ITO, Mohali V. Sh. Balwinder Singh Dhillon, Mohali

ITA 1140/CHANDI/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1555 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1140/CHD/2014 ASSESSMENT YEAR: 2008-09 THE INCOME TAX OFFICER, VS SHRI BALWINDER SING H DHILLON, WARD 6(3), # 86-B, SECTOR 71, MOHALI. MOHALI. PAN: ABIPD8959N (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SING H RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 27.07.2015 DATE OF PRONOUNCEMENT : 03.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS), CHANDIGARH DATED 01.10.2014 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE CANCELLATI ON OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. THE BRIEF FACTS OF THE CASE ARE THAT A HOUSING S OCIETY, NAMED AS THE DEFENCE SERVICES COOPERATIVE HOUSE BU ILDING SOCIETY LTD. MOHALI (HEREINAFTER REFERRED TO AS 'S OCIETY') CONSISTING OF 207 MEMBERS WAS FORMED, WHICH WAS THE OWNER OF 27.0 ACRES OF LAND IN VILLAGE KANSAL, DISTRICT M OHALI. THIS SOCIETY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT (HEREINAFTER REFERRED TO AS 'AGREEMENT') ON 27.04.2007 WITH M/S HASH BUILDERS (PVT.) LTD., CHAN DIGARH 2 AND M/S. TATA HOUSING DEVELOPMENT COMPANY LTD., MUM BAI (HEREINAFTER REFERRED TO AS THDC), BY VIRTUE OF WHI CH THE SOCIETY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERATION AND ALSO CONSIDERATION IN KI ND TO THE MEMBERS OF THE SOCIETY. THE ASSESSEE WAS ALSO A MEMBER OF THE SAID SOCIETY OWNING 250 SQ. YARDS LAND. THE TOTAL CONSIDERATION WAS SETTLED AT RS. 40,00,000/- PLUS A LLOTMENT OF ONE FLAT OF 1150 SQ. FEET TO THE ASSESSEE, OUT O F WHICH THE ASSESSEE HAD RECEIVED RS. 16 LACS. THE ASSESSEE HAD FURNISHED HIS RETURN OF INCOME FOR THE A.Y. 2008-09 ON 28.08.2008 DECLARING INCOME OF RS. 3,13,980/-. A RE VISED RETURN DECLARING INCOME OF RS. 18,30,180/- WAS FILE D SUBSEQUENTLY ON 24.10.2009, IN WHICH LONG TERM CAPI TAL GAIN OF RS. 15,04,702/- WAS DECLARED. THE ASSESSING OFFICER NOTICED THAT AS PER THE AGREEMENT DATED 27.04.2007, EACH OF THE MEMBERS OF THE SOCIETY INCLUDING THE ASSESSEE, OWNING PLOT OF 250 SQ. YARDS WERE TO RECEIVE RS. 40,00,000 /- IN CASH AND A FURNISHED FLAT MEASURING 1150 SQ. FT., W ITH MARKET VALUE OF RS. 51,75,000/-, CALCULATED AT THE RATE OF RS. 4500/- PER SQ. FT. THUS, THE TOTAL CONSIDERATIO N FOR TRANSFER OF PLOT CAME TO RS. 91,75,000/-. THE ASSES SING OFFICER COMPUTED THE INCOME BY WAY OF CAPITAL GAINS BY ADOPTING THIS AMOUNT AS SALE CONSIDERATION. FINALLY , THE ASSESSMENT WAS MADE BY TAKING CAPITAL GAINS INCOME AT RS. 89,28,284/-. PENALTY PROCEEDINGS U/S 271(L)(C) WERE ALSO INITIATED. IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAD FILED A REPLY, BUT THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE 3 EXPLANATION AND LEVIED MINIMUM LEVIABLE PENALTY OF RS. 20,25,000/-. 3. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFO RE LD. CIT(APPEALS). THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION OF THE ASSESSEE AVAILABLE ON RECORD, CAN CELLED THE PENALTY. HIS FINDINGS IN PARA 5 & 6 ARE REPROD UCED AS UNDER : 5. I HAVE CONSIDERED THE FACTS OF THE CASE. AS PER THE PROVISIONS OF SECTION 271(L)(C), PENALTY CAN BE LEV IED, IF THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. F OR THE SAKE OF READY REFERENCE, EXPLANATION-I BELOW SECTION 271(1)(C) IS REPRODUCED BELOW : 'EXPLANATION 1.-WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFI CER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER T O BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH H E IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROV E THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 5.1 THUS, THE PENALTY FOR CONCEALMENT CAN BE LEVI ED WHEN THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OR I S NOT ABLE TO GIVE ANY SATISFACTORY EXPLANATION IN REGARD TO ANY MATTER WHICH IS MATERIAL TO THE COMPUTATION OF INCOME. NOW WE EXAMINE THE FACTS OF THE PRESENT CAS E. 4 IT IS NOTEWORTHY THAT THE VIEW TAKEN BY THE ASSESSI NG OFFICER THAT THE AMOUNT OF CAPITAL GAINS HAS TO BE COMPUTED BY TAKING THE TOTAL CONSIDERATION, ACTUALL Y RECEIVED OR RECEIVABLE BY THE APPELLANT AS SALE CONSIDERATION AND THAT THE TOTAL AMOUNT