Asstt. Commissioner of income tax Central Cir. 1(1), Nagpur V. Smt. Sudha Rana, Nagpur

ITA 125/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3171 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 30-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2012
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: MANOR MORYANI
• Keywords: Cost of acquisition; Capital Gains
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.125/NAG./2012 (ASSESSMENT YEAR : 200809 ) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE1(1), AAYAKAR BHAWAN CIVIL LINES, NAGPUR 440 001 . APPELLANT V/S SMT. SUDHA RANA FLAT NO.T2 & T3, ARC NEST MOHAN NAGAR, NAGPUR 440 001 PAN AFMPR4972G . RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI MANOR MORYANI DATE OF HEARING 23.03.2017 DATE OF ORDER 27.03 .2017 O R D E R PER SHAMIM YAHYA, A.M. AFORESAID APPEAL BY THE REVENUE IS DIRECTED AGAINST IMPUGNED ORDER DATED 20 TH JANUARY 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, FOR ASSESSMENT YEAR 200809. 2. THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED BE LOW: 1. THE LEARNED CIT(A) ERRED IN DELETING THE PENALT Y OF ` 18,40,088 LEVIED UNDER SECTION 271AAA OF THE ACT. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CAS E OF THE ASSESSEE IS NOT COVERED BY EH PROVISIONS OF SECTION 271AAA SINCE THE INCOME IS FROM LTCG AND HENCE IS NOT UNDISCLOSE D INCOME 2 SMT. SUDHA RANA EVEN THOUGH THE ASSESSEE DECLARED UNDISCLOSED INCOM E OF ` 2.25 CRORE U/S 132(4) OF THE ACT ON ACCOUNT OF LTCG. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN UNDER SU BSECTION (2) OF SECTION 271AAA IN AS MUCH AS SHE HAS NOT SPECIFIED THE MANNER IN WHICH THE UNDISCLOSED INCOME OF ` 2.25 CRORE WAS DERIVED. 4. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSEE EVEN THOUGH DECLARED ` 2.25 CRORE AS UNDISCLOSED INCOME U/S 132(4) HAD MADE A DISCLOSURE OF ONLY ` 1.84 CRORE IN THE RETURN OF INCOME, THUS FAILING TO HONOUR THE STATEMENT MADE U /S 132(4) AND PAYING TAXES THEREON AS CONTEMPLATED UNDER SUB SECTION 2 OF SECTION 271AAA. 2. BRIEF FACTS ARE, A SEARCH OPERATION UNDER SECTION 13 2, WAS CONDUCTED IN THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE OF THE RANA MAVEN GROUP ON 27 TH MARCH 2008. SUBSEQUENT TO ISSUE OF NOTICE U/S 142(1) ASSESSEE HAS FILED A RETURN OF IN COME ON 26 TH OCTOBER 2009 DECLARING A TOTAL INCOME OF RS.1,84,08 ,800. ASSESSMENT HAS BEEN COMPLETED ASSESSING INCOME OF RS.2,34,70,8 60 AFTER RE COMPUTING THE CAPITAL GAINS OFFERED BY THE ASSESSEE BY REWORKING THE INDEXED COST OF ACQUISITION BY TAKING INTO ACCOUNT THE ADVANCE RECEIVED AND RETAINED BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 51 OF THE INCOME-TAX ACT. THE ASSESSING OFFICER HAS ALSO REJE CTED THE CLAIM OF THE ASSESSEE U/S.54F. THE ASSESSING OFFICER HAS INI TIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA. VIDE ORDER DATED 29 TH JUNE 2010, PENALTY HAS BEEN LEVIED UNDER SECTION 271AAA, BY TH E ASSESSING OFFICER. WHILE LEVYING PENALTY, THE ASSESSING OFFIC ER HAS OBSERVED THAT THE ASSESSEE HAS FAILED TO FULFILL THE CONDITIONS L AID DOWN IN SUB-SECTION 3 SMT. SUDHA RANA 2 OF SECTION 271AAA OF THE ACT WHICH STIPULATES THA T IF THE ASSESSEE HAS IN THE COURSE OF A STATEMENT UNDER SECTION 132( 4) ADMITTED THE UNDISCLOSED INCOME AND SPECIFIED THE MANNER OF EARN ING SUCH INCOME AND SUBSTANTIATED THE MANNER IN WHICH SUCH UNDISCLO SED INCOME IS DERIVED AND PAYS THE TAX TOGETHER WITH THE INTEREST THEREON, NO PENALTY IS LEVIABLE. ACCORDING TO THE ASSESSING OFF ICER, ASSESSEE HAS AT THE TIME OF SEARCH IN THE COURSE OF A STATEMENT UN DER SECTION 132(4) ADMITTED LONG TERM CAPITAL GAIN ON SALE OF LAND AMO UNTING TO ` 2.25 CRORE. HOWEVER, THE ASSESSING OFFICER HAS POINTED O UT THAT THE ASSESSEE HAS FAILED TO ADHERE TO THIS DECLARATION A ND A RETURN OF INCOME HAS BEEN FILED OFFERING INCOME OF ` 1.84 CRORE. FURTHER, ACCORDING TO THE ASSESSING OFFICER TAX AND INTEREST DUE ON UNDISCLOSED INCOME HAS NOT BEEN PAID BY THE ASSESSEE WHEN THE R ETURN OF INCOME HAS BEEN FILED. THEREFORE, THE ASSESSING OFFICER HA S HELD THAT THE ASSESSEE HAS FAILED TO SATISFY CUMULATIVELY ALL THR EE CONDITIONS LAID DOWN THE PROVISIONS OF SECTION 271AAA FOR IMMUNITY FROM PENALTY. PENALTY OF ` 18,40,088 BEING 10% OF UNDISCLOSED INCOME OF ` 1,84,08,000 HAS BEEN LEVIED. 3. UPON ASSESSEES APPEAL, THE LEARNED COMMISSIONER (AP PEALS) DELETED THE PENALTY HOLDING AS UNDER: 3. I HAVE CAREFULLY CONSIDERED THE ISSUE IN DISPUTE BEFORE ME. THE SECTION 271AAA BY FINANCE ACT 2007 TO PROVIDE FOR L EVY OF PENALTY IN ADDITION TO TAX A SUM OF 10% OF THE UNDISCLOSED INCOME OF THE 4 SMT. SUDHA RANA SPECIFIED PREVIOUS YEAR WHERE AN ACTION UNDER SECTI ON 132 HAS BEEN INITIATED AFTER 1 ST JUNE 2007. AS PER SUBSECTION (2) TO SECTION 271AAA SUCH PENALTY WILL NOT BE LEVIABLE IF THE ASSESSEE IN A STATEMENT UNDER SECTION 132(4) ADMITS THE UNDISCL OSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED AND SUBSTANTIATES THE SAME AND FURTHER PAYS THE TAX AND INTEREST OF THE UNDISCLOSED INCOME. 4. FOR THE PURPOSES OF THIS SECTION, UNDISCLOSED IN COME HAS BEEN DEFINED TO MEAN I) ANY INCOME OF THE SPECIFIED PREV IOUS YEAR REPRESENTED EITHER WHOLLY OR PARTLY BY ANY MONEY, B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTION S FOUND IN THE COURSE OF A SEARCH U/S.132 WHICH HAS NOT BEEN RECOR DED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT O R OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR OR WHICH HAS OTHERWISE NOT BEEN DISCL OSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH OR II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAIN ED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YE AR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 5. IN THE LIGHT OF THIS DEFINITION IT IS NECESSARY TO EXAMINE WHETHER THE INCOME RETURNED BY THE ASSESSEE AS LONG TERM CA PITAL GAIN OF RS.1,84,08,800/- FALLS WITHIN THE AMBIT OF UNDISCLO SED INCOME CONTEMPLATED IN THE EXPLANATION TO SECTION 271AAA. THE APPELLANT HAS DURING THE PREVIOUS YEAR ENTERED INTO A TRANSAC TION FOR SALE OF LAND. APPELLANT DOES NOT MAINTAIN ANY BOOKS OF ACCO UNT. TH LAND SOLD BY THE ASSESSEE DURING THE YEAR WAS RECEIVED U NDER WILL. THE DOCUMENT IN RESPECT OF SALE TO TWO PARTIES VIZ. MR. VIJAY MESHRAM WAS REGISTERED ON 07/09/2007 AND THAT TO MAVEN INFR ACON WAS REGISTERED ON 24/01/2008 BEFORE THE DATE OF SEARCH. THEREFORE IT IS APPARENT THAT THE RELEVANT TRANSACTIONS CANNOT B E CONSIDERED UNRECORDED OR NOT DOCUMENTED IN THE SPECIFIED PREVI OUS YEAR. I AM THEREFORE IN AGREEMENT WITH THE CONTENTION OF TH E AR THAT THE TRANSACTION OF SALE OF LAND ENTERED INTO BY THE ASS ESSEE CANNOT BE TREATED AS 'UNDISCLOSED INCOME' AS DEFINED IN EXPLA NATION TO SECTION 271AAA. 6. AO IN THE PENALTY ORDER HAS STATED THAT APPELLAN T HAS MADE A STATEMENT U/S.132(4) DISCLOSING CAPITAL GAINS OF RS .2,34,53,000/-. HOWEVER IN THE RETURN OF INCOME, INCOME OFFERED WAS RS.1.84 CRORES. THUS THE DISCLOSURE WAS 'NOT HONOURED' AND APPELLANT IS NOT ENTITLED TO THE BENEFIT OF IMMUNITY. AO HAS FUR THER STATED THAT TAXES DUE ON THE RETURNED INCOME HAVE NOT BEEN PAID . 5 SMT. SUDHA RANA 7. IN THIS CONTEXT IT IS NECESSARY TO OBSERVE THAT WHILE AO HAS HELD THAT THE DISCLOSURE OF RS.2.25 CRORES AS PER STATEM ENT U/S.132(4) HAS NOT BEEN HONOURED, FOR THE PURPOSE OF CONSIDERI NG THE 'UNDISCLOSED INCOME' FOR LEVY OF PENALTY U/S.271AAA , AO HAS ONLY CONSIDERED THE RETURNED INCOME AND NOT THE ASSESSED INCOME OF RS.2,34,70,860/-. 8. IT IS THEREFORE CLEAR THAT WHILE LEVYING PENALTY , AO HAS DISCARDED HIS OWN THEORY THAT THE DISCLOSURE IN THE RETURN OF INCOME IS NOT FULL AND TRUE. FURTHER THE OBSERVATIO NS OF AO REGARDING PAYMENT OF TAXES ARE FACTUALLY INCORRECT. AS POINTED OUT BY AR IN HIS SUBMISSIONS THE ENTIRE TAX ALONG WITH INTEREST OF RS.47,56,985/- HAS BEEN PAID BY 30/11/2009. 4. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFOR E US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFF ICER IN THIS CASE HAS LEVIED PENALTY ON THE GROUND THAT THE ASSESSEE HAS NOT HONOURED HIS COMMITMENT DURING THE COURSE OF STATEMENT UNDER SEC TION 132(4) OF THE ACT. IN THIS REGARD, WE NOTE THAT THE SAID STAT EMENT RELATED TO LONG TERM CAPITAL GAIN ASSESSEE HAS DULY DISCLOSED THE L ONG TERM CAPITAL GAIN AND PAID THE TAX THEREUPON. MOREOVER, THE SEAR CH WAS CONDUCTED ON 27 TH MARCH 2008, BEFORE THE CLOSE OF FINANCIAL YEAR, HE NCE, IT CANNOT BE SAID THAT ANYTHING WAS UNRECORDED IN THE BOOKS A ND THE RETURN OF INCOME SUBMITTED BY THE ASSESSEE OR THERE WAS ANY C ONCEALMENT. THE LEARNED COMMISSIONER (APPEALS) HAS CLEARLY GIVEN A FINDING THAT THE SAID TRANSACTION CANNOT BE SAID TO BE UNRECORDED TR ANSACTION. FURTHERMORE, THE TAX EMANATING ON THE SAID TRANSACT ION HAS BEEN DULY PAID, HENCE, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE 6 SMT. SUDHA RANA LEARNED COMMISSIONER (APPEALS) DELETING THE PENALTY . ACCORDINGLY, WE SUSTAIN THE ORDER OF THE LEARNED COMMISSIONER (APPE ALS). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.2017 SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 27.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR