Urmila Devi, Siliguri V. ITO, Ward - 1(3), Siliguri

ITA 1046/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48239 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: S M SURANA
• Section: 54F; 27

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . . . . . . . , , , , ! ! ! ! /AND ' #!' , $% ) [BEFORE HONBLE SHRI G. D. AGRAWAL, V.P. & HONBLE SHRI MAHAVIR SINGH, JM] !& !& !& !& / I.T.A NO. 1046/KOL/2009 #'( )* #'( )* #'( )* #'( )*/ // / ASSESSMENT YEAR: 2005-06 URMILA DEVI VS INCOME-TAX OFFICER, WD-1(3), S ILIGURI (PAN-ADFPD 1048 R) ( ,- /APPELLANT ) (./,-/ RESPONDENT ) FOR THE APPELLANT: SHRI S. M. SURANA FOR THE RESPONDENT: SHRI P. K. MISHRA $01 / ORDER PER MAHAVIR SINGH, JM ( ' ' ' ' #!' #!' #!' #!' , , , , $% $% $% $% ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A), SILIGURI IN APPEAL NO.27/CIT(A)/SLG/08-09 VIDE DATED 27.03.2009. THE A SSESSMENT WAS FRAMED BY ITO, WD-2(4), SILIGURI U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DA TED 31.12.2007. THE PENALTY IN DISPUTE WAS LEVIED BY ITO, WD-2(4), SILIGURI U/S 27 1(1)(C) OF THE ACT VIDE HIS ORDER DATED 30.06.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT BY AS SESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED ADDITIONAL GROUND, WHICH IS A L EGAL GROUND THAT AMOUNT OF CAPITAL GAIN WITHDRAWN IN THE YEAR IF NOT TAXABLE IN THAT YEAR, THEN THERE IS NO QUESTION OF LEVY OF PENALTY, IN VIEW OF THE PROVISO 1 TO SECTION 54F(4) OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING ADDITIONAL GROUND: FOR THAT THE PENALTY IMPOSED IS BAD IN LAW SINCE T HE ADDITION MADE IN THE ASSESSMENT ITSELF LAWS BAD IN LAW, THE AMOUNT WAS NOT LIABLE T O BE ADDED IN THE ASSESSMENT YEAR IN QUESTION. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS SOLD ONE PLOT OF LAND FOR A SUM OF RS.15 LACS AND ANOTHER PLOT OF LAND FOR A SUM OF RS.7.08 LACS, FOR WHICH ASSESSEES SHARE WAS 37.5% ONLY 2 ITA 1046/K/2009 URMILA DEVI A.Y.05-06 BY REGISTERED SALE DEEDS MADE ON 17.12.2004 FALLING IN THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. THE ASSESSEE CLAIMED EXEM PTION U/S. 54F OF THE ACT IN RESPECT OF THESE TWO PROPERTIES BY DEPOSITING THE ENTIRE SALE PROCEEDS UNDER CAPITAL GAIN SCHEME, 1988 IN THE UBI, SEVOKE ROAD, SILIGURI ON 27.7.2005 I.E. BE FORE THE DUE DATE OF FILING OF RETURN OF INCOME AND CLAIMED DEDUCTION AS PER SECTION 54F OF THE ACT FOR INVESTMENT OF THIS SALE CONSIDERATION IN THE CAPITAL GAINS ACCOUNTS SCHEME 1988 AND THEREAFTER TO BE UTILISED FOR THE CONSTRUCTION OF RESIDENTIAL HOUSE. BUT THE ASSESSE E BEFORE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONTENDED THAT SHE WITHDR EW THE MONEY DUE TO URGENT FINANCIAL CRISIS AND ACCEPTED BEFORE THE ASSESSING OFFICER THAT EXEM PTION SHE AVAILED OF HERSELF EARLIER MAY NOW BE WITHDRAWN AND TAX ON SUCH CAPITAL GAIN WAS DEPOS ITED. THE ENTIRE CONSIDERATION DEPOSITED IN CGAS-1988, ON ACCOUNT OF SALE OF BOTH PROPERTIES, W AS WITHDRAWN ON 20.12.2007 FALLING IN THE ASSESSMENT YEAR 2008-09. ASSESSING OFFICER ASSESSED THE CAPITAL GAIN IN RESPECT OF BOTH THE PARTIES I.E. LAND IN QUESTION AT NO. 1 AT RS.15,90, 420/- AND LAND IN QUESTION NO.2 AT RS.2,91,464/-. THE ASSESSEE ACCEPTED THESE ADDITIONS ON ASSESSMENT OF CAPITAL GAINS. ASSESSING OFFICER SUBSEQUENTLY, INITIATED PENALTY PROCEEDINGS U/S. 27 1(1)(C) OF THE ACT AND LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CO NCEALMENT OF INCOME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE P ENALTY BY HOLDING THAT THE ASSESSEE AGREED SUBSEQUENT TO DETECTION AND THIS IS NOT A VOLUNTAR Y DISCLOSURE. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SHRI S. M. SURANA POINTED OUT THAT PROVISO TO SECTION 54F(4) OF THE ACT PROVIDES HOW THE AMOUNT D EPOSITED IN CAPITAL GAINS ACCOUNTS SCHEME IS TO BE DEALT WITH AND IF PREMATURELY WITHD RAWN THEN HOW TO BE TAXED AND ACCORDING TO THIS PROVISO CAPITAL GAIN IS TO BE TAXED IN THE PRE VIOUS YEAR IN WHICH PERIOD THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. HE STA TED THAT THE ORIGINAL ASSETS WERE TRANSFERRED AS ON 17.12.2004 I.E. IN THE FY 2004-05 RELEVANT TO ASSES SMENT YEAR 2005-06 AND THE ASSESSEE HAS WITHDRAWN THE DEPOSITS MADE IN CGAS-1988 AS ON 20.1 2.2007 AND THREE YEARS EXPIRES AS ON 17.12.2007 I.E. IN FY 2007-08 RELEVANT TO ASSESSMEN T YEAR 2008-09 AND ASSESSMENT OF THIS CAPITAL GAIN CAN BE MADE IN ASSESSMENT YEAR 2008-09 . HE ARGUED THAT ONCE THE ASSESSMENT CANNOT BE MADE, ALTHOUGH THE ASSESSEE VOLUNTARILY D ISCLOSED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS DURING THE ASSESSMENT YEAR 2 005-06 I.E. THE RELEVANT ASSESSMENT YEAR, PENALTY U/S. 271(1)(C) OF THE ACT CANNOT BE LEVIED. ON THE OTHER HAND, THE LD. SR. DR SHRI P. K. MISHRA RELIED ON THE ORDERS OF THE LOWER AUTHORITIE S AND HE STATED THAT THE ASSESSEE HERSELF HAS ADMITTED THIS INCOME BEFORE THE AO DECLARING THE CA PITAL GAIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE STATED THAT ONCE ASSESSMENT IS MAD E IN RESPECT TO CAPITAL GAIN IN THE RELEVANT 3 ITA 1046/K/2009 URMILA DEVI A.Y.05-06 ASSESSMENT YEAR, THE PENALTY U/S. 271(1)(C) OF THE ACT IS TO BE LEVIED IN THAT YEAR ONLY FOR THE REASON THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME, AS THE CASE MAY BE, IN THAT VERY YEAR. HENCE, HE URGED THE BENCH TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE TO GO THROUGH THE PROVISO TO SECTION 54F(4) , WHICH READS AS UNDER: PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, (I) THE AMOUNT BY WHICH (A)THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRA NSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVI DED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B) OF SUB-SECTION (1), EXC EEDS (B)THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF TH E NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE OR IGINAL ASSET EXPIRES ; AND (II)THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. WE FIND FROM THE ABOVE PROVISION THAT BY AMENDMENT TO SECTION 54F A NEW PROVISO WAS ADDED AND PROVIDED FOR A NEW SCHEME OF DEPOSIT OF AMOUNT MEANT FOR REINVESTMENT IN THE NEW ASSET. AFTER THE AMENDMENTS WHERE THE AMOUNT OF CAPITAL GA INS OR THE NET CONSIDERATION, AS THE CASE MAY BE, IS NOT APPROPRIATED OR UTILISED BY THE TAXP AYER FOR ACQUISITION OF THE NEW ASSET BEFORE THE DATE FOR FURNISHING THE RETURN OF INCOME, IT SHALL BE DEPOSITED BY HIM ON OR BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 13 9(1), IN AN ACCOUNT WITH A BANK OR INSTITUTION AND UTILISED IN ACCORDANCE WITH CGAS-1988. THE AMO UNT ALREADY UTILISED TOGETHER WITH THE AMOUNTS OF DEPOSITS SHALL BE DEEMED TO BE THE AMOUN T UTILISED FOR THE ACQUISITION OF THE NEW ASSET. IF THE AMOUNT DEPOSITED IS NOT UTILISED FUL LY FOR ACQUIRING THE NEW ASSET WITHIN THE PERIOD STIPULATED, THE CAPITAL GAIN RELATABLE TO THE UNUTI LIZED AMOUNT SHALL BE TREATED AS THE CAPITAL GAIN OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE Y EARS EXPIRES. FURTHER, THE TAXPAYERS SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AND EVEN THE CBDT VIDE CIRCULAR NO.421 DATED 12.6.1985 HAS ELABORATELY DIS CUSSED HOW AND IN WHICH YEAR THE CAPITAL GAIN WILL BE TAXED IN CASE OF PREMATURE WITHDRAWAL OR UNUTILIZED WITHDRAWAL. THE BOARD HAS CLARIFIED THAT THE CAPITAL GAIN RELATABLE TO THE UN UTILIZED AMOUNT SHALL BE TREATED AS THE CAPITAL GAIN OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF TH REE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET EXPIRES. IN THE PRESENT CASE BEFORE US ALSO THE ORIGINAL ASSETS WERE TRANSFERRED AS ON 17.12.2004 BY REGISTERING THE SALE DEED AND THE AMOUNTS WERE DEPOSITED BY THE ASSESSEE 4 ITA 1046/K/2009 URMILA DEVI A.Y.05-06 UNDER CGAS-1988 WITH UBI, SEVOKE ROAD, SILIGURI ON 27.7.2005 BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. SUBSEQUENTLY, THE ASSESSEE WI THDREW THIS AMOUNT AS ON 20.12.2007, AS THIS AMOUNT REMAINED UNUTILIZED TO BE INVESTED IN THE RE SIDENTIAL PROPERTY. THIS CAPITAL GAIN ON SALE CONSIDERATION ON BOTH THE PROPERTIES IS TO BE ASSES SED IN THE AY 2008-09 AND NOT IN AY 2005-06 AS HAS BEEN ASSESSED BY THE AO. ONCE THE ASSESSMEN T CANNOT BE MADE, THERE IS NO QUESTION OF LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT AND FOR T HIS WE PLACE OUR RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JAINARAYAN BABULAL VS CIT (1988) 170 ITR 399 WHEREIN HONBLE BOMBAY HIGH COURT DISCUSSING THE FA CTS THAT THE ASSESSEE, A HINDU UNDIVIDED FAMILY, CARRIED ON BUSINESS AND IN ITS BOOKS OF ACC OUNT RELATING TO NOVEMBER, 1948, CERTAIN CASH CREDITS WERE FOUND AGGREGATING TO RS. 24,600 FOR WH ICH IT WAS EXPLAINED ON BEHALF OF THE ASSESSEE THAT THE AMOUNTS HAD BEEN EARNED IN SPECUL ATION BUSINESS. THE INCOME-TAX OFFICER INCLUDED THE AMOUNT OF RS. 24,600 IN THE TOTAL INCO ME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1950-51 AND ALSO IMPOSED PENALTY UNDER SECTION 28(1 )(C) OF THE INDIAN INCOME-TAX ACT, 1922. ON FURTHER APPEAL BEFORE THE TRIBUNAL, IT WAS CONTE NDED ON BEHALF OF THE ASSESSEE THAT PENALTY COULD NOT BE IMPOSED IN THE ASSESSMENT YEAR 1950-51 . THE TRIBUNAL UPHELD THE ORDER OF PENALTY AND HELD THAT