Late Shri Padkakar R. Kibe, Pune V. Income-tax Officer,

ITA 1301/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1204 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Cost of acquisition
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1301/PN/2014 #% & '& / ASSESSMENT YEAR : 2006-07 LATE SHRI PADMAKAR R. KIBE, (THROUGH LEGAL HEIR NITIN P. KIBE), C/O NIRUPA S. KANITKAR, POONA POULTRY PRODUCTS, MAMURDI, DEHU ROAD, PUNE 412101 PAN : ABAPK2700Q ....... / APPELLANT (% / V/S. INCOME TAX OFFICER, WARD 8(2), PUNE / RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI RAJESH DAMOR / DATE OF HEARING : 29-06-2015 / DATE OF PRONOUNCEMENT : 28-08-2015 ) / ORDER PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 25-04- 2014 FOR 2 ITA NO. 1301/PN/2014, A.Y. 2006-07 THE ASSESSMENT YEAR 2006-07, CONFIRMING THE LEVY OF PENALT Y U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). THE PENALTY OF RS.56,44,710/- U/S. 271(1)(C) HAS BEEN LEVIED IN RESPECT OF DISALLOWANCE OF EXCESS COST OF ACQUISITION CLAIMED BY THE ASSESSEE, WHILE COMPUTING CAPITAL GAINS ARISING ON SALE OF LAND. 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE WAS P ROPRIETOR OF POONA LAYERS, A COMMERCIAL LAYER FARM SITUATED AT VILLAGE G AHUNJE, DEHU ROAD, PUNE. THE ASSESSEE EXPIRED ON 16-06-2005 A ND AFTER HIS DEMISE THE BUSINESS AFFAIRS WERE LOOKED AFTER BY HIS DAUGHT ER SMT. NIRUPA KANITKAR. DURING THE FINANCIAL YEAR ENDED ON 31-03- 2006, THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 07-12-2005 FOR SALE OF LAND SITUATED AT VILLAGE GAHUNJE WITH M/S. CITY PARK. THE LONG TERM CAPIT AL GAIN ARISING FROM THE SALE OF LAND WAS OFFERED TO TAX. IN TH E COMPUTATION OF INCOME, THE COST OF LAND WAS DECLARED AS RS.1,25,84,030/- AS AGAINST COST SHOWN IN BOOKS OF ACCOUNT AT RS.12,58,403/-. THE BROUGHT FORWARD BUSINESS LOSS OF RS.76,2 2,116/- WAS ADJUSTED AGAINST LONG TERM CAPITAL GAIN ON SALE OF LA ND. AT THE TIME OF ASSESSMENT THE MISTAKE IN THE COST OF LAND WAS N EITHER NOTICED BY THE ASSESSING OFFICER NOR IT WAS POINTED OUT BY THE AS SESSEE. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT OBSERVE D THAT THE BROUGHT FORWARD LOSS RS.76,22,116/- CLAIMED WERE IN FACT ASC ERTAINED AT RS.24,77,330/- DURING THE ASSESSMENT PROCEEDINGS FOR A SSESSMENT YEAR 2004-05. THE ASSESSING OFFICER, ACCORDINGLY, ALLOWED SE T OFF OF LOSS AT RS.24,77,330/- AND MADE ADDITION OF RS.51,44,786/-. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF ASSESSING OFFICER. DURING T HE APPELLATE PROCEEDINGS, THE DISCREPANCY IN THE COST OF LAND AS SHOWN IN THE BOOKS OF ACCOUNT AND AS CLAIMED BY THE ASSESSEE WAS OBSERVED BY THE 3 ITA NO. 1301/PN/2014, A.Y. 2006-07 COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE ADMITT ED THE MISTAKE IN RESPECT OF COST OF ACQUISITION. THE COMMISSIONER OF INCOME TAX (APPEALS) WITHDREW THE ADJUSTMENT OF BROUGHT FORWARD LOSS RS.24,77,330/- ON THE GROUND, THAT CARRIED FORWARD BUSINES S LOSS CAN BE SET OFF ONLY AGAINST PROFITS AND GAINS OF BUSINESS PROFES SION. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING WRONG INFORMATION. THE ASSESSING OFFICER VIDE ORDER DATED 26-03-2013 LEVIED PENALTY OF RS.56,44,710/- FOR CONCEALING OF INCOME. AGGRIEVED BY THE PENALTY ORDER U/S. 271(1)(C), THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER P ARTLY ACCEPTED THE APPEAL OF THE ASSESSEE BY DELETING THE PEN ALTY IN RESPECT OF DENIAL OF ADJUSTMENT OF BROUGHT FORWARD BUSINESS LOSS. HO WEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENT IONS OF THE ASSESSEE WITH REGARD TO INADVERTENT ERROR IN MENTIONING THE WRONG AMOUNT OF COST OF ACQUISITION OF LAND AT THE TIME OF FILING OF R ETURN OF INCOME. AGAINST THESE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI SUNIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD DIED IN JUNE, 2005 I.E. EVEN BEFORE THE FILING OF THE RETURN. THE ASSESSEE IS BEING REPRESENTED BY HIS LE GAL REPRESENTATIVE. AFTER HIS DEMISE ON 16-06-2005, HIS POULTR Y FARM BUSINESS WAS CARRIED OUT UP TO 31-03-2006 BY HIS DAUG HTER SMT. NIRUPA KANITKAR. ON 07-12-2005, THE LAND OF THE ASSESSEE WAS SOLD AND CAPITAL GAIN ARISING THERE FROM WAS OFFERED TO TAX. ASS ESSMENT YEAR 2006-07 WAS THE FIRST YEAR WHEN THE COMPUTERIZED RETUR N WAS FILED. IN 4 ITA NO. 1301/PN/2014, A.Y. 2006-07 THE COMPUTER SOFTWARE, THE FIGURE ZERO (0) WAS SET AS DEFA ULT. THE COST OF ACQUISITION OF LAND WAS INADVERTENTLY PUNCHED AS RS.1,25,8 4,030/- INSTEAD OF RS.12,58,403/-. THIS MISTAKE WAS NEITHER OBSERV ED BY THE ASSESSEE NOR IT CAME TO THE NOTICE OF ASSESSING OFFICER D URING ASSESSMENT PROCEEDINGS. THE MISTAKE CAME TO LIGHT DURING FIRST APPELLATE PROCEEDINGS. THE ASSESSEE IMMEDIATELY ACCEPTE D THE MISTAKE AND FURNISHED THE EXPLANATION FOR THE SAME. THE BALANCE S HEET OF THE ASSESSEE SHOWS THE CORRECT VALUE OF LAND. THERE WAS N O DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO FURNISH WRONG I NFORMATION IN THE COMPUTATION OF INCOME. IT WAS AN INADVERTENT BONAFIDE MIS TAKE. THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPE ALS) IN HIS ORDER HAS DRAWN INFERENCE AGAINST THE ASSESSEE FROM THE RETURN OF INCOME FILED BY THE DAUGHTER OF THE ASSESSEE (SMT. NIRUPA K ANITKAR) IN HER OWN CASE. THE DAUGHTER OF THE ASSESSEE IN HER RET URN OF INCOME HAD CLAIMED CERTAIN DEDUCTIONS WHICH WERE DISALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE FILED AP PEAL BEFORE THE TRIBUNAL, THE TRIBUNAL ALLOWED THE SAME. SINCE, T HE COMMISSIONER OF INCOME TAX (APPEALS) IN THE PRESENT CASE H APPENS TO DEAL WITH THE CASE OF THE DAUGHTER OF THE ASSESSEE, HE IS PREJUDICED AGAINST THE ASSESSEE, AS IS EVIDENT FROM THE FINDINGS GIVEN BY HIM IN THE IMPUGNED ORDER. THE ASSESSEE FAIRLY ADMITS THAT THE PUN CHING OF ADDITIONAL ZERO (0) WHILE WRITING THE COST OF LAND IN COMPUTAT ION WAS A MISTAKE FOR WHICH VALID EXPLANATION WAS FURNISHED. THEREFORE, NO PENALTY IS LEVIABLE. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING CASE LAWS: I. CIT VS. LAKSHMI VILAS BANK LTD.; 303 ITR 428 (MADRAS H.C.). II. CIT VS. M/S. BENNETT COLEMAN & CO. LTD.; INCOME TAX APPEA L (LOD) NO.2117 OF 2012, DECIDED ON 26-02-2013. 5 ITA NO. 1301/PN/2014, A.Y. 2006-07 4. ON THE OTHER HAND SHRI RAJESH DAMOR REPRESENTING T HE DEPARTMENT SUBMITTED THAT THE ASSESSEE DID NOT CO-OPE RATE AT THE TIME OF ASSESSMENT. THE ASSESSEE DID NOT PAY THE TAX AMOUN T AT THE TIME OF FILING OF RETURN. THROUGHOUT THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE DELIBERATELY DID NOT POINT OUT THE MISTAKE. EVEN AT THE TIME OF FILING OF APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE DELIBERATELY IGNORED THE ALLEGED MISTAKE. MENTIONING OF EXA GGERATED COST OF LAND BY ASSESSEE IS A DELIBERATELY ATTEMPT TO SU PPRESS THE LONG TERM CAPITAL GAIN. BY ADDING ZERO (0) IN THE AMOUNT OF COS T OF LAND THE LONG TERM CAPITAL GAIN WAS REDUCED FROM RS.5,13,08,794/- TO RS.2,95,75,834/-. THUS, THERE WAS A HUGE DIFFERENCE OF MORE THAN RS.2.17 CRORES IN THE LONG TERM CAPITAL GAIN. THE ASSESSE E IS A HABITUAL OFFENDER AND IN THE HABIT OF DELIBERATELY CLAIMING EXCESS DED UCTION, EXPENDITURE AND SUPPRESSING THE INCOME. THIS FACT IS EVIDE NT FROM THE OBSERVATIONS MADE BY THE COMMISSIONER OF INCOME TAX (APP EALS) IN THE IMPUGNED ORDER. SMT. NIRUPA KANITKAR IN HER RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2008-09 HAD COMMITTED SIMILAR MISCHIEF BY CHANGING THE AMOUNT SHOWN IN THE AGREEMENT. THEREFORE, THE ACT ION OF THE ASSESSEE IN PUNCHING EXTRA ZERO (0) WHILE STATING THE C OST OF LAND IS DELIBERATE ACT AND NOT AN INADVERTENT MISTAKE. THE LD. D R SUBMITTED THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS WELL REASONED AND JUSTIFIED. HE PRAYED FOR SUSTAINING THE IMPUGNED ORDER . 5. THE LD. AR, CONTROVERTING THE SUBMISSIONS OF THE DR SU BMITTED, THAT THE RETURN OF INCOME HAS BEEN FILED BY SHRI NITIN P. KIBE (SON) ON LATE SHRI PADMAKAR R. KIBE AND NOT SMT. NIRUPA KANITKAR. IN THE FIRST INSTANCE THE INFERENCE DRAWN BY THE COMMISSIONER OF INCOM E TAX (APPEALS) FROM THE RETURN IN THE CASE OF SMT. NIRUPA KANITKA R IS 6 ITA NO. 1301/PN/2014, A.Y. 2006-07 UNJUSTIFIED. SECONDLY, SINCE, THE RETURN HAS BEEN FILED BY S HRI NITIN P. KIBE, SON OF THE DECEASED ASSESSEE, THE COMMISSIONER OF IN COME TAX (APPEALS) HAS NO OCCASION TO DRAW INFERENCE FROM THE RETU RN FILED BY SMT. NIRUPA KANITKAR IN HER OWN CASE. AS FAR AS DELAYED PAYMENT OF TAX IS CONCERNED, SHRI NITIN P. KIBE HAS PAID THE TAX AFTER ARRANGING FUNDS FROM VARIOUS SOURCES. NO ESTATE OF DECEASED LATE SHRI PADMAKAR R. KIBE IS LEFT FOR THE PAYMENT OF TAX. THE LD. AR FURTHER S UBMITTED THAT IN THE IMPUGNED ORDER THE COMMISSIONER OF INCOME TAX (APP EALS) HAS REFERRED TO CERTAIN FORGED AGREEMENTS. SMT. NIRUPA KANITK AR WAS IN NO WAY IN CONNECTED WITH THOSE AGREEMENTS AS THE SAID AGR EEMENTS WERE PREPARED BY M/S. NEW PLANET TRADING CO. PVT. THE LD. AR VEHEMENTLY PRAYED FOR DISMISSING THE SUBMISSIONS OF THE LD. DR. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HA S PLACED RELIANCE. THE PENALTY HAS BEEN LEVIED FOR INFLATING THE AC QUISITION COST OF LAND BY ADDING ZERO (0) AT THE END OF ACTUAL COST, WHILE COMPUTING LONG TERM CAPITAL GAIN FROM SALE OF LAND. IT IS AN UNDISPUTED FACT THAT IN THE BOOKS OF ACCOUNT, THE VALUE OF LAND HAS BEEN RIGHTLY STATED. THUS, THERE IS NO MISS-STATEMENT OR CONCEALMENT IN THE BOOKS OF ACCOUNT. THE WRONG MENTIONING OF FIGURE IN THE COMPUTATION HAS BEE N ATTRIBUTED TO THE NEW COMPUTER SOFTWARE, WHEREIN THE FIGURE ZERO (0) IS SET TO BE PART OF SOFTWARE AND HAS TO BE REPLACED WITH THE ACTUAL FIGURE WHILE PUNCHING THE AMOUNT. THE ERROR IN MENTIONING THE COST O F LAND WAS POINTED OUT BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN ASSESSMENT APPELLATE PROCEEDINGS. THE COMMISSIONER OF INC OME TAX 7 ITA NO. 1301/PN/2014, A.Y. 2006-07 (APPEALS) ENHANCED THE ASSESSED INCOME, AS A RESULT PENALT Y PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED. 7. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE COMM ISSIONER OF INCOME TAX (APPEALS) HAS DISBELIEVED THE EXPLANATION FURNISHE D BY THE ASSESSEE PRIMARILY ON THE GROUND, THAT AFTER THE DEATH OF LATE SHRI PADMAKAR R. KIBE HIS BUSINESS WAS LOOKED AFTER BY HIS DAUG HTER SMT. NIRUPA KANITKAR. SMT. NIRUPA KANITKAR IN HER OWN CASE FOR THE ASSESSMENT YEAR 2008-09 HAD ALLEGEDLY COMMITTED SOME M ISCHIEF BY CHANGING THE AMOUNT SHOWN IN THE AGREEMENT WHILE FILING THE RETURN OF INCOME, TO EVADE TAX. ADMITTEDLY, IN THE PRESENT CASE, TH E RETURN OF INCOME HAS BEEN FILED BY SHRI NITIN P. KIBE, SON OF LATE SHR I PADMAKAR R. KIBE AND NOT BY SMT. NIRUPA KANITKAR. IT IS EQUALLY UND ISPUTED THAT THE ASSESSMENT YEAR 2006-07 WAS THE FIRST YEAR WHEN C OMPUTERIZED RETURN OF INCOME WAS FILED. SINCE, IT WAS A SHIFT FROM MANUAL FILIN G OF RETURN TO COMPUTERIZE FILING OF RETURN, THERE IS HIGH PROBA BILITY THAT SUCH ERROR MAY HAVE CREPT IN. 8. WE ARE OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN COMING TO THE CONCLUS ION THAT SINCE SMT. NIRUPA KANITKAR HAS COMMITTED SOME MISCHIEF WHILE FILING HE R RETURN OF INCOME, SHE WAS ALSO INSTRUMENTAL IN COMMITTING SIM ILAR TINKERING WITH THE FIGURES IN THE PRESENT CASE. THE FINDIN GS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE CLEARLY BASED ON CONJECTURES AND SURMISES. IT IS A WELL SETTLED LAW THAT PENALTY CANNO T BE LEVIED MERELY ON ASSUMPTION AND PRESUMPTIONS. THE ASSESSEE HAS FURNISHED THE REASONS FOR MENTIONING OF WRONG AMOUNT IN THE COMPUT ATION OF 8 ITA NO. 1301/PN/2014, A.Y. 2006-07 LONG TERM CAPITAL GAIN, WHICH TO OUR MIND IS REASONABLE AND ACCEPTABLE WITHIN MEANING OF SECTION 273B OF THE ACT. 9. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. LAKSHMI VILAS BANK LTD. (SUPRA) HAD UPHELD THE ORDER OF TRIBUNAL IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IN SOMEWHAT SIMILAR CIRCUMSTANCES. IN THE SAID CASE, THE ASSESSEE FILED ITS R ETURN OF INCOME. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. D URING THE COURSE OF THE ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE EXCESS CLAIM, WHICH WAS DISALLOWED WHILE COMPUTING DEDUCTION U/S. 36(1)(VIIA). PENALTY PROCEEDINGS WERE INITIATED . THE ASSESSEE FURNISHED THE REASONS, THAT THERE WAS A CLERICAL MISTAKE D UE TO MISPLACEMENT OF DECIMAL POINT WHILE COMPUTING. THE COMMISSIONE R OF INCOME TAX (APPEALS) CONFIRMED THE LEVY OF PENALTY. THE MA TTER TRAVELLED TO TRIBUNAL. THE TRIBUNAL FOUND THAT THE MISTAKE WAS DUE TO MISPLACEMENT OF DECIMAL AND THAT THERE WAS NO MALAFIDE INTEN TION ON THE PART OF THE ASSESSEE. THE MISPLACEMENT OF DECIMALS CO ULD NOT TANTAMOUNT TO CONCEALMENT OF PARTICULARS OR FURNISHING INAC CURATE PARTICULARS. THE HON'BLE HIGH COURT UPHELD THE FINDINGS OF THE TRIBUNAL AND HELD THAT THE BURDEN ALWAYS LIES UPON THE D EPARTMENT TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED HIS INCOME. 10. WE FIND THAT IN THE PRESENT CASE, THE ASSESSEE HAD FURNISHED THE EXPLANATION GIVING REASONS FOR MISTAKE IN MENTIONING THE AMO UNT OF COST OF ACQUISITION OF LAND. IT HAS BEEN STATED THAT THE MISTAKE WAS BONAFIDE. IN THE BOOKS OF ACCOUNT THE AMOUNT WAS CORREC TLY MENTIONED. SINCE, IT WAS THE FIRST YEAR OF FILING RETURNS BY USING COMPUT ER SOFTWARE, THERE IS EVERY POSSIBILITY OF COMMITTING ERROR IN TRANSFORMA TION STAGE. 9 ITA NO. 1301/PN/2014, A.Y. 2006-07 THEREFORE, THERE WAS NO REASON TO DISBELIEVE THE REASONS GIVEN BY THE ASSESSEE. THE DEPARTMENT HAS NOT BEEN ABLE TO DISCHAR GE THE ONUS OF ESTABLISHING THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THUS, IN VIEW OF T HE FACTS OF THE CASE, WE ACCEPT THE EXPLANATION FURNISHED BY THE ASSESSEE AND DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF AUGUST, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 28 TH AUGUST, 2015 RK )*+#,-!.!', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT-V, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- / ITAT, PUNE