ITO, New Delhi v. M/s Om Ispat Udyog Pvt. Ltd., Gurgaon

ITA 4531/DEL/2010 | 2005-2006
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 453120114 RSA 2010
Assessee PAN AAACO0905D
Bench Delhi
Appeal Number ITA 4531/DEL/2010
Duration Of Justice 1 year(s) 1 month(s) 6 day(s)
Appellant ITO, New Delhi
Respondent M/s Om Ispat Udyog Pvt. Ltd., Gurgaon
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 18-11-2011
Date Of Final Hearing 23-09-2011
Next Hearing Date 23-09-2011
Assessment Year 2005-2006
Appeal Filed On 12-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI R. P. TOLANI JM AND SHRI K. D. RA NJAN AM I. T. APPEAL NO. 4531 (DEL) OF 2010. ASSESSMENT YEAR : 200506. THE INCOME-TAX OFFICER M/S. OM ISPAT UDYOG P. LTD. W A R D : 13 (1) VS. PLOT NO. 166 SECTOR : 7 N E W D E L H I. I M T M A N E S H A R G U R G A O N [HARYANA]. P A N / G I R NO. AAA CO 0905 D. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI J. P. GULATI ADV.; DEPARTMENT BY : SHRI R. S. NEGI SR. D. R.; O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)XVIII NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN DELETING THE PENALTY OF RS.8 15 000/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE I. T. ACT; 2 I. T. APPEAL NO. 4531 (DEL) OF 2010. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN NOT APPRECIATING THE PROVISIONS OF SECTION 50-C OF THE OF THE I. T. ACT; 3. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACTS DISCU SSED IN DETAIL IN THE PENALTY ORDER THAT INACCURATE PARTICULARS HAVE BEEN DELIBER ATELY FILED AND ALSO THE ASSESSEE WAS EVASIVE ON THIS POINT THROUGHOUT THE A SSESSMENT PROCEEDINGS AND ONLY AGREED TO THE ADDITION AFTER BEING CORNERED BY THE ASSESSING OFFICER. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT]. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE IN THE RETURN OF INCOME SHOWED LONG TERM CAPITAL GAIN AFTER INDEXATION AT RS.28 26 759/- FROM SALE OF FACTORY P LOT ON 4/02/2005. THE ASSESSING OFFICER NOTICED THAT THE TRANSACTION VALUE OF THE PROPERTY WAS SHOWN AT RS.31 50 000/- AND STAMP DUTY PAID THEREON WAS AT RS.4 24 000/-. IT WAS FURTHER NOTICED FROM THE SALE DEED THAT FOR COMPUTING STAMP DUTY THE SALE CONSIDERATION WAS TAKEN AT RS.7 0 63 400/- BY SUB REGISTRAR GURGAON. THE ASSESSING OFFICER ASKED THE ASSESSEE TO INFORM THE CIRCLE RATE/SECTOR RATE OF THE AREA; WHEN THE PROPERTY WAS SOLD BY THE ASSESSEE; AND THE RATE AT WHICH THE STAMP DUTY WAS PAID. THE ASSESSEE WAS ALSO ASKED TO INFORM AS TO WHETHER CAPITAL GAIN WAS COMPUTED IN ACCORDANCE WITH PROVISIONS OF SECTION 50C OF THE ACT. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT CIRCLE RATE FOR COMPUTING STAMP DUTY IN RESPECT OF ASSESSEES PROPE RTY WAS RS.12 000/- PER SQ. YD. IT WAS ALSO SUBMITTED THAT UPTO FINANCIAL YEAR 2003-04 THE CIRC LE RATE WAS RS.6 000/- PER SQ. YD. AND FOR FINANCIAL YEAR 2004-05 THE CIRCLE RATE WAS JUST DOU BLE. IT WAS ALSO SUBMITTED THAT ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN ON SALE OF PLOT AT RS.28 26 759/- BY DECLARING SALE CONSIDERATION RECEIVED AT RS.31 50 000/-. IT WAS ALSO SUBMITTED THAT LONG TERM CAPITAL GAIN WAS SHOWN ON THE CORRECT AMOUNT OF SALE CONSIDERATION RECEIVED AND T HERE WAS NO EVIDENCE THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT IN ADDITION OR OTHER THAN WHAT WAS RECORDED IN THE SALE DEED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS NOT WELL VERSED WIT H COMPLICATED TAX LAWS. THE ASSESSEES COUNSEL OMITTED TO NOTICE THAT STAMP DUTY ON SALE O F PLOT AND BUILDING WAS PAID AT CIRCLE RATE 3 I. T. APPEAL NO. 4531 (DEL) OF 2010. WHICH WAS HIGHER THAN THE CIRCLE RATE FIXED FOR THE IMMEDIATE PRECEDING FINANCIAL YEAR. THE OMISSION HAD OCCURRED IN THE OFFICE OF THE ASSESSEE S COUNSEL AND CAPITAL GAIN COULD NOT BE WORKED OUT BY APPLYING BY PROVISIONS OF SECTION 50- C OF THE ACT. THIS CONTENTION OF THE ASSESSEE WAS REJECTED. THE ASSESSING OFFICER ADOPTED SALE C ONSIDERATION AT RS.70 63 400/- FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. THE ASSE SSING OFFICER COMPUTED LONG TERM AT RS.67 02 516/- AS AGAINST ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.28 26 759/-. NO APPEAL WAS FILED BY THE ASSESSEE AGAINST THE COMPUT ATION OF CAPITAL GAINS. 5. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASS ESSEE REITERATED THE SIMILAR ARGUMENTS. IT WAS SUBMITTED THAT THE PREVAILING MARKET RATE AT TH E TIME OF SALE WAS MUCH LESS THAN THE CIRCLE RATE. THE ENTIRE ONUS FOR NOT COMPLYING WITH THE P ROVISIONS OF SECTION 50-C HAD BEEN PUT ON THE COUNSEL OF THE ASSESSEE WHO HAD SIGNED AS WELL AS FILED HIS REPLY. IT HAS BEEN FURTHER CONTENDED THAT THE STAMP DUTY WAS PAID BY THE BUYER AND NOT B Y THE ASSESSEE. THE FACT THAT THE VALUE ADOPTED FOR THE PURPOSE OF STAMP DUTY WAS HIGHER TH AN THE SALE CONSIDERATION WAS OMITTED TO BE NOTICED BY THE COUNSEL. THEREFORE THERE WAS NO CO NCEALMENT ON THE PART OF THE ASSESSEE. THE REPLY GIVEN BY THE ASSESSEE WAS REJECTED ON THE GRO UND THAT THE SALE CONSIDERATION WAS SUBSTANTIALLY LOWER THAN THE MARKET RATE. IN ORDER TO PLUG THIS LOOPHOLE SECTION 50-C WAS INTRODUCED SO THAT AT LEAST THE VALUE ADOPTED FOR C OMPUTING STAMP DUTY IS TAKEN FOR WORKING OUT CAPITAL GAIN AS WELL. IT IS A WELL-KNOWN FACT THAT ALMOST IN ALL CASES THE MARKET RATE PREVAILING WAS MUCH HIGHER THAN THE CIRCLE RATE AND IT IS THE CIRCLE RATE WHICH FOLLOWS THE MARKET RATE AND NOT OTHERWISE. IT WAS ALSO OBSERVED THAT SHIFTING OF ONUS ON COUNSEL FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 50-C OF THE ACT WAS NOTHING BUT AN AFTER-THOUGHT AND THAT TOO A MOTIVATED ONE TO TAKE ADVANTAGE OF FAVOURABLE JUDICIAL PRONOU NCEMENTS ON THE ISSUE. IT WAS NOT THE CASE THAT PROVISIONS OF SECTION 50-C WERE INTRODUCED FRO M THIS YEAR ITSELF. THEREFORE IT SKIPPED FROM THE MIND OF THE COUNSEL OF THE ASSESSEE. THE AO T HEREFORE CONCLUDED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY NOT C OMPLYING WITH PROVISIONS OF SECTION 50-C OF THE ACT. HE THEREFORE IMPOSED PENALTY AT THE RAT E OF 100 PER CENT OF THE TAX SOUGHT TO BE EVADED. 4 I. T. APPEAL NO. 4531 (DEL) OF 2010. 6. ON APPEAL THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THERE WAS NO IOTA OF EVIDENCE THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT IN EXCESS OF SALE CONSIDERATION AND THE DEEMING PROVISIONS OF SECTION 50-C CAN BE INVOKED ONLY FOR THE LIMITED PU RPOSES INTER ALIA TO COMPUTE CAPITAL GAINS AND CHARGING OF TAX AND NOT FOR THE IMPOSITION OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS ALSO SUBMITTED THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FALSE AND WAS REJECTED BY IMPUTING SUSPICION IMAGINATION SURMISES AND CONJE CTURES. THE PENALTY UNDER SECTION 271(1)(C) CAN BE IMPOSED WHEN THERE WAS VARIATION IN THE INCO ME ASSESSED VIS--VIS INCOME RETURNED. THE AO HAS REJECTED THE EXPLANATION OF THE ASSESSEE ON THE PLEA THAT THE ASSESSEE HAS SHIFTED ONUS ON THE COUNSEL FOR NOT COMPLYING WITH PROVISIONS OF SE CTION 50-C AND IT WAS AN AFTER-THOUGHT TO TAKE ADVANTAGE OF FAVOURABLE JUDICIAL PRONOUNCEMENTS. T HE LD. AR OF THE ASSESSEE RELYING ON DECISION OF HONBLE APEX COURT IN THE CASE OF CONCO RD OF INDIA INSURANCE CO. LTD. VS. SMT. NIRMALA DEVI 118 ITR 506 (SC) SUBMITTED THAT LEGAL ADVICE GIVEN BY MEMBERS OF LEGAL PROFESSION MAY SOMETIME BE WRONG. EVEN SOMETIME ON A QUESTION OF LAW THE DECISIONS ARE SOMETIME WRONG. IT IS WELL SETTLED LAW THAT ANY JU DGEMENT ON SUSPICION HOWSOEVER HIGH IT MAY BE IS NOT SUSTAINABLE IN LAW. IT WAS ALSO SUBMITT ED THAT THE DIRECTORS OF THE COMPANY WERE IGNORANT OF TAX LAWS AND THE OMISSION HAD OCCURRED ON THE PART OF THEIR COUNSEL. THEREFORE IT WAS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHI NG INACCURATE PARTICULARS OF INCOME BUT A BONAFIDE OMISSION FOR NOT TAKING NOTICE OF SECTION 50C INTRODUCED WITH EFFECT FROM A.Y. 2003- 04. THE ASSESSEE PLACED RELIANCE ON SEVERAL DECISI ONS TO SUPPORT ITS CONTENTION. THE LD. CIT (A) AFTER CONSIDERING VARIOUS DECISIONS RELIED UPON BY THE LD. AR OF THE ASSESSEE HELD THAT THE AO HAS NOT MADE OUT A CASE OF CONCEALMENT OF PARTICULAR OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME AGAINST THE ASSES SEE. THE AO HAD ALSO NOT MADE OUT ANY CASE OF LACK OF BONAFIDE BY THE ASSESSEE. HE THEREFORE DELETED THE PENALTY. 7.1 BEFORE US THE LD. SR. DR SUBMITTED THAT THE ASS ESSEE HAD NOT FILED ANY APPEAL AGAINST THE QUANTUM ADDITION. THE ASSESSEE HAD NOT SHOWN IN CO MPUTATION OF CAPITAL GAIN THE SALE CONSIDERATION AS PER CIRCLE RATE. THE ASSESSEE HAD SHIFTED THE ONUS ON THE ASSESSEES COUNSEL. THEREFORE ASSESSEE WHILE FILING OF RETURN OF INCOM E HAS FURNISHED INACCURATE PARTICULARS OF CAPITAL GAINS. THE LD. SR. DR PLACED RELIANCE ON T HE FOLLOWING DECISIONS:- 5 I. T. APPEAL NO. 4531 (DEL) OF 2010. 1. CIT VS. ESCORTS FINANCE LTD. [2010] 328 ITR 44 (DEL.); 2. CIT VS. ZOOM COMMUNICATION P. LTD. [2010] 327 ITR 510 (DEL.); & 3. UNION OF INDIA & OTHERS VS. DHARAMENDRA TEXTILE PROCESSORS & OTHERS [2007] 295 ITR 244 (SC). 7.2 ON THE OTHER HAND THE LD. AR OF THE ASSESSEE S UBMITTED THAT IT IS NOT A CASE OF BOGUS CLAIM. THERE WAS NO EVIDENCE WITH THE AO THAT THE ASSESSEE HAD RECEIVED AMOUNT MORE THAN WHAT WAS RECORDED IN THE SALE DEED. COMPUTATION OF CAPITAL GAINS ON THE SALE AMOUNT RECORDED IN THE SALE DEED IS A GENUINE MISTAKE COMMITTED BY THE COUNSEL FOR THE ASSESSEE. AT THE FIRST OPPORTUNITY THE ASSESSEE SUBMITTED SALE DEED. THE PROVISIONS OF SECTION 50-C OF THE ACT ARE APPLICABLE FOR THE PURPOSE OF COMPUTATION OF CAPITA L GAINS AND CANNOT BE EXTENDED FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). THE ASSESSEE HAD FURNISHED EXPLANATION FOR NOT COMPUTING CAPITAL GAINS ON THE BASIS OF CIRCLE RATE WHICH HA S BEEN REJECTED BY THE ASSESSING OFFICER WITHOUT ANY BASIS. THEREFORE PENALTY UNDER SECTION 271(1) (C) OF THE ACT IS NOT IMPOSABLE. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE AO WHILE COMPUTING CAPITAL GAINS HAS RELIED ON PROV ISIONS OF SECTION 50-C OF THE ACT. HE HAS NOT CONDUCTED ANY ENQUIRY EITHER FROM THE MARKET AS TO THE PREVALENT RATE OF THE PROPERTY AT PARTICULAR POINT OF TIME WHEN THE SALE WAS MADE. T HE AO HAD ALSO NOT MADE ENQUIRIES FROM THE BUYER AS TO HOW MUCH AMOUNT WAS ACTUALLY PAID BY HI M TO THE ASSESSEE. THERE IS NO DISPUTE ABOUT THE FACT THAT ASSESSEE HAD PAID THE TAX ON CO MPUTATION OF CAPITAL GAINS AS PER PROVISIONS OF SECTION 50-C OF THE ACT AND NO APPEAL HAS BEEN FILE D AGAINST THE APPLICABILITY OF PROVISIONS OF SECTION 50-C. PROVISIONS OF SECTION 50-C ARE DEEMI NG PROVISIONS. THE CONTENTION OF THE ASSESSEE IS THAT IN IMMEDIATE PRECEDING YEAR THE CIRCLE RATE WAS RS.6 000/- PER SQ. YD. WHICH WAS RAISED DURING THE YEAR UNDER CONSIDERATION TO RS.12 000/- PER SQ. YD. THERE IS NO MATERIAL ON RECORD TO SUBSTANTIATE THAT THE ASSESSEE HAD PAID MORE THAN W HAT WAS RECORDED IN THE SALE DEED. THE LD. CIT (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MAD E BY THE ASSESSEE HAS CANCELLED THE PENALTY BY OBSERVING AS UNDER :- 6 I. T. APPEAL NO. 4531 (DEL) OF 2010. 4.4 I HAVE CAREFULLY CONSIDERED THE PENALTY O RDER AND THE SUBMISSIONS MADE BY THE LD. AR. AS PER THE FACTS OF THIS CASE THE APPELLANT COMPANY IN ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 HAD SHOWN LONG T ERM CAPITAL GAIN OF RS.28 26 759/- AFTER CLAIMING INDEXATION ON SALE OF A FACTORY PLOT IN GURGAON AT RS.31 24 347/-. IN THE COURSE OF THE ASSESSMENT PR OCEEDING UNDER SECTION 143(3) IT WAS FOUND BY THE ASSESSING OFFICER THAT THE SALE CONSIDERATION SHOWN BY THE APPELLANT WAS LOWER THAN THE CIRCLE RATE FOR STAMP DUTY WHICH WAS RS.70 63 400/-. ON BEING ASKED THE AR OF THE ASSESSEE VIDE LETTER DATED 29/08/2007 INFORMED THAT THE CIRCLE RATE HAD BEEN DOUBLED FROM RS.6 000/- PE R SQ. YARD IN FY 2003-04 TO RS.12 000/- PER SQ. YARD IN FY 2004-05. IT WAS POI NTED OUT BY THE LD. AR THAT THE ASSESSEE WAS NOT WELL VERSED WITH TAX LAWS AND THE COUNSEL OF THE ASSESSEE OMITTED TO APPLY DEEMING PROVISION OF SECTION 50-C OF THE A CT IN COMPUTING THE CAPITAL GAINS. THE LD. AR MENTIONED THAT ALTHOUGH THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS MUCH LESS AND WAS AS PER THE FIGURE RE CORDED IN THE SALE DEED IN ORDER TO AVOID LITIGATION AND BY PEACE THE ASSESSEE HAD NO OBJECTION TO RE- COMPUTATION OF THE CAPITAL GAINS BY APPLYING THE DE EMING PROVISION OF SECTION 50- C PROVIDED NO PENALTY PROCEEDINGS ARE INITIATED. THE LD. AR ALSO MENTIONED THAT THE RETURN FILED BY THE ASSESSEE MAY BE CONSIDERED TO BE REVISED TO THIS EXTENT. THE ASSESSING OFFICER ACCORDINGLY COMPUTED LONG TER M CAPITAL GAINS AT RS.67 02 516/-. THE APPELLANT ACCEPTED THE ABOVE Q UANTUM ASSESSMENT ORDER AND PAID THE TAXES WITHOUT FILING ANY APPEAL. 4.4.1 SUBSEQUENTLY THE AO VIDE THE IMPUGNED PENA LTY ORDER UNDER SECTION 271(1)(C) HAS IMPOSED PENALTY OF RS.8 15 000/- ON T HE QUANTUM ADDITION. IN THIS REGARD IT IS ARGUED BY THE LD. AR THAT THE QUANTUM ADDITION WAS MADE BY THE AO SIMPLY BY APPLYING THE DEEMING PROVISION OF SECTION 50-C OF THE ACT. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE ACTUALLY RECEIVED ANY AMOUNT HIGHER THAN WHAT WAS SHOWN IN THE SALE DEED. AS SUCH THERE IS NO C ASE OF CONCEALMENT OF INCOME 7 I. T. APPEAL NO. 4531 (DEL) OF 2010. AGAINST THE ASSESSEE. IT IS ARGUED THAT THE OMISSI ON TO APPLY THE CIRCLE RATRE FOR STAMP DUTY UNDER SECTION 50-C WAS DUE TO MISTAKE OF THE COUNSEL AND THE SAME WAS ACCEPTED BY THE ASSESSEE BY FILING THE LETTER O F THE AR BEFORE THE AO DURING THE ASSESSMENT PROCEEDING. THIS WAS A BONAFIDE MIS TAKE AND THE AO HAS NOT MADE OUT ANY CASE OF MALAFIDE OR DELIBERATENESS BY THE ASSESSEE. IT IS ALSO ARGUED BY THE LD. AR THAT THE SALE DEED WAS FURNISHED TO T HE AO AT THE FIRST OPPORTUNITY AND THE FACT OF HAVING PAID STAMP DUTY AS PER CIRCL E RATE WAS NEVER WITHHELD FROM THE AO AND IT WAS THE ASSESSEE WHO HAD BROUGHT ON R ECORD THE INFORMATION ON CIRCLE RATE FOR PAYMENT OF STAMP DUTY. IT IS FURTH ER ARGUED THAT IN THE PRESCRIBED FORM FOR FILING RETURN OF INCOME THERE IS NO SPECI FIC COLUMN WHEREIN THE ASSESSEE COULD FURNISH INFORMATION WITH REGARD TO VALUATION AS PER WHICH STAMP DUTY WAS PAID OR A COMPUTATION OF CAPITAL GAINS AS PER SECTI ON 50-C OF THE ACT. IT IS POINTED OUT BY THE LD. AR THAT THE HONBLE SUPREME COURT IN VDM.RM. M.RM. MUTHIAH CHETTIAR VS. CIT (1969) 74 ITR 183 (SC) HAS HELD THAT ASSESSEE CANNOT BE DEEMED TO HAVE COMMITTED FAILURE TO DISCLOSE THE INCOME IN THE ABSENCE OF PRESCRIBED PARTICULAR IN THE RETURN OF INCOME. THE RATIO OF THIS JUDGEMENT WAS FOLLOWED BY THE HONBLE SUPREME COURT IN CIT VS. P. K. KOCHAMMAU AMMA PERIOOKE (1980) 125 ITR 624 (SC) AND PENALTY WAS WA IVED BECAUSE THE RETURN FORM DID NOT PRESCRIBE THE PARTICULARS TO BE DISCLO SED FOR INCOME ASSESSABLE UNDER SECTION 64 OF THE ACT. THE HONBLE ITAT MUMBAI I N JHAVAR PROPERTIES P. LTD. VS. ACIT (2009) 317 (AT) 278 (MUM.) FOLLOWING THE J UDGEMENT OF THE HONBLE SUPREME COURT IN 125 ITR 624 (SC) HAS WAIVED PENALT Y BECAUSE IN THE RETURN FORM THE PRESCRIBED PARTICULARS FOR DISALLOWANCE U NDER SECTION 40-A(2) WERE NOT PRESCRIBED. FURTHER IT IS ARGUED THAT THE MISTAKE IN COMPUTING THE CAPITAL GAINS IN THE RETURN OF INCOME WAS DUE TO THE OMISSION BY THE COUNSEL TO APPLY THE DEEMING PROVISION OF SECTION 50-C AND THAT THE CIRCLE RATE HAD BEEN DOUBLED DURING THE SAME YEAR. IT IS ARGUED THAT THE ASSESSEE HAS PROV ED ITS BONAFIDE BY ACCEPTING THE ABOVE OMISSION AT THE ASSESSMENT STAGE WITHOUT DISP UTING OR SEEKING REFERENCE TO VALUATION OFFICER AND HAS PAID TAXES WITHOUT AGITAT ING THE MATTER IN APPEAL. IT IS POINTED OUT THAT THE JURISDICTIONAL HIGH COURT IN C IT VS. DHANBAL (2009) 211 TAXATION 128 (DEL.) HAS WAIVED PENALTY BECAUSE DEDU CTION UNDER SECTION 80-HHC 8 I. T. APPEAL NO. 4531 (DEL) OF 2010. WAS CLAIMED @ 100% ON THE ADVICE OF THE C.A. WHERE AS IT WAS ADMISSIBLE @ 80%. THE JURISDICTIONAL HIGH COURT IN CIT VS. ESCO RTS FINANCE LTD. (2009) 324 ITR 80 (SC) HAS OPINED THAT PENALTY WOULD NOT BE LE VIABLE FOR INADVERTENT ERROR WHICH IS CORRECTED IN THE ASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT HAS DISMISSED DEPARTMENTAL SLP WHERE PENALTY WAS HE LD NOT LEVIABLE BECAUSE FEE PAID TO THE REGISTRAR OF COMPANIES WAS WRONGLY CLAI MED AS THE ASSESSEE MERELY APPLIED INACCURATE LEGAL POSITION. IT IS FURTHER A RGUED THAT THE ADDITION MADE ON THE BASIS OF A DEEMING PROVISION WHICH CREATES A LE GAL FICTION CANNOT BE BASIS FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). IN THIS R EGARD THE LD. AR HAS RELIED ON THE DECISION OF THE HONBLE ITAT AHMEDABAD IN A RE CENT CASE OF ITO VS. HARLEY STREET PHARMACEUTICAL LTD. (2010) 38 SOT 486 (AHD.) WHERE BY FOLLOWING THE RATIO OF THE HONBLE SUPREME COURT IN CIT VS. MOTHE R INDIA REFRIGERATION INDUS. P. LTD. (1985) 155 ITR 711 (SC) THE HONBLE ITAT H ELD THAT LEGAL FICTION OF SECTION 50-C IS LIMITED TO CALCULATION OF CAPITAL G AINS AND CANNOT BE EXTENDED FURTHER. 4.4.2 CONSIDERING THE FACTS AND CIRCUMSTANCES AS MENTIONED ABOVE AND THE PLETHORA OF JUDICIAL DECISIONS RELIED UPON BY T HE LD. AR I FIND THAT THE AO HAS NOT MADE OUT A CASE OF CONCEALMENT OF PARTICULARS O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE RETURN OF I NCOME AGAINST THE APPELLANT. FURTHER THE AO HAS ALSO NOT MADE OUT ANY CASE OF LA CK OF BONAFIDE BY THE APPELLANT. AS SUCH THE IMPUGNED PENALTY CANNOT BE SUSTAINED. THE SAME IS THEREFORE DELETED. 9. ON CONSIDERATION OF THE FACTS AND THE DECISION O F LD. CIT (APPEALS) WE ARE OF THE CONSIDERED OPINION THAT PROVISIONS OF SECTION 50-C HAVE BEEN INSERTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. IT IS NOT ALWAYS TRU E THAT IN EVERY CASE THE MARKET VALUE OF THE PROPERTY WILL BE HIGHER THAN THE CIRCLE RATE. NO E VIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUGGEST THAT THE ASSESSEE HAS DELIBERATELY TRANSFERRED THE PROPERTY AT A PRICE 9 I. T. APPEAL NO. 4531 (DEL) OF 2010. LOWER THAN THE MARKET PRICE AND THE CIRCLE RATE WAS THE ACTUAL SALE CONSIDERATION. THE DEEMING PROVISIONS OF SECTION 50-C FOR THE PURPOSE OF COMPU TATION OF CAPITAL GAINS CANNOT BE EXTENDED FOR LEVY OF PENALTY UNDER SECTION 271(1)(C)OF THE ACT. THE DECISION RELIED UPON BY THE REVENUE IN THE CASE OF ESCORT FINANCE (SUPRA); DHARMENDRA TEXT ILE & PROCESSORS & ZOOM COMMUNICATIONS (SUPRA) ARE NOT APPLICABLE IN A CASE WHERE INCOME I S ASSESSED UNDER DEEMING PROVISIONS. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE OR DER PASSED BY THE LD. CIT (A) CANCELLING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 18 TH NOVEMBER 2011. SD/- SD/- [ R. P. TOLANI ] [ K . D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH NOVEMBER 2011. * MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.