THE SUM OF RS. 24,600 WAS RIGHTLY ASS ESSED IN THE ASSESSMENT YEAR 1950-51. ON A REFERENCE HONBLE HIGH COURT HELD THAT THE QUESTION WHETHER THE SUM OF RS. 24,600 WAS PROPERLY ASSESSED IN THE ASSESSMENT YEAR 1950-51 CO ULD BE CONSIDERED IN PENALTY PROCEEDINGS. HONBLE BOMBAY HIGH COURT RELIED ON THE CASE LAW OF CIT V. GOKULDAS HARIVALLABHDAS [1958] 34 ITR 98 (BOM). AND FURTHER HELD THAT THE TERMS O F ALL THE EARLIER ORDERS SHOWED CLEARLY THAT THE AMOUNT OF RS. 24,600 WAS ASSESSABLE AS INCOME F ROM UNDISCLOSED SOURCES BUT THE ENTRIES AGGREGATING TO THE SAID AMOUNT OF RS. 24,600 WERE M ADE DURING THE COURSE OF THE FINANCIAL YEAR THAT BEGAN ON APRIL 1, 1948, AND ENDED ON MARCH 31, 1949. THE RELEVANT ASSESSMENT YEAR FOR THAT FINANCIAL YEAR WAS THE ASSESSMENT YEAR 1949-50 . NO PENALTY COULD BE IMPOSED FOR NON- DISCLOSURE OF THAT INCOME IN ASSESSMENT FOR THE ASS ESSMENT YEAR 1950-51.HONBLE HIGH COURT LAYING DOWN THE PRINCIPAL STATED THAT ASSESSMENT PR OCEEDINGS ARE TAXING PROCEEDINGS AND PENALTY PROCEEDINGS ARE CRIMINAL PROCEEDINGS IN THEIR VERY NATURE. A DECISION GIVEN IN AN ASSESSMENT PROCEEDING CANNOT POSSIBLY BE BINDING UPON THE AUTH ORITY WHO TRIES THE ASSESSEE FOR AN OFFENCE. IT IS OPEN TO THE INCOME-TAX OFFICER IN PENALTY PRO CEEDINGS TO CONSIDER HIS EARLIER FINDING THAT A PARTICULAR RECEIPT CONSTITUTED INCOME FOR A PARTICU LAR ASSESSMENT YEAR, BUT HE IS NOT BOUND BY THAT FINDING. IF ANY OTHER EVIDENCE IS PRODUCED IN PENALTY PROCEEDINGS, IT IS OPEN TO THE INCOME- TAX OFFICER TO COME TO A DIFFERENT CONCLUSION. THE ONLY WAY IN WHICH INCOME FROM AN UNDISCLOSED SOURCE COULD BE ASSESSED IS TO MAKE THE ASSESSMENT ON THE BASIS THAT THE PREVIOUS YEAR FOR SUCH INCOME WAS THE FINANCIAL YEAR. 5 ITA 1046/K/2009 URMILA DEVI A.Y.05-06 6. WE FIND FROM THE ABOVE FACTS AND THE CASE LAW OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JAYNARAIN BABULAL (SUPRA) THAT IN CASE THE INCOME IS DISCLOSED, IN RESPECT TO CAPITAL GAIN, IN ASSESSMENT YEAR 2005-06 AND THE SAME IS TO BE AS SESSED IN ASSESSMENT YEAR 2008-09, PENALTY U/S. 271(1)(C) CANNOT BE LEVIED IN THE RELEVANT ASS ESSMENT YEAR 2005-06 BECAUSE THE INCOME OF CAPITAL GAIN IS NOT AT ALL ASSESSABLE IN THAT ASSES SMENT YEAR. ACCORDINGLY, WE DELETE THE PENALTY LEVIED AND CONFIRMED BY LOWER AUTHORITIES AND THIS APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 8. ORDER PRONOUNCED IN OPEN COURT ON 30.6.2011. SD/- SD/- . . . . . . . . , , , , ' ' ' ' #!' #!' #!' #!' , $% (G. D. AGRAWAL) (MAHAVIR SINGH) VICE PRESIDENT JUDICIAL MEMBER ( 2 2 2 2) )) ) DATED 30TH JUNE, 2011 PRONOUNCED BY SD/-(S.V.MEHROTRA) SD/-(M. SINGH) AM/30.6.11 JM/30.6.11 34 #'5 #6 JD.(SR.P.S.) $01 7 .##8 08)9- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT SMT. URMILA DEVI, SARASWATI RICE MILL C OMPOUND, 2 ND MILE, SEVOKE ROAD, SILIGURI-734001 2 ./,- / RESPONDENT, ITO, WARD-1(3), SILIGURI 3 . #1' ( )/ THE CIT(A), SILIGURI 4. #1' / CIT, SILIGURI 5 . ?#@ .#' / DR, KOLKATA BENCHES, KOLKATA /8 .#/ TRUE COPY, $01'A/ BY ORDER, ' ! /ASSTT. REGISTRAR .