Gurusharan Kaur, Bangalore V. DCIT, Bangalore

ITA 1190/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5535 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: H N KHINCHA
• Keywords: Capital asset; Revised return
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1190/BANG/2010 (ASST. YEARS 2005-06) SMT. GURUSHARAN KAUR, NO.119, 9 TH MAIN, ARASAPPA COMPLEX, IDEAL HOME TOWNSHIP, RAJARAJESHWARINAGAR, BANGALORE-98. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), BANGALORE. . RESPONDENT APPELLANT BY : SHRI H.N KHINCHA RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEV ANT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) I AT BANGALO RE DATED 15.09.2010. THE APPEAL ARISES OUT OF THE PENALTY PR OCEEDINGS COMPLETED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 . ITA NO.1190/B/10 2 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U /S 271(1)(C) OF THE INCOME-TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND SHE FILED HER RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING A TOTAL INCOME OF RS.8,45,560/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(1), THE ASSESSEE HAD BEEN ASKED TO PRODUCE THE CASH FLOW STATEMENT. THE ASSESSEE PRODUCED THE SAM E AND IT WAS OBSERVED THAT THE ASSESSEE HAS NOT DISCLOSED THE IN COME ON SALE OF SITE AMOUNTING TO AROUND RS.29,70,000/-. ON BEING ASKED TO EXPLAIN THE SAME, THE ASSESSEE SUBSEQUENTLY FILED REVISED COMPU TATION INCLUDING THIS INCOME BUT AS THERE WAS SUBSTANTIAL SHORT TERM CAPITAL LOSS FOR THE ASSESSEE, THIS WAS SET OFF AGAINST IT AND SO NET AD DITION TO TOTAL INCOME WAS NIL. HOWEVER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT BY ISSUING NOTICE DATED 28.12.2007. IN RESPONSE TO THE SAME, THE ASS ESSEE FILED A LETTER DATED 4.4.2008 STATING THAT THE ASSESSEE HAD SOLD A SITE AT BANGALORE (WHICH WAS A LONG TERM CAPITAL ASSET) WITH THE IDEA OF CONSTRUCTING A RESIDENTIAL HOUSE BY APPLYING THE SALE CONSIDERATIO N OF THE SITE AND TO CLAIM EXEMPTION U/S 54F OF THE INCOME-TAX ACT BUT THE HOUSE COULD ITA NO.1190/B/10 3 NOT BE CONSTRUCTED IN HER NAME BUT IT WAS CONSTRUCT ED BY HER HUSBAND. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS FILED R EVISED STATEMENT OF INCOME SHOWING INCOME FROM LONG TERM CAPITAL GAINS AND, THEREFORE, THERE IS NO LOSS OF REVENUE TO THE GOVERNMENT AND T HERE IS NO DELIBERATE DEFIANCE OF LAW AND THE PENALTY PROCEEDI NGS SHOULD BE DROPPED. THE ASSESSING OFFICER, HOWEVER, WAS NOT C ONVINCED WITH THIS EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAD NEITHER FILED NOR HAD OFFERED CAPITAL GAINS IN THE HOUSE PROPERTY AT THE TIME OF FILING OF RETURN OF INCOME AND HAS OFFERED THE SAME ONLY AFTER BEING CONFRONTED WITH THE SAME DURING THE ASSESSMEN T PROCEEDINGS. HE HELD THAT THE ASSESSEE BEING A LONG STANDING TAX PAYER SHOULD HAVE DISCLOSED IT IN HER RETURN OF INCOME BEFORE THE DEP ARTMENT FINDING IT BUT SINCE THE ASSESSEE FAILED TO SUBMIT ACCURATE PA RTICULARS OF ITS INCOME AND HAS ALSO CONCEALED HER TRUE INCOME UNTIL THE DEPARTMENT HAS FOUND IT, HE HELD IT TO BE FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT. ACCORDINGLY, HE LEVIED MINI MUM PENALTY OF RS.6,45,743/-. 4. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING AT LENGTH, THAT THE SITE WAS SOL D IN SEPTEMBER 2004 AND THE ASSESSEE WAS UNDER THE BONAFIDE IMPRESSION THAT SHE COULD ITA NO.1190/B/10 4 CLAIM EXEMPTION U/S 54F WITH REGARD TO CONSTRUCTION OF RESIDENTIAL HOUSE, WHICH WAS STARTED IN 2000 BUT WAS COMPLETED IN MAR, 2005. IT WAS ALSO SUBMITTED THAT AMOUNT SPENT ON CONSTRUCTIO N WAS MORE THAN SALE CONSIDERATION OF THE SITE AND THE ASSESSEE WAS ADVISED THAT FOR THE HOUSE SO CONSTRUCTED, ASSESSEE SHOULD CLAIM EXEMPTI ON U/S 54F FOR THE LATER SALE OF SITE AND BECAUSE OF THIS REASON, THE ASSESSEE DID NOT OFFER LONG TERM CAPITAL GAIN ON SALE OF SITE TO TAX. SHE HAS ALSO PLACED RELIANCE UPON VARIOUS DECISIONS FOR THE PROPOSITION THAT MERE ADDITION TO THE ASSESSEES INCOME DOES NOT AMOUNT TO CONCEAL MENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME; AND NO PENALTY CAN BE LEVIED ON THE SAID BASIS. HOWEVER, THE CIT(A) W AS NOT CONVINCED WITH THIS ARGUMENT OF THE ASSESSEE AND HELD THAT IT IS A FIT CASE FOR LEVY OF PENALTY. ACCORDINGLY HE CONFIRMED THE LEVY OF PE NALTY AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI H.N KH INCHA REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEF ORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE WAS UNDER A B ONAFIDE IMPRESSION THAT SHE COULD CLAIM EXEMPTION U/S 54F O N THE RESIDENTIAL HOUSE WHICH WAS CONSTRUCTED DURING THE ABOVE PERIOD AND, THEREFORE, THE NON-DISCLOSURE BY THE ASSESSEE WILL NOT ATTRACT THE LEVY OF ITA NO.1190/B/10 5 PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT. IN SUP PORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 (SC). 6. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE, BUT FOR THE INVESTIGATION MADE BY THE ASSESSING OFFICER, WOULD NOT HAVE DISCLOSED THE CAPITAL GAINS AND, THEREFORE, THE INT ENTION OF THE ASSESSEE TO CONCEAL THE INCOME AND FURNISH INACCURATE PARTIC ULARS OF INCOME IS VERY CLEAR. SHE SUBMITTED THAT THE ASSESSEE HAS ON LY FILED REVISED STATEMENT AFTER BEING CONFRONTED DURING THE COURSE OF SCRUTINY AND HAS NOT FILED REVISED RETURN OF INCOME. IN SUPPORT OF THIS CONTENTION THAT IN THESE CIRCUMSTANCES THE PENALTY IS JUSTIFIED, SHE PLACED RELIANCE UPON THE FOLLOWING DECISIONS : 1) JCIT VS. SAHELI LEASING AND INDUSTRIES LTD., REP ORTED IN 324 ITR 170, SC 2) CIT VS. A SREENIVASA PAI, 242 ITR 29 ITA NO.1190/B/10 6 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS, WE FIND THAT THE ASSESSEE HAD SOLD TH E PROPERTY AND DID NOT PAY THE CAPITAL GAINS TAX ON THE SAME. THE EXP LANATION GIVEN BY THE ASSESSEE WAS THAT SHE WAS UNDER THE IMPRESSION THAT SHE COULD CLAIM EXEMPTION U/S 54F WITH REGARD TO THE HOUSE CO NSTRUCTED JOINTLY IN HER HUSBANDS NAME, THE CONSTRUCTION OF WHICH W AS COMMENCED IN 2000 AND WAS COMPLETED IN MARCH, 2005. WHETHER THI S EXPLANATION IS BONAFIDE OR NOT IS TO BE SEEN. IN THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO CHEMICALS (SUPR A) THE HONBLE SUPREME COURT WAS DEALING WITH THE CASE WHERE ALL T HE FACTS WERE DISCLOSED BY THE ASSESSEE AND A PARTICULAR CLAIM WA S DISALLOWED AND AN ADDITION WAS MADE. IN SUCH CIRCUMSTANCES, THE HON BLE SUPREME COURT HAS HELD THAT MERE DISALLOWANCE OF THE CLAIM WILL NOT ATTRACT PENALTY. BUT IN THE CASE BEFORE US, THE ASSESSEE H AS NOT MADE ANY CLAIM NOR HAS DISCLOSED THE RELEVANT FACTS BEFORE T HE AUTHORITIES. IT IS NOT THE CASE OF THE DISALLOWANCE OF CLAIM AS IN THE CASE OF RELIANCE PETRO CHEMICALS (SUPRA) THEREFORE, THE DECISION OF THE HONBLE SUPREME COURT WILL NOT APPLY TO THE FACTS OF THE CA SE BEFORE US. 8. THE LEARNED DR HAD RELIED UPON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF SHAHELI LEASING AND IN DUSTRIES LTD., ITA NO.1190/B/10 7 WHEREIN THE HONBLE SUPREME COURT WAS DEALING WITH THE PENALTY LEVIED BY THE AO AND THE SANE WAS DELETED BY THE TR IBUNAL ON THE GROUND THAT BOTH THE RETURNED AS WELL AS ASSESSED I NCOME WAS NIL. THE HONBLE SUPREME COURT ONLY SAID THAT JUST BECAUSE T HE RETURNED AND ASSESSED INCOME IS NIL, IT CANNOT BE SAID THAT THE PENALTY IS NOT LEVIABLE. THE FACTS OF THE CASE BEFORE US ARE DIST INGUISHABLE AND, THEREFORE, THE SAID JUDGMENT IS NOT APPLICABLE. 9. THE SECOND JUDGMENT RELIED UPON BY THE LEARNED D R IS OF THE HONBLE KERELA HIGH COURT IN THE CASE OF A SREENIVA SA PAI (SUPRA) WHEREIN THE HONBLE HIGH COURT WAS DEALING WITH A C ASE WHERE THE ASSESSEE HAS FILED ITS ORIGINAL RETURN OF INCOME AN D BOOKS OF ACCOUNTS BEING IMPOUNDED FOR THE PURPOSE OF SCRUTINY OF THE CORRECTNESS OF THE ENTRIES. THEN THE ASSESSEE FILED REVISED RETURN OF INCOME OFFERING ADDITIONAL INCOME UNDER THE HEAD OTHER SOURCES I N THIS CIRCUMSTANCES, THE HONBLE HIGH COURT HELD THAT REV ISED RETURN WAS FILED AS AN ATTEMPT TO PLUG THE LOOPHOLE AFTER DETE CTION AND IT WAS NOT INTENDED TO BRING ON RECORD THE MATERIALS WHICH WER E DISCOVERED SUBSEQUENT TO THE FILING OF THE RETURN AND, THEREFO RE, THE PENALTY WAS IMPOSABLE. THE CASE BEFORE US IS ALSO THAT THE ASS ESSEE WAS AWARE THAT THE CAPITAL GAINS WAS LEVIABLE TO TAX BUT HAS NOT O FFERED THE SAME TO ITA NO.1190/B/10 8 TAX AND SHE HAS NOT DISCLOSED THE FACTS BEFORE THE AUTHORITIES BELOW. HAD THE ASSESSEE DISCLOSED THE CAPITAL GAINS AND HA D CLAIMED EXEMPTION U/S 54F AND IF SUCH EXEMPTION HAD BEEN DI SALLOWED, THE ASSESSEES BONAFIDE CLAIM COULD HAVE BEEN PROVED BY THE FACT THAT SHE HAS DISCLOSED THE CAPITAL GAINS. HOWEVER, IN THE C ASE BEFORE US, THE ASSESSEE HAS NEITHER DISCLOSED THE INCOME RECEIVED BY HER FROM SALE OF SITE NOR THE INVESTMENT ALLEGEDLY MADE IN THE CONST RUCTION OF THE HOUSE. ONLY AFTER HAVING BEEN DETECTED BY THE AUTH ORITIES FROM THE CASH FLOW STATEMENT THAT THE ASSESSEE HAS FILED THE REVISED COMPUTATION OF INCOME. MERELY BECAUSE THE REVISED COMPUTATION HAS BEEN ACCEPTED AND HAS NOT RESULTED IN ANY ADDITION BECAU SE OF THE SHORT TERM CAPITAL LOSS, IT CANNOT BE SAID THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T HE INCOME BY THE ASSESSEE. IN VIEW OF THE SAME, WE ARE OF THE OPINI ON THAT THE LEVY OF PENALTY IS JUSTIFIED. THE ASSESEES APPEAL IS ACCO RDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS DISMISSED. ITA NO.1190/B/10 9 ORDER PRONOUNCED IN THE OPEN COURT ON 22ND JUN, 2011. SD/- SD/- (A MOHAN ALANKAMONY) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 22/06/2011 COPY TO : 1. THE ASSESSEE` 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.