has been denied by the Department, wherein the Hon'ble Supreme Court observed as under: "We are not concerned in the present case with the means rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In the Webster's Dictionary, the word "inaccurate" has been defined as: not accurate, not exact or correct; not according....
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....g of inaccurate particulars of income and concealment of income and consequently, he levied penalty u/s 271(1)(c) of the Act. 4.1 In the present case, the ld. AO was of the opinion that the assessee has furnished the wrong valuation as on 1.4.19981. As such, the assessee concealed the two incomes and assessee liable for penalty to the extent of 100% of tax to be evaded. The main contention of the ld. AO is that assessee has furnished the wrong valuation report from the valuer and consequently, ld. AO enquired with the valuer regarding method of valuation followed by the valuer and recorded his statement of the valuer. The relevant sworn statement of the valuer Mr. K. Manjunath was recorded u/s 131 of the Act recorded on 20.6.2014 and 17.10.2016 which are as follows: Qn. 14: AS per the order of Chief commissioner your registration number Reg No. as CAT-I/Reg No. ICC-I/2006-07 dated 11.08.2006. you are value which class of assets? I have been appointed as a registered valuer for category I for of assets of immovable properties (Other than agricultural lands. plantations. forests. mines quarries). Qn. 15: As per the order of chief commissioner vide your r....
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....1 is arrived at Rs.65,61,225/-, Please explain the difference. Ans. The valuation report is only for property in survey No 19 which is extending to only 6 acres and 1 gunta and hence the total value to that extent of land is given 25 Rs 6561,225/-, Though | have mentioned 11 Acres 42 guntas in the column, | have given valuation only for acres and 1 gunta, Qn. 23 I am showing you the registered document 1425 of 80-81 dated 17.11.1980, where the property in question extending to 11 acres 25 guntas was purchased by Mr Mahesh Rahil Rahim for a consideration of Rs 40,000/, In the details of the property, the market value of the said land is reported as Rs 40,000/-. Within a period of months, what is the basis for arriving at the market value of Rs 25/sq ft by you? Ans, As the transacted values are much more than the registered values, | have adopted the market rate in 1981 as Rs 25/sq ft. Qn. 24: Now I am showing the letter sent by sub-registrar office Devanahalli, Taluk Kasaba Hobli, where the sale Instances In that locality during the year 1980-81 and 1981-82 have been furnished. From the perusal of the sale instances submitted by the S.R.O., there ....
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....ontradiction to the purpose mentioned in column 1 of the report, What do you have to say regarding this? Ans. ILis a typographical error. Qn. 31: You have submitted two valuation report in form No. 01 Dated 20.06.2014 and 17.10.2016, While adopting the value of the said immovable property? if yes please mention the details of the visit like the date and time Ans. We have inspected the property on the date mentioned in the said report. Qn. 32 It Is seen that the two valuation reports are made in the gap of 2 years. What is the fees charged for the submission of these valuation reports and the mode of receipt of fees? Ans: I have received Rs 15,000 by cheque for the report dated 17 10.2016 and for the report dated 20 06. 2014, I remember of receiving Rs 10,000 by cash don't remember the exact date. Qn. 33: There are lot of infirmities with regards to valuation report submitted by you. Some of the infirmities are the sale Instances are not available, the report of valuation Is not in the prescribed form, the purpose mentioned in the report and the report of actual valuation given are contradictory. You are also not qualified to val....
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....he value of the same. The valuation cannot be accurate and it may be changed from one valuer to another valuer. Even if there is any difference in the valuation made by one person to another person, it is only being estimation, that may be an indicator of value. The assessee who has sold the land, cannot be held responsible for the lapse found or committed by the independent valuer. In the present case, assessee has obtained the valuation report for the property as on 1.4.1981 from the registered valuer. Later, the valuer has withdrawn by stating that he is not a technical expert to value the agricultural property. The ld. AO has adopted the value on the basis of valuation details produced by the SRO. 4.4 Further, in our opinion, fair market value of a capital asset is the value which would ordinarily fetch in the open market on sale of same on the relevant date and not on the value adopted for registration by sub-registrar for stamp duty purpose. In the absence of confirmed fair market value as on 1.4.1981, the ld. AO is also not referred the matter to the DVO for valuation of the property as on 1.4.1981. On the other hand, he considered the value adopted for registration of th....
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.... of the Act. Further, the impugned penalty has been levied by the ld. AO merely on the basis of findings in the quantum proceedings and have not independently examined the matter in the penalty proceedings u/s 271(1)(c) of the Act, even on this procedural count, the penalty levied cannot be sustained though the addition has been sustained by the Tribunal, that by itself does not prove that there is any conclusive and absolute material to suggest the assessee has concealed any income and or furnished inaccurate particulars of income. In our opinion, penalty cannot be levied in this kind of situation as there was no evidence to suggest that claim of assessee was bogus or malafide and disallowance of the claim itself cannot be reason to levy penalty. The addition of capital gain is computed on account of difference in estimation of cost of acquisition between the claim made by assessee and the value adopted by the ld. AO. The ld. AO not able to prove that there was any willful or gross negligence on the part of assessee resulting thereby either any concealment of income and or furnishing inaccurate particulars of income. To levy penalty for concealment, it is necessary that there must....
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....rks (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) has held as under : "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, Courts must carefully try to ascertain the true principle laid down by the decision." 10. In this case, the addition has been only based upon the estimates and values obtained from Sub-Registrar's office in preference of the value as per valuer's report. As evident from the Hon'ble jurisdictional High Court decision in Thulasimani Ammal case cited above (supra), the guideline value is not conclusive proof. 11. The Revenue's reliance upon s. 50C of the IT Act, 1961 is also misplaced. The Said section reads as under ....
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....erence to valuation cell is provided. Hence, this section is neither applicable nor it is Rie 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. 13. Under such circumstances, 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 the learned CIT(A).: 4.7 Further, the judgements relied by the ld. A.R. in the following cases also support our views: (i) Jurisdictional High Court in Commissioner of Income-tax, Bangalore v. Chandrasekaran reported in [2015] 56 taxmann.com 210 (Karnataka), wherein the Hon'ble High Court held as under:- "7......In that context, the claim for depreciation was also a bona fide error. When pointed out, he has paid the tax. Under these circumstances, Appellate Authority on appreciation of entire facts have concurrently held that there is no deliberate suppression of income nor it is a case of furnishing of inaccurate particulars. It is a bona fide mistake and the moment the mistake was pointed out, th....
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....t the assessee concealed income by furnishing inaccurate particulars of income. The Assessing Officer is required to satisfy himself about the concealment of income or furnishing inaccurate particulars of such income. [Paras 6 and 7] The provision of section 271(1)(c ) shows that the Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. The instant case is most befitting case to exercise such discretion. It shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further, as seen from the facts of the case, to avoid litigation the assessee accepted the addition. The lower authorities relied on proceedings before Assessing Officer relating to the assessment for levying the penalty. The same do not constitute admission for the purpose of levying penalty. [Para 8] The admission by the assessee, which was more influenced by extraneous consideration and other factors and was not supported by any incriminating material as explained in course of assessment and penalty proceedings, cannot be q basis to impose a penalty for concealment of income. It was....
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.... confirmed by the Commissioner (Appeals). Accordingly, the entire penalty levied upon the assessee was liable to be deleted. [Para 21]." 4.8 Order of the Tribunal in the case of Tecnotree Convergence Ltd. Vs. DCIT in ITA No.1518/Bang/2017 dated 11.8.2021 for the AY 2009-10 wherein they considered the order of the Tribunal in the case of DCIT Vs. Mastek Ltd. in ITA No.118/Ahd/2007 vide order dated 16.4.2010, wherein held as under: "12. The Tribunal in the case of DCIT v. Mastek Ltd. in ITA No.118/Ahd/2007 vide order dated 16.04.2010 held as under:- "5. We have considered the rival submissions and the material available on record. It is admitted fact that assessee disclosed all the particulars of the above disallowances in the return of income. The AO made part of the disallowances out of the above expenditure which has been substantially reduced by the learned CIT(A). It would, therefore, show that the assessee disclosed all the relevant facts and materials in the return of income as well as before the authorities below on merit. It is not a case of the AO that the assessee has made false claim or suppressed the facts relating to the above claims of the expendit....