Shri Rashmikant Mohanlal Suthar, Ahmedabad V. Income Tax Office, Ward-5(3)(2), Ahmedabad

ITA 111/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7926 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI SR D R
• Keywords: Cost of acquisition

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 111/AHD/2017 ( ASSESSMENT YEAR : 2009-10) SHRI RASHMIKANT MOHANLAL SUTHAR F-3, HARI CHANCHAL APARTMENT, JETHABHAI PARK, NARAYAN NAGAR ROAD, AHMEDABAD - 380007 / VS. ITO, WARD-5(3)(2), FIRST FLOOR, NARAYAN CHAMBER, NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD ././ PAN/GIR NO. : ALXPS5041D ( APPELLANT ) .. ( !' / RESPONDENT ) # / APPELLANT BY : NONE !' $# / RESPONDENT BY : SMT. RICHA RASTOGI, SR. D.R. % &'($) DATE OF HEARING 27/06/2018 *+, $) / DATE OF PRONOUNCEMENT 04/07/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-5, AHMEDAB AD (CIT(A) IN SHORT), DATED 02.12.2016 ARISING IN THE PENALTY ORD ER DATED 12.02.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 271(1 )(C) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2009-10. ITA NO. 111/AHD/17 [SHRI RASHMIKANT M. SUTHAR VS. ITO] A.Y. 2009-10 - 2 - 2. WHEN THE MATTER WAS CALLED FOR HEARING, NONE APP EARED FOR THE ASSESSEE. ACCORDINGLY, THE MATTER IS PROCEEDED EX PARTE. 3. THE LEARNED DR FOR THE REVENUE RELIED UPON THE P ENALTY ORDER PASSED BY THE AO UNDER S. 271(1)(C) OF THE ACT, WHI CH WAS ENDORSED BY THE CIT(A). 4. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER, THE PENALTY ORDER AS WELL AS THE ORDER OF THE CIT(A). THE SHOR T QUESTION FOR ADJUDICATION IS MAINTAINABILITY OF PENALTY UNDER S. 271(1)(C) OF THE ACT AMOUNTING TO RS.1,47,371/- IN THE FACTS OF THE CASE . THE ASSESSEE IN THE INSTANT CASE HAD SOLD AGRICULTURAL LAND AFTER C ONVERTING IT INTO NON- AGRICULTURAL LAND. THE ASSESSEE, WHILE DECLARING T HE CAPITAL GAIN, CLAIMED 50% TOWARDS EXPENSES ON ACCOUNT OF COST OF IMPROVEMENT. IN THE QUANTUM PROCEEDING, THE EXPENSES INCURRED TOWAR DS COST OF IMPROVEMENT WAS REDUCED FROM 50% TO 33.33%. CONSEQ UENTLY, LONG TERM CAPITAL GAINS (LTCG) AMOUNTING TO RS.3,86,693/ - WAS ADDED TO THE ASSESSED INCOME ON ACCOUNT OF INCREASE IN THE L TCG. AS A RESULT OF QUANTUM PROCEEDINGS, PENALTY UNDER S. 271(1)(C) AMOUNTING TO RS.1,47,371/- WAS LEVIED UPON THE ASSESSEE. IN THI S REGARD, WE FIRSTLY NOTE THAT THE AO IN THE ASSESSMENT ORDER ALLEGED F URNISHING INACCURATE PARTICULARS OF INCOME WHILE MAKING ADDI TION ON ACCOUNT OF LTCG NOTED ABOVE. HOWEVER, THE PENALTY ORDER PASSE D BY THE AO IS ON THE FOOTING THAT THE ASSESSEE HAS CONCEALED PAR TICULARS OF INCOME. THEREFORE, THERE IS A CHANGE IN THE BASIS OF SATIS FACTION FOR THE LEVY OF PENALTY. IN THESE CIRCUMSTANCES, THE ISSUE IS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-OR DINATE BENCH IN SHRI KANTIBHAI NARANBHAI PRAJAPATI VS. ITO ITA NO. 2880/ AHD/2014 ORDER DATED 15.02.2018. THE RELEVANT OPERATIVE PARA OF T HE ORDER OF THE CO- ORDINATE BENCH IS REPRODUCED HEREUNDER: ITA NO. 111/AHD/17 [SHRI RASHMIKANT M. SUTHAR VS. ITO] A.Y. 2009-10 - 3 - 8. WE STRAIGHT AWAY FIND THAT THE AO VIDE PENALTY ORDER DATED 25/11/2013 UNDER S.271(1)(C) OF THE ACT IMPOSED P ENALTY ON ADDITIONS MADE ALLEGING CONCEALMENT OF PARTICUL ARS OF INCOME. HOWEVER, THE CIT(A), ON THE OTHER HAND, HAS CONFIRM ED THE PENALTY ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCOME. APPARENTLY, THE BASIS AND FOUNDATION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED BY THE CIT(A). IT IS THUS OSTENSIBLE T HAT FINDINGS RECORDED BY THE CIT(A) SHOW THAT PENALTY HAS BEEN C ONFIRMED ON A DIFFERENT PREMISE AND THE ORIGINAL SATISFACTION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED OR MODIFIED BY THE APPELLA TE AUTHORITY. IN SUCH CIRCUMSTANCES, WHERE THE ORIGINAL BASIS OF IMP OSITION OF PENALTY HAS BEEN ALTERED IN A SIGNIFICANT WAY BY THE FIRST APPELLATE AUTHORITY, THE VERY BASIS FOR SUSTAINING THE PENALTY IS RENDER ED NON-EXISTENT. NEEDLESS TO SAY, THE IMPOSITION OF PENALTY IS SOLEL Y DEPENDENT UPON THE SATISFACTION OF THE AO [UNLESS INITIATED BY C IT(A)] AND NON- ELSE. THE GROUND FOR ACTION BY AO WAS ALLEGATION O F CONCEALMENT. THIS GROUND HAS BEEN SUBSTITUTED BY CIT(A) TO FURN ISHING INACCURATE PARTICULARS OF INCOME WHILE CONFIRMING THE PENALTY QUANTIFIED BY THE AO. THUS, IN THE ABSENCE OF CONTINUITY IN THE FIND INGS OF THE AO AND THE CIT(A), THE ORDER OF THE PENALTY PASSED BY THE AO IS LIABLE TO BE STRUCK DOWN ON THIS GROUND ALONE. FOR SUCH A VIEW, WE USEFULLY REFER TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF NEW SORATHIA ENGINEERING COMPANY VS. CIT (2006) 282 ITR 642 (GUJ.) AND CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 3 06 (GUJ.). SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN GIAN CHAND BATIA VS. DCIT 61 ITD 24(ALL.). THER EFORE, WHERE CONCURRENT I.T.AUTHORITIES ARE NOT SURE ABOUT NATUR E OF DEFAULT, THE PENAL ACTION UNDER S.271(1)(C) OF THE ACT IS NOT SU STAINABLE IN LAW. 9. CONSEQUENTLY, THE PENALTY ORDER OF THE AO DATED 25/11/2013 IS SET ASIDE AND PENALTY IMPOSED THEREBY IS CANCELLED. 5. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE PE NALTY IS REQUIRED TO STRUCK DOWN ON THIS LEGAL GROUND ALONE. HOWEVER, W E ALSO NOTICE THAT PENALTY HAS BEEN IMPOSED MERELY BECAUSE EXPENSES IN CURRED FOR COST OF ACQUISITION WAS ESTIMATED BY THE AO AT 33.33% IN PLACE OF 50% CLAIMED BY THE ASSESSEE. THUS, IT GIVES A CLEAR IM PRESSION THAT PENALTY HAS BEEN IMPOSED ON ESTIMATED DISALLOWANCES. SUCH ACTION IS NOT ORDINARILY PERMISSIBLE WITHOUT BRINGING CULPABILITY OF SOME SORT WHICH IS NOT FOUND TO BE PRESENT IN THIS CASE. NO INFIDEL ITY ON THE PART OF THE ASSESSEE WAS BROUGHT ON RECORD PER SE. THE AO HIMSELF HAS ACCEPTED THE FACTUM OF INCURRING EXPENDITURE ALBEIT AT DIFFE RENT AMOUNTS. IN THESE CIRCUMSTANCES, THE PENALTY UNDER S. 271(1)(C) OF THE ACT FOR ITA NO. 111/AHD/17 [SHRI RASHMIKANT M. SUTHAR VS. ITO] A.Y. 2009-10 - 4 - ALLEGED WRONG PARTICULARS OF INCOME DOES NOT APPEAR JUSTIFIED. THUS, THE AO IS DIRECTED TO CANCEL THE PENALTY IMPOSED UN DER S. 271(1)(C) OF THE ACT ON THIS SCORE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED EX PARTE . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/07/2018 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- ..' / REVENUE 2.' / ASSESSEE 0. ) % 1) / CONCERNED CIT 4. % 1)- / CIT (A) 4.5'67!8)8& 9 9 / DR, ITAT, AHMEDABAD :.7;<= / GUARD FILE. BY ORDER / 9 / 9 THIS ORDER PRONOUNCED IN OPEN COURT ON 04/07/2 018