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| DATE: | August 6, 2014 (Date of publication) |
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| Click here to download the judgement (harish_shetty_50C_penalty.pdf) |
No S. 271(1)(c) penalty for failure to compute capital gains as per s. 50C. Direct judgements on the topic have to be followed
The assessee sold property for a sale consideration of Rs.4.50 lakhs. The said plot of land was valued for Stamp Duty purposes at Rs.15,89,000. The AO applied s. 50C and considered the difference between the sale price and Stamp Duty value for purposes of computation of capital gain. He also levied concealment penalty u/s 271(1)(c) on such difference. The levy of penalty was confirmed by the CIT(A). Before the ITAT, the assessee claimed that the issue was covered in his favour by Renu Hingorani (ITAT Mum), Chimanlal Manilal Patel (ITAT Ahd) & Madan Theatres 260 CTR (Cal) 75 where it was held that as the AO had not questioned the actual consideration received by the assessee and as s. 50C was a deeming provision, it could not be said that the assessee had filed inaccurate particulars of income so as to attract levy of penalty u/s 271(1)(c) of the Act. The department claimed that as the assessee was aware of s. 50C, it ought to have applied it and failure to do so was a deliberate attempt to furnish inaccurate particulars of his income which entailed concealment penalty. Reliance was placed on Zoom Communications 327 ITR 510 (Del) & Escort Finance 328 ITR 44 (Del). HELD by the Tribunal:
There are direct judgements which hold that where addition is made on account of application of s. 50C and there is no material on record to show that the assessee had received more amount than that shown by it on sale of property then penalty u/s 271(1)(c) cannot be levied. The decisions relied upon by the Dept are not directly on the issue and distinguishable on facts. The context in which the decisions have been rendered is entirely different from the context of the present case. The law in this regard is well settled as held in Sun Engineering 198 ITR 297 (SC). When there is a direct decision available on the issue, then it will be appropriate to follow the same particularly when no contrary decision on the same very issue is cited by the opposite side.
good.
I think we need to revive Jury system which can only do equity better. It was removed in Nanavati v Ahuja case as Jury gave benefit of doubt fairly but powers be say vested interests removed. Now i think in all Administrative tribunals why in CIT(A) type appeals there should be citizen juries as in US is meaningful, i believe. Juries are citizens not interested in departments or governments and they are indeed very impartial . so jury trials would be fine as a matter of equity!
The judgment is not only flawed but tends to give advantage to those who do not follow the Rule of Law at will. It is my understanding that in developed countries the system is to believe in the citizen or taxpayer, but if caught dodging the Rule then the punishment is quick and appropriate. We in India specially the IT Deptt. are shifting towards that i.e to believe in the tax payer and that is the precise reason for introducing various schemes like “File Smile & go”, picking less than 1% of cases for scrutiny and that to based on some precise information. This means about 99% of cases are not checked by the taxman. It is only less the 1% are checked and in that 1% very minuscule % of cases the concealment or dodging of tax is detected. In such cases the Ld. Appellate Authorities pass such orders leaving nothing for the country to show some semblance of “DETERRENCE”. This is the precise reason why tax avoiding is done at impunity in this country.
I also do agree with Dr. G. Balakrishnaiah about the jury system as the common men sitting on jury will see the law as laymen and not find technical faults like the tribunal did in above case.
The courts at the one end will say the tax laws should be strictly interpreted but the reality lies somewhere else. In the above case the Sec 50C is very well placed on the statute and the assessee do not follow it at impunity and when caught by the ITD the tribunal comes out on his side. following this s precedent the may be many more cases which have escaped.
Incidentally Jury system helps general system of citizens learn rule of law better as juries are selected today at random basis every day all people get chances to sit on jury bench, there is no specific qualification except one is sound in common sense that way once jury decides under equity law there is no appeal at all. that way jury decisions stand , why not we also help people learn rule of law too, is my question ; Jury decides purely on common sense once judge guides jury as far as law is concerned.
Lawyers need to appear to put up their as meaningfully as possible.
see in Nanavati case jury said the anger in Nanavati is normal as normal in any one so they decided is gunning Ahuja who was having affair with Nanavati’s wife and Nanavati saw him in his house when Nanavati came from duty, so what he did is natural in any situation and thus they let off Nanavati a naval officer!
Laws work on doctrines more than just statutes, statutes several times faulty so declared Void!
Judicial reviews became needed to declare statutes void ab initio.
Doctrines are developed over several centuries on the basis of human nature!