Shanmughma Ramamoorthy, CHENNAI V. ITO, CHENNAI

CO 59/CHNY/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3672 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: SUSHMA HARINI A
• Keywords: Bonafide belief
• Section: 143(3); 54F; 54

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 4 0 2 / CHNY /201 7 / ASSESSMENT YEAR:20 1 2 - 1 3 & C.O. NO. 59/CHNY/2017[IN I.T.A. NO. 402/CHNY/2017] THE INCOME TAX OFFICER , NON CORPORATE WARD 23 ( 2 ) , 130 - B, MUDICHUR ROAD, WEST TAMBARAM, C HENNAI 6 00 04 5 . VS. SHRI SHANMUGHAM RAMAMOORTHY, NO. 2, SARATHY STREET, PALLAVARAM, CHENNAI 600 0 43 . [PAN:A AAPR2796J ] ( APPELLANT ) ( RESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : SHRI K. RAVI , J CIT ASSESSEE BY : MS. SUSHMA HARINI, A., ADVOCATE / DATE OF HEARING : 0 8 . 0 3 .201 8 / DATE OF P RONOUNCEMENT : 26 . 0 4 .201 8 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) 10 , C HENNAI DATED 1 8 . 11 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 PASSED AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND SOLD A PROPERTY AT DOOR NO.70 / A /1 , N EW DOOR NO.8 / 70 - A1, SRINIVASA PERUMAL KOIL I.T.A. NO . 402 / CHNY / 17 & C.O. NO. 59/CHNY/17 2 STREET, CANTONMENT PALLAVARAM AND THE SALE PRICE OF THE LAND AND BUILDING WAS .2,96,33,000 / - . THE ASSESSEE WORKED OUT THE CAPITAL GAIN AT . 1 ,41,09,724 / - AND CLAIMED DEDUCTION U NDER SECTION 54 OF THE ACT FOR THE ENTIRE AMOUNT AND ADMITTED NIL INCOME UNDER LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER FOUND DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THAT THE PROPERTY SOLD WAS NOT A RESIDENTIAL PROPERTY BUT COMMERCIAL PROPERTY. THE A SSESSING OFFICER ALSO FOUND THAT THE PROPERTY PURCHASED OUT OF THE SALE PROCEEDS, WAS ONLY AN AGRICULTURAL LAND OF 7.5 ACRES WHICH CONSISTED OF A SMALL H OUSE MEASURING 990 SQ.FT. AND HENCE , DISALLOWED THE TOTAL DEDUCTION CLAIMED BY THE ASSESSEE U NDER SECTION 54 OF THE ACT OF . 1 ,84,99,503 / - AS THE DEDUCTION WAS ALLOWABLE ONLY FOR RESIDE NT IAL PROPERTY. FURTHER, T HE A SSESSING OFFICER ALSO OBSERVED FROM THE RETURN FILED FOR CONSECUTIVE ASSESSMENT YEAR S THAT THE ASSESSEE HAD OWNED MORE THAN TWO RESIDENTIAL HOUSES AT THE TIME OF SA LE OF HIS PROPERTY AND ACCORDINGLY HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 54F OF THE ACT ALSO. 3. IN THE PENALTY ORDER, THE ASSESSING OFFICER OBSERVED THAT T HE ACT OF ASSESSEE IN CLAIMING A DEDUCTION THAT HE IS NOT ENTITLED FOR ALSO TANTAMOUN T TO SUPPRESSION / CONCEALMENT OF INCOME. FURTHER SUCH A CLAIM ALSO FALLS UNDER FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS, BY FOLLOWING THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS 301 ITR 277 , WHEREIN , IT WAS HELD THAT MENS I.T.A. NO . 402 / CHNY / 17 & C.O. NO. 59/CHNY/17 3 REA NOT ESSENTIAL FOR CIVIL LIABILITY OF PENALTY AND MOREOVER, I T WA S ALSO A FACT THAT THIS AMOUNT COULD NOT HAVE BEEN ASSESSED BUT FOR THE SCRUTINY ASSESSMENT AND THERE IS NO VOLUNTARY ADMISSION BY AS SESSEE , THE ASSESSING OFFICER LEVIED PENALTY OF .38,10,897/ - . 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FACTS OF THE CASE AND BY FOLLOWING THE DECISION IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR.), THE LD. CIT(A) DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM EXEMPTION EITHER UNDER SECTION 54 OR UNDER SECTION 54F OF THE ACT AND THEREBY FURNISHED INACCURATE PARTICULARS AND CONCEALED THE INCOME BY CLAIMING EXEMPTION, WHICH WAS FOUND DURING THE COURSE OF SCRUTINY ASSESSMENT. THEREFORE, THE ASSESSING OFFICER RIGHTLY LEVIED PENALTY UNDER SECTION 271 (1)(C) OF THE ACT, WHICH SHOULD BE CONFIRMED BY REVERSING THE ORDER OF THE LD. CIT(A). 6. PER CONTRA, BY FILING CROSS OBJECTION, THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C ) OF THE ACT AND PRAYED FOR CONFIRMING THE ORDER PASSED BY THE LD. CIT(A). I.T.A. NO . 402 / CHNY / 17 & C.O. NO. 59/CHNY/17 4 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, REGULAR ASSESSMENT UNDER SECTION 143(3) OF TH E ACT WAS PASSED AFTER ISSUING STATUTORY NOTICES. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE RETURN FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER, IT WAS DETECTED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT OR THERE WAS ANY SEARCH OR SURVEY IN THE CASE OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS FURNISHED COMPLETE PARTICULARS OF INCOME WITH A BONAFIDE BELIEF THAT WHATEVER DETAILS FURNISHED IN THE RETURN OR CORRECT. IF THE ASSESSING OFFICER F OUND ANY OF THE CLAIM MADE BY THE ASSESSEE IS NOT CORRECT, HE IS SUPPOSE TO REJECT SUCH CLAIM AND THE ASSESSEE IS LIABLE TO PAY TAX. IN THIS CASE ALSO, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 54 OR UNDE R SECTION 54F OF THE ACT AND ACCORDINGLY, THE ASSESSEE AGREED AND PAID TAX, WHICH WAS ALSO NOT DISPUTED. THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT ESTABLISHED ANYWHERE IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CONCEALED THE PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HE FURTHER OBSERVED THAT JUST BECAUSE THE ASSESSEE HAS ACCEPTED THE ADDITION IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER CANNOT LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN A MECHANI CAL MANNER. I.T.A. NO . 402 / CHNY / 17 & C.O. NO. 59/CHNY/17 5 7.1 BY REFERRING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158, IN THE CASE OF CIT V MANJUNTHA COTTAN & GINNING FACTORY (SUPRA), THE HON BLE KARNATAKA HIGH COURT HAS HELD THAT EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FRO M THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONDUCTED BY THE AUTHORITIES WHICH HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED, AND IF NOT, IT WOULD HAVE ESCAPED FROM TAX NET AS OPINED BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER. ACCORDINGLY, BY FOLLOWING THE ABOVE DECISIONS, THE LD. CIT(A) HAS HELD THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT LEVIABLE ON THE ASSESSEE S CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT AND DELETED THE PENALTY. THUS, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. C IT(A) AND NO NEW GROUND HAS BEEN RAISED FOR ADJUDICATION. SINCE WE HAVE CONFIRMED THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T.A. NO . 402 / CHNY / 17 & C.O. NO. 59/CHNY/17 6 ACT, AND DISMISSED THE APPEAL FILED BY THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND ACCORDINGLY DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 26 TH APRIL , 2018 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALA NKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 26 . 0 4 .201 8 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.