IN INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSAIN, JM I.T.A. No. 1272/Mum/2012 (Assessment Year: 2008-09) Pratap Ratan Das Income Tax Officer 14(1)(4) Room No.203, Earnest House, 17, Ground Floor, Phophal Wadi, Nariman Point, Opp: Cotton Exchange, Mumbai-400 021. Vs. Kalbadevi (w) Mumbai-400 002. PAN/GIR No. AACPD 0156A ( Appellant) : ( Respondent) Appellant by : None Respondent by : Shri Mohammed Rizwan : 03/02/2016 Date of Hearing : 21/09/2016 Date of Pronouncement ORDER Per Sandeep Gosain, Judicial Member: Present Appeal has been filed by assessee against order of Commissioner of Income Tax (Appeals)- 25, dated 27.12.2011 on grounds of appeal mentioned herein below. 2 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO 1. learned Commissioner of Income Tax (Appeals) XXIV, has erred on facts and in law by upholding addition of Rs.2039230/- made by ld AO as Long Term Capital Gain of income of appellant. 2. learned Commissioner of Income Tax (Appeals) XXIV, Mumbai, has erred on facts and in law by Upholding assessment made by ld AO, mainly on grounds of appellant without considering fact that appellant was taken as agreement price at time of considering valuation of property instead of prevailing in market . 3. learned Commissioner of Income Tax (Appeals) XXIV, Mumbai , has erred on facts and in law upholding assessment order passed by ld AO without giving reasons for his decision. 4. learned Commissioner of Income Tax (Appeals) XXIV, Mumbai, has erred on facts and in law by upholding assessment made by ld AO where AO has failed to determine undisclosed income in accordance with provisions section 50C of Income Tax 1961. 5. learned Commissioner of Income Tax (Appeals) XXIV, Mumbai , has erred on facts and in law by upholding assessment made by ld AO as Agricultural Income ,which was made without revealing recording of subjective satisfaction Enunciated under relevant provisions, where material found at time of assessment was used against appellant. 6. learned Commissioner of Income Tax (Appeals) XXIV, Mumbai, has erred on facts and in law by upholding addition as undisclosed income without considering judicially and not applying natural justice. 7. learned Commissioner of Income Tax (Appeals) XXIV, has erred on facts and in law by Penalty u/s271(1)(c) made b ld AO as justifying in penalty on certain issue of appellant. 8. order of ld Commissioner of Income Tax (Appeals) XXIV, Mumbai is bad in law. 9. appellant craves leave to amend/alter any of ground or grounds and / or add fresh ground or grounds as may be necessary at time of hearing. 2. brief facts of case are that assessee being individual is goldsmith carrying out labour job and derives income from business as well as capital gains. return of income was filed on 06.03.2008 declaring total income of Rs.6,31,560/-. same was processed u/s 143(1) of Act and later on 3 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO case was selected for scrutiny through CASS. After serving statutory notices and seeking reply from assessee, order of assessment was passed by AO thereby making additions on account of long term capital gain, on account of sale of gold and sales of shop. However additions u/s 68 were also made. 3. Aggrieved by order of AO, assessee filed appeal before CIT(A) and CIT(A) after considering case of assessee dismissed appeal of assessee vide order dated 27-12-2011. 4. Aggrieved by order of CIT(A), assessee filed present appeal before us on grounds mentioned herein above. 5. At very outset, it is noticed that even in spite of several notices, none has appeared on behalf of assessee and on perusal of order sheet we have noticed that nobody was appearing on behalf of assessee. Although notices were also served upon assessee for appearing before us, but even then respondent has not preferred to appear and even no application for adjournment was moved. On other hand ld. DR is present in court and is ready with arguments. Therefore we have decided to proceed with hearing of case ex-parte with assistance of ld. DR and material on record. Ground No.1 to 4 5. Since all grounds raised by assessee are inter-connected and inter- related therefore we thought it fit to dispose off same through present 4 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO common order. afore mentioned grounds relates to applicability of section 50C of Act in case of assessee. We have heard ld. DR and we have also perused material placed on record as well as orders passed by revenue authorities. Before we decide merits of case it is necessary to evaluate orders passed by CIT(A) while dealing with issue operative para is reproduced below: 4. During course of appellate proceeding Ld. AR vehemently protested application of section 50C of I.T. Act 1961 and argued that sale consideration shown in sale agreement should be accepted as true and fair consideration of property. 5. On careful consideration of arguments of Ld. A.R. viz-a-viz facts stated in assessment order, it immensely transpires that there is no force in arguments of Ld. A.R. Section sac of Act states that value assessed by stamp duty Valuation Authority shall for purpose of section 48 be deemed to be full value of consideration received or accruing as result of such transfer. Thus by deeming provisions, sale consideration shall be deemed to be as value assessed by stamp duty valuation authority. validity of this section was upheld by Hon'ble High Courts and in particular Hon'ble High Court of Madras and Hon'ble High Court of Bombay. Therefore, I am of view that there is no substance in argument of Ld.AR that section 50C is not applicable in case of assessee. non application of Section 50C in case of assessee amounts to travesty of justice and parliament. legislative intention behind this provision is well explained in Finance Act as well as by Hon ble high courts. While introducing section 50C in Fianc Act 2002, it was mentioned that bill proposes to insert new section 50C in I.T. Act to make special provision for determining full value of consideration in case of transfer of immovable property. Further .the heading of introduction of this clause in Finance Bill 2002 was titled as "computation of capital gains in real estate transactions". Thus, purpose' of section 50C was to cover all types of transactions pertaining to immovable property with view to substitute real market value fetched by person. 5 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO Hon'ble High Court of Madras in case of V.R. Palani Swamy vs. Union of India (180 Taxman 2.e3) had held that section 48 provides for mode of computation of capital gains and section 50C has been introduced from 1.4.2003 by Finance Act. 2002. conspectus of provision is that it is special provision for full value of consideration in certain cases. It applies to all cases of transfer of capital assets. Hon'ble High Court of Madras further held in same case that it is obvious from reading of provision of section 50C, rather it is not disputed that same is inserted to prevent large scale under valuation of real value of in sale deed so as to defraud revenue and Govt. legitimately entitled tom by pumping in black money. impugned provision has been incorporated to check such evasion of tax by under valuing real properties. (180 Taxman 253 Mad). Hon'ble jurisdictional High Court of Mumbai in case of Bhatia Nagar Premises Co operative Housing Society vs. UOI (Date of order 19.8.2ala) upheld applicability of section 50C in case of development agreement for development and sale of land in following words. (i) There is distinction between subject matter of tax and standard by which amount of tax is measured. subject matter of tax is capital gains and manner in which it should be computed is provided by section 50C Section 50C is only measure of tax and not subject matter of tax. valuation rule of Stamp Act is for purpose of computation' of income. It is only standard' of measure for imposing tax. (Principle laid down in A. Sanyasi Rao 219 ITR 330 (SC) followed; (ii) Section 50C was introduced with view to prevent evasion of tax and under- valuation of transaction and must be read in that context. classification made by section sac is in respect of identifiable group of assesses and is not arbitrary, unreasonable or discriminatory. (K.R. Palanisamy vs. UOI 306 ITR 61 (Mad) followed. Hon'ble Special Bench of Jurisdictional IT AT Mumbai, had also upheld applicability of section 50C for depreciable assets/ business assets, in case of ITO vs. United Marine Academy (date of order 25.4.2011) in following words. There are two deeming fictions created in section 50 and section 50C for computing capital gains on building. While section 50 modifies cost of acquisition for purposes of section 48, section 50C modifies term full value of consideration received or accruing as result of transfer of capital asset . two deeming fictions operate in different fields and there is no conflict between them. As section 50C was inserted to prevent 6 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO assessee s indulging in under-valuation, there is no logic why it should not be applied to depreciable building; (The full text of this judicial pronouncement is published in 54 DTR at page 177 of year 2011) Accordingly, in view of facts and circumstances of case it is held that section 50C is applicable in case of assessee and A.O. is correct in applying section 50C subject to valuation by DVO/VO. Accordingly action of AO is upheld. 5.1 After hearing ld. DR and after perusal of orders passed by revenue authorities, we are of considered view that ld. CIT(A) has rightly come to conclusion that section 50C of Act states that value assessed by stamp duty Valuation Authority shall for purpose of section 48 be deemed to be full value of consideration received or accruing as result of such transfer. Thus by deeming provisions, sale consideration shall be deemed to be as value assessed by stamp duty valuation authority. Ld. CIT(A) has also appreciated that validity of this section 50C has already been upheld by Hon ble High Courts including that of Hon ble High Court of Madras and Hon ble High Court of Bombay. Ld. CIT(A) has duly considered submissions of assessee that section 50C is not applicable in case of assessee and that sale consideration shown in sale agreement should be accepted as true and fair consideration of property. We have further noticed that Hon ble High Court in case of Bhatia Nagar Premises Cooperative Housing Society has already held that Sec-50C was introduced with view to prevent evasion of tax and under valuation of transactions and applicability of said section 50C has been upheld by Hon ble High Court and even 7 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO Jurisdictional High Court of Bombay in case of Bhatia Nagar Premises Cooperative Housing Society vs. UOI has upheld applicability of Section 50C in case of development agreement for development and sale of land in following words. (i) There is distinction between subject matter of tax and standard by which amount of tax is measured. subject matter of tax is capital gains and manner in which it should be computed is provided by section 50C. Section 50C is only measure of tax and not subject matter of tax. valuation rule of Stamp Act is for purpose of computation of income. It is only standard of measure for imposing tax. (Principle laid down in A. Sanyasi Rao 219 ITR 330 (SC) followed; (ii) Section 50C was introduced with view to prevent evasion of tax and under valuation of transaction and must be read in that context. classification made by section 50C is in respect of identifiable group of assessee and is not arbitrary, unreasonable or discriminatory.(K.R. Palanisamy vs. UOI 306 ITR 61 (Mad) followed. 5.2 In addition Hon ble Special Bench of Jurisdictional ITAT Mumbai, has also upheld applicability of section 50C for depreciable assets/business assets, in case of ITO vs. United Marine Academy operative para of judgement is reproduced below: There are two deeming fictions created in section 50 and section 50C for computing capital gains on building. While section 50 modifies cost of acquisition for purposes of section 48, section 50C modifies term full value of consideration received or accruing as result of transfer of capital asset . two deeming fictions operate in different fields and there is no conflict between them. As section 50C was inserted to prevent assessee s indulging in under-valuation, there is no logic why it should not be applied to depreciable building. 8 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO 6. We have duly considered above cited judgments and therefore we are of considered view that AO as well as CIT(A) were correct in applying section 50C in facts and circumstances of present case. No new circumstance have been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, we are of considered view that findings recoded by learned CIT (A) are judicious and well reasoned. Accordingly, we uphold same and dismiss this ground of appeal. Ground No.5 7. CIT(A) has dealt with this issue in its order and operative para is reproduced below for sake of reference: Ground No. 2: Addition on account of non genuine agricultural income of Rs.2,30,000/-. During course of assessment proceeding AO found that assessee had shown agricultural income of Rs.2,30,000/ - in spite of fact that assessee was not in possession of any agricultural land. On being asked, assessee submitted that agricultural land was owned by his father who died in year 2004 and said land was inherited to him. He also submitted that agricultural income was regularly shown in earlier years which was accepted by then A.O. in assessment u/ s 143(3) of IT. Act 1961. However, he did not furnish any evidence as to holding of agricultural land etc. Accordingly AO held that assessee had no genuine agricultural income and sum of Rs.2,30,000/ - shown as agricultural income represents undisclosed income of assessee u/ s 68 of 1. T. Act 1961. Being agreed with action of AO., assessee is in appeal before this forum. 9 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO During course of appellate proceeding ld. AR reiterated same arguments as made before AO. However, he was given opportunity to produce following evidences to establish genuineness of agricultural income. 1. Evidence as to ownership of land i. e. to say Farm No. 8A and 7/12. 2. Income and expenditure account of agricultural produce. 3. Sale bills of agricultural produce, bills for seed, fertilizer, labour expenses etc. For this purpose he was given time of one month. However, neither assessee nor AR. could furnish such vital evidences to establish genuineness of agricultural income. In absence of such evidences it cannot be said that impugned income was agricultural income. On contrary it immensely establishes that impugned income in form of agricultural income was money laundering device to camouflage unaccounted income of assessee under garb of agricultural income Regarding argument that in earlier year said income was accepted by then AO in assessment u/ s 143(3) is of no consequence. If concerned AO had not examined claim properly, there is no bar against revenue to examine case because each year of assessment is independent of previous years. If it is established that same facts existed in. preceding year, it is amenable to take remedial action as per law to safeguard interest of revenue. Accordingly this ground of appeal is rejected and action of AO is upheld (332 ITR 471 Delhi High Court). 8. After hearing ld. DR and perusal of record we are of considered view that although ld. CIT(A) while considering said issue has granted sufficient time to assessee to substantiate his arguments by supporting documentary evidence/proof but even inspite of availing opportunities assessee could not furnish any vital evidences to establish genuineness of agricultural income. Therefore in absence of such evidences it cannot be held that impugned income was agricultural income. We have carefully gone through orders passed by CIT(A) and found that assessee has not produced any document in support of 10 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO his arguments and no new circumstance has been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, we are of considered view that findings recoded by learned CIT (A) are judicious and are well reasoned. Accordingly, we uphold same. Resultantly, this ground raised by Revenue stands dismissed. Ground No.6 10. Ground No.6 is general in nature and hence, requires no specific adjudication. Ground No.7 11. Ld CIT(A) has dealt with this issue and has given categorically finding that mere initiation of penalty u/s 271(1)(c) is not appealable action. Even otherwise once appeal has already been dismissed by CIT(A) therefore assessee was justified in initiating penalty proceeding u/s 271(1)(c) and even in view of our finding on issue no.1,2&4 present ground raised by assessee is not maintainable. Ground No.8 12. Ground No.8 is general in nature and hence, requires no specific adjudication. 11 ITA No. 1272/Mum/2012(A.Y. 2008-09) Pr atap Rat Das vs. ITO 13. In result, assessee s appeal is dismissed. Order pronounced in open court on 21 September, 2016. Sd/- Sd/- (Jason P. Boaz) (Sandeep Gosain) Accountant Member Judicial Member Mumbai; Dated : 21.09.2016 Ps. Ashwini Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Pratap Ratan Das v. Income Tax Officer 14(1)(4), Mumbai