Satish Chandra, A.M. - (1.) THE appeal by the assessee is directed against the order dt. 13th Nov., 2000 of the CIT(A)-IX whereby he confirmed the penalty of Rs. 68,78,095 imposed by the AO under Section 271(1)(c) of the Act for the asst. yr. 1998-99.
(2.) The assessee is an HUF. It enjoys income from property and income from interest. It filed return for the asst. yr. 1998-99 on 30th Sept., 1998, declaring income of Rs. 30,80,030. The case of the assessee was selected for scrutiny. The AO found that the assessee had shown long-term capital loss of Rs. 34,12,000 on account of sale of property being land and building known as Jekison Niwas, 220 Walkeshwar Road. Mumbai. Assessee had 1/4th share in the said property. Assessee's share in the property was sold for a consideration of Rs. 8 crores. The AO noted that the assessee had adopted the cost of acquisition as on 1st April, 1981 at Rs. 2,52,00,001 as per the valuation report dt. 25th June, 1996, of the registered valuer Shri Uday Chande. The indexed cost was worked out at Rs. 8,34,12,000. Thus, assessee declared long-term capital loss of Rs. 34,12,000 (Rs. 8,34,12,000--Rs. 8,00,00,000) to be carried forward to the subsequent year. During the course of assessment proceedings the AO referred the property to the DVO under Section 55A of the Act to ascertain the correct cost of acquisition as on 1st April, 1981, of the property in question. The DVO in his report, dt. 27th June, 2000, valued the fair market value of the assessee's share in the property as on 1st April, 1981, at Rs. 1,44,92,907 as against Rs. 2,52,00,000 shown by the assessee. The assessee was confronted. Vide letter, dt. 24th July, 2000, it was submitted on behalf of the assessee that the valuation of 1/4th share of the assessee in the property as on 1st April, 1981, at Rs. 2,52,00,000 by the registered valuer is correct and that the value determined by the valuation cell is without justification of the objections raised and that the valuation shown by the assessee was on the basis of registered valuer's valuation report. The AO considered the submissions of the assessee. According to him, the DVO had duly considered the objections raised by the assessee in his report. He further observed that the registered valuer had adopted the rates published in local paper (Accommodation Times) which rates cannot be said to be authentic. He also observed that the valuation made by the registered valuer is not based on any actual sale instances whereas DVO cited sale instances and has determined the fair market value after having considered the evidence furnished by the assessee and also taking into account all the relevant materials collected in this regard by him. He, therefore, rejected the assessee's contention that fair market value of the property as on 1st April, 1981, be adopted at Rs. 2,52,00,001 for computing the long-term capital gains. He adopted the cost of acquisition as on 1st April, 1981, of the property at Rs. 1,44,92,907 as determined by the DVO and computed long-term capital gains at Rs. 3,09,78,478 as against long-term capital loss of Rs. 34,12,000; shown by the assessee. The AO completed the assessment according on total income of Rs. 3,40,59,510 vide his order, dt. 8th Aug., 2000 under Section 143(3) of the Act. He initiated penalty proceedings.
(3.) IN response to show cause notice it was submitted in writing that there was no concealment of income or asset whatsoever. The valuation report of the registered valuer contains each and every details of property. The capital gain was computed on the basis of value of the property as on 1st April, 1981, as arrived at by the registered valuer which was submitted along with return. It was also stated therein that all the material facts in respect of 1/4th share of the sale of property had been disclosed when the return was filed. It is the difference of opinion in respect of value of the property as on 1st April, 1981, between the registered valuer and the DVO which does not amount to concealment. The DVO arrived at the value by using the best judgment and perspective. It is on the basis of concepts and methods adopted by him without taking into account the objections and suggestions made by the assessee. The difference between the value as determined by the registered valuer and the DVO does not change the basic character or the details of valuation. Hence, there is no concealment whatsoever. It was also stated therein that for the sake of mental peace and in order to co-operate with the Department that the assessee does not wish to go in appeal and dispute the assessment. Request was made to drop the penalty. The AO considered the above submissions. According to him, assessee has not filed appeal against the order under Section 143(3) hence computation of total income has become final. He further observed that the provisions of Section 271(1)(c) are attracted. Further, Expln. I also applied. The AO also observed that by no stretch of imagination a property in a posh locality like Walkeshwar Mumbai would have resulted in loss after substitution of an indexed cost of acquisition. The intention of the assesses in obtaining the valuation report is obviously viewed in the context of assessee having returned loss under the head 'capital gains'. He rejected the assessee's contention that there was only a difference of opinion among two valuers. He further observed that the DVO has analysed in detail each of the objections raised during the course of valuation. He based his report on relevant sale instances. The AO, therefore, concluded that the assessee furnished inaccurate particulars of income in respect of the amount added under the head 'capital gains' and imposed the impugned penalty which is the minimum prescribed.;