Jayapal Sankarappa Naicker, Coimbatore V. DCIT, Coimbatore

ITA 1141/CHNY/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7958 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 15-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2012
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Revised return
• Section: 131; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , ! , ' #$ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1141 /MDS./2012 ( / ASSESSMENT YEAR :2008-09) M/S.JAYAPAL SANKARAPPA NAICKER , 157,P.M.SWAMY COLONY, COIMBATORE -2 VS. DCIT,CIRCLE-III, COIMBATORE-2 PAN AEFPJ 4301 Q ( () / APPELLANT ) ( %*() / RESPONDENT ) / APPELLANT BY : MR.A.S.SRIRAMAN,ADVOCATE / RESPONDENT BY : MR.A.B.KOLI,JCIT, D.R / DATE OF HEARING : 15.02.2016 ! /DATE OF PRONOUNCEMENT : 19.02.2016 + / O R D E R PER CHALLA NAGENDRA PRASAD, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-I, COIMBA TORE DATED ITA NO.1141 /MDS/2012 2 30.04.2012 IN APPEAL NO.09/11-12 FOR ASSESSMENT Y EAR 2008-09 IN CONFIRMING THE LEVY OF PENALTY UNDER SEC.271(1)(C) OF THE ACT. 2. BRIEF FACTS ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2008 DECLARING THE INCOME OF ` 14,09,950/-. SUBSEQUENTLY REVISED RETURN WAS FILED ON 26.03.2010 ADMITTING TH E INCOME OF ` 42,63,990/-. THE ASSESSING OFFICER COMPLETED THE A SSESSMENT U/S.143(3) OF THE ACT ON 22.09.2010 ACCEPTING THE INCOME RETURNED BY THE ASSESSEE IN THE REVISED RETURN. THE AO INIT IATED PENALTY PROCEEDINGS UNDER SEC.271(1)(C) OF THE ACT FOR THE REASON THAT ASSESSEE FILED REVISED RETURN OFFERING ON-MONEY R ECEIPT OF ` 28,34,240/- TO TAX ONLY AFTER THE COURSE OF INVEST IGATION DONE BY THE INVESTIGATION WING. THEREFORE, AO WAS OF THE VIEW THAT PRIM FACIE ASSESSEE HAS CONCEALED /FILED INACCURATE PARTICULAR S OF INCOME. IN RESPONSE TO THE PENALTY NOTICE, THE ASSESSEE VIDE L ETTER DATED 10.03.2011 STATED THAT REVISED RETURN WAS FILED PUR SUANT TO AN ENQUIRY IN ORDER TO BUY A PEACE OF MIND THE ADDITIONAL INCO ME WAS OFFERED. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS FULLY CO -OPERATED WITH THE DEPARTMENT AND REFRAINED FROM GOING ON FURTHER APPE AL AND THEREFORE, ITA NO.1141 /MDS/2012 3 REQUESTED TO DROP THE PENALTY PROCEEDINGS. HOWEVER , THE AO PASSED PENALTY ORDER LEVYING PENALTY UNDER SEC.271(1)(C) O F THE ACT HOLDING THAT BUT FOR THE ENQUIRY THE ASSESSEE WOULD NOT HA VE DECLARED ON- MONEY RECEIVED BY HIM. ON APPEAL, THE CIT(A) SUSTA INED THE ORDER OF THE AO IN LEVYING PENALTY UNDER SEC.271(1)(C) OF TH E ACT. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSES SEE FILED REVISED RETURN OFFERING THE ADDITIONAL INCOME AND T HE REVISED RETURN WAS ACCEPTED BY THE REVENUE WITHOUT ANY ADDITION AN D THEREFORE, NO PENALTY COULD BE LEVIED. HE ALSO PLACED RELIANCE IN THE CASE OF ACIT VS. M/S.RAM THANGA NAGAI MALIGAI IN ITA NO.2183/MDS ./2014 VIDE ORDER DATED 10.06.2015. THE COUNSEL FOR THE ASSESS EE SUBMITS THAT THE IMPUGNED CAPITAL GAIN WAS LIABLE TO TAX IN THE HANDS OF AOP COMPRISING OF THE ASSESSEE AND FOUR OTHERS, WHO JOI NTLY OWNED THE PROPERTY WHICH WAS SOLD COLLECTIVELY AND HENCE, THE AOP BEING A TAXABLE ENTITY UNDER THE ACT, THE ON-MONEY IF AT A LL IT SHOULD BE TAXED IN THE HANDS OF AOP BUT NOT IN THE HANDS OF THE ASS ESSEE. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT TO AVOID PROT RACTED LITIGATION AND TO BUY PEACE WITH THE DEPARTMENT, ASSESSEE OFFE RED THE ITA NO.1141 /MDS/2012 4 ADDITIONAL INCOME IN HIS HAND AND FILED REVISED RET URN, WHICH WAS ACCEPTED, THEREFORE THE PENALTY SHOULD NOT HAVE BEE N LEVIED. THE DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE LOWER AUTHORITIES IN LEVYING THE PENALTY. HE FURTH ER SUBMITS THAT BUT FOR THE INVESTIGATION ASSESSEE WOULD NOT HAVE ADMIT TED ADDITIONAL INCOME, THEREFORE THERE IS A CONCEALMENT OF INCOME AND THUS, THE AO IS JUSTIFIED IN LEVYING PENALTY UNDER SEC.271(1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE ON TH E FOLLOWING DECISIONS:- 1 K P MADHUSUDHANAN VS.CIT [2001] 118 TAXMAN 324 (S C) 2 P.GOVINDSWAMY VS. CIT [2001] 116 TAXMAN 155 (MAD. ) 3 G.C.AGARWAL VS. CIT [1990] 186 ITR 571 (SC) 4 F.C.AGARWAL V. CIT [1976] 102 ITR 408(GUJ.) 5 M.SAJJANRAJ NAHAR VS. CIT [2006] 155 TAXMAN 536 ( MAD.) 6 CIT V. KRISHNA & CO [1979] 120 ITR 144(MAD.) 7 RAVI & CO., V. ACIT [2005] 143 TAXMAN 287 (MAD.) 8 CIT V. MAK DATA LTD 31 TAXMANN .COM 35(DEL.) 9 CIT, DELHI VS USHA INTERNATIONAL LTD. 254 CTR 509 (DEL.) 10 CIT VS.SANGMESHWARA ASSOCIATES (2012) 345 ITR 39 6(KARN.) ITA NO.1141 /MDS/2012 5 4.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE ALONG WITH FOUR OTHERS HAS JO INTLY AND COLLECTIVELY PURCHASED AGRICULTURE LANDS ADMEASURIN G 5.90 ACRES IN VELAMPALAYAM VILLAGE FOR A TOTAL CONSIDERATION OF ` 4,77,500 VIDE SALE DEED 2423/2005 EXECUTED IN THEIR FAVOR AND THIS SAM E AGRICULTURE LAND WAS SOLD FOR A TOTAL CONSIDERATION BY THREE DE EDS OF SALE EXECUTED AS UNDER ON THE SAME DAY AS BELOW: SL. .NO. DOCUMENT NO. DATED SALE PRICE( `) 1. 5317/2007 13.12.2007 RS.25,28,000/- 2. 5318/2007 13.12.2007 RS.52,00,000/- 3. 5319/2007 13.12.2007 RS.17,00,800/- THE VENDORS AND THE PURCHASERS ARE ONE AND THE SAME IN ALL THE THREE DOCUMENTS. THERE WAS NO SEARCH IN THE PREMISE S OF THE ASSESSEE AND THERE WAS NO MATERIAL FOUND ON RECORD TO SUBSTANTIATE OR ESTABLISH THE DESTINATION OF THE ONMONEY PURPORT EDLY PAID BY THE PURCHASER TO THE SELLERS. HOWEVER IT IS AN ADMITTED POSITION THAT THE ASSESSEE WAS SUMMONED U/S. 131 AND STATEMENT WAS RE CORDED FROM HIM THAT HE HAD RECEIVED ONMONEY. IT IS ALSO ADMITT ED THAT HE FILED ITA NO.1141 /MDS/2012 6 REVISED RETURN OF INCOME AND PAID TAXES FOR THE SAM E. THE PLEA OF THE ASSESSEE IN THE PENALTY PROCEEDINGS IS THAT APA RT FROM THE ADMISSION THERE IS NO MATERIAL AT ALL TO INDICATE T HERE ARE PAYMENTS OF ONMONEY IN THE TRANSACTION. APART FROM THE STATEMEN T RECORDED NEITHER IN THE ASSESSMENT PROCEEDINGS NOR IN THE PE NALTY PROCEEDINGS ANY MATERIAL HAS BEEN SIGHTED TO SHOW THAT THE ASSE SSEE IS GUILTY OF CONCEALMENT OF INCOME. APART FROM THE ABOVE IT WAS ADMITTED POSITION THAT THE PROPERTY IN QUESTION WAS PURCHASE D JOINTLY AND COLLECTIVELY SOLD AND AUTOMATICALLY THE PROPERTY WA S PURCHASED BY THE A.O.P. COMPRISING 1. S. TAMARAI KANNAN 2. M. KUMARAVELU. 3. E. THIAGARAJAN. 4. R. ARUMUGHAM 5. S. JAYAPAL AND WAS ALSO SOLD BY THE SAME A.O.P. IF AT ALL THER E WAS ANY MONEY PAYMENT AS ALLEGED IT COULD HAVE BEEN IN THE HANDS OF THE A.O.P. AND NOT IN THE HANDS OF THE INDIVIDUAL ASSESSEE. IT WAS NOW SETTLED LAW AS HELD IN THE RELIANCE PETRO PRODUCT THAT BEFORE LAYI NG ANY PENALTY IT HAS TO BE ESTABLISHED THAT THE ASSESSEE IS LIABLE T O BE TAXED IN LAW IN ITA NO.1141 /MDS/2012 7 A STATED MANNER. IT IS TRITE LAW THAT MERE ADMISSI ON /AGREEING FOR ADDITION BY THE ASSESSEE AND NOT FOR CONCEALMENT OF INCOME AND FURTHER IF NO MATERIAL IS FOUND OR BROUGHT ON RECOR D TO ESTABLISH THE CONCEALMENT NO PENALTY CAN BE LEVIED. THE A.O. SHOU LD BE SATISFIED THAT THE ASSESSEE IS GUILTY OF CONCEALMEN T OF INCOME AND THEN ONLY SHOULD INITIATE PENALTY PROCEEDINGS. IF T HE ORDER OF ASSESSMENT ITSELF IS INVALID IN LAW THE PENALTY PRO CEEDINGS FALLS TO THE GROUND. 4.2 IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL R EPORTED IN [2000] 241 ITR 124 (M.P.), THE ASSESSEE FILED RETURNS ORIG INALLY SHOWING A MEAGER INCOME. LATER ON, IN PURSUANCE OF A NOTICE ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, REVISED RE TURNS WERE FILED SHOWING HIGHER INCOME TO PURCHASE PEACE OF MIND AND TO AVOID VEXATIOUS LITIGATION. THE REVISED RETURNS WERE ACCE PTED AND REGULARISED BY THE REVENUE. ON INITIATION OF PENALT Y PROCEEDINGS UNDER SECTION 271(1)(C), THE TRIBUNAL HELD THAT PEN ALTY COULD NOT BE LEVIED BECAUSE THERE WAS NO CONCEALMENT. THE HIGH COURT HELD THAT THE ASSESSMENT WAS MADE BY THE REVENUE AND ONCE THE ASSESSING ITA NO.1141 /MDS/2012 8 AUTHORITY HAD FAILED TO TAKE ANY OBJECTION IN THE M ATTER, THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS REVISED RETUR NS AND THE EXPLANATION THAT HE HAD DONE SO TO BUY PEACE WITH T HE DEPARTMENT AND TO COME OUT OF VEXED LITIGATION COULD BE TREATE D AS BONA FIDE. THEREFORE, NO PENALTY COULD BE LEVIED FOR CONCEALME NT. THIS DECISION OF HONBLE MADHYA PREADSH HIGH COURT HAS BEEN CONFI RMED BY THE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL REPORTED IN [2000] 251 ITR 09 (SC). HEAD NOTE OF THE DECISIO N OF HONBLE APEX COURT READS AS FOLLOWS:- THE ASSESSEE HAD ORIGINALLY FILED RETURNS SHOWING M EAGRE INCOME. WHEN, AFTER ACTION UNDER SECTION 132 OF THE INCOME- TAX ACT, 1961, A NOTICE UNDER SECTION 148 WAS SERVED ON HIM, HE FILE D REVISED RETURNS SHOWING HIGHER INCOME. EVENTUALLY, ASSESSMENT ORDER S WERE PASSED AND THE RETURNS SUBMITTED REGULARISED UNDER SECTION 148. IN PENALTY PROCEEDINGS UNDER SECTION 271, THE ASSES-SEE CLAIME D THAT HE HAD OFFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION. PENALTY ORDERS WERE PASSED AND THE COMMISSIONER (AP PEALS) CONFIRMED THE ORDERS. BUT THE APPELLATE TRIBUNAL HE LD THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLU NTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH, AND THAT PENALTY COU LD NOT BE LEVIED. ON A REFERENCE, THE HIGH COURT HELD THAT NO PENALTY CO ULD BE LEVIED FOR CONCEALMENT (SEE [2000] 241 ITR 124). THE DEPARTMEN T PREFERRED APPEALS TO THE SUPREME COURT. THE SUPREME COURT DIS MISSED THE ITA NO.1141 /MDS/2012 9 APPEALS HOLDING THAT NO INTERFERENCE WITH THE ORDER OF THE HIGH COURT WAS CALLED FOR. DECISION OF THE MADHYA PRADESH HIGH COURT IN CIT V. SURESH CHANDRA MITTAL [2000] 241 ITR 124 AFFIRMED. AS CAN BE SEEN FROM THE ABOVE DECISION, THERE WAS A SEARCH AND PURSUANT TO SEARCH NOTICE U/S.148 OF THE ACT WAS IS SUED. THE ASSESSEE FILED REVISED RETURN SHOWING A HIGHER INCO ME, VOLUNTARILY SURRENDERED IN GOOD FAITH AND TO PURCHASE PEACE WIT H THE DEPARTMENT. THE HIGH COURT AND THE HONBLE SUPREME COURT HELD THAT THERE IS NO CONCEALMENT OF INCOME. IN THE CASE ON HAND, THE ASSESSEE FILED REVISED RETURN IN TIME OFFERING THE ADDITIONAL INCOME VOLUNTARILY IN GOOD FAITH TO PURCHASE PEACE WITH TH E DEPARTMENT, THOUGH IN THE COURSE OF INVESTIGATION AND TO AVOID PROTRACTED LITIGATION. THUS, WE SEE THAT IT IS A CASE OF SIMPLY ACCEPTING THE ADDITIONAL INCOME BY THE ASSESSEE IN THE COURSE OF INVESTIGATI ON AND FILING THE REVISED RETURN IN TIME AND TO AVOID PROTRACTED LITI GATION AS TO IN WHOSE HANDS THE ADDITION IS TO BE MADE WHETHER ASSESSEE O R THE AOP AND IN WHICH THE CASE, THE RATIO OF THE DECISION OF HON BLE SUPREME COURT WILL APPLY. THUS FOLLOWING THE SAID DECISION, WE HO LD THAT THERE IS NO ITA NO.1141 /MDS/2012 10 CONCEALMENT OF INCOME. THUS WE DIRECT THE LD. ASSE SSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SEC.271(1)(C) OF TH E ACT. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON FRIDAY, THE 19 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) ( ' #$ % ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 19 TH FEBRUARY,2016 . K S SUNDARAM. '#$$ %&$'& /COPY TO: $ 1. /APPELLANT 2. /RESPONDENT 3. $ ($)* /CIT(A) 4. $ ( /CIT 5. &+,$ - /DR 6. ,.$/ /GF