Sh. Balwant Rai, Goniana V. The Deputy Commissioner of Income tax, Bathinda

ITA 134/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5797 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R JAIN
• Keywords: Depreciation
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER. I.T.A. NO.134(ASR)/2010. (ASSESSMENT YEAR: 2005-06) SHRI BALWANT RAI, THE DY. C.I.T., C/O ARORA SWEETS, CIRCLE-II, NEAR BUS STAND, BHATINDA. GONIANA. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI K.R. JAIN, ADV. RESPONDENT BY: SHRI TARSEM LAL, D.R. ORDER PER H.L. KARWA, VICE PRESIDENT. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A), BHATINDA DATED 24-12-2009 IN CONFIRMING THE PENALTY OF RS.58,720/- LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T, 1961 (IN SHORT, THE ACT) FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SURVEY UNDER SECTION 133A OF THE ACT ON THE BUSINESS PREMISES OF THE ASS ESSEE WAS CONDUCTED ON 17-3-2005. DURING THE SURVEY OPERATION, AGREEMENT DATED 4-8-2004 FOR THE SALE OF RESIDENTIAL HOUSE OF RS.24,.50,500/- WAS FO UND WHICH WAS ENTERED INTO BY THE ASSESSEE SHRI BALWANT RAI WITH SHRI SUB HODH AGGARWAL. HOWEVER, THE PROPERTY WAS REGISTERED FOR RS.1,75,00 0/- ONLY. IN THIS CASE, THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF T HE ACT AND AN ADDITION 2 OF RS.4,01,250/- WAS MADE ON ACCOUNT OF CAPITAL GAI N WORKED OUT AS AGAINST NIL FIGURE OF CAPITAL GAIN SUBMITTED BY THE ASSES SEE. ACCORDING TO THE A.O., WHILE MAKING CALCULATION OF CAPITAL GAIN, THE ASSES SEE HAS ARBITRARILY ADOPTED THE COST AS ON 1-4-1981 AT 15% ON THE SALE PROCEEDS WITHOUT ANY BASIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. CONFRONTED THE ASSESSEE WITH A SALE INSTANCE OF THE AREA WHERE TH E PROPERTY WAS SITUATED TAKING INTO CONSIDERATION THE SALE INSTANCE OF 22-6 -1981 FOR A CONSIDERATION OF RS.45,000/- FOR AN AREA OF 76.6 SQ.YARD OF PROPE RTY NO.13/IV/142 AT GONIANA, THE CAPITAL GAIN WAS WORKED OUT AT RS.4,01 ,150/- AFTER GIVING THE BENEFIT OF INVESTMENTS MADE BY THE ASSESSEE IN THE RESIDENTIAL HOUSE. SINCE THE ASSESSEE FAILED TO REFLECT THE CAPITAL GAIN IN THE RETURN OF INCOME, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE INITIATED FOR CONCEALMENT OF INCOME. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDE R BEFORE THE CIT(A), BHATINDA AND THE CIT(A), VIDE ORDER DATED 26-2-2008 CONFIRMED THE ADDITION MADE EXCEPT A MINOR RELIEF OF RS.63,423/-. IN VIEW OF THIS, THE ASSESSEE WAS ALLOWED AN OPPORTUNITY FOR HEARING ASKING THE ASSES SEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT MAY NOT BE IMPOSED. HOWEVER, THERE WAS NO RESPONSE FROM THE ASSESSEE AN D CONSEQUENTLY THE A.O. IMPOSED A PENALTY OF RS.58,720/- UNDER SECTION 271(1)(C) OF THE ACT. 3. ON APPEAL, THE CIT(A) CONFIRMED THE LEVY OF PENA LTY AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS APPARENT FROM THE RECORD THAT THE ASSESSEE DECLARED THE COST OF THE LAND AS ON 1-4-1981 AT RS. 2,114/- PER SQ. YARD. THE A.O., ON THE OTHER HAND, ESTIMATED THE SAME AT RS.5 22/- PER SQ. YARD BASED ON ANOTHER PROPERTY SOLD ON 27-6-1981. IN THE QUAN TUM PROCEEDINGS, THE OBJECTION OF THE ASSESSEE WAS AGAINST TAKING COST O F RS.209/- BEING 40% OF 3 THE RATE ADOPTED FOR COMMERCIAL PORTION. THIS OBJE CTION OF THE ASSESSEE WAS BASED ON THE FACT THAT THE A.O. HIMSELF WHILE BIFUR CATING THE CONSOLIDATED SALE CONSIDERATION OF RS.2450000/- INTO RESIDENTIAL AND COMMERCIAL POTION HAS TAKEN THE SAME BASIS AS ADOPTED BY THE ASSESSEE I.E. VALUE OF RESIDENTIAL PORTION IS HALF OF THE VALUE OF COMMERCIAL PORTION. THE CONTENTION OF THE ASSESSEE IN THE QUANTUM PROCEEDINGS BEFORE THE CIT( A) WAS THAT THE RESIDENTIAL PORTION COULD HAVE BEEN VALUED AT RS.26 1/- PER. SQ.YARD IN PLACE OF RS.209/- AS ADOPTED BY THE ASSESSEE. IT IS APPAR ENT FROM THE RECORD THAT WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE, THE LEARNED CIT(A) HAS ADOPTED THE RATE OF RESIDENTIAL PORTION AS