M/s. Surinder Kuar Sahni, New Delhi V. ITO, New Delhi

ITA 1179/DEL/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9359 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILESH KUMAR SENIOR
• Assessee Lawyers: R K MEHRA
• Section: 271(1)(c); 27; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1179/DEL./2014 (ASSESSMENT YEAR : 2009-10) SMT. SURINDER KAUR SAHNI, VS. ITO, WARD 32 (1), C 21, FRIENDS COLONY EAST, NEW DELHI. NEW DELHI 110 065. (PAN : AAYPS9540H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. MEHRA, CA REVENUE BY : SHRI SHAILESH KUMAR, SENIOR DR DATE OF HEARING : 13.12.2018 DATE OF ORDER : 19.12.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SMT. SURINDER KAUR SAHNI (HEREINAFTE R REFERRED TO AS THE ASSESSEE) BY FILING THE PRESE NT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 12.12.2013 PASSE D BY LD. CIT (APPEALS)-XXVI, NEW DELHI QUA THE ASSESSMENT YEAR 2 009-10 CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) ON THE GROUNDS INTER ALI A THAT :- ITA NO.1179/DEL./2014 2 1) THE LEVY OF PENALTY U/S 271(1)(C) IS UNJUSTIFIE D AND ILLEGAL UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) THE AO HAS ERRED IN IMPOSING A PENALTY OF RS.2,13,07,291/- IN AS MUCH AS THE CLAIM OF EXEMPTI ON U/S 54 OF THE ACT WAS BONA FIDE. THE PROVISIONS OF SECTION 27 1(1)(C) OF THE ACT WERE NOT ATTRACTED, AS THERE WAS NEITHER ANY CO NCEALMENT OF INCOME NOR IT WAS A CASE OF FURNISHING INACCURATE P ARTICULARS. 3) THE PENALTY PROCEEDINGS ARE INDEPENDENT AND THE AO WAS BOUND TO CONSIDER THE CLAIM OF THE ASSESSEE ON FACT S AFRESH AS CLAIMED. 4) THE CLAIM OF EXEMPTION WAS ADMISSIBLE AS ALL THE CONDITIONS LAID IN THE SECTION WERE SATISFIED, THE ASSESSEE HAD MADE INVESTMENT IN CONSTRUCTION OF A RESIDENTIAL UN IT, A VILLA WHICH WAS TO BE COMPLETED WITHIN THREE YEARS AND AS SUCH THE CLAIM HAD BEEN WRONGLY DENIED IN THE ASSESSMENT. NO PENALTY WAS LEVIABLE UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE. THE PENALTY IS LIABLE TO BE QUASHED. RELIEF CLIAMED A) THE IMPOSED UNDER SECTION 271(1)(C) BE DELETED . B) ANY OTHER RELIEF TO WHICH THE ASSESSEE IS ENTIT LED BE ALLOWED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF COMPLETED ASSESSMENT UNDER SECTION 143 (3) OF THE ACT VIDE WHICH ASSESSI NG OFFICER MADE DISALLOWANCE OF RS.2,13,07,291/- CLAIMED BY TH E ASSESSEE U/S 54 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS F AILED TO FULFILL THE CONDITION LAY DOWN U/S 54 AND THEREBY DISALLOWED TH E AMOUNT OF RS.2,13,07,291/- AND SOUGHT TO INITIATE PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT READ WITH SECTION 274 OF THE A CT. ITA NO.1179/DEL./2014 3 3. DURING THE PENALTY PROCEEDINGS, AFTER DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, AO PROCEEDED TO LEVY THE PENALTY F RS.48,26,102/- @ 100% ON THE TAX EVADED. 4. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE PENALTY BY DISMIS SING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, THE ASSESSEE HAS SOLD HER IMMOVABL E PROPERTY AT NEW FRIENDS COLONY, NEW DELHI FOR A CONSIDERATIO N OF RS.2,75,00,000/- AND HAS COMPUTED THE LONG TERM CAP ITAL GAIN OF RS.2,13,07,291/- AFTER DEDUCTING THE INDEXED COST O F ACQUISITION. IT IS ALSO NOT IN DISPUTE THAT SUBSEQUENTLY ON FAILURE OF THE BUILDER TO DELIVER THE POSSESSION OF THE PROPERTY PURCHASED, T HE ASSESSEE HAS SURRENDERED AN AMOUNT OF RS.2,13,07,291/- CLAIMED A S EXEMPTED ON ACCOUNT OF CAPITAL GAIN TO BUY PEACE AND TO AVOID F URTHER LITIGATION WITH THE DEPARTMENT SUBJECT TO THE CONDITION, PENAL TY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE NOT INITIATED. ITA NO.1179/DEL./2014 4 7. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCUMST ANCES OF THE CASE, GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND THE ARGUMENTS ADDRESSED BY THE AUTHORIZED REPRESENTATIV ES OF THE PARTIES, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME DURING ASSESSMENT PROCEEDINGS? 8. PERUSAL OF THE ASSESSMENT ORDER DATED 23.12.2011 , AVAILABLE AT PAGE 28 TO 31 OF THE APPEAL SET APPARENTLY SHOWS THAT THE AO WITHOUT APPLYING HIS MIND HAS SOUGHT TO INITIATE TH E PENALTY PROCEEDINGS BY RECORDING THAT, PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961 A RE INITIATED. CHARGE INTEREST, ISSUE NECESSARY FORMS. GIVE CREDI T OF TAXES PAID. AO HAS NOT MADE UP HIS MIND AT THE TIME OF PASSING ASSESSMENT ORDER AS TO WHETHER THE PENALTY PROCEEDINGS ARE BEI NG INITIATED UNDER WHICH LIMB OF SECTION 271(1)(C) VIZ. AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 9. WHEN WE EXAMINE PENALTY ORDER AT PAGE 2, AGAIN I T IS RECORDED BY THE AO THAT SINCE THE CLAIM OF THE ASSE SSEE WAS NOT ADMISSIBLE AS SHE HAS NOT INVESTED LONG TERM CAPITA L GAINS AS PER PROVISIONS CONTAINED U/S 54 OF THE ACT, PENALTY PROCEEDINGS U/S ITA NO.1179/DEL./2014 5 271(1)(C) OF THE ACT READ WITH SECTION 274 WERE INI TIATED. EVEN, DURING THE PENALTY PROCEEDINGS, AO WAS NOT AWARE OR SATISFIED IF HE IS LEVYING THE PENALTY FOR CONCEALMENT OF PARTICULA RS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE, BUT ABRUPTLY CAME TO THE CONCLUSION IN THE LAST PARA OF THE PENALTY ORDER THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME . 10. ASSESSMENT ORDER SEEKING TO INITIATE THE PENALT Y PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS HAVE BEEN INITIATED BY THE AO IN A MECHANICAL MANNER WITHOUT BEING SATISFIED AS TO THE REQUIREMENTS LAY DOWN U/S 271(1)(C). HONBLE KARNATAKA HIGH COU RT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY & ORS . 359 ITR 565 (KARN.), AFFIRMED BY HONBLE SUPREME COURT, DEALT WITH IDENTICAL ISSUE AND HAS HELD THAT WHEN ASSESSEE HAS NOT BEEN SPECIFICALLY MADE AWARE OF THE CHARGES LEVELED AGAI NST HER AS TO WHETHER THERE IS CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME ON HER PART , THE PENALTY U/S 271(1)(C) IS NOT SUSTAINABLE. BUT, IN THE INSTANT CASE, TILL LEVYIN G THE PENALTY, AO HIMSELF WAS NOT AWARE AS TO UNDER WHICH LIMB OF THE SECTION 271 (1)(C) THE PENALTY IS BEING LEVIED. 11. WHEN WE EXAMINE THE CASE ON MERITS, UNDISPUTEDL Y IT HAS COME ON RECORD THAT THE ASSESSEE HAS RECEIVED AN AM OUNT OF RS.2,75,00,000/- CRORES FROM THE SALE OF HOUSE PROP ERTY AND ITA NO.1179/DEL./2014 6 ASSESSEE STATED TO HAVE BOOKED A VILLA OF THE VALUE OF RS.3,50,00,000/- WITH SAWHNEY BUILDERS PVT. LTD. BY MAKING THE INITIAL PAYMENT OF RS.2,25,00,000/- VIDE CHEQUE NO. 1003062 DATED 06.08.2008 AND PAID ANOTHER AMOUNT OF RS.1,90,00,00 0/- VIDE CHEQUE NO. 1003072 DATED 18.08.2008. 12. HOWEVER, WHEN SAWHNEY BUILDERS WITH WHOM THE AM OUNT FOR PURCHASE OF VILLA WAS DEPOSITED BY THE ASSESSEE IN ORDER TO CLAIM EXEMPTION U/S 54 OF THE ACT, HAS NOT BEEN GRA NTED PERMISSION BY THE DELHI DEVELOPMENT AUTHORITY (DDA) AND THE PR OJECT HAS NOT TAKEN OFF, THE ASSESSEE SURRENDERED THE AMOUNT OF RS.2,13,07,291/- CLAIMED AS EXEMPTION U/S 54 OF THE ACT. 13. SO WHEN UNDISPUTEDLY ASSESSEE HAS DEPOSITED AMO UNT OF RS.2,25,00,000/- AND RS.1,90,00,000/- ON 05.08.2008 AND 18.08.2008 RESPECTIVELY AND THIS FACT IS DULY PROVE D FROM BANK STATEMENT, AVAILABLE AT PAGE 37 OF THE PAPER BOOK, NO MALAFIDE CAN BE ATTRIBUTED TO THE ASSESSEE IN INVESTING THE SALE PROCEED OF THE HOUSE PROPERTY TO CLAIM THE EXEMPTION U/S 54 OF THE ACT, PARTICULARLY WHEN IT IS PROVED FROM THE LICENCE OF SAWHNEY BUILDERS, COPY OF WHICH IS AVAILABLE AT PAGE 11 OF THE PAPER BOOK, WAS VALID UPTO 17.11.2008 THOUGH SUBSEQUENTLY REVOK ED FOR NON- FULFILLING CERTAIN CONDITIONS. IN THESE CIRCUMSTAN CES, FINDINGS RETURNED BY AO AS WELL AS LD. CIT (A) THAT THE ASSE SSEE HAS NEITHER ITA NO.1179/DEL./2014 7 PURCHASED THE PROPERTY NOR HAS CONSTRUCTED THE PROP ERTY WITHIN THE PRESCRIBED PERIOD AS PER PROVISIONS CONTAINED U/S 5 4 OF THE ACT AND AS SUCH, PROCEEDED TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE NOT SUSTAINABLE BEING NOT BASED ON THE FACTS. 12. MOREOVER, WHEN THE ASSESSEE HAS CATEGORICALLY I NTIMATED AO VIDE LETTER DATED 21.12.2011, AS REFERRED BY AO, IN PAGE 3 OF THE ASSESSMENT ORDER, THAT DUE TO RECESSION IN REAL EST ATE, THE BUILDERS/ DEVELOPERS WERE NOT ABLE TO DELIVER THE VILLA WITHI N 3 YEARS AS PER THEIR COMMITMENT, SHE HAS SURRENDERED THE EXEMPTION CLAIMED U/S 54 OF THE ACT TO BUY PEACE AND TO AVOID FURTHER LIT IGATION WITH THE DEPARTMENT ON THE CONDITION THAT PENALTY PROCEEDINGS U/S 271(1)(C) ARE NOT INITIATED, THERE IS NO QUESTION OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 13. MOREOVER, MERELY THE FACT THAT CLAIM OF EXEMPTI ON OF THE ASSESSEE U/S 54 HAS BEEN REJECTED BY THE AO IS NO G ROUND TO LEVY THE PENALTY U/S 271(1)(C). RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 WHEREIN IT IS HELD THAT UNLESS THE DETAIL SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE F OUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTI ON OF INITIATING PENALTY U/S 271(1)(C) OF THE ACT. ITA NO.1179/DEL./2014 8 14. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, AO HA S FAILED TO MAKE OUT THE CASE OF CONCEALMENT OF INCOME OR FURNI SHING OF INACCURATE PARTICULARS OF SUCH INCOME BY THE ASSESS EE SO AS TO ATTRACT THE PROVISIONS CONTAINED U/S 271(1)(C) OF T HE ACT, HENCE PENALTY LEVIED BY AO AND CONFIRMED BY LD. CIT (A) I S HEREBY ORDERED TO BE DELETED. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF DECEMBER, 2018. SD/- SD/- (N.S. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF DECEMBER , 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-7, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.