Razia Khatoon, Hyd, Hyderabad V. ACIT, Circle-6(1), Hyderabad, Hyderabad

ITA 1202/HYD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2383 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V RAGHURAM
• Assessee Lawyers: N SWAPNA
• Keywords: Wrong claim; Revised return
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1202/HYD/2015 ASSESSMENT YEAR: 2008-09 SMT. RAZIA KHATOON, HYDERABAD. PAN AXYPK 5691A VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.V. RAGHURAM ASSESSEE BY : SMT. N. SWAPNA DATE OF HEARING : 06-06-2017 DATE OF PRONOUNCEMENT : 21-06-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) - VI HYD ERABAD, DATED 27/08/2015 FOR AY 2008-9. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE ALONG WITH CO-OWNERS HAD SOLD A RESIDENTIAL PROPERTY SITUATED AT ROAD NO. 5, BANJARA HILLS, HYDERABAD DURING THE PREVIOUS YEAR R ELEVANT TO AY UNDER CONSIDERATION. IN THE ORIGINAL RETURN OF INCO ME, ASSESSEE HAS CLAIMED EXEMPTION OF RS. 53,57,865/-. DURING THE AS SESSMENT PROCEEDINGS, WHEN THE AO ASKED THE ASSESSEE TO PROD UCE THE DETAILS OF SUCH CLAIM, THE ASSESSEE HAS ACCEPTED THAT SHE C OULD NOT COMMENCE THE CONSTRUCTION OF RESIDENTIAL HOUSE FOR WHICH THE ASSESSEE HAS PURCHASED A PLOT OF LAND FOR THE VALUE OF RS. 33,57,865/- AND ACCORDINGLY, THE ASSESSEE HAS FILED REVISED RETURN OF 2 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. INCOME AND CLAIMED EXEMPTION U/S 54 OF THE ACT AT R S. 33,57,865/-. AFTER ACCEPTING THE REVISED RETURN OF INCOME, THE A O CONFRONTED WITH THE FACT THAT THE CLAIM U/S 54 IS AVAILABLE ONLY FO R RESIDENTIAL PROPERTY AND NOT FOR PURCHASE OF PLOT OF LAND. HENCE, THE AS SESSEE HAS ACCEPTED THE FACT AND AGREED FOR WITHDRAWAL OF EXEM PTION. 3. IN VIEW OF THE ABOVE FACTUAL BACK GROUND, THE AO INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICE U/S 274 READ WITH SECTION 271(1)(B), WHICH WAS SERVED ON THE ASSESSEE ON 07/1 2/2010. 3.1 DURING THE PENALTY PROCEEDINGS, THE ASSESSEE PR OTESTED THE LEVY OF PENALTY AND FILED HER SUBMISSIONS BEFORE TH E AO. HOWEVER, AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE GROU ND THAT THE ASSESSEE DID NOT ADDUCE ANY REASONS FOR MAKING A FA LSE CLAIM U/S 54 OF THE ACT OF RS. 33,57,865/- AND FURTHER OBSERVED THAT THE ASSESSEE HAS INTENTIONALLY MADE A WRONG CLAIM, WHICH CAME TO THE NOTICE DURING THE COURSE OF SCRUTINY PROCEEDINGS. ACCORDINGLY, AO LEVIED PENALTY OF RS. 8 LAKHS. 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A), WHO WAS CONFIRMED THE ORDER OF T HE AO. 5. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IN CONFIRMING THE ORDER LEVYING PENALTY IS NOT ONLY ERRONEOUS IN LAW BUT IS CONTRAR Y TO THE DECISION OF THE HIGH COURT OF AP. 2. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THA T THE AO IN HIS NOTICE HAS NEVER PROPOSED TO LEVY PENALTY ON THE AG REED ADDITION AND FURTHER THAT SUCH ADDITION IS NOT EXPE CTED TO BE MADE IN THIS ASSESSMENT YEAR AS PER PROVISIONS OF T HE ACT AS HELD BY THE ITAT, IN THE CASE OF SRI JANARDHAN REDD Y WHICH IS CITED BY THE ASSESSEE AND THEREBY ERRED IN CONFIRMI NG LEVY OF PENALTY ON SUCH ADDITION. 3. THE ORDER OF THE LD. CIT(A) IS ALSO CONTRARY TO THE DECISION OF THE HIGH COURT OF AP IN THE CASE OF TAHER ALI WHERE IN IT IS HELD THAT IF ANY ADDITION IS MADE BASED ON MATERIAL THAT IS BEFORE THE 3 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. AO NO PENALTY IS ATTRACTED AS THERE IS NO CONCEALME NT AND THEREFORE IS ERRONEOUS. 5.1 ASSESSEE FILED A PETITION FOR ADMITTING THE FO LLOWING ADDITIONAL GROUND, WHEREIN IT WAS SUBMITTED THAT THE ADDITIONA L GROUND IS PURELY LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER AND THERE IS NO NEED FOR FRESH INQUIRY INTO FACTS AS THE PENALTY SHOW CA USE NOTICE IS ALREADY AVAILABLE ON RECORD. HE RELIED ON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CIT VS. NTPC, 229 ITR 393): ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PEN ALTY OF RS. 8,00,000/- LEVIED BY THE AO AND UPHELD BY THE CIT(A ) IS UNSUSTAINABLE ON THE FACTS OF THE PRESENT CASE AND ALSO IN LAW FOR NON-APPLICATION OF MIND ON PART OF AO AS THE VE RY BASIS I.E., PENALTY SHOW CAUSE NOTICE DOES NOT SPECIFY WHETHER THE NOTICE WAS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5.2 IN VIEW OF THE SUBMISSIONS OF THE ASSESSEE, WE ADMIT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. 6. LD. AR SUBMITTED THAT THE NOTICE SERVED ON THE A SSESSEE IS DEFECTIVE AS PENALTY SHOW CAUSE NOTICE DOES NOT SPE CIFY WHETHER THE NOTICE WAS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6.1 ON MERITS, LD. AR SUBMITTED THAT THE ASSESSEE H AS CLAIMED DEDUCTION U/S 54 AFTER MAKING AN INVESTMENT ON PLOT OF LAND WITH AN INTENTION OF CONSTRUCTING RESIDENTIAL HOUSE. HOWEVE R, DUE TO REASONS KNOWN TO THE ASSESSEE, CONSTRUCTION COULD NOT BE CA RRIED OUT. REFERRING TO THE PROVISIONS OF SECTION 54 OF THE AC T, THE LD. AR SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 54, ASSESSEE CAN CARRY OUT THE CONSTRUCTION OF THE PROPERTY WITHIN A PERIO D OF THREE YEARS AND WITH THE INTENTION OF CONSTRUCTING RESIDENTIAL PROP ERTY, HAS INVESTED IN THE PLOT OF LAND AND ACCORDINGLY, THE CLAIM WAS MAD E IN THE REVISED RETURN OF INCOME. HE SUBMITTED THAT SINCE THE FACT WAS BROUGHT ON RECORD, THE ASSESSEE HAS AGREED FOR DENIAL OF EXEMP TION U/S 54. HE 4 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. SUBMITTED THAT THE FACT REMAINS THAT THE ASSESSEE H AS IN FACT INVESTED THE AMOUNT IN BUYING THE PLOT AND ACCORDINGLY THE S AME WAS CLAIMED IN THE REVISED RETURN OF INCOME, FOR WHICH THE ASSE SSEE HAS ALREADY SUBMITTED RELEVANT DOCUMENTS BEFORE THE AO. 6.2 LD. AR FURTHER SUBMITTED THAT, HOWEVER, ASSESSE E HAS MADE INVESTMENT ON PLOT OF LAND AND FAILED TO CONSTRUCT RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS AS PER THE PROVISION S OF SECTION 54(2) OF THE ACT. LD. AR SUBMITTED THAT THE AMOUNT NOT SO UT ILIZED CAN BE CHARGED U/S 45 AS INCOME OF THE PREVIOUS YEAR FOR W HICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES AND HENCE, ASSESSEE WAS NOT AT ALL AT FAULT. 6.3 LD. AR RELIED ON THE DECISION OF THE AP HIGH CO URT IN THE CASE OF CIT VS. M/S TAHER ALI INDUSTRIES & PROJECTS LTD. , ITTA NO. 128 OF 2014, JUDGMENT DATED 04/03/2014 AND ALSO THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO CHEMICA LS LTD., 320 ITR 158. 7. LD. DR, ON THE OTHER HAND, ARGUED THAT THE ASSE SSEE HAS MADE A FALSE CLAIM IN THE REVISED RETURN OF INCOME AND A SSESSEE HAS NOT DEMONSTRATED ANY INTENTION TO CONSTRUCT THE RESIDEN TIAL HOUSE. SHE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT, SLP NO. 9772 OF 2013. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE FACTS ARE THAT THE ASSESSEE HAS CLAI MED DEDUCTION U/S 54 OF THE ACT FOR THE VALUE OF RS. 53,57,865/ AFTER PURCHASING A PLOT OF LAND WITH AN INTENTION TO CONSTRUCT A RESIDENTIAL H OUSE ON THE PLOT. TO CLAIM DEDUCTION U/S 54, ASSESSEE HAS TO DEPOSIT UNU TILIZED PORTION OF CAPITAL GAINS IN A BANK ACCOUNT UNDER THE CAPITAL G AINS SCHEME, HOWEVER, THE ASSESSEE HAS NOT FOLLOWED THIS PROCEDU RE. BUT, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54 ONLY TO THE E XTENT OF ACTUAL 5 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. INVESTMENT ON PLOT OF LAND WHEREAS AS PER THE PROVI SIONS OF SECTION 54, ASSESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION ON MERE INVESTMENT IN PLOT OF LAND. WHEN THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE AO, ASSESSEE ACCEPTED THE FACT AND ACCORDINGLY ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. 8.1 THEREAFTER, THE AO INITIATED PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT FOR THE WRONG CLAIM MADE BY THE ASSESSEE U/S 54 WITH AN IMPROPER NOTICE ISSUED TO THE ASSESSEE, AS ACCORDIN G TO THE ASSESSEE, IN THE PENALTY NOTICE THE ASSESSING OFFIC ER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INC OME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REFORE, THE NOTICE IS NOT VALIDLY ISSUED. ON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, WE OBSERVE THAT ASSESSEE HAS ALREADY BROUGHT ON REC ORD THE PARTICULARS OF INVESTMENT ON PLOT OF LAND WITH A BO NAFIDE INTENTION TO CONSTRUCT RESIDENTIAL HOUSE ON THE LAND BEFORE THE AO. THE ASSESSEE HAS CLAIMED ONLY THE VALUE OF PLOT OF LAND WHICH WA S ACTUALLY INVESTED BY THE ASSESSEE. THE ASSESSEE HAS NOT CONSTRUCTED A NY RESIDENTIAL HOUSE. THE ASSESSEE HAS TO DEPOSIT THE FUNDS IN SEP ARATE BANK ONLY WHEN SHE EARMARKS CERTAIN FUNDS FOR FUTURE INVESTME NT IN THE RESIDENTIAL PROPERTY. IN THIS CASE, THE ASSESSEE HA S ONLY CLAIMED THE DEDUCTION ONLY TO THE EXTENT OF COST OF PLOT PURCHA SED BY THE ASSESSEE. THE SAME WAS BROUGHT ON RECORD BEFORE THE AO. THERE IS NO DISPUTE WITH REGARD TO THE COST OF PLOT OF LAND PURCHASED BY THE ASSESSEE. THE ONLY DISPUTE IS THAT THE ASSESSEE HAS CLAIMED THE COST OF PLOT OF LAND WHEREAS THE ELIGIBILITY U/S 54 IS T O CLAIM ONLY THE VALUE OF INVESTMENT IN THE RESIDENTIAL HOUSE NOT IN RESID ENTIAL PLOT. THIS IS ONLY MISTAKE ON THE PART OF THE ASSESSEE IN UNDERST ANDING THE PROVISIONS OF THE ACT. THE SAME WAS CONFRONTED WITH THE ASSESSEE, ASSESSEE HAS ACCEPTED THE MISTAKE AND ACCORDINGLY T HE DEDUCTION WAS WITHDRAWN. THE AO FAILED TO BRING ON RECORD THA T THE ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF INCOME OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS, EXCE PT SAYING THAT THE 6 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. ASSESSEE HAS MADE A WRONG CLAIM U/S 54, ON THE OTHE R HAND, THE ASSESSEE HAS FURNISHED RELEVANT SALE DEED RELATING TO THE PURCHASE OF PIECE OF LAND BEFORE THE AO AND THE REVISED RETURN OF INCOME WAS ALSO ACCEPTED BY THE AO BEFORE COMPLETING THE REGULAR AS SESSMENT. THEREFORE, THE ASSESSEE HAS SUBMITTED ALL THE RELEV ANT INFORMATION BEFORE AO, HENCE, THERE IS NO QUESTION OF FURNISHIN G OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME AND THE PENALT Y LEVIED BY THE AO AND CONFIRMED BY THE CIT(A) IS HEREBY DELETED. 8.2 AS REGARDS THE ISSUE OF SHOW CAUSE NOTICE WRONG LY, WE FIND THAT THE AO DID NOT SPECIFY/ MENTION WHETHER THE AS SESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. THE ISSUE IS SQUARELY C OVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHE REIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE T RIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN AP PEAL AGAINST THE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A D ECISION OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & G INNING FACTORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE AS SESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 REA D WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UND ER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INIT IATED, I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, ON THIS ASPECT AL SO, THE PENALTY ORDER DOES NOT WITHSTAND. 7 ITA NO. 1202/H/15 RAZIA KHATOON, HYD. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 21 ST JUNE, 2017. KV COPY TO:- 1) RAZIA KHATOON, C/O K. VASANTKUMAR, AV RAGHURAM, P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 01. 2) ACIT, CIRCLE 6(1), IT TOWERS, HYDERABAD 500 001. 3) CIT(A) - VI, HYDERABAD 4) PR. CIT - 6, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE