Sri Sachinadra Nath Kayal, Hooghly V. ITO, WD-23(1), HOOGHLY, Hooghly

ITA 1084/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0666 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: S P DA TTA
• Section: 27

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1084/KOL/2015 ASSESSMENT YEAR:2010-11 SRI SACHINDRA NATH KAYAL VILL. MAKHLA-2, P.O. & P.S. UTTARPARA, DIST.HOOGHLY PIN 712247 [ PAN NO.AFEPK 7726 E ] / V/S . ITO WARRD-23(1), AAYAKAR BHAWAN, KHADINAMORE, CHINSURAH, HOOGHLY PIN-712101 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.P. DATTA, ADVOCATE /BY RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT-DR /DATE OF HEARING 24-10-2017 /DATE OF PRONOUNCEMENT 26-12-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-6, KOLKATA DATED 09.07.2015 PE RTAINING TO ASSESSMENT YEAR 2010-11. PENALTY LEVIED BY ASSESSING OFFICER U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 30.04.2013. SHRI S.P. DATTA, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI SAURBH KUMAR, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. SOLE EFFECTIVE ISSUE RAISED BY ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER FOR 10,98,667/- ON ACCOUNT OF PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. ITA NO.1084/KOL/2015 A.Y. 20 10-11 SH. SACHINDRA NATH KAYAL VS. ITO WD-23(1), HGL PAGE 2 3. THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATIO N HAS SOLD ITS LONG TERM ASSETS AND EARNED AN INCOME OF 53,33,336/- ONLY AS CAPITAL GAINS. HOWEVER, THE IMP UGNED INCOME WAS NOT OFFERED TO TAX BUT THE DISCLOSURE OF THE SAME WAS MADE IN THE BALANCE SHEET FILED ALONG WITH THE INCOME TAX RETURN. THE A MOUNT OF CAPITAL GAINS WAS SHOWN AS INVESTMENT IN LIC MARKET PLUS. THUS, IT IS CLEAR THAT THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN WHICH WAS NOT OFFERED TO TAX BUT DISCOURSE WAS MADE IN THE BALANCE- SHEET. HOWEVER, AO IN THE QUANTUM ASSESSMENT ORDER HAS MADE THE ADDITION OF LONG TERM CAPITAL GAINS EARNED BY ASSESSEE AND INITIATED THE PENALTY PROCEEDINGS AND HE FINALLY IMPOSED THE PENALTY U/S 271(1)(C) OF THE AC T FOR 10,98,667/- TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE LTCG INCOME WA S NOT OFFERED TO TAX DUE TO LACK OF KNOWLEDGE OF INCOME TAX AND AMOUNT OF CAPITAL GA INS WAS DULY DISCLOSED IN THE BALANCE SHEET. THEREFORE, IT CANNOT BE SAID THE INC OME WAS CONCEALED DELIBERATELY. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF A SSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANTS SUBMISSIONS. I FIND THAT THE UNDISPUTED FACTUAL POSITION IS THAT THE APPELLA NT HAD NOT DECLARED ANY LONG TERM CAPITAL GAINS ON AMOUNT OF SALE OF LAND BUT HAD DIS CLOSED THE SALES PROCEEDS AS INCREASED IN CAPITAL IN HIS BALANCE SHEET ALONG WIT H THE CORRESPONDING INVESTMENT. THE APPELLANT ACCEPTED THE ADDITION IN THE ASSESSME NT AND PAID THE DEMAND RAISED. HE HAS PRAYED FOR DELETION OF THE PENALTY ON THE GR OUND OF IGNORANCE OF THE PERSON PREPARING THE COMPUTATION OF INCOME AND PAYMENT OF THE ENTIRE DEMAND. IN MY VIEW, THE APPELLANTS EXPLANATION IS VERY VAGUE AND FAR-F ETCHED. IT IS VERY DIFFICULT TO ACCEPT THAT THE APPELLANT OMITTED TO DISCLOSE THE HUGE AMO UNT OF LONG-TERM CAPITAL GAIN ONLY ON ACCOUNT OF IGNORANCE. THE APPELLANTS EXPLANATIO N CANNOT BE ACCEPTED TO BE SATISFACTORY OR BONA-FIDE. IT WAS OBSERVED BY THE H ON'BLE DELHI HIGH COURT, WHILE HOLDING THAT PENALTY HAS TO BE IMPOSED WHERE THE AP PELLANT IS NOT ABLE TO SHOW THAT THE MISTAKE/OMISSION IS BONAFIDE, IN THE CASE OF C OMMISSIONER OF INCOME-TAX V. ZOOM COMMUNICATION (P) LTD.