DCIT, CHENNAI V. Hema Maheswari, CHENNAI

ITA 1306/CHNY/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8605 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: G BASKAR
• Keywords: Gift; Cost of acquisition; Difference of opinion
• Section: 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , ! ' #, % &' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO.987/MDS/2013 ) *) / ASSESSMENT YEAR : 2006-07 SMT. R. HEMA MAHESWARI, NO.38 (OLD NO.24), A.B.M. AVENUE, R.A. PURAM, CHENNAI - 600 028. PAN : ABEPH 2330 P V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI - 600 034. (,-/ APPELLANT) (./,-/ RESPONDENT) ./ ITA NO.1306/MDS/2013 ) *) / ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI - 600 034. V. SMT. R. HEMA MAHESWARI, NO.38 (OLD NO.24), A.B.M. AVENUE, R.A. PURAM, CHENNAI - 600 028. (,-/ APPELLANT) (./,-/ RESPONDENT) )01 2 3 /ASSESSEE BY : SHRI G. BASKAR, ADVOCATE # 2 3 /REVENUE BY : SHRI SUPRIYO PAL, JCIT 4 2 1% / DATE OF HEARING : 23.06.2016 56* 2 1% / DATE OF PRONOUNCEMENT : 01.09.2016 2 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, CHENNAI, DATED 06.03.2013, CONFIRMING THE PENALTY L EVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE COMMON ISSUE ARIS ES IN BOTH THESE APPEALS, WE HEARD BOTH THE APPEALS TOGETHER AND DIS POSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI G. BASKAR, THE LD. COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THERE WAS SEARCH IN THE VEL TECH GROUP OF INST ITUTIONS IN THE YEAR 2010. A SIMULTANEOUS SEARCH WAS ALSO CONDUCTE D IN THE CASE OF THE PRESENT ASSESSEE. FOR THE ASSESSMENT YEAR 2 006-07, THE ASSESSING OFFICER MADE AN ADDITION OF ` 9 LAKHS TOWARDS LEASE ADVANCE. ACCORDING TO THE LD. COUNSEL, THE REASON FOR MAKING THE ADDITION IS THAT THE COPY OF AGREEMENT WITH VEL HOR TICULTURE LTD. WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER. THE FAC T REMAINS THAT THE ASSESSEE HAS RECEIVED ` 9 LAKHS AS ADVANCE. MOREOVER, THE ADDITION WAS MADE UNDER SECTION 153A OF THE ACT. SINCE THE SOURCE OF RECEIPT OF MONEY IS LEASE ADVANCE, EVEN T HOUGH THE 3 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 ADDITION WAS SUSTAINED IN THE HANDS OF THE ASSESSEE , ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDING TO THE LD. COUNSEL , THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. 3. SHRI G. BASKAR, THE LD. COUNSEL FOR THE ASSESSEE , FURTHER SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD HER SHARE OF PROPERTY AT TIRUPATHI FOR A S ALE CONSIDERATION OF ` 22 LAKHS. IN FACT, THE ASSESSEES MOTHER SMT. SAKU NTHALA RANGARAJAN ACQUIRED THE PROPERTY THROUGH HER MOTHER BY WAY OF GIFT ON 30.08.1980. IN TURN, SMT. SAKUNTHALA RANGARAJAN GIFTED THE PROPERTY TO HER THREE DAUGHTERS EQUALLY ON 29.06.20 03. THE SAID PROPERTY WAS SOLD ON 21.11.2005 FOR A SALE CONSIDER ATION OF ` 66 LAKHS. THE ASSESSEES 1/3 RD SHARE COMES TO ` 22 LAKHS. WHILE COMPUTING THE LONG TERM CAPITAL GAINS, THE ASSESSEE TOOK THE COST OF ACQUISITION AT ` 6 LAKHS. HOWEVER, THE ASSESSING OFFICER TOOK THE VALUE AT ` 1,87,204/- AND COMPUTED THE LONG TERM CAPITAL GAINS TO THE EXTENT OF ` 20,12,796/-. ACCORDING TO THE LD. COUNSEL, THE DIS PUTE WAS WITH REGARD TO THE VALUATION OF PROPERTY AS ON 01.04.1981. THE FACT IS THAT CAPITAL GAIN AS DISCLOSED IN THE REGUL AR RETURN WAS NOT IN DISPUTE. MERELY BECAUSE THE DIFFERENCE OF OPINION BETWEEN THE 4 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 ASSESSEE AND ASSESSING OFFICER FOR TAKING THE VALUA TION OF PROPERTY AS ON 01.04.1981 THAT CANNOT BE CONSTRUED AS CONCEA LMENT OF INCOME AS CLAIMED BY THE ASSESSING OFFICER. THEREF ORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY DE LETED THE ADDITION. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT DURING THE FINANCIAL YEAR 2002-03, THE ASSESSEE SHO WED OPENING CASH BALANCE OF ` 22,90,198/- AS ON 01.04.2002. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT SHE WAS HOLDING AGRICULTURAL LAND TO THE EXTENT OF 6.46 ACRES, WHIC H WAS USED FOR PURCHASE OF PROPERTY. DISBELIEVING THE CLAIM OF TH E ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE OPENING BALANCE W AS SHOWN FOR THE ASSESSMENT YEAR 2003-04 RELEVANT TO THE FINANCI AL YEAR 2002-03. THEREFORE, THE ADDITION CAN BE MADE ONLY FOR THE AS SESSMENT YEAR 2003-04 AND NOT FOR THE YEAR UNDER CONSIDERATION. MERELY BECAUSE THE ASSESSING OFFICER MADE THE ADDITION FOR ASSESSM ENT YEAR UNDER CONSIDERATION, ACCORDING TO THE LD. COUNSEL, THAT W OULD NOT AUTOMATICALLY LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. ON THE CONTRARY, SHRI SUPRIYO PAL, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R LEVIED PENALTY 5 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 IN RESPECT OF THREE ADDITIONS. OUT OF THREE ADDITI ONS ON WHICH PENALTY WAS LEVIED, THE CIT(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER IN RESPECT OF ONLY ONE AD DITION. IN RESPECT OF TWO OTHER ADDITIONS, THE CIT(APPEALS) DELETED TH E PENALTY LEVIED BY THE ASSESSING OFFICER. THEREFORE, THE REVENUE H AS ALSO FILED APPEAL IN I.T.A. NO.1306/MDS/2013 IN RESPECT OF DEL ETION OF PENALTY BY THE CIT(APPEALS). IN RESPECT OF THE PENALTY LEV IED ON THE ADDITION OF ` 9 LAKHS, THE CIT(APPEALS) FOUND THAT THE ASSESSEE C OULD NOT PRODUCE ANY AGREEMENT IN SUPPORT OF THE SO-CALLED L EASE AGREEMENT WITH M/S VEL HORTICULTURE LTD. THE CIT(APPEALS) HA S ALSO FOUND THAT THE ASSESSEE POSSESSED ONLY 6.46 ACRES OF LAND. TH EREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEE WOULD NOT H AVE RECEIVED ` 9 LAKHS AS ADVANCE. ACCORDINGLY, HE CONFIRMED THE PE NALTY LEVIED BY THE ASSESSING OFFICER. HOWEVER, IN RESPECT OF THE ADDITION TO THE EXTENT OF ` 9,06,196/- ON ACCOUNT OF LONG TERM CAPITAL GAINS, T HE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS DISCLOSED THE LONG TERM CAPITAL GAINS AND THE DIFFERENCE WAS ONLY WITH REGA RD TO COST OF ACQUISITION OF PROPERTY. ACCORDINGLY, BY PLACING R ELIANCE ON THE JUDGEMENT OF APEX COURT IN CIT V. RELIANCE PETROPRO DUCTS PVT. LTD. 322 ITR 158, HE DELETED THE PENALTY LEVIED BY THE A SSESSING OFFICER. ACCORDING TO THE LD. D.R., WHEN THE ASSESSEE HAS NO T FURNISHED THE 6 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 CORRECT COST OF ACQUISITION AS ON 01.04.1981, THERE WAS CONCEALMENT OF INCOME, THEREFORE, THE CIT(APPEALS) OUGHT NOT HA VE DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE LD. D .R., FURTHER SUBMITTED THAT THE ASSESSING OFFICER ALSO MADE AN A DDITION OF ` 20 LAKHS TOWARDS UNDISCLOSED CASH CREDIT. THE ASSESSE E HAS SHOWN ` 22,90,198/- AS OPENING CASH BALANCE AS ON 01.04.200 2. HOWEVER, THE ASSESSEE COULD NOT PRODUCE CASH BOOK IN SUPPORT OF THE ABOVE SAID OPENING BALANCE. THE ASSESSEE OFFERED CASH CR EDIT IN THE CASH FLOW STATEMENT FOR ASSESSMENT YEAR 2006-07, WHICH W AS AVAILED FOR PURCHASE OF PROPERTY DURING THE YEAR UNDER CONSIDER ATION. SINCE THE ASSESSEE CLAIMS CASH BALANCE AS ON 01.04.2002, IT I S FOR THE ASSESSEE TO ESTABLISH THE CASH BALANCE BY PRODUCING NECESSARY MATERIAL. SINCE SUCH MATERIAL WAS NOT PRODUCED, AC CORDING TO THE LD. D.R., THE ADDITION WAS MADE. THEREFORE, ACCORD ING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PE NALTY LEVIED BY THE ASSESSING OFFICER. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT WITH REGARD TO ADDITION OF ` 11.97,289/-, BEING THE DIFFERENCE BETWEEN THE INCOME SHOWN IN THE RETURN OF INCOME UNDER SECT ION 153A OF THE ACT AND THE ORIGINAL RETURN, THE ASSESSEE HAS OFFER ED ENTIRE AMOUNT 7 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 FOR TAXATION. SINCE IT WAS UNEARTHED DURING THE CO URSE OF SEARCH OPERATION, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS VOLUNTARILY OFFERED THE SAME IN THE BLOCK PROCEEDING. BUT FOR THE SEARCH, THE ASSESSEE WOULD NOT HAVE DISCLOSED ` 11,97,289/-. THEREFORE, ACCORDING TO THE LD. D.R., MERELY BECAUSE THE ASSES SEE DISCLOSED THE AMOUNT VOLUNTARILY IN THE RETURN OF INCOME FILE D CONSEQUENT TO SEARCH OPERATION UNDER SECTION 153A OF THE ACT THAT CANNOT BE A REASON FOR DELETING THE PENALTY LEVIED BY THE ASSES SING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS SEARCH IN THE PREMISES OF VEL TECH GROUP OF INS TITUTIONS DURING THE YEAR 2010 AND CONSEQUENTLY, A SEARCH WAS CONDUC TED IN THE PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEA RCH OPERATION, SEVERAL INCRIMINATING MATERIALS WERE FOUND IN RESPE CT OF SALE OF PROPERTY AT TIRUPATHI AND INVESTMENT IN THE LANDED PROPERTIES. THE ASSESSING OFFICER MADE ADDITION AND ALSO LEVIED PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT. WITH REGARD TO ADDIT ION OF SO-CALLED AGRICULTURAL INCOME, THE CIT(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. WITH REGARD TO LONG TERM CAPITAL GAINS, THE CIT(APPEALS) FOUND THAT THE DISPUTE IS WITH REGARD TO COST OF 8 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 ACQUISITION OF PROPERTY AS ON 01.04.1981. THEREFOR E, HE DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. WITH REGA RD TO OPENING CASH BALANCE AS ON 01.04.2002, THE CIT(APPEALS) FOU ND THAT THE ASSESSEE HAS NOT ESTABLISHED THE AVAILABILITY OF FU NDS, ACCORDINGLY, HE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OF FICER. THE CIT(APPEALS) HAS ALSO DELETED THE PENALTY WITH REGA RD TO DIFFERENCE BETWEEN THE INCOME RETURNED IN THE ORIGINAL RETURN AND THE RETURN FILED UNDER SECTION 153A OF THE ACT. THE FACT REMA INS THAT THERE WAS SEARCH OPERATION IN THE YEAR 2010 AND UNDISCLOS ED INCOME WAS ASSESSED UNDER SECTION 153A OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PENALTY, IF ANY, CAN BE LEVIED ONLY UNDER SECTION 271AAA OF THE ACT. IN OTHER WORDS, T HE UNDISCLOSED INCOME COMPUTED BY THE ASSESSING OFFICER SQUARELY F ALLS IN SUB- CLAUSE (I) OF 271AAA OF THE ACT. THEREFORE, IN VIE W OF SUB-SECTION (3) OF SECTION 271AAA OF THE ACT, THERE CANNOT BE A NY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIE W OF THE SPECIFIC PROHIBITION UNDER SECTION 271AAA(3) OF THE ACT, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER C ANNOT LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREF ORE, THE CIT(APPEALS) OUGHT TO HAVE DELETED THE ENTIRE PENAL TY LEVIED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, THIS TRIB UNAL IS UNABLE TO 9 I.T.A. NO.987/MDS/13 I.T.A. NO.1306/MDS/13 UPHOLD THE ORDERS OF THE LOWER AUTHORITY. ACCORDIN GLY, THE ORDERS OF THE ASSESSING OFFICER, AS CONFIRMED BY THE CIT(APPE ALS), ARE SET ASIDE AND THE ENTIRE PENALTY LEVIED BY THE ASSESSIN G OFFICER IS DELETED. 8. IN THE RESULT, ASSESSEES APPEAL IN I.T.A. NO.98 7/MDS/2013 IS ALLOWED AND THE REVENUES APPEAL IN I.T.A. NO.1306/ MDS/2013 IS DISMISSED. ORDER PRONOUNCED ON 1 ST SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( ! ' # ) ( ... ) (CHANDRA POOJARI) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 1 ST SEPTEMBER, 2016. KRI. 2 .19: ;:*1 /COPY TO: 1. )01 /ASSESSEE 2. ASSESSING OFFICER 3. 4 <1 () /CIT(A)-II, CHENNAI 4. 4 <1 /CIT 5. := .1 /DR 6. >) ? /GF.