Usha Bhaskar Peshattiwar, Raigad V. Income-tax Officer,

ITA 1142/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9251 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Bonafide belief
• Section: 143(3); 50C; 54F; 142(1); 54

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1142/PUN/2014 / ASSESSMENT YEAR : 2005-06 USHA BHASKAR PESHATTIWAR, 101/09, HOC EMPLOYEES CO-OP. HSG. SOCIETY, NEAR HOTEL GARDEN, PANVEL 410206, DISTRICT RAIGAD, MAHARASHTRA. PAN : ASMPP7985P. . / APPELLANT V/S INCOME TAX OFFICER, WARD-4, PANVEL. . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : SHRI AJAY MODI / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF TH E ORDER OF COMMISSIONER OF INCOME TAX (A)-1, THANE DT.03.02 .2014 FOR THE ASSESSMENT YEAR 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL. ON THE BASIS OF INFORMATION RECEIVED FROM THE TRANSACTIONS REPORTED IN ANNUAL INFORMA TION / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT: 30.06.2017 2 RETURN, AO NOTICED THAT ASSESSEE HAD SOLD PROPERTY FOR CONSIDERATION OF RS.33,96,000/- ON 18.03.2007. ON THE BAS IS OF THE AFORESAID INFORMATION, NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME FOR A.Y. 2005 -06. ASSESSEE FILED RETURN OF INCOME ON 27.12.2007 DECLARING TOTA L INCOME OF RS.58,990/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT V IDE ORDER DT.31.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS.26,04,442/- INCLUDING LONG TERM CAPITAL GAINS OF RS.25,45,450/-. ON THE ADDITION OF CAPITAL GAINS MADE BY THE ASSESSEE, AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT AND THEREAFTER VIDE ORDER DT.27.03.2012 LEVIED PENALTY OF RS.5,66,598/- ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED T HE MATTER BEFORE LD.CIT(A) WHO VIDE ORDER DT.03.02.2014 (IN APPEAL NO.10/12-13) CONFIRMED THE LEVY OF PENALTY BY HOLDING AS UNDER : 9. I HAVE CONSIDERED THE APPELLANTS SUBMISSIONS, THE OBSERVATIONS OF THE AO IN THE PENALTY ORDER AND THE FACTS OF THE CASE. THE ONLY GROUND ON WHICH THE APPELLANT HAS R EQUESTED FOR CANCELLATION OF PENALTY IS THAT SHE HAD ACTED ON WR ONG LEGAL ADVICE AND HAD A BONAFIDE BELIEF THAT THE LONG TERM CAPITAL GAINS EARNED BY HER FROM THE SALE OF THE PROPERTY W ERE NOT TAXABLE. WITH REGARD TO WRONG LEGAL ADVICE, IT IS SEEN THAT THE APPELLANT HAS NOT PLACED ON RECORD ANY EVIDENCE ILL THE FORM OF A CERTIFICATE FROM THE CHARTERED ACCOUNTANT THAT HE HAD GIVEN ANY SUCH ADVICE TO THE APPELLANT. AS FAR AS BONAFIDE BE LIEF OF THE APPELLANT IS CONCERNED, IT IS SEEN THAT THE APPELLANT HERSELF ADMITTED THAT THE LONG TERM CAPITAL GAINS R ESULTING FROM THE SALE OF PROPERTY WERE TAXABLE. SHE HAD THEN TRIED TO CLAIM EXEMPTION U/S. 54 OF THE IT. ACT ON THE GROUND THAT THE REQUIRED INVESTMENT WILL BE MADE IN THE CONSTRUCTION OF A RE SIDENTIAL UNIT WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF SAL E OF THE CAPITAL ASSET. HOWEVER, NO SUCH INVESTMENT WAS MADE AS ADMI TTED BY THE APPELLANT HERSELF. THEREFORE, EVEN THE EXEMPTIO N CLAIMED BY THE APPELLANT U/S. 54F OF THE IT. ACT WAS NOT AVAIL ABLE TO HER. THEREFORE, AT BOTH THE STAGES I.E. AT THE FIRST STAGE ITSELF, THE PARTICULARS OF THE INCOME HAD BEEN CONCEALED BY THE APPELLANT BY NOT FILING ANY RETURN OF INCOME IN SPITE OF HAVI NG EARNED TAXABLE LONG TERM CAPITAL GAINS. THEN, SECONDLY, THE APPELLANT 3 HAD CLAIMED EXEMPTION U/S. 54F OF THE IT. ACT WITHOUT MAKING REQUISITE INVESTMENT WITHIN THE TIME ALLOWED TO HER . THEREFORE, THE A.O. HAS RIGHTLY IMPOSED PENALTY U/S. 271(1)(C) OF THE IT. ACT, 1961 AND THE SAME IS THEREFORE CONFIRMED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (APPEALS)-I, THANE ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF RS.5,66,598/- ARISING OUT OF ADDITION OF CAPITAL GAIN ON TRANSFER OF IMMOVABLE PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (APPEALS)-I, THANE ERRED IN THE LEVY OF PENALTY U/S 271(1)(C) ON VALUATION OF RS.33,96,000/- AS PER 50C AND NOT THE ACTUAL CONSIDERATION OF RS.30,00,500/- AS PER THE A GREEMENT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE IS NOW IN APPEAL BEFORE US. 3. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFOR E AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE IS A N OLD LADY AROUND 75 YEARS AGE AND FURTHER SUBMITTED THAT TH E TRANSACTION OF SALE OF PROPERTY WAS DONE BY HER FOR THE FIRST TIME AND SHE WAS ADVISED BY HER CA LATE SHRI G.K. GADGIL THAT C APITAL GAINS DOES NOT ARISE ON THE TRANSFER OF LAND AND WAS NOT LIABLE TO TAX. BASED ON THE ADVICE OF CA, SHE WAS UNDER BONAFIDE B ELIEF THAT SHE WAS NOT LIABLE UNDER CAPITAL GAINS. SHE FURTHER SUBMITT ED THAT SHE HAD NO INTENTION TO MAKE A CLAIM. IT WAS FURTHER SUB MITTED THAT TRANSACTION PROCEEDINGS ARE DISTINCT AND SEPARATE. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LD.CIT(A). 4 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 5. IN THE PRESENT CASE, WE FIND THAT ASSESSEE HAD CLAIMED THAT SHE DOES NOT KNOW THAT CAPITAL GAIN ARISING FROM TRANSAC TION OF SALE OF PROPERTY WILL INVITE CAPITAL GAIN PROVISIONS AND WAS LIABLE TO TAX AND BASING ON LEGAL ADVICE SHE HAD A BONAFIDE BELIEF THAT S UCH INCOME WAS NOT TAXABLE. AO FOUND THAT THE ADDITION HAD MADE TO THE APPELLANTS INCOME ON THE BASIS OF AIR AND IF THE AIR HAD NOT BEEN RECEIVED, THE LONG TERM CAPITAL GAINS EARNED BY TH E APPELLANT ON SALE OF PROPERTY WOULD HAVE ESCAPED FROM TAXATION. 6. BEFORE US, LD. AR HAS SUBMITTED ALL THE NECESSARY DETAILS WITH REGARD TO SALE OF PROPERTY WAS SUBMITTED BEFORE THE AO AND IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOM E OR CONCEALMENT OF PARTICULARS OF INCOME. IT IS SETTLED LAW THA T PARAMETERS OF JUDGING THE DECISION FOR THE ADDITION MADE I N THE ASSESSMENT IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUN T OF INCOME AND THAT CERTAIN DISALLOWANCES / ADDITION COULD LEGALL Y BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERAN CE OF THE PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S 271(1)(C) O F THE ACT ON THE PREPONDERANCE OF THE PROBABILITIES AND THE R EVENUE HAS TO PROVE THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT GENUINE. FURTHER TO LEVY PENALTY, IT HAS TO BE SHOWN THAT THE A SSESSEE HAS VOLUNTARILY FURNISHED INACCURATE PARTICULARS OF INCOME OR CO NCEALED THE PARTICULARS OF INCOME. IT IS ALSO A SETTLED LAW THAT TH E PENALTY 5 PROCEEDINGS ARE ENTIRELY DISTINCT FROM THE ASSESSMENT P ROCEEDINGS AND HOWSOEVER AND GOOD THE FINDINGS OF THE ASSESSMENT M AY BE, THEY ARE NOT CONCLUSIVE AS FAR AS PENALTY PROCEEDINGS AR E CONCERNED. CONSIDERING THE TOTALITY OF THE AFORESAID FACT S, WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY U/S 271 (1)(C) IS LEVIABLE. WE THEREFORE DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 30 TH DAY OF JUNE, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; ! DATED : 30 TH JUNE, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-1, THANE. CIT-2, THANE. #$% &&'(,* '(, / DR, ITAT, B PUNE; %,-./ GUARD FILE. / BY ORDER, // //// // TRUE COP // /// TRUE // //COPY // TRUE COPY // / 0123 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.