[2010] 191 TAXMAN 179 (DELHI) /[2010] 327 ITR 510 (DELHI)/[2010] 2233 CTR 465 (DELHI)AS FOLLOWS: THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMA LL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF T HE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOL LY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAI M IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD ST ILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUND ATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITIO N OF PENALTY, EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS N ATURE, THAT WOULD GIVE ITA NO.1084/KOL/2015 A.Y. 20 10-11 SH. SACHINDRA NATH KAYAL VS. ITO WD-23(1), HGL PAGE 3 LICENCE TO UNSCRUPULOUS ASSESSEE TO MAKE WHOLLY UNT ENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THE M, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF-ASSESSMENT UNDER SECTION 143(1) OF TH E ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOUL D BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT P AYING THE AX LEGALLY PAYABLE BY THEM, IF THEIR CASE ARE NOT PICKED UP FO R SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT WHICH THESE PENALTY PROVI SIONS IN THE ACT HAVE. 7. CONSIDERING THE ABOVE OBSERVATIONS OF THE HON'BL E COURT AND THE FAILURE OF THE APPELLANT TO DISCHARGE THE ONUS PUT ON HIM BY EXPLA NATION 1 TO SECTION 271(1)(C) TO ESTABLISH THAT THE EXPLANATION GIVEN BY HIM IN RELA TION TO THE ADDITION IS BONA FIDE, IT HAS TO BE HELD THAT THE ASSESSING OFFICER RIGHTLY I MPOSED PENALTY OF RS.10,98,667/- ON THE APPELLANT. THE FACT THAT THE APPELLANT PAID THE ADDITIONAL TAX PAYABLE ON THE ENHANCED INCOME DOES NOT PROVIDE HIM IMMUNITY FROM COMPUTATION OF THE AMOUNT OF TAX SOUGHT TO BE EVADED IN TERMS OF EXPLANATION 4 T O SECTION271(1)(C).THE PENALTY F RS.10,98,667/- IMPOSED BY THE ASSESSING OFFICER IS CONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD. AR FOR THE ASSESSEE FILED PAPER BO OK WHICH IS RUNNING PAGES FROM 1 TO 30 AND HE REITERATED THE SAME ARGUMENTS T HAT WERE MADE BEFORE LD. CIT(A) WHEREAS LD. DR VEHEMENTLY RELIED ON THE ORDER OF AU THORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN IT UNDISPUTED FACT THAT ASSESSEE HAS EARNED LTCG WHICH WAS NOT OFFERED TO TAX. IT IS ALSO UNDISPUTED THAT THE DISCLOSURE OF THE SAME MADE IN BALANCE-SHEET OF THE ASSESSEE. THUS, WE NOT E THAT NON- OFFERING OF LTCG TO THE TAX WAS NOT DELIBERATE. IT WAS OUT OF IGNORANCE OF ASSESSEE. IN SUCH CIRCUMSTANCES, THE PENALTY U/S. 271(1)(C) OF THE ACT CANNOT BE LEV IED. IN HOLDING SO, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CHANDRAPAL BAGGA VS. INCOME-TAX APPELLATE TRIBUNAL ON 31.01.2003 EQUIVALENT CITATIONS (2003) 182 CTR RAJ, 185, 2003 261 ITR 67 RAJ, WHEREIN THE HON'BLE COURT HAS HELD:- 11. WHEN THE ASSESSEE HAS DISCLOSED THE TRANSACTIO NS WHICH IS THE BASIS FOR CAPITAL GAINS TAX AND THOUGH WRONGLY CLAIMED EXEMPTION FROM THE CAPITAL GAINS TAX, BUT THAT CANNOT BE A CASE OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. IF IT HAS CLAIMED ANY EXEMPTION AFTER DISCLOSING THE RELE VANT BASIC FACTS AND UNDER ITA NO.1084/KOL/2015 A.Y. 20 10-11 SH. SACHINDRA NATH KAYAL VS. ITO WD-23(1), HGL PAGE 4 IGNORANCE OF THE PROVISIONS OF THE ACT OF 1961, AND NOT OFFERED THAT AMOUNT FOR TAX, IN SUCH CASES, PENALTY SHOULD NOT BE IMPOSED. IN SUCH CASES RATHER IT IS THE DUTY OF THE ASSESSING OFFICER TO ASK FOR FURTHER DETAILS AND TA X THE INCOME IF IT IS LIABLE TO TAX AND THAT HAS BEEN DONE IN THIS CASE. 12. IN VIEW OF THESE FACTS ON RECORD, WE SEE NO REA SON TO SUSTAIN THE ORDER OF THE TRIBUNAL. THE ORDER OF THE TRIBUNAL IS SET ASIDE AN D PENALTY IS CANCELLED. THE APPEAL STAND ALLOWED ACCORDINGLY. IN THE BACKGROUND OF THE ABOVE DISCUSSIONS AND PREC EDENT WE, THEREFORE HOLD THAT IMPOSITION OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. WE ORDER ACCORDINGLY. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26/12/2017 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 26/12/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SRI SACHINDRA NATH KAYAL, VILL. MKHLA-2, P.O.& P.S. UTTARPARA, DIST. HOOGHLY PIN-712247 2. /RESPONDENT-ITO WARD-23(1), AAYAKAR BHAWAN, KHADINA MORE, CHINSURAH, HO OGHLY, PIN 712101 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO ,,