Differences In Opinion of Approved Valuer Regarding Fixation Of Value Of Particular Property Can't Be Termed As Concealment: Chennai ITAT Deletes Penalty
Pankaj Bajpai
6 May 2024 4:45 PM IST
The Chennai ITAT held that assessee's claim on the fair market value cannot be termed as concealment of income, if such claim was based on the valuation report of an approved valuer. The Bench of Manjunatha. G (Accountant Member) and Manomohan Das (Judicial Member) observed that “The basis of the assessee's claim is the report of the approved valuer. Further, differences of...
The Chennai ITAT held that assessee's claim on the fair market value cannot be termed as concealment of income, if such claim was based on the valuation report of an approved valuer.
The Bench of Manjunatha. G (Accountant Member) and Manomohan Das (Judicial Member) observed that “The basis of the assessee's claim is the report of the approved valuer. Further, differences of opinion will always be there regarding the fixation of value of a particular property. Showing of different value of a particular property by different valuers is not uncommon. It is possible. Therefore, there were different opinions on the assessee's matter and for different opinions penalty cannot be levied on the assessee”. (Para 11)
As per the brief facts of the case, an ancestral property belonging to Sengoda Gounder was sold by his legal heirs S. Rajamani, S. Natarajan, S. Kannan and Jaya for a consideration of Rs.1,00,10,000/- in favour of two different persons. As the sold property was a HUF property, the return was filed in the name of Sengoda Gounder HUF by his legal heirs admitting total income of Rs. 18,42,150/-. The return was however filed belatedly includes capital gain of Rs. 17,45,290/-. The assessee while computing the capital gain had adopted fair market value of the property as on 01-04-1981 at Rs. 13,06,125/- i.e., Rs.2,14,948/- per acre whereas the guideline value as per the Registration Department is 25,000/- per acre. The Registration Department vide letter made available under a reference from the Revenue and the assessment was reopened u/s.148. The AO based on the guideline value received from the Registration Department, computed the long-term capital gain and proposed to bring the amount computed by him to tax net. The Tribunal estimated Rs. 1,50,000/- per acre as value of the property. The AO complied with the order of the Tribunal. However, he initiated penalty proceedings against the assessee by issuing a notice u/s 271(1)(c) and finally levied a penalty of Rs.5,16,640/- upon the assessee.
The Bench observed that the assessee's claim on the valuation of the property as well as the guideline value adopted by the AO did not accept by the Tribunal.
The Tribunal estimated the fair market value of the property at Rs.1,50,000/- per acre against the guideline value of Rs. 25,000/- as was provided by the Registration Department to the Revenue, added the Bench.
The Bench referred to the decision of jurisdictional Madras High Court in the case of Mrs. Thulasiammal vs. CIT (2000) 158 CTR 5 (Mad), to reiterate that the guideline values of Registration Department has evidentiary value and they are intended to give information or instruction to the registering authorities but the guidelines would not establish the market value of the land.
The Bench also referred to the decision of Madras High Court in the case of CIT vs. Apsara Talkies 155 ITR 303 (Mad) to reiterate that, a valuation estimate, without more, cannot justify a finding of concealment.
Hence, the ITAT allowed the assessee's appeal while reiterating that incorrect claim in law cannot tantamount to furnishing inaccurate particulars.
Counsel for Appellant/ Assessee: T. Vasudevan
Counsel for Respondent/ Revenue: P. Sajit Kumar
Case Title: Sengoda Gounder HUF verses DCIT
Case Number: ITA No.1179/Chny/2023
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