ACIT, Pune V. Shri Vinay A Joneja, Pune

ITA 1133/PUN/2012

• Counselvise Citation: 113324514 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Business income; Question of law; Wrong claim; Agreed addition; Capital receipt; Revised return; Revenue expenditure
• Section: 54B; 80HHC; 133A; 27; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.1133/PN/2012 (ASSESSMENT YEAR 2007-08) ACIT, CIRCLE-4, PUNE .. APPELLANT VS. VINAY A. JONEJA, 88, PORWAL PLAZA, 2421, EAST STREET, CAMP, PUNE - 411001 .. RESPONDENT PAN NO.ABKPJ8047M ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI A.K. MODI DATE OF HEARING : 12-02-2014 DATE OF PRONOUNCEMENT : 11-04-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30-01-2012 OF THE CIT(A)-II, PUNE RELATING TO ASSES SMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A CIVIL CONTRACTOR ENGAGED IN THE BUSINESS OF ROAD CONSTRUCTION. HE FI LED HIS RETURN OF INCOME ON 31-12-2007 DECLARING TOTAL INCOME OF RS.5,98,210 /-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBS ERVED FROM THE STATEMENT OF TOTAL INCOME SUBMITTED ALONG WITH RETU RN OF INCOME THAT THE ASSESSEE HAD WORKED OUT CAPITAL GAIN OF RS.62,57,58 7/- AND AFTER ADJUSTING THE BROUGHT FORWARD CAPITAL LOSS OF RS.21,410/- HAD DECLARED NET CAPITAL GAIN AT RS.62,35,890/-. FROM THE ABOVE CAPITAL GAIN THE ASSESSEE HAD DEDUCTED AN AMOUNT OF RS.63 LAKHS BEING AGRICULTURAL LAND PU RCHASED AS PER AGREEMENT. 2 2.1 THE ASSESSING OFFICER ASKED THE ASSESSEE TO GIV E THE DETAILS OF THE TRANSACTION. THE ASSESSEE VIDE LETTER DATED 24-12- 2009 FILED THE REQUISITE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER WHIC H ARE AS UNDER : (I) INDEX-II DATED 11/04/2004 GIVING DETAILS OF PURHASE OF LAND AT MOHAMADWADI BEAR ING S.NO.14/HISSA NO.11/ADMEASURING TOTAL AREA OF 31.5 R ( I.E. 2927.5 SQ.MTR.) (II) INDEX-II DATED 06/10/2006 GIVING DETAILS OF SALE OF LAND AT S.NO.14/HISSA NO.11/ ADMEASURING TOTAL AREA OF 31.5R. (III) COPY OF ARTICLES OF AGREEMENT DATED 28/03/2007 ENTERED BY THE ASSESSEE WITH MR. ASHWINI G. JONEJA, FOR PURCHASE OF LAN D AT MOHAMADWADI, S.NO.14/HISSA NO.5B+6D+6A+7A WITH DEVELO PMENT RIGHTS FOR AN AGREED AMOUNT OF RS.63,00,000/-. (IV) 7/12 EXTRACT OF THE PROPERTY AT S.NO.14/HISSA N O.11 AREA 0.49 R (V) VILLAGE FORM NO.7 DATED 15/5/006. 2.2 THE ASSESSEE CLAIMED THAT THE LAND SOLD AND SUB SEQUENTLY PURCHASED ALONG WITH DEVELOPMENT RIGHTS ARE AGRICULTURAL LAND AND ARE LIABLE FOR CAPITAL GAIN TAX. HOWEVER, THE ASSESSING OFFICER DID NOT A CCEPT THE CONTENTION OF THE ASSESSEE ON THE FOLLOWING GROUNDS : 1. THE LANDS IN QUESTION AT MOHAMAWADI IS WITHIN 8 KM S. OF PUNE MUNICIPAL CORPORATION. 2. FORM NO.7 DATED 15/5/2006 CLARIFIES THAT THE LAND AT S.NO.14/HISSA NO.11 AT MOHAMADWADI WAS NOT CULTIVATED SINCE THE YEA R 2002-03 BEING A BARREN LAND. 3. ENQUIRIES WITH THE PUNE MUNICIPAL CORPORATION, ZO NAL SECTION, TOWN PLANNING DEPARTMENT, REVEALED THAT THE SAID LANDS ARE IN RESIDENTIAL ZONE AND THERE ARE SOME RESERVATION FOR DEVELOPMENT AS PER THE DEVELOPMENT PROJECTS. 2.3 THE ASSESSING OFFICER ACCORDINGLY CALCULATED TH E SHORT TERM CAPITAL GAIN AS UNDER : TOTAL SALE CONSIDERATION AS PER SALE DEED REGISTERED UNDER NO.17628/006/DT.6/10/2006 RS.75,00 ,000 LESS : COST OF PROPERTY SOLD RS.12,00,000 (PURCHASED ON 13/4/2004 (AS PER INDEX-II) ---------------- SHORT TERM CAPITAL GAIN RS.63,00,000 ---------------- 3 2.4 THE ASSESSING OFFICER FURTHER NOTED THAT THE AS SESSEE HAD WRONGLY APPLIED THE INDEXATION METHOD TREATING THE SAME AS LONG TERM CAPITAL GAIN ALTHOUGH THE PROPERTY WAS SOLD WITHIN 2 YEARS FROM THE DATE OF THE PURCHASE. THE ASSESSING OFFICER ACCORDINGLY DETERMINED THE SH ORT TERM CAPITAL GAIN AT RS.63 LAKHS. THE ASSESSEE DID NOT FILE ANY APPEAL. IN THE MEANTIME THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S .271(1)(C) OF THE I.T. ACT. 2.5 THE ASSESSEE DURING THE PENALTY PROCEEDINGS SUB MITTED THAT HE HAD FILED HIS RETURN OF INCOME VOLUNTARILY AND HAS NOT CONCEALED THE INCOME. THE ENTIRE PARTICULARS/DETAILS IN RESPECT OF TRANSF ER OF PROPERTY WAS DULY DISCLOSED. HE HAD NO TAXATION KNOWLEDGE AND HIS RE TURN OF INCOME WAS PREPARED AND FILED WITHOUT ANY MALAFIDE INTENTION A ND THE DEDUCTION WAS CLAIMED THROUGH OVERSIGHT. IT WAS ARGUED THAT THE ENTIRE CAPITAL RECEIPTS HAS BEEN REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. IT WAS FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS WHEN THE MISTAKE WAS POINTED OUT THE ASSESSEE SUO-MOTO AGREED AND HAS PAID THE TAX. REL YING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RE LIANCE PETRO PRODUCTS PVT. LTD., REPORTED IN 322 ITR 158 AND THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARESH WARDHA CHEMICALS AND MINERALS PVT. LTD. IT WAS ARGUED THAT THE PENALTY U /S.271(1)(C) IS NOT LEVIABLE. 2.6 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE. DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM AND OBSERVING THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS AND THEREFORE EXPLANATION-1 TO SECTION 271(1)(C) IS CLEARLY 4 APPLICABLE THE ASSESSING OFFICER LEVIED PENALTY OF RS.21,20,580/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 3. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SA ME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE HAS SOLD/TRANSFERRED HIS LAND AT MOHAMADWADI FOR TOTAL CONSIDERATION OF RS.75,00,000/-. THE ASSESSEE HAS ACQUIRED/PURCHASE D THE SAID LAND ON 13- 04-2004 FOR TOTAL CONSIDERATION OF RS.12,29,380/- I NCLUDING STAMP DUTY AND REGISTRATION CHARGES FROM SALIM SADRUDDIN KHOJA & O THERS AND THE SAME HAS ALREADY BEEN REFLECTED IN THE BOOKS OF ACCOUNTS . THE ASSESSEE HAS RECEIVED NET GAIN OF RS.62,70,620/- ON SALE OF THE AFOREMENTIONED LAND. DURING THE FILING OF INCOME TAX RETURN FOR THE YEAR UNDER CONSIDERATION, THE CONSULTANT OF THE ASSESSEE INADVERTENTLY AND THROUG H OVERSIGHT CLAIMED THE EXEMPTION U/S.54(B)OF I.T ACT AND SHOWN THE INCOME FROM CAPITAL GAIN AT NIL EVEN THOUGH THE ASSESSEE HAD SHORT TERM CAPITA L GAIN OF RS.62,70,620/. 3.1 IT WAS ARGUED THAT THE ASSESSEE VOLUNTARILY AC CEPTED FOR THE AGREED ADDITION IN RESPECT OF DEDUCTION WRONGLY CLAIMED BY HIS CONSULTANT IN THE ABOVE SAID TRANSFER OF PROPERTY DURING THE ASSESSME NT PROCEEDINGS. THE ASSESSEE HAS ALREADY PAID THE INCOME TAX OF RS.8,50 ,000/- AGAINST THE ABOVE SAID INCOME TAX DUES AND IS READY TO PAY THE BALANC E ENTIRE DUES ALONG WITH INTEREST. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS SUO MOTO AND VOLUNTARILY HAD AGREED FOR THE ADDITION OF SHOR T TERM CAPITAL- GAIN OF RS.62,70,620/- FOR SALE OF LAND AT MOHAMADWADI. IT WAS ARGUED THAT THE ASSESSEE DID NOT HAVE TAXATION KNOWLEDGE AND HIS RE TURN OF INCOME HAS BEEN PREPARED BY CHARTERED ACCOUNTANT AND HIS CHARTERED ACCOUNTANT HAS SUBMITTED THE ENTIRE PARTICULARS IN RESPECT OF PROP ERTY AND INADVERTENTLY AND 5 WITHOUT ANY MALAFIDE INTENTION AND THROUGH OVERSIGH T CLAIMED THE DEDUCTION. HOWEVER, THE ENTIRE CAPITAL RECEIPTS HAS ALREADY BEEN REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS AND RETURN OF INCOME FILED. FURTHER DURING THE ASSESSMENT PRECEDING THE ASSESSEE SUMOTO AND VOLUNT ARILY STATED AND DECLARED THAT, HE IS WITHDRAWING THE DEDUCTIONS CLA IMED U/S 54B AND SUMOTO VOLUNTARILY ACCEPTED THE AGREED ADDITION IN RESPECT OF DEDUCTION CLAIMED INADVERTENTLY & THROUGH OVERSIGHT ON ACCOUNT OF THE TRANSFER OF PROPERTY. 3.2 IT WAS ARGUED THAT THE AO HAS WRONGLY LEVIED THE PENALTY IN SPITE OF THE FACT THAT, THE ASSESSEE NEITHER INTENTIONALLY C ONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF THE INCOME DURI NG THE ASSESSMENT PROCEEDING AND THEREFORE THE SAID PENALTY IS NOT JU STIFIED. THE ASSESSEE HAS ALREADY DECLARED IN THE RETURN OF HIS INCOME PARTI CULARS OF THE CAPITAL GAIN IN RESPECT OF THE SALE OF LAND AT MOHAMADWADI AND T HE BOOKS OF ACCOUNTS OF THE ASSESSEE ALREADY REFLECTS THE ABOVE SAID TRANSA CTION AND THEREFORE THE SAID PENALTY IS NOT JUSTIFIED. IT WAS ARGUED THAT THE ASSESSEE HAS CO-OPERATED IN THE ASSESSMENT PROCEEDING AND THAT THERE WAS NO CONSCIOUS BREACH OF LAW. THE ASSESSEE DID NOT CONCEAL ANY INCOME OR FACTS AN D NEITHER INTENTIONALLY FURNISHED ANY INACCURATE PARTICULARS OF INCOME NOR WAS THERE ANY CONCEALMENT. IT WAS ACCORDINGLY ARGUED THAT THE PE NALTY LEVIED BY THE AO BE DELETED. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT BY HOLDING AS UNDER : 6 3.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE MATERIAL ON RECORD. THE APPELLANT HAS RAISED TWO GRO UNDS OF APPEAL AND IN GROUND NO.1 THE APPELLANT HAS CONTESTED THE PENALTY LEVIED U/S.271(1)(C) OF RS.21,20,580/-. IT HAS BEEN CONTENDED BY THE APPELLA NT THAT THE ENTIRE PARTICULARS IN RESPECT OF TRANSFER OF AGRICULTURAL LAN D AT MOHAMADWADI WAS FURNISHED WHILE FILING THE RETURN OF INCOME. THE AP PELLANT HAS FURTHER STATED THAT, HOWEVER, WHILE CALCULATING THE CAPITAL GAINS I N RESPECT OF THE ABOVE PROPERTY, INADVERTENTLY AND HAVING NO MALAFIDE INTE NTION THROUGH OVERSIGHT THE TAX CONSULTANT CLAIMED THE DEDUCTION. THOUGH TH E APPELLANT, SUBMITS THAT THE SAME WHEN FOUND TO BE INCORRECT, THE ADDITI ONS MADE BY THE A.O. WAS VOLUNTARILY AGREED IN RESPECT OF WRONG CLAIM OF EXEMPTION U/S 54B AND THE TAXES DUE THEREON HAS ALSO BEEN PAID SUBSEQUENTLY. I T HAS ALSO BEEN STATED THAT THE CAPITAL RECEIPTS IN RESPECT OF THE AFO RESAID PROPERTY SOLD HAVE BEEN REFLECTED IN THE REGULAR BOOKS OF ACCOUNT AND T HE RETURN OF INCOME FILED. IT HAS ALSO BEEN SUBMITTED THAT THE APPELLANT DID NOT HAVE TAXATION KNOWLEDGE AND THAT HIS RETURN OF INCOME HAD BEEN PRE PARED BY THE CHARTERED ACCOUNTANT AND THE ENTIRE PARTICULARS WERE FURNISHED BY HIM INADVERTENTLY AND WITHOUT ANY MALAFIDE INTENTION AN D THROUGH OVERSIGHT CLAIMED THE EXEMPTION. HOWEVER, DURING THE ASSESSMENT P ROCEEDINGS THE APPELLANT SUBMITS THAT SUO MOTO THE CLAIM OF EXEMPTION U/S 54B WAS WITHDRAWN AND ALSO VOLUNTARILY AGREED TO THE ADDITIO N. IT HAS ALSO BEEN SUBMITTED THAT THE DETAIL OF THE PURCHASE OF THE LAND ON 13.04.2004 FOR A TOTAL CONSIDERATION OF RS.12,29,380/-INCLUDING STAMP D UTY AND REGISTRATION CHARGES HAD BEEN REFLECTED IN THE BOOKS OF ACCOUNTS AN D COPIES OF THE PURCHASE AND SALE DETAILS WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. THUS, THE ENTIRE TRANSACTION OF PURCHASE AND SALE OF L AND AND CAPITAL GAINS THEREON HAD BEEN REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS, AUDITED BALANCE SHEET AND STATEMENT OF THE COMPUTATION OF INCOME. THE APPELLANT HAS ALSO STATED ON THE CONTENTION OF THE ASSESSING OFFICER REFERR ED IN THE PENALTY ORDER THAT THE REFERENCE MADE BY THE ASSESSING OFFICER OF THE YEAR OF PURCHASE OF LAND AS 1999 IS NOT CORRECT AS THE YEAR OF ACQUISITION WAS 2004 AND IT WAS BECAUSE OF INADVERTENT TYPOGRAPHICAL ERROR THAT THE YEAR OF ACQUISITION WAS INCORRECTLY MENTIONED AS 1999 INSTEAD OF 2004 BEING THE CORRECT YEAR. THE APPELLANT HAD, HOWEVER, CALCULATE D THE COST OF INDEX OF 480 BY CONSIDERING THE ACTUAL YEAR OF ACQUISITION OF 2004 /05 AND NOT 1999 AS IS CLEARLY EVIDENT FROM THE STATEMENT OF COMPENSATION OF TOTAL INCOME. THEREFORE, THE INFERENCE DRAWN BY THE ASSESSING OFFICER IS NOT CORRECT SO FAR AS THE CONTENTION OF THE ASSESSING OFFICER REGARDING URB AN LAND AND AGRICULTURAL LAND AND THE CLAIM OF DEDUCTION U/S. 5 4B OF THE IT. ACT, IS CONCERNED, THE APPELLANT HAS CONTENDED THAT THE EXEM PTION CLAIMED BY THE CONSULTANT WAS INADVERTENT AND THROUGH OVERSIGHT AND W HICH WAS CORRECTED DURING THE ASSESSMENT PROCEEDINGS BY SUO MOTO VOLUNTARILY ADMITTING FOR AGREED ADDITION OF SHORT-TERM CAPITAL GAIN ON SALE OF THE SAID LAND. IT HAS THUS BEEN CONTENDED THAT THERE WAS NO CONSCIOUS BREACH OF L AW AND THE APPELLANT DID NOT CONCEAL ANY INCOME OR FACT AND NEITHER INTE NTIONALLY FURNISHED ANY INACCURATE PARTICULARS. IT HAS ALSO BEEN CONTENDED THA T THE A.O. HAD WRONGLY LEVIED THE PENALTY AS THE APPELLANT HAD NEITHER INT ENTIONALLY CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS. THE APPE LLANT HAS RELIED ON THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CLAIM: 1) RELIANCE PETROPRODUCTS (P) LTD. (2010) 322 ITR 15 8 (SC) 2) KANBAY SOFTWARE INDIA (P) LTD. (2009) 122 TTJ 72 1 (PUNE) 3) CIT VS HARESHWARDHA CHEMICAL AND MINERAL LTD (2004 ) 186 CTR (RAJ) 552 4) CIT VS CAPLIN POINT LABORATORIES LTD (2007) 212 CT R MAD 58 5) DEVIDAS SUKHANI VS ITO (2006) 101 TTJ (JD) 551 6) RAJENDRA KUMAR VS ITO (2005) 94 TTJ (JD) 280 7) HINDUSTAN STEEL LTD VS STATE OF ORISSA (1972) 63 ITR 26 (SC) 7 3.4 IN THE PRESENT CASE, IT IS UNDISPUTED THAT DURING THE REGULAR ASSESSMENT IT WAS POINTED OUT TO THE ASSESSEE THAT THE OWNE RSHIP FOR THE MOHAMADWADI PROPERTY BY ASSESSEE BEING LESS THAN 36 MONT HS, THE CAPITAL GAINS EARNED WAS SHORT-TERM CAPITAL GAIN AND THUS WAS NO T ENTITLED FOR EXEMPTION U/S 54B OF THE ACT. THEREFORE, THE DISALLOW ANCE MADE BY THE A.O, ON THIS ACCOUNT WAS ACCEPTED BY THE ASSESSEE AND WAS NOT F URTHER CONTESTED IN APPEAL, THE APPELLANT HAS SUBMITTED THAT DUE TO IN ADVERTENT TYPOGRAPHICAL / CLERICAL ERROR, THE YEAR OF ACQUISIT ION WAS MENTIONED IN THE STATEMENT OF COMPUTATION AS 1999 INSTEAD OF THE CORREC T YEAR I.E. 2004, THOUGH THE APPELLANT HAS CALCULATED THE COST OF INDEX BY CONSIDERING THE ACTUAL YEAR OF ACQUISITION AS 2004-05 AND NOT 1999 IS ALSO A POINT WHICH CANNOT BE IGNORED AND PRIMA FACIE INDICATES THE BONA FIDE CONDUCT OF THE APPELLANT. THE APPELLANT HAS ALSO NOT CONCEALED THE D ETAILS OF PURCHASE / SALE OF THE PROPERTY FROM THE DEPARTMENT AS THE DETAILS OF THE SALES AND PURCHASES HAVE BEEN PROVIDED THOUGH THE EXEMPTION CLA IMED U/S 54B HAS BEEN STATED TO BE INADVERTENT AND THROUGH OVERSIGHT A ND ONCE NOTICED AND FOUND TO BE INCORRECT, THE APPELLANT HAS VOLUNTARILY ADMITTED FOR THE AGREED ADDITION OF SHORT-TERM CAPITAL GAIN ON SALE OF LAND. THEREFORE, THIS IS NOT A CASE WHERE THE INFORMATION OF THE EARNINGS ON ACCOUNT OF CAPITAL GAINS HAD BEEN CONCEALED BY THE APPELLANT AS THE INFORMATION PERTAINING TO THE ARRIVING OF INCOME FROM CAPITAL GAINS HAVE BEEN DULY DISCLOSED BY THE APPELLANT IN THE RETURN OF INCOME. NEITHER THIS CASE INVOLVES ANY ENQUIRY OR DETECTION OF THE CONCEALMENT WHICH LED TO THE DISCLO SURE OF THE INFORMATION. IN THE PRESENT CASE DISCLOSURE OF THE INFORMATION IS VO LUNTARY. A MERE OMISSION OR NEGLIGENCE WOULD NOT PRIMA FACIE CONSTITUT E A DELIBERATE ACT AND CONSCIOUS BREACH OF LAW ON THE PART OF THE APPELLANT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS ACCEPTED THIS MISTAKE AND HAS A LSO EXPLAINED THAT IT HAD HAPPENED INADVERTENTLY OR THROUGH OVERSI GHT AND THAT IT AS A GENUINE CLERICAL / TYPOGRAPHICAL MISTAKE WITH NO MAL AFIDE INTENTIONS, THEREFORE, COULD NOT BE HELD AS CONCEALMENT. THEREFO RE, WHERE THERE IS NOTHING TO SUGGEST GROSS OR WILLFUL NEGLECT, THE EXPLAN ATION TO SECTION 271(1)(C) CANNOT BE OF HELP TO JUSTIFY PENALTY. IN T HE CASE OF CIT VS MEHTA ENGINEERS LTD. (2008) 300 ITR 308 ( P & H) IT WAS HEL D THAT WHERE THE FACTS ARE DISCLOSED BUT, INFERENCE IS DIFFERENT, THERE IS NO CASE FOR PENALTY. 3.5 COMING TO THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS LTD., (2010) 322 ITR 158 (S.C) IT WAS HELD AS UNDER: 'READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH A RE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN I TS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY U/S. 271 (1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDIN G THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT T O THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEM SELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CO NCEALMENT OF INCOME ON ITS PART.' THIS JUDGEMENT OF THE HON'BLE APEX COURT THEREFORE, EMPHASIZES THAT MERE MAKING OF A CLAIM OF DEDUCTION WHICH WAS NOT ALLOWA BLE BY ITSELF WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME . IN FACT, EVERY LEGAL DISALLOWANCE UNDER THE PROVISIONS OF THE ACT CANNOT LE AD TO THE CONCLUSION THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. 8 3. 5.1 THE APPELLANT HAS ALSO CITED THE DECISION IN THE C ASE OF KANBAY SOFTWARE INDIA (P) LTD. V DCIT (2009) 122 TTJ 721 ( PUNE). IN THE AFORESAID JUDGEMENT IT WAS HELD THAT 'BY NO STRETCH OF LOGIC OR RATIONALE IT COULD BE SAID THAT IMPOSITION OF PENALTY UNDER S. 271(1)(C) HAS A CAUSE AND EFFECT RELA TIONSHIP WITH ADDITION BEING MADE TO THE RETURNED INCOME PER SE. A N ADDITION BEING MADE TO INCOME DOES, BECAUSE OF IMPACT OF EXPLN. I, E FFECTIVELY RAISE A PRESUMPTION AGAINST THE ASSESSEE BUT THAT IS AN ENTIRELY R EBUTTABLE PRESUMPTION AND THE SCHEME OF REBUTTAL IS PROVIDED IN THE EXPLANATION ITSELF. THE SCHEME OF S. 271(1)(C) VISUALIZES IMPOSITION OF PENALTY WHEN THE ASSESSEE HAS CONCEALED INCOME OR WHEN THE ASSESSEE HAS FU RNISHED INACCURATE PARTICULARS OF INCOME. IN ADDITION TO THE SE TWO SITUATIONS, PENALTY CAN ALSO BE IMPOSED, INTER ALIA, WHEN ASSESSEE IS DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME UNDER EXPLN. 1 TO S. 271(1)(C), THIS EXPLANATION PROVIDES THAT THE ASSESSEE WILL BE DEEMED T O HAVE CONCEALED PARTICULARS OF INCOME WHERE IN RESPECT OF ANY FACTS MA TERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (I) WHEN THE ASSESSEE FAILS TO PROVIDE AN EXPLANATION, (II) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH IS FOUND TO BE FALSE, AN D (III) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS, TO SUBSTAN TIATE AND HE FAILS TO PROVE THAT THE EXPLANATION WAS. BONAFIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE THE TRIBUNAL ALSO HELD THAT AS LONG AS PENALTY IS FOR D EFAULT, AN INNOCENT VIOLATION MAY MERIT COMPENSATION BUT NOT PENALTY. TH E TRIBUNAL CONCLUDED AFTER AN ELABORATE DISCUSSION ON THE SUBJECT AS UNDER: 'WITH MENS REA OR WITHOUT MENS REA, A PENALTY CAN ONL Y BE IMPOSED WHERE THERE IS FAILURE DEEMED FAILURE, TO DISCHARGE A N OBLIGATION.' 3.5.2 IN THE CASE OF DEVI DASS SUBHANI VS 1TO (2006) 10 TTJ 551 (JD), THE ITAT JODHPUR, ON THE ASSESSEE HAVING WRONGLY CLAIMED EX EMPTION U/S 54 IN THE RELEVANT ASSESSMENT YEAR AFTER WITHDRAWING SUCH CLAI M MADE IN AN EARLIER YEAR UNDER BONAFIDE MISCONCEPTION AND BELIEF , HELD PENALTY U/S 271(1) COULD NOT BE LEVIED IN THE ABSENCE OF ANY EV IDENCE TO ESTABLISH THAT THE ASSESSEE HAD DELIBERATELY FURNISHED INACCURATE PARTI CULARS OR HAD CONSCIOUSLY CONCEALED TAXABLE INCOME. 3.5.3 CANCELLATION OF PENALTY FOR A WRONG CLAIM OF DEDUCT ION IN COMPUTATION OF NON-AGRICULTURAL INCOME BONAFIDE MAD E AND FOR A WRONG CLAIM OF RELIEF U/S 80P WERE FOUND TO BE DECISIONS ON FACT ON WHICH NO QUESTION OF LAW WOULD ARISE AS HELD IN CIT VS SHAHABAD COOP. SUGAR MILLS LTD. (2010) 322 ITR 73 (P & H). THE HIGH COURT IN T HE CASE REFERRED TO THE DECISION INTER ALIA TO HINDUSTAN STEEL LTD. VS STATE O F ORISSA (1972) 83 ITR 76 (SC) IN A SALES-TAX CASE, WHERE PENALTY WAS NOT FOU ND LEVIABLE IN THE ABSENCE OF A CONSCIOUS BREACH OF LAW. IN FACT, IT WAS O BSERVED THAT DELIBERATE DEFIANCE OF LAW IS WHAT WOULD MERIT PENALTY. A WRONG CLAIM AS BUSINESS INCOME OF WHAT SHOULD BE TREATED AS SHORT TERM CAPITA L GAINS ON THE ADVICE OF ASSESSEE'S COUNSEL IT WAS HELD, CANNOT BE TREATED AS AN INSTANCE OF DELIBERATE DEFIANT IN CIT VS SIDDHARTH ENTERPRISES (20 10) 322 ITR 80 (P & H). 3.5.4 IN THE CASE OF CIT VS CAPLIN POINT LABORATORIES LTD. ( 2007) 293 ITR 524 (MAD) IT WAS HELD THAT THE WRONG CLAIMED DEDUCTI ON U/S 80HHC & 80I BY SHOWING THE INTEREST INCOME AS 'BUSINESS INCOME' INSTE AD OF INCOME FROM OTHER SOURCES' CANNOT BE HELD AS CONCEALMENT OF INCOME OR FURNISH OF 9 INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY THE PENALTY U/S 271(1)(C) WAS DELETED. 3.5.5 FOLLOWING RELIANCE PETRO PRODUCTS CITED SUPRA, IT WAS HELD IN CIT VS SAS PHARMACEUTICALS (2011) 335 ITR 259 (DEL) THAT TH ERE IS NO CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCL OSURE IN THE I.T. RETURN. IT FURTHER HELD THAT UNLESS IT IS FOUND THAT T HERE IS ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF IN COME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON-DISCLO SURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE IT. RETURN. SIM ILARLY IN THE CASE OF CIT VS DHARAMPAL PREMCHAND LTD. (2010) 329 ITR 572 (DEL) ALSO, IT HAS HELD MERELY BECAUSE THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80 IA AND 80IB, WHICH CLAIM WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY PROCEEDINGS AS THE SAME CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(1 )(C). 3.5.6 IT HAS BEEN A LONG ESTABLISHED PRACTICE THAT THE TAXP AYERS AGREE TO CERTAIN ADDITIONS DURING ASSESSMENT PROCEEDINGS NOT ALWAY S BECAUSE THEY ARE CONVINCED THAT SUCH ADDITION IS WARRANTED OR OTHE RWISE JUSTIFIED, BUT WITH A VIEW TO BRING FINALITY TO THE WHOLE MATTER T O BUY PEACE AND AVOID LITIGATION THE GENERAL VIEW HAS ALWAYS BEEN THAT MERE ADMISSION BY ITSELF NEED NOT OFFER IMMUNITY TO THE TAXPAYER, WHERE THE ADMISSION HAD BEEN EXTORTED FROM HIM AFTER CONCEALMENT HAD BEEN BROUGH T HOME. IN THE CASE OF CIT VS D & H SECHERON ELECTRODES LTD. (2008) 296 ITR 193 (MP) WHEREIN THE ASSESSEE HAD SURRENDERED INCOME AND EXPLANATION OF A SSESSEE GIVEN IN FACTUAL VERSION WAS ACCEPTABLE, IT WAS HELD THAT THERE EXISTED NO MENS REA AS CONTEMPLATED U/S 271(1)(C), PENALTY WOULD NOT BE LEV IABLE. THE APPELLANT HAS ALSO CITED THE JODHPUR ITAT DECISION IN THE CASE OF RAJENDRA KUMAR VS ITO (2005) 94 TTJ (JD) 280 WHERE IN IT HAS BEEN HELD THAT MERE NON FILING OF APPEAL AGAINST THE ASSESSMENT ORDER DOES NOT IPSO FACTO L EAD TO LEVY OF PENALTY U/S 271(1)(C) ON SIMILAR FACT WHEN ASSESSEE AGREE D TO ADDITION, IT WAS HELD TO BE BONAFIDE EXPLANATION WHERE NO PENALTY WAS LEVIABLE AS HELD IN PERMINDAR KUMAR GUPTA VS 100 (1988) 32 TTJ 549 (D EL). 3.5 IN VIEW OF THE ABOVE FACTS AND THE DECISIONS CITED SUPR A INCLUDING THAT OF THE APEX COURT IN THE CASE OF CIT VS RELIANCE PET ROPRODUCTS PVT. LTD. (SUPRA), THE PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAIN ABLE AND IS DELETED. GROUNDS OF APPEAL NOS. A, B, C & D RAISED BY THE APPEL LANT ARE TREATED TO BE ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-T AX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN DELETING THE PENALTY OF RS.21,20,580/- LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 INSTEAD OF CONFIRMING TH E SAID PENALTY. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT AS THE ASSESSEE HAD ERRONEOU SLY CLAIMED DEDUCTION U/S 54B EVEN THOUGH THE CAPITAL GAINS ARISING IN HIS HA NDS WERE IN THE NATURE OF SHORT TERM CAPITAL GAINS AND NOT LONG TERM CAPITA L GAINS, AND ALSO AS THE ASSESSEE HAD NO VALID OR BONAFIDE EXPLANATION IN SUPPORT OF SUCH ERRONEOUS CLAIM, PENALTY U/S 271(1)(C) WAS PATENTLY ELIGIBLE. 10 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN INFERRING THAT POSSIBLY THE ASSESSEE AGREED TO THE ADDITI ON ONLY WITH A VIEW TO BUYING PEACE AND AVOIDING LITIGATION WITHOUT APP RECIATING THAT THE ASSESSEE HAD AGREED TO THE SAID ADDITION WITHOUT ANY CHO ICE AND ONLY AFTER THE ASSESSING OFFICER BROUGHT TO HIS NOTICE THE UNAMBIGU OUS PROVISIONS OF THE ACT IN THIS REGARD. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE CONDUCT OF THE ASSESSEE IN CLAIMING DEDUCTION U/S 54B, W HICH WOULD HAVE RESULTED IN EVASION OF TAX BUT FOR DETECTION BY THE A SSESSING OFFICER COULD BY NO MEANS BE ROUTINELY TREATED AS INADVERTENT AND BONA FIDE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN GIVING ANY CREDENCE TO THE ASSESSEE'S PLEA THAT THE RETU RN HAD BEEN PREPARED BY THE CHARTERED ACCOUNTANT WHO HAD CLAIMED THE DED UCTION WITHOUT ANY MALAFIDE INTENTION. IT OUGHT TO HAVE BEEN APPRECIAT ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE ASSESSEE HAD HIMSELF VER IFIED THE RETURN TO BE TRUE AND, THEREFORE, EVEN ASSUMING WITHOUT CONCEDI NG THAT THE CLAIM HAD BEEN MADE BY THE CHARTERED ACCOUNTANT WHO COULD ONL Y HAVE DONE SO IN A REPRESENTATIVE CAPACITY, THE ASSESSEE CANNOT BE RESOLVED OF THE MISCONDUCT. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT THE ASSESSEE HAD FURNISHED I NACCURATE PARTICULARS OF INCOME IN AS FAR AS THE LAND WAS BOUGHT IN THE YEA R 2004 AND NOT IN THE YEAR 1999 AS HAD BEEN CLAIMED BY THE ASSESSEE. MOREOVER, THE ASSESSEE WAS WELL AWARE OF THE FACT THAT THE LAND WHICH WAS SOLD WAS AN URBAN LAND AND ALSO THE TRANSACTION IN RESPECT OF THE LAND CLAIMED TO HAVE BEEN PURCHASED WAS MERELY AN ARTICLE OF AGREEMENT FOR TRANSFER OF TH E DEVELOPMENT RIGHTS, WHICH WAS NOT EVEN REGISTERED, NEITHER ANY CONSIDERATI ON HAD BEEN PAID NOR THE POSSESSION OF THE LAND HAD BEEN TAKEN. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ACCEPTING THE ASSESSEE'S CONTENTION THAT HE HAD NO KNOWL EDGE OF ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAD BEEN IN THE BUSINESS F OR A LONG TIME AND HAD ASSISTANCE OF THE QUALIFIED PROFESSIONAL. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT WHILE EVERY LEGAL DISALLO WANCE MAY NOT LEAD TO PENALTY, A DISALLOWANCE BASED ON AN INCONTESIBE PROVISI ON WOULD JUSTIFIABLY LEAD TO LEVY OF PENALTY. 10. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED COMMISSIONER OF INC OME-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE REST ORED. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELI ED ON THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT KNOWING F ULLY WELL THAT THE ASSET SOLD IS HELD FOR A PERIOD OF LESS THAN 3 YEARS THE ASSESSEE CLAIMED CAPITAL 11 GAIN AS LONG TERM CAPITAL GAIN AND CLAIMED DEDUCTIO N U/S.54B. HE SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY REVIS ED RETURN PRIOR TO THE DETECTION BY THE DEPARTMENT AND ONLY WHEN HE WAS CO NFRONTED BY THE ASSESSING OFFICER THAT HE AGREED FOR THE ADDITION. HE SUBMITTED THAT EVEN IN AGREED ADDITION PENALTY CAN BE LEVIED. 6.1 REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. REPORTED IN 327 ITR 510 HE SUBMITTED THAT THE HONBLE HIGH COURT AFTER CONSIDE RING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 HAS UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SIMILAR CIRCUMSTANCES AND THE ORDER O F THE TRIBUNAL WAS REVERSED. 6.2 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT VIDE CIVIL APPEAL NO.977 2/2013 HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT THE STATUTE DOES NOT RECOGNISE DEFECTS SUCH AS VOLUNTARY DISCLO SURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT ETC. UNDER THE EXPL ANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT. IT HAS BEEN HELD IN THE SAID DECISION THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENALTY PROCEEDINGS U/S.271(1)(C) AND THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CON CEALED INCOME HE HAD TO BE ABSOLVED FROM PENALTY PROCEEDINGS. HE ACCORDING LY SUBMITTED THAT THE ORDER OF THE CIT(A) BEING CONTRARY TO LAW SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 12 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT IT IS N OT AN AGREED ADDITION BUT WAS AN ERRONEOUS CLAIM AND THEREFORE, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) IS NOT APPLICABLE. HE SUBMITTED THAT DUE TO TYPOGRAPHICAL ERROR THE MISTA KE HAS HAPPENED AND ASSESSEE HAD NO MALAFIDE INTENTION. HE SUBMITTED T HAT ALTHOUGH IN THE STATEMENT OF COMPUTATION THE YEAR OF ACQUISITION WA S MENTIONED AS 1999, HOWEVER, THE ASSESSEE HAS CONSIDERED THE INDEXED CO ST AT 496 WHICH ITSELF SHOWS THAT THERE WAS SOME CONFUSION WHILE MAKING TH E CALCULATION. HE SUBMITTED THAT WHEN THE MISTAKE WAS BROUGHT TO THE NOTICE OF THE ASSESSEE HE ACCEPTED THE SAME. HE FURTHER SUBMITTED THAT PR OVISIONS OF SECTION 54B GRANTS THE ASSESSEE THE EXEMPTION IF HE SELLS THE A GRICULTURAL LAND SITUATED AT PUNE. 7.1 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT REPORTED IN 348 ITR 306 (SC) HE SUBMITTED THAT PENALTY WAS DELETED ON ACCOUNT OF INADVERTENT MISTAKE. HE SUBMITTED THAT MISTAKE IN THE INSTANT CASE HAS H APPENED IN THE OFFICE OF THE CHARTERED ACCOUNTANT. THEREFORE, IN VIEW OF TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOU SE COOPERS PVT. LTD. (SUPRA), THE PENALTY DELETED BY THE LD.CIT(A) IS JU STIFIED. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS RAISED BY THE REVENUE SH OULD BE DISMISSED. 8. WE HAVE CONSIDERED RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT T HAT THE ASSET IN THE INSTANT 13 CASE WAS PURCHASED ON 13-04-2004 FOR A CONSIDERATIO N OF RS.12 LAKHS AND SOLD ON 06-10-2006 FOR A CONSIDERATION OF RS.75 LAK HS, THE DETAILS OF WHICH ARE AT PAGE 5 OF THE ASSESSMENT ORDER. THE ASSESSE E FILED THE RETURN OF INCOME ON 31-12-2007 CLAIMING THE YEAR OF ACQUISITI ON OF THE ASSET AS 1999 INSTEAD OF THE CORRECT YEAR AS 2004. THE NOTICE IS SUED U/S.143(2) OF THE ACT DATED 11-09-2008 WAS ISSUED AND SERVED ON THE ASSES SEE ON 16-09-2008 AND THE FINAL ORDER WAS PASSED ON 30-12-2009. EVEN THO UGH THE PERIOD OF HOLDING OF THE ASSET SOLD WAS FOR LESS THAN 36 MONT HS AND THEREFORE THE INCOME DOES NOT FALL WITHIN THE LONG TERM CAPITAL G AIN, WE FIND THE ASSESSEE NEVER FILED ANY REVISED RETURN BEFORE THE ISSUE OF NOTICE U/S.143(2). FURTHER, THE ASSESSEE BEFORE THE CIT(A) VIDE LETTER DATED 20 -01-2012 HAD STATED THAT HE HAD VOLUNTARILY ACCEPTED FOR THE AGREED ADDITION IN RESPECT OF DEDUCTION WRONGLY CLAIMED BY HIS CONSULTANT. THE RELEVANT OB SERVATION OF THE CIT(A) AT PARA 3.2 OF THE ORDER READS AS UNDER: 3.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, VIDE LETTER DATED 20-01- 2012 FOLLOWING WRITTEN SUBMISSION WAS FILED BY THE APPE LLANT IN THIS REGARD : A. NOTE ON SALE OF LAND & CAPITAL GAIN ON SALE OF LAN D DURING THE YEAR UNDER REVIEW, THE APPELLANT HAS SOLD/ TRANSFERRED HIS LAND AT MOHAMMADWADI FOR TOTAL CONSIDERATION OF RS.75 ,00,000/-. THE APPELLANT HAS ACQUIRED/PURCHASED THE SAID LAND ON 13/04/2004 FOR TOTAL CONSIDERATION OF RS.12,29,380/- INCLUDING ST AMP DUTY AND REGISTRATION CHARGES FROM SALIM SADRUDDIN KHOJA & OTH ERS AND SAME HAS ALREADY BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. XEROX OF PURCHASE AND SALE DEED IS ENCLOSED HEREWITH FOR YOUR K IND PERUSAL. THE APPELLANT WISH TO DRAW YOUR KIND ATTENTION TO T HE FACT THAT, THE APPELLANT HAS RECEIVED NET GAIN ON SALE OF ABOVE SAI D OF RS.62,70,620/- AND DURING THE FILING OF INCOME TAX R ETURN FOR THE YEAR UNDER REVIEW, THE CONSULTANT OF THE APPELLANT INADV ERTENTLY THROUGH OVERSIGHT CLAIMED THE EXEMPTION U/S.54(B) OF I.T. ACT AND SHOWN THE INCOME FROM CAPITAL GAIN HAS NIL. INSPITE OF THE FAC T THAT, THE APPELLANT HAVING SHORT TERM CAPITAL GAIN OF RS.62,70, 620/-. B. THE APPELLANT VOLUNTARILY ACCEPTED FOR THE AGREE D ADDITION IN RESPECT OF DEDUCTION WRONGLY CLAIMED BY HIS CONSULTANT IN THE ABOVE SAID TRANSFER OR PROPERTY DURING THE ASSESSMENT PROCEEDIN GS. THE APPELLANT HAS ALREADY PAID THE INCOME TAX OF RS.8,50, 000/- AGAINST 14 THE ABOVE SAID INCOME TAX DUES AND READY TO PAY THE B ALANCE ENTIRE DUES ALONG WITH INTEREST. THE APPELLANT WISH TO DRAW YOUR KIND ATTENTION TO TH E FACT THAT, DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANT SUO MOTO & VOLUNTARILY AGREED ADDITION OF SHORT TERM CAPITAL GA IN OF RS.62,70,620/- FOR SALE OF LAND AT MOHAMMADWADI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 FROM THE ABOVE, IT IS CLEAR THAT THE ADDITION M ADE BY THE ASSESSING OFFICER IS AN AGREED ADDITION AND THEREFORE THE SUB MISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT IS NOT AN AGREED A DDITION IS NOT CORRECT. 8.2 WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF ZOOM COMMUNICATION PVT. LTD. (SUPRA) AFTER CONSIDERING T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS OBSERVED AS UNDER (SHORT NOTES) : HELD, THAT ADMITTEDLY, IN VIEW OF THE PROVISIONS CON TAINED IN SECTION 40(A)(II) OF THE ACT, THE AMOUNT OF INCOME-TAX COUL D NOT HAVE BEEN CLAIMED AS A DEDUCTION WHILE COMPUTING INCOME OF THE ASSESSEE. AS REGARDS THE AMOUNT CLAIMED ON ACCOUNT OF UNUSABLE AND DISCARDED A SSETS, THE TRIBUNAL, WAS ENTIRELY INCORRECT IN TAKING THE VIEW THAT THE D EDUCTION CLAIMED BY THE ASSESSEE WAS ADMISSIBLE TO IT U/S.32(1)(III). CLAUSE (I) O F SUB-SECTION (1) OF SECTION 32 RELATES TO ASSETS OF AN UNDERTAKING ENGAGED I N GENERATION AND/OR DISTRIBUTION OF POWER. ADMITTEDLY, THE ASSESSEE-COMPANY WAS NOT ENGAGED IN GENERATION AND FOR DISTRIBUTION OF POWER, DURING THE RELEVANT YEAR. THUS, THE PROVISIONS, OF CLAUSE (I) OF SUB-SECTION (1) OF SECT ION 32 WOULD NOT APPLY IN RESPECT OF THE ASSETS CLAIMED TO HAVE BECOME UNUSAB LE AND WRITTEN OFF. THEREFORE, THE ASSESSEE HAD NO JUSTIFICATION TO CLAIM T HIS AMOUNT OF RS.13,24,539/- AS A REVENUE EXPENDITURE. IN FACT, TH E ASSESSEE DID NOT CLAIM, EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE COMMI SSIONER (APPEALS) THAT SUCH A DEDUCTION WAS PERMISSIBLE U/S.32(1)(III). I T WAS ALSO NOT THE CASE OF THE ASSESSEE THAT IT WAS UNDER A BONA FIDE BELIEF THAT THESE TWO AMOUNTS COULD BE CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE WAS A COMPANY WHICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN C OMPUTATION OF ITS INCOME, AND ITS ACCOUNTS WERE COMPULSORILY SUBJECTED T O AUDIT. THE TRIBUNAL ERRED IN LAW IN DELETING THE PENALTY IN RE SPECT OF THE AMOUNT OF RS.1 LAKH CLAIMED AS DEDUCTION ON ACCOUNT OF PAYMENT OF I NCOME-TAX AND THE AMOUNT OF RS.13,24,539/- DEBITED UNDER THE HEAD EQ UIPMENT WRITTEN OFF, IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. 15 8.3 WE FIND THE HONBLE SUPREME COURT IN THE CASE O F MAK DATA PVT. LTD. VIDE CIVIL APPEAL NO.9772/2013 HAS OBSERVED AS UNDE R : 6. WE HAVE HEARD COUNSEL ON EITHER SIDE. WE FULLY C ONCUR WITH THE VIEW OF THE HIGH COURT THAT THE TRIBUNAL HAS NOT PROPERLY UNDERSTOOD OR APPRECIATED THE SCOPE OF EXPLANATION 1 TO SECTION 27 1(1)(C) OF THE ACT, WHICH READS AS FOLLOWS :- EXPLANATION 1 WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, -- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFF ERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NO T ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION I S BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE CO MPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT AD DED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT T HEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT, ETC. TO EXPLAIN AWAY ITS CONDU CT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTIC ULARS OF INCOME. EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPORTED AN D ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGEN T AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLA NATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE TO SHO W THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE A DDITIONAL SUM OF RS.40,74,000/- WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND T O MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. STATUTE D OES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER THE EXPLANATION 1 TO SEC TION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOE S NOT RELEASE THE APPELLANT-ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDING S. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCL OSURE OF HIS CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALTY . 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME I N THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT T HE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEED INGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK 16 STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFF IDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURV EY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MO NTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INT ENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOU LD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WA S SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUEN TLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTI ONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEA R TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCEED INGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND T HE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MA NNER OR REDUCE IT INTO WRITING. THE SCOPE OF SECTION 271(1)(C) HAS ALSO BEEN ELABORATELY DISCUSSED BY THIS COURT IN UNION OF INDIA VS. DHARMENDRA TEXTIL E PROCESSORS (2008) 13 SCC 369 AND CIT VS. ATUL MOHAN BINDAL (2009) 9 SCC 5 89. 11. THE PRINCIPLE LAID DOWN BY THIS COURT, IN OUR V IEW, HAS BEEN CORRECTLY FOLLOWED BY THE REVENUE AND WE FIND NO ILLEGALITY I N THE DEPARTMENT INITIATING PENALTY PROCEEDINGS IN THE INSTANT CASE. WE , THEREFORE, FULLY AGREE WITH THE VIEW OF THE HIGH COURT. HENCE, THE APPEAL LACKS MERIT AND IS DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. 8.4 SINCE THE GAIN ON SALE OF THE LAND WAS SHORT TE RM WHICH HAS BEEN WRONGLY CLAIMED BY THE ASSESSEE AS LONG TERM BY SUB STITUTING THE YEAR OF ACQUISITION AS 1999 INSTEAD AS 2004 AND SINCE NO RE VISED RETURN WAS FILED NOR THE MISTAKE WAS BROUGHT TO THE NOTICE OF THE AS SESSING OFFICER SUO MOTO BEFORE IT WAS DETECTED BY THE DEPARTMENT FOR WHICH THE ASSESSEE HAD TO FINALLY SURRENDER THE ADDITION, THEREFORE, FOLLO WING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD., (SUPRA) AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS PVT. LTD., (SUPRA) WE HOLD THAT THE LD.CIT(A) WAS N OT JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER. 17 8.5 SO FAR AS THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUPRA) IS CONCE RNED THE SAME IN OUR OPINION WAS UNDER DIFFERENT CONTEXT AND NOT APPLICA BLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE, THE ASSESSEE PROVIDED MULTI DISCIPLINARY MANAGEMENT CONSULTANCY SERVICES. FOR THE A.Y. 200- 01 IT FILED ITS RETURN OF INCOME U/S.139(6) R.W.S. 139(6A) OF THE I.T. ACT, 1 961 ACCOMPANIED BY TAX AUDIT REPORT U/S.44AB OF THE ACT AND STATEMENT OF P ARTICULARS IN FORM 3CD. EVEN THOUGH THE STATEMENT INDICATED THAT THE PROVIS ION TOWARDS PAYMENT OF GRATUITY WAS NOT ALLOWABLE, THE ASSESSEE CLAIMED TH E SAME AS DEDUCTION IN ITS RETURN OF INCOME ON THE BASIS OF THE RETURN AND THE SAID ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE I.T. ACT. SUBSEQUENTL Y, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S.148 O N THE GROUND THAT PROVISION FOR GRATUITY WAS NOT ALLOWABLE U/S.40A(7) AND WAS REQUIRED TO BE ADDED BACK WHICH HAS NOT BEEN ADDED BY THE ASSESSEE THEREBY LEADING TO UNDER ASSESSMENT OF INCOME. UNDER THESE CIRCUMSTAN CES WHEN PENALTY WAS LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E HIGH COURT, THE HONBLE SUPREME COURT DELETED THE PENALTY BY OBSERV ING AS UNDER (SHORT NOTES) : HELD, ALLOWING THE APPEAL, THAT THE FACTS OF THE CA SE WERE PECULIAR AND SOMEWHAT UNIQUE. NOTWITHSTANDING THAT THE ASSESSEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSI BLE THAT EVEN THE ASSESSEE COULD MAKE A SILLY MISTAKE. THAT FACT THAT TH E TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCAL LY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE U/S.40A(7) OF THE ACT INDICATED THAT THE ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. APART FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO F RAMED THE ASSESSMENT ORDER. ALL THAT HAD HAPPENED WAS THAT THOUGH A BONAFIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETU RN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH A S THE PRESENT, DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING IN ACCURATE PARTICULARS 18 OR ATTEMPTING TO CONCEAL ITS INCOME. ON THE PECULIA R FACTS OF THIS CASE, THE IMPOSITION OF PENALTY ON THE ASSESSEE WAS NOT JUSTIFIED 8.6 THUS, IN THE ABOVEMENTIONED CASE THE AUDITORS H AD MENTIONED IN THE FORM 3CD STATING THAT PROVISION TOWARDS PAYMENT OF GRATUITY WAS NOT AN ALLOWABLE DEDUCTION AND THE ASSESSING OFFICER IN TH E ORIGINAL ASSESSMENT PROCEEDINGS ALSO COULD NOT NOTICE THE ERROR COMMITT ED BY THE ASSESSEE. 8.7 HOWEVER, IN THE INSTANT CASE, THE ASSET PURCHAS ED IN THE YEAR 2004 HAS BEEN TAKEN AS 1999 TO TREAT THE PROFIT ON SALE OF T HE ASSET AS LONG TERM CAPITAL GAIN AND ASSESSEE HAS NEITHER FILED ANY REVISED RET URN NOR BROUGHT THE MISTAKE TO THE NOTICE OF THE ASSESSING OFFICER BEFO RE THE SAME WAS DETECTED. THEREFORE, THE DECISION RELIED ON BY THE LD. COUNSE L FOR THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN TH IS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE CIT(A) AND CONFIRM THE P ENALTY LEVIED BY THE ASSESSING OFFICER. GROUNDS RAISED BY THE REVENUE A RE ACCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11-04-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 11 TH APRIL, 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLAT E TRIBUNAL, PUNE