OF CAPITAL GAIN IS ASSESSABLE AS THE INCOME OF THE YEAR UNDER APPEA L, HAS BEEN UPHELD BY THE TRIBUNAL. THEREFORE, THE LIM ITED POINT FOR CONSIDERATION IS WHETHER THE APPELLANT HA S A REASONABLE EXPLANATION FOR HIS OMISSION TO DISCLOSE THE INCOME BY WAY OF CAPITAL GAINS IN THE RETURN. IN TH E ORIGINAL RETURN FILED BY HIM, NO INCOME UNDER THE H EAD CAPITAL GAINS WAS SHOWN, BUT ON HIS OWN, HE HAD FIL ED ANOTHER RETURN AND DISCLOSED ALL THE MATERIAL FACTS RELATING TO THE TRANSFER OF PLOT. IN THIS RETURN, S OME INCOME UNDER THE HEAD CAPITAL GAINS WAS SHOWN BUT T HE SALE CONSIDERATION SHOWN WAS ONLY THE AMOUNT WHICH HE HAD ACTUALLY RECEIVED DURING THE PREVIOUS YEAR. IT IS CLEAR FROM THE ARGUMENTS RAISED BY THE APPELLANT TH AT THERE WERE CERTAIN CONTROVERSIES AND DISPUTES IN RE GARD TO THE TRANSFER OF PLOT. IN FACT, I UNDERSTAND THAT THE VARIOUS ISSUES HAVE STILL NOT BEEN RESOLVED AND THE CONSTRUCTION OF THE BUILDING, IN WHICH THE APPELLAN T WAS TO GET A FLAT AS A PART OF SALE CONSIDERATION, HAS NOT STARTED TILL DATE. IN THESE PECULIAR CIRCUMSTANC ES, THE BELIEF OF THE APPELLANT THAT THE CAPITAL GAINS ON W HICH HE HAS TO PAY TAX HAS TO BE COMPUTED ONLY ON THE BA SIS OF THE AMOUNT WHICH HE HAS ACTUALLY RECEIVED, CANNO T BE CONSIDERED TO BE TOTALLY UNREASONABLE, THOUGH IT WAS NOT STRICTLY LEGAL. THE FACT THAT ALL THE MATERIAL FACTS WHICH WERE REQUIRED TO COMPUTE THE CORRECT CAPITAL GAINS WERE FURNISHED BY THE APPELLANT IN HIS SECOND RETURN, ESTABLISH HIS BONAFIDE CREDENTIALS. IN VIEW OF THIS DISCUSSION, IT IS HELD THAT PENALTY FOR CONCEA LMENT HAS BEEN WRONGLY LEVIED IN THE INSTANT CASE AND THE SAME IS ACCORDINGLY CANCELLED. GROUNDS OF APPEAL TA KEN BY THE APPELLANT ARE ALLOWED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. 5 4. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OF FICER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT ASSESSEE HAS DECLARED CAPITAL GAINS ON THE AMOUNT W HICH WAS RECEIVED BY EXECUTING THE SALE DEED AND FOR AGREEME NT TO SELL REGARDING WHICH NO TRANSACTIONS WERE COMPLETED, NO CAPITAL GAIN ARISES. THE ASSESSEE DECLARED ALL THE PARTICULARS IN THE RETURN OF INCOME AS WELL AS BEFORE ASSESSING OFFICER. THEREF ORE, ON MERE DIFFERENCE OF OPINION, PENALTY WAS CORRECTLY CANCEL LED BY THE LD. CIT(APPEALS). HE HAS FURTHER SUBMITTED THAT ON THE IDENTICAL ISSUE, HON'BLE PUNJAB & HARYANA HIGH COURT IN ITS R ECENT DECISION IN THE CASE OF SHRI C.S. ATWAL VS CIT, LUD HIANA & OTHERS IN BUNCH OF 85 APPEALS, DECIDED THE QUANTUM ISSUE AGAINST THE REVENUE IN ITA NO. 200 OF 2013 DATED 22 .07.2015. HE HAS SUBMITTED THAT FACTS OF THIS CASE ARE SIMILA R TO THE CASE OF SHRI C.S. ATWAL (SUPRA). THEREFORE, PENALTY WAS CORRECTLY CANCELLED IN THE MATTER IN ISSUE. 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FAC TS OF THE CASE OF ASSESSEE ARE ADMITTEDLY IDENTICAL AS HAVE BEEN D ECIDED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHRI C.S. ATWAL VS CIT, LUDHIANA (SUPRA) IN WHICH THE HON'BLE HIGH COURT DECIDED THE ISSUE OF EXIGIBILITY TO CAPITAL GAIN IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE CASE OF T HE PRESENT ASSESSEE ALSO, THE ASSESSEE HAS, OF HIS OWN FILED A NOTHER RETURN OF INCOME DISCLOSING ALL THE MATERIAL FACTS RELATIN G TO TRANSFER OF PLOT AND HAS DISCLOSED CAPITAL GAINS ON THE AMOUNT WHICH WAS ACTUALLY RECEIVED DURING THE YEAR UNDER CONSIDERATI ON. THE DISPUTE WAS LEFT REGARDING TRANSFER OF PLOT AND THE AMOUNT WHICH 6 WAS NOT YET RECEIVED THROUGH THE AGREEMENT TO SELL. THE LD. CIT(APPEALS), THEREFORE, ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD, CORRECTLY HELD THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE EXPLANATION OF THE ASSESSEE WAS BONAFI DE AND AFTER PASSING THE IMPUGNED ORDER, WHEN THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHRI C.S.ATWAL VS CIT, LUDHIANA (SUPRA) HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE, WOULD CLEARLY PROVE THAT IT IS NOT A FIT CASE OF LEVY OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. TH EREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(APPEALS) IN DELETING PENALTY. THE DEPARTMENTAL APPEAL FAILS AND IS DISM ISSED. 6. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH