COMMISSIONER OF INCOME TAX VS FORTUNE HOTELS AND ESTATES PVT. LTD.-(High Court)

1 Heard Mr.Vimal Gupta, learned Senior Counsel appearing in support of this Appeal, which impugns the order of the Income Tax Appellate Tribunal dated 30.09.2011 allowing the Assessee’s Appeal and deleting the penalty under Section 271(1)(c) (of Income Tax Act, 1961).Mr.Vimal Gupta submits that the substantial question of law which arises for determination and consideration is whether, the Tribunal was right in holding that the penalty cannot be imposed with reference to addition of deemed income under Section 50C (of Income Tax Act, 1961). Mr.Vimal Gupta relies upon the judgment of the Honourable Supreme Court in the case of Chuharmal V/s Commissioner of Income Tax reported in 172 ITR 250 (SC).

2. Upon perusal of the order passed by the Tribunal in its entirety and noting the peculiar facts pertaining to the Assessee we are of the view that the question as posed before us and the contentions advanced need not be gone into in any further details. The admitted factual position and which the Tribunal noted is prevailing throughout. The Assessee was the owner of the office premises at Nariman Point, Mumbai and he sold the same during the year previous to the Assessment Year 2004­2005 and sale consideration was Rs.2 crores. The Assessing Officer noted that the market value adopted by the Registrar of Assurances for levy of stamp duty was Rs.3,72,42,000/­. In view thereof by taking recourse to Section 52C(2) (of Income Tax Act, 1961) the Assessing Officer called upon the Assessee to show cause as to why the full value of consideration received on transfer should not be adopted as per the stamp valuation. The Assessee insisted that the question of valuation of the property should be referred to the Departmental Valuation Officer. That was so referred and the report was submitted by the Valuation Officer dated 27.12.2006 determining the market value of the property at Rs.2,70,03,920/­. The Assessee maintained that the value of Rs.2 crores is actual sale consideration received by it. However, this was not accepted and the difference between the consideration received and determination of the Valuation Officer was declared as tax liability.

3. To this extent there is no dispute and what later on followed was the imposition of penalty. The Tribunal held that this cannot be taken as a case of furnishing inaccurate particulars of income inasmuch as there was a registered sale deed and there was consideration mentioned therein. That ground was raised and therefore, the document was forwarded to the Valuer and for determination of the value, by itself would not mean that the Assessee had furnished inaccurate particulars of income or has concealed the income. In these peculiar circumstances the imposition of penalty was not justified, is the conclusion drawn. The larger question posed for our consideration by Mr.Vimal Gupta really does not arise in the peculiar facts of the case. We leave that question and contentions based thereon open for being canvassed in an appropriate case. The Tribunal’s order even if containing any reference to some deeming provision will not preclude or prevent the Revenue from raising such contentions. With this clarification and finding that the Tribunal’s order does not raise any substantial question of law that we proceed to dismiss the Appeal. It is, accordingly, dismissed. No costs.

(A.K. Menon, J) (S.C. Dharmadhikari, J)