Income-tax Officer, V. Smt. Anjanabhai Baban Nadhe, Pune

ITA 1288/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93683 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Additional evidence; Cost of acquisition; Wrong claim
• Section: 54B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1288/PN/2013 (ASSESSMENT YEAR : 2008-09) ITO, WARD-9(3), PUNE .. APPELLANT VS. SMT. ANJANABHAI BABAN NADHE, VISAWA BUNGLOW, SWAPNASHILPA HOUSING SOCIETY, SECTOR NO.12/1A, WHALEKARWADI, CHINCHWAD NAGAR, CHINCHWAD, PUNE 411 033 .. APPELLANT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 16-04-2015 DATE OF PRONOUNCEMENT : 24-04-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 15-03-2013 OF THE CIT(A)-V, PUNE RELATI NG TO ASSESSMENT YEAR 2008-09. 2. DELETION OF PENALTY OF RS.30,45,297/- LEVIED BY THE AO U/S.271(1)(C) OF THE I.T. ACT IS THE ONLY ISSUE RAI SED BY THE REVENUE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HER RETURN OF INCOME ON 29-07- 2008 DECLARING TOTAL INCOME OF RS.28,06,670/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE HAS 2 SHOWN THE INCOME UNDER THE HEAD LONG TERM CAPITAL G AIN OF RS.28,06,668/-. THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS RS.1,61,05,525/- WHEREAS THE COST OF ACQUISITIO N AFTER INDEXING WAS SHOWN AT RS.1,25,000/-. THE CAPITAL G AIN SHOWN BY THE ASSESSEE WAS RS.1,58,06,668/-. THE ASSESSEE HA S CLAIMED EXEMPTION OF RS.75 LAKHS U/S.54EC AND ANOTHER RS.50 LAKHS U/S.54B BEING INVESTMENT IN AGRICULTURAL LAND. 4. WHILE SCRUTINIZING THE ABOVE CLAIM U/S.54B, THE AO NOTED THAT THE LAND SOLD BY THE ASSESSEE IS NOT AN AGRICU LTURAL LAND AS PER THE PROVISIONS OF SECTION 54B. SIMILARLY, THE LAND PURCHASED OUT OF THE SALE PROCEEDS OF THE LAND IS ALSO NOT AN AGR ICULTURAL LAND. THE AO THEREFORE CONFRONTED THE ASSESSEE ABOUT THE SAME. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM MADE U/S.54B, THE AO DISALLOWED THE CLAIM AND MADE ADDITION OF RS.1,3 0,00,000/- U/S.54B OF THE ACT. THE AO SIMILARLY, MADE ADDITIO N OF RS.3,77,722/- BEING INTEREST INCOME FROM THE CORPOR ATION BANK. ON BEING CONFRONTED BY THE AO, THE ASSESSEE ADMITTE D HER MISTAKE. THE AO THEREAFTER MADE ADDITION OF RS.3,7 7,722/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF INTE REST INCOME. 5. IN RESPECT OF QUANTUM ADDITION THE ASSESSEE INIT IALLY DID NOT FILE ANY APPEAL. SUBSEQUENTLY, THE APPEAL WAS FILED BUT WAS WITHDRAWN. MEANWHILE, THE AO INITIATED PENALTY PRO CEEDINGS U/S.271(1)(C) OF THE I.T. ACT. IT WAS SUBMITTED BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS THAT THERE WAS NO MA LAFIDE INTENTION. IT WAS SUBMITTED THAT THE MISTAKE HAS H APPENED DUE TO 3 LACK OF KNOWLEDGE OF NATURE ON AGRICULTURE LAND. T HE ASSESSEE HAD PURCHASED LAND IN AGRICULTURAL ZONE AND THEREFO RE, IT WAS PRESUMED THAT IT IS AGRICULTURAL LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ONLY, THE ASSESSEE CAME TO K NOW THAT EVERY LAND IN AGRICULTURAL ZONE IS NOT AN AGRICULTU RAL LAND. THEREFORE, THERE WAS NO MALAFIDE INTENTION AND IT W AS AN HONEST MISTAKE. 6. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THOUGH IT WAS CLEAR FROM THE LAND RECORD THAT THE LAND UNDER CONSIDERATION W AS NOT AGRICULTURAL LAND AND ALSO THE LAND PURCHASED WAS N OT AGRICULTURAL LAND, STILL THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 54B OF THE I.T. ACT. ACCORDING TO THE AO, IT WAS A WILLFUL ATTEMPT TO AVOID TAX. SIMILARLY, THE ASSESSEE HAS EARNED INTEREST INCOME FROM DEPOSITS WITH CORPORATION BANK WHICH WAS NOT DISCLOSED IN TH E RETURN OF INCOME FILED. THE ASSESSEE HAS ALSO FAILED TO EXPL AIN THE REASONS AS TO WHY THIS INTEREST INCOME WAS NOT DISCLOSED. ON THE CONTRARY, BOTH ADDITIONS WERE ACCEPTED BY THE ASSES SEE AS NO APPEAL AGAINST THE SAID ORDER WAS FILED. IN VIEW O F THE ABOVE, THE AO HELD THAT PROVISIONS OF SECTION 271(1)(C) ARE C LEARLY ATTRACTED. HE THEREFORE LEVIED PENALTY OF RS.30,45 ,297/- BEING THE MINIMUM PENALTY LEVIABLE U/S. 271(1)(C) OF THE I.T. ACT. 7. BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSEE IS A 59 YEAR OLD WIDOW AND BEING ILLITERATE WAS QUITE UNAWARE OF THE PROVISIONS OF THE I.T. ACT AND WAS NOT PROPERLY GUI DED BY THE THEN CA. THE AFFIDAVIT OF SHRI SACHIN AKOLKAR, CHA RTERED 4 ACCOUNTANT WAS ALSO FILED STATING THE CIRCUMSTANCES IN WHICH DETAILS COULD NOT BE FILED AND ALSO THE PROMISE OF THE THEN AO THAT IF TAXES ARE PAID BEFORE 31-03-2011 ON THE ASS ESSED INCOME NO PENALTY WILL BE LEVIED. NARRATING THE SEQUENCE OF EVENTS WHICH LED TO POOR REPRESENTATION BEFORE THE AO DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEE DINGS, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE REQUESTED FOR ADMISSION OF THE FOLLOWING DOCUMENTS AS ADDITIONAL EVIDENCE : (I) CERTIFICATE FROM ADD. COLLECTOR-URBAN LAND (CEILING AND REGULATION) STATING THE SAID LAND BEIN G S.NO.76 COMES UNDER AGRICULTURAL DIVISION. DT. 06-0 2- 1993 & DT. 29-09-1995. (II) 7/12 EXTRACT OF THE SAID LAND BEING S.NO.76 SH OWING AGRICULTURAL ACTIVITIES BEING CARRIED ON THE SAID L AND FROM 2001 TO 2007-08, GROUNDNUTS, CHOWLI, MOONG & BRANJWALS, TILL ETC. WERE SOWN AND HARVESTED OVER T HE PERIOD OF TIME. (III) CERTIFICATE FROM THALHATI, VILLAGE WAKAD, TAL . MULSHI DIST. PUNE CERTIFYING THAT AGRICULTURAL PROD UCTS- JOWAR, TILL WERE CULTIVATED UPTO THE YEAR 2007-08 O N THE SAID LAND AT S.NO.76, WAKAD-CERTIFICATE DT. 13-07-2 011. (IV) CERTIFICATE FROM THALHATI, VILLAGE WAKAD, TAL. MULSHI DIST PUNE CERTIFYING THAT THE SAID LAND WAS CONVERTED FROM AGRICULTURAL LAND TO NON-AGRICULTURA L BY COLLECTOR PUNE VIDE HIS ORDER MA/NA/SR/220/11 DATED 30-07-2011 CERTIFICATE DATED 10-01-2013. 8. THE LD.CIT(A) FORWARDED THE ADDITIONAL EVIDENCES TO THE AO FOR HIS COMMENTS WHICH WAS REQUIRED TO BE FORWAR DED BY 14- 03-2013. HOWEVER, THE AO DID NOT SEND ANY COMMENT. THE LD.CIT(A) THEREFORE PROCEEDED TO ADJUDICATE THE ISS UE ON THE BASIS OF THE ADDITIONAL EVIDENCES FILED AS WELL AS THE SUBMISSION OF THE ASSESSEE AND DELETED THE PENALTY LEVIED BY T HE AO U/S.271(1)(C) OF THE I.T. ACT. WHILE DOING SO, HE OBSERVED THAT 5 THE ASSESSEE HAS WITHDRAWN THE APPEAL IN RESPECT OF THE QUANTUM APPEAL. THEREFORE, SHE HAS NO MERIT IN RESPECT OF THE QUANTUM ADDITIONS. FURTHER, THE CLAIM OF DEDUCTION U/S.54B AMOUNTING TO RS.1,30,00,000/- IS NOT ADMISSIBLE AS THE NEW LAND PURCHASED AMOUNTING TO RS.55 LAKHS WAS NOT AGRICULTURAL LAND AND PROOF OF INVESTMENT OF RS.75 LAKHS IN SPECIFIED ASSET WAS NO T SUBMITTED. HOWEVER, HE NOTED THAT THE ASSESSEE WAS MISGUIDED B Y HER CHARTERED ACCOUNTANT. THE ASSESSEE IS AN ILLITERAT E WIDOW OF 59 YEARS OLD AND IS NOT CAPABLE OF PUTTING HER SIGNATU RE ON THE DOCUMENTS. SHE HAS PUT HER THUMB IMPRESSION ON THE DOCUMENTS ON THE PLACE EARMARKED FOR SIGNATURE. THE ASSESSEE BY FILING THE RETURN AND OFFERING CAPITAL GAINS ON THE SAID LAND HAD DISCLOSED THE BASIC FACTS RELATING TO THE ASSESSMENT. THE AD DITION HAS BEEN MADE ON ACCOUNT OF DISALLOWANCE OF WRONG CLAIM AND NOT ON ACCOUNT OF FINDING OF CONCEALED INCOME BY THE AO. ACCORDING TO HIM, DISALLOWANCE OF WRONG CLAIM ALSO ATTRACTS PENA LTY U/S. 271(1)(C) OF THE I.T. ACT. HOWEVER, CONSIDERING TH E FACT THAT THE ASSESSEE IS AN ILLITERATE WIDOW OF 59 YEARS OLD AND WAS MISGUIDED BY HER CHARTERED ACCOUNTANT, THE ONUS ON THE ASSESS EE CAN BE SAID TO BE DISCHARGED WHEN THE ASSESSEE BROUGHT THE LAND TRANSACTION TO THE NOTICE OF THE AO BY WAY OF FILIN G OF RETURN NOTWITHSTANDING THE WRONG CLAIM MADE U/S.54B OF THE I.T. ACT. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISIO N OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHANDRA PAL BAGGA VS. ITAT REPORTED IN 261 ITR 67 WHERE THE ASSESSEE HAD DISCLOSED THE PRIMARY FACTS REGARDING SALE OF HOUSE PROPERTY. THE 6 CAPITAL GAIN WAS NOT OFFERED TO TAX ON THE WRONG AD VICE OF THE ADVOCATE. IN THAT CASE ALSO, THE ADVOCATE FILED AN AFFIDAVIT ADMITTING HIS MISTAKE AND THE HONBLE HIGH COURT HE LD THAT PENALTY U/S. 271(1)(C) WAS NOT LEVIABLE. HE ACCORD INGLY DELETED THE PENALTY SO LEVIED BY THE AO U/S. 271(1)(C) OF T HE I.T. ACT. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. 10. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY REL IED ON THE ORDER OF THE AO. HE SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED IS 2008-09 AND THE DUE DATE OF FILING OF THE RETURN BY THE ASSESSEE IS 30-06-2008. HOWEVER, SHE FILED HER RETURN OF IN COME ON 29- 07-2008 WHICH IS A BELATED RETURN. FURTHER, THE AS SESSEE HAS MADE THE WRONG CLAIM OF DEDUCTION U/S.54B WHICH SHE WAS NOT ENTITLED TO CLAIM. BY MAKING A WRONG CLAIM, THE AS SESSEE HAS TRIED TO EVADE THE TAX, THEREFORE, THE PROVISIONS O F SECTION 271(1)(C) ARE CLEARLY ATTRACTED IN THIS CASE. FURT HER, THE INTEREST INCOME WHICH WAS TAXABLE DURING THE YEAR HAS ALMOST BEEN DISCLOSED. 11. REFERRING TO THE DECISION OF HONBLE KERALA HIG H COURT IN THE CASE OF MUTTOOKARAN MACHINE TOOLS VS. ACIT REPO RTED IN 313 ITR 413 HE SUBMITTED THAT THE HONBLE HIGH COUR T IN THE SAID DECISION HAS OBSERVED THAT THE ASSESSEE HAD MA DE BOGUS CLAIMS OF INVESTMENT ALLOWANCE AND DEPRECIATION IN RESPECT OF MACHINERY WHICH WAS NOT PURCHASED, INSTALLED OR COM MISSIONED DURING THE PREVIOUS YEAR. THOUGH THE RETURNS WERE PREPARED BY 7 THE AUDITOR FOR THE ASSESSEE, IT WAS FOR THE ASSESS EE TO ENSURE THAT WRONG CLAIMS WERE NOT MADE BY THE PRACTITIONER OR A UDITOR. THE HONBLE HIGH COURT ACCORDINGLY CONFIRMED THE PENALT Y IMPOSED. HE SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE ABOVE CITED DECISION. HE ACCORDINGL Y SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT O F THE AO BE RESTORED. 12. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). REFERR ING TO PAGE 11 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENC H TO THE COMPUTATION OF TOTAL INCOME WHICH GIVES THE DETAILS OF CAPITAL GAIN AND ALSO REFLECTS INVESTMENT OF RS.55 LAKHS U/ S.54B(1) AND ANOTHER RS.75 LAKHS U/S.54EC TOWARDS INVESTMENT OF CAPITAL GAIN IN CERTAIN BONDS. REFERRING TO PAGES 153 TO 155 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE AFFI DAVIT OF THE CHARTERED ACCOUNTANT FILED BEFORE THE AO ADMITTING THE MISTAKE. REFERRING TO PAGES 151 AND 152 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE AFFIDAVIT FILED BY TH E SAME CHARTERED ACCOUNTANT ADMITTING THE MISTAKE WHICH WAS FILED BE FORE THE LD.CIT(A). REFERRING TO COPY OF THE ASSESSMENT ORD ER HE SUBMITTED THAT THE AO DISCUSSES ONLY THE DISALLOWAN CE U/S.54B. HOWEVER, THERE IS NO DISCUSSION ABOUT THE ADMISSIBI LITY OR OTHERWISE OF DEDUCTION U/S.54EC. HE SUBMITTED THAT THE ASSESSEE DOES NOT HAVE ANY OTHER SOURCE OF INCOME. HE SUBMI TTED THAT AS PER PROVISIONS OF SECTION 54B CAPITAL GAIN ON TRANS FER OF LAND USED FOR AGRICULTURAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES. 8 SIMILARLY, U/S.54EC CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS. REFERRING TO PAGE 13 OF THE PAPE R BOOK, WHICH IS THE COPY OF THE BANK ACCOUNT MAINTAINED WITH THE CORPORATION BANK, HE SUBMITTED THAT AN AMOUNT OF RS.75,01,000/- WAS DEPOSITED IN THE SAID BANK ON 20-06-2007 OUT OF WHI CH AN AMOUNT OF RS.75 LAKHS WAS KEPT AS FIXED DEPOSIT ON THE VER Y NEXT DAY. REFERRING TO PAGE 15 OF THE PAPER BOOK HE SUBMITTED THAT THE BANK HAS GIVEN CERTIFICATE THAT THE SAID SAVING ACC OUNT WITH CORPORATION BANK HAS THE NOMENCLATURE OF CAPITAL GA IN ACCOUNT IN THE RECORDS OF THE BANK. REFERRING TO PROVISIONS O F SECTION 54B HE SUBMITTED THAT IF AN ASSESSEE DOES NOT UTILIZE T HE CAPITAL GAIN FOR THE PURCHASE OF NEW ASSET BEFORE THE DATE OF FU RNISHING THE RETURN OF INCOME U/S.139 AND DEPOSITS THE SAME BEFO RE FURNISHING OF SUCH RETURN IN ACCOUNT IN ANY SUCH BANK OR INSTI TUTION AS MAY BE SPECIFIED AND UTILIZED IN ACCORDANCE WITH ANY SC HEME SUCH DEPOSIT SHALL BE DEEMED TO BE THE COST OF NEW ASSET . IT CAN BE TAXED ONLY AFTER A PERIOD OF TWO YEARS IF THE AMOUN T IS NOT SO UTILIZED. HE ACCORDINGLY SUBMITTED THAT AN AMOUNT OF RS.75 LAKHS WHICH WAS KEPT IN THE SPECIFIED ACCOUNT CANNOT BE T AXED IN THIS YEAR. HE SUBMITTED THAT SINCE THE ASSESSEE IS SATI SFYING THE CONDITIONS, THEREFORE, TO THIS EXTENT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.54B. HE SUBMITTED THAT ALTHOUGH THE A BOVE ARGUMENT WAS NOT MADE BEFORE THE AO OR THE CIT(A), HOWEVER, PENALTY PROCEEDINGS BEING SEPARATE PROCEEDINGS, THE ASSESSEE CAN RAISE THIS ISSUE DURING PENALTY PROCEEDINGS. 9 13. IN HIS ALTERNATE CONTENTION, THE LD. COUNSEL FO R THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE DEVELOPMENT AGREEMENT WHICH IS DATED 18-10-2006. HE SUBMITTED THAT THE L AND HAS BEEN TRANSFERRED IN THE MONTH OF OCTOBER 2006 AND THEREF ORE CAPITAL GAIN FALLS IN THE A.Y. 2007-08 AND NOT A.Y. 2008-09 . THEREFORE, THE CAPITAL GAIN, IF ANY, IS TAXABLE IN A.Y. 2007-0 8. REFERRING TO PAGE 52 OF THE PAPER BOOK THE LD. COUNSEL FOR THE A SSESSEE DREW THE ATTENTION OF THE BENCH TO CLAUSE 10 OF THE DEVE LOPMENT AGREEMENT AND SUBMITTED THAT THE PHYSICAL POSSESSIO N OF THE LAND WAS HANDED OVER TO THE DEVELOPERS ON THAT DATE AND THEREFORE, THE TRANSFER HAS TAKEN PLACE DURING A.Y. 2007-08. REFE RRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT REPORTED IN 26 0 ITR 491 HE SUBMITTED THAT THE CAPITAL GAIN HAS TO BE COMPUT ED IN THE YEAR IN WHICH THE TRANSFER TAKES PLACE. THEREFORE, IN T HE INSTANT CASE, THE CORRECT ASSESSMENT YEAR FOR TAXING THE CAPITAL GAIN IS A.Y. 2007-08 AND NOT A.Y. 2008-09. REFERRING TO THE DEC ISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MANG ESH TUPE VS. ACIT AND OTHER CONNECTED APPEALS VIDE ITA NOS. 804 TO 809/PN/2012 ORDER DATED 30-04-2013 HE SUBMITTED THA T UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL HAD CANCELLED THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE I.T. ACT AND UPHELD BY THE CIT(A). 14. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND IN HIS REJOINDER SUBMITTED THAT THE TAXABILITY OF THE CAPITAL GAIN IN A DIFFERENT ASSESSMENT YEAR WAS NOT BEFORE THE AO. N O SUCH 10 GROUND WAS TAKEN BY THE ASSESSEE BEFORE THE CIT(A). NOW THE LD. COUNSEL FOR THE ASSESSEE IS GIVING A NEW TWIST TO THE FACTS OF THE CASE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSE AND THAT OF THE AO BE RESTORED. 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN THE RETURN FILED BY HER HAS COMPUTED THE CAPITAL GAIN ON ACCOUNT OF SALE OF AGR ICULTURAL LAND BY CONSIDERING THE SALE VALUE AT RS.1,61,15,525/- O N 22-10-2007. AFTER DEDUCTING THE INDEXED COST OF ACQUISITION AT RS.3,08,857/- THE ASSESSEE HAS DETERMINED THE CAPITAL GAIN AT RS. 1,58,06,668/-. AFTER CLAIMING DEDUCTION U/S.54 AMOUNTING TO RS.55 LAKHS AND U/S.54EC AMOUNTING TO RS.75 LAKHS THE ASSESSEE HAS OFFERED THE LONG TERM CAPITAL GAIN OF RS.28,06,668/- TO TAX. T HE DATE OF SALE OF AGRICULTURAL LAND HAS BEEN STATED TO BE 22-10-20 07. SINCE THE INVESTMENT IN THE LAND AMOUNTING TO RS.55 LAKHS WAS NOT TOWARDS INVESTMENT IN AGRICULTURAL LAND THE AO DISALLOWED T HE CLAIM MADE BY THE ASSESSEE. IT IS ALSO A FACT THAT THE A O HAS NOT DISCUSSED ABOUT THE ADMISSIBILITY OF THE DEDUCTION CLAIMED U/S.54EC AND DETERMINED THE TAXABLE INCOME AT RS.1, 61,59,390/- BY DISALLOWING BOTH THE DEDUCTIONS, I.E. RS.75 LAKH S AND RS.55 LAKHS. THE ASSESSEE HAS NOT PREFERRED ANY APPEAL. SINCE THE ASSESSEE HAD MADE A WRONG CLAIM U/S.54B THE AO LEVI ED PENALTY OF RS.30,45,297/- U/S.271(1)(C) OF THE I.T. ACT WHI CH WAS DELETED 11 BY THE LD.CIT(A). IT IS THE GRIEVANCE OF THE REVEN UE THAT THE ASSESSEE BY MAKING A WRONG CLAIM HAD FILED INACCURA TE PARTICULARS OF INCOME. THEREFORE, PENALTY PROCEEDI NGS U/S.271(1)(C) OF THE I.T. ACT ARE APPLICABLE. IT I S THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESS EE WAS A VICTIM OF WRONG ADVICE GIVEN BY THE CHARTERED ACCOUNTANT. FURTHER, THE ASSESSEE HAS MADE DEPOSIT OF RS.75 LAKHS IN SPECIFI ED ACCOUNT U/S.54B AND THE ASSESSEE IS ENTITLED TO CLAIM THAT AS A DEDUCTION IN THAT PARTICULAR YEAR. IT IS ALSO THE ALTERNATE CON TENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ACTUAL DATE OF SA LE IS 18-10-2006 AND AS PER CLAUSE 10 OF THE DEVELOPMENT AGREEMENT T HE VACANT POSSESSION OF THE LAND WAS HANDED OVER TO THE DEVEL OPERS ON 18- 10-2006. THEREFORE, THE CAPITAL GAIN IF ANY IS CHA RGEABLE TO TAX IN A.Y. 2007-08 AND NOT A.Y. 2008-09. MERELY BECAUSE THE ASSESSEE HAD SHOWN THE SAME IN A.Y. 2008-09 PENALTY CANNOT BE LEVIED IN A WRONG ASSESSMENT YEAR. 16. WE HAVE GONE THROUGH THE DEVELOPMENT AGREEMENT WHICH IS EXECUTED AT PUNE ON 18-10-2006 BETWEEN THE ASSES SEE AND ONE MRS. JAYASHREE NARENDRA CHICHWADE ON ONE PART AND M /S. ADITYA PROMOTERS A REGISTERED PARTNERSHIP FIRM, PARTY OF T HE OTHER PART. AS PER CLAUSE 10 OF THE SAID DEVELOPMENT AGREEMENT THE ACTUAL PHYSICAL VACANT AND PEACEFUL POSSESSION OF THE SAID PROPERTY WAS HANDED OVER TO THE DEVELOPERS ON THE SAID DATE. FOR THE SAKE OF CLARIFY THE CLAUSE 10 OF THE DEVELOPMENT AGREEMENT IS REPRODUCED BELOW : 12 10 THE OWNERS DO AND EACH OF THEM DOTH HEREBY DELIVERED AND HANDED OVER THE ACTUAL PHYSICAL, VACA NT AND PEACEFUL POSSESSION OF THE SAID PROPERTY AND THE PO RTION IN THEIR POSSESSION AS ALSO THE TO ENABLE THE DEVEL OPER TO COMMENCE, CARRY OUT AND EXECUTE THE WORK OF CONSTRUCTION AND DEVELOPMENT OF ITS OWNERSHIP FLAT SCHEME AND THE DEVELOPER IS AND SHALL ALWAYS BE SEI ZED AND POSSESSED OF THE SAID PROPERTY FOR THE PURPOSES OF DEVELOPMENT AND CONSTRUCTION ETC., THE DEVELOPER AS SUCH THE DEVELOPER IS FURTHER ENTITLED PERSONALLY OR THR OUGH ITS EMPLOYEES. SUB-AGENTS, CONTRACTORS. BUILDERS ETC., TO HOLD AND POSSESS THE SAID PROPERTY AND TO COMMENCE, CONTINUE, CARRY ON AND COMPLETE THE DEVELOPMENT AND CONSTRUCTION ACTIVITIES FREE FROM ANY CLAIM OR OBJE CTION FROM THE OWNERS AND/OR ANY ONE OF THEM AND/OR FROM ANY PERSON CLAIMING BY, THROUGH, UNDER, IN TRUST OR ON THEIR BEHALF OR ON BEHALF OF ANY OF THEM. THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA ( SUPRA) THE TRANSFER TOOK PLACE IN A.Y. 2007-08 AND CAPITAL GAI N, IF ANY, IS CHARGEABLE TO TAX IN A.Y. 2007-08. ALTHOUGH THIS P LEA WAS NOT TAKEN BEFORE THE AO OR THE CIT(A), HOWEVER, THE ASS ESSEE IN OUR OPINION CANNOT BE PRECLUDED FROM TAKING THIS PLEA D URING PENALTY PROCEEDINGS. IT IS THE SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE INDEPENDENT. THE ASSES SEE CAN TAKE NEW PLEA DURING THE PENALTY PROCEEDINGS WHICH HE HA S NOT TAKEN DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, THE P LEA OF THE REVENUE THAT THE ASSESSEE SHOULD NOT BE PERMITTED T O RAISE THIS NEW PLEA CANNOT BE ACCEPTED. 17. HAVING HELD THAT THE TRANSFER TOOK PLACE IN A.Y . 2007-08 AND NOT IN A.Y. 2008-09 THE NEXT QUESTION THAT ARIS ES IS AS TO WHETHER THE ASSESSEE HAVING OFFERED THE SAME TO TAX IN A.Y. 2008-09 CAN BE VISITED BY THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT IN THIS YEAR 2008-09. AN IDENTICAL IS SUE HAD COME UP 13 BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE O F SHRI MANGESH TUPE AND OTHER CONNECTED APPEALS (SUPRA) W HEREIN THE CIT(A) HAD CANCELLED THE PENALTY LEVIED BY THE AO U /S.271(1)(C) OF THE I.T. ACT ON THE GROUND THAT HAVING REGARD TO CLAUSE OF THE MOU DATED 26-03-1999 THE TRANSFER OF LAND HAS TAKEN PLACE IN THE F.Y. 98-99 RELEVANT TO ASSESSMENT YEAR 99-00 IT SELF AND THEREFORE THE IMPUGNED CAPITAL GAIN WAS LIABLE TO T AX IN 99-00 AND NOT IN A.Y. 2003-04 AS HELD BY THE AO. ON FURTHER APPEAL THE TRIBUNAL UPHELD THE ORDER OF THE CIT(A) BY OBSERVIN G AS UNDER : 26. THE POINT MADE OUT BY THE ASSESSEE IS THAT HAVING R EGARD TO THE AFORESAID, WHEREBY MTDCL WAS GRANTED IRRECOVERABL E LICENSE TO COMMENCE DEVELOPMENT OF THE LAND ON 26.03 .1999 ITSELF, THEN AS PER THE DECISION OF THE HON'BLE BOMBA Y HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA), 'TRANSFER' WITHIN THE MEANING OF SECTION 2(47) OF THE ACT TAKE S PLACE AND THE CORRESPONDING CAPITAL GAIN BECOME TAXABLE IN ASSESSM ENT YEAR 1999-2000 IN TERMS OF SECTION 45(I) OF THE ACT. THE HON'BLE BOMBAY HIGH IN THE AFORESAID JUDGEMENT HAD AN OCCASIO N TO CONSIDER THE IMPORT OF THE EXPRESSION 'TRANSFER' AS PER THE SECTION 2(47) OF THE ACT IN CASE OF A 'DEVELOPMENT A GREEMENT' BETWEEN THE LAND OWNER AND A DEVELOPER. AS PER THE HON'BLE BOMBAY HIGH COURT, IF A TRANSACTION INVOLVED THE ALL OWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RET AINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERR ED TO UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) OR ANY TRANSACTION WHICH HAS EFFECT OF TRANSFERRING OR EN ABLING IN ENJOYMENT OF TRANSFER PROPERTY THEN HAVING REGARD TO THE CLAUSES (V) AND (VI) OF SECTION 2(47) OF THE ACT, TRA NSFER TAKES PLACE IN THE YEAR IN WHICH SUCH AGREEMENT IS ENTERED INTO. THE MOU DATED 26.03.1999 BETWEEN ASSESSEE AND MTDCL CLEARL Y PROVIDES FOR PERMITTING MTDCL TO IRRECOVERABLY ENTER AND COMMENCE AND COMPLETE DEVELOPMENT OF THE LAND OWNED BY ASSESSEE AND THEREFORE, THERE IS SUBSTANTIAL FORCE IN THE PLEA OF THE ASSESSEE THAT THE ON DATE OF ENTERING OF MOU I.E. 2 6.03.1999, AN EVENT OF 'TRANSFER' WITHIN THE MEANING OF SECTION 2(47) OF THE ACT HAS TAKEN PLACE AND THEREFORE THE CAPITAL GAIN I S LIABLE TO BE TAXED IN ASSESSMENT YEAR 1999-2000. WE ARE CONSCIOUS THA T THE PRESENT PROCEEDINGS ARE NOT IN RELATION TO SUBSTANTIVE TAXATION OF THE IMPUGNED AMOUNTS BUT THE AFORESAID PROPOSITION IS B EING CONSIDERED ONLY TO EXAMINE WHETHER LEGALLY SPEAKING I S THERE JUSTIFICATION IN THE PLEA OF THE ASSESSEE THAT THE TAXAB ILITY OF THE IMPUGNED CAPITAL GAIN WAS NOT LEGALLY CONCLUSIVE IN THE MANNER MADE BY THE ASSESSING OFFICER AND THAT IN THE EYES OF LA W, THE IMPUGNED CAPITAL GAIN WAS TAXABLE IN AN ANOTHER MANN ER. 14 27. IT IS WELL SETTLED PROPOSITION THAT THE ASSESSMENT P ROCEEDINGS AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF T HE ACT ARE INDEPENDENT PROCEEDINGS AND THAT THE CONCLUSIONS REACH ED IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE SO FAR AS THE PENAL PROVISIONS ARE CONCERNED. NO DOUBT A CONCLUSION ARRIVED AT IN THE ASSESSMENT PROCEEDINGS IS GOOD EVIDENCE BUT THE SAM E CANNOT BE CONSIDERED AS CONCLUSIVE FOR THE PURPOSE OF P ENALTY PROCEEDINGS IN AS MUCH AS THE TWO PROCEEDINGS ARE INDE PENDENT PROCEEDINGS, AND, IN THIS CONNECTION GAINFUL REFERENC E CAN BE MADE TO THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE KHUDAY ESWARA & SONS 83 ITR 639 (SC) AND ALSO TO THE JUDGEMENT OF THE HON'BLE ALLAHABAD AND MADRAS HIGH C OURT IN THE CASES OF RAJA MOHD. AMIR AHMAD KHAN 100 ITR 433 ( ALL.) AND B. MUNIAPPA GOUNDER 102 ITR 787 (MAD.) RESPECTIVELY. IN CASE THE ASSESSEE IN THE COURSE OF PENALTY PROCEEDINGS IS ABLE TO DEMONSTRATE WITH CERTAIN DEGREE OF CERTAINTY THAT TH E ADDITION MADE IN THE ASSESSMENT PROCEEDINGS WAS NOT WARRANTED THE N THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE CONSIDER ED AS CONCLUSIVE SO AS TO FASTEN PENAL LIABILITY UNDER SECTIO N 271(1)(C) ON THE ASSESSEE. IN SUPPORT OF THE AFORESAID PROPOSITION, WE MAY RELY UPON THE RATIO OF JUDGEMENT OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF JAINARAYAN BABULAL VS. CIT 170 I TR 399 (BOM.) IN VIEW OF THE AFORESAID DISCUSSION, IN OUR CONSI DERED OPINION, THE CIT(A) MADE NO MISTAKE IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER WITH RESPECT TO THE INCO ME BY WAY OF LONG TERM CAPITAL GAIN OF RS. 30,12,878/- ON SALE OF LAND. ACCORDINGLY, THE ORDER OF THE CIT(A) IS AFFIRMED AND THE APPEAL OF THE REVENUE IN ITA NO. 771/PN/2012 IS DISMISSED. 18. SINCE ADMITTEDLY, THE DEVELOPMENT AGREEMENT WAS ENTERED ON 18-10-2006 FOR WHICH THE CAPITAL GAIN, IF ANY, H AS TO BE TAXED ONLY IN A.Y. 2007-08, THEREFORE, RESPECTFULLY FOLLO WING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MANGESHTUPE AND OTHERS (SUPRA) WE HOLD THAT PE NALTY U/S.271(1)(C) OF THE I.T. ACT IS NOT LEVIABLE IN TH E INSTANT CASE ON ACCOUNT OF CAPITAL GAIN THAT HAD ARISEN DURING THIS YEAR. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) CANCELLI NG THE PENALTY FOR THE REASONS STATED ABOVE. 19. SO FAR AS THE PENALTY LEVIED ON ACCOUNT OF ADDI TION OF INTEREST INCOME, NO PLAUSIBLE REASON HAS GIVEN BY T HE LD. AUTHORISED REPRESENTATIVE AS TO WHY PENALTY SHALL N OT BE LEVIED 15 FOR NON-DISCLOSURE OF INTEREST INCOME OF RS.3,77,72 2/-. WE THEREFORE HOLD THAT PENALTY IS LEVIABLE ON THE INTE REST INCOME NOT DISCLOSED IN THE RETURN OF INCOME. THE ORDER OF TH E LD.CIT(A) ON THIS ISSUE IS SET-ASIDE AND THE AO IS DIRECTED TO R ECOMPUTE THE PENALTY ON SUPPRESSION OF INTEREST INCOME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY PARTLY ALLOWED. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24-04-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PA NDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 24 TH APRIL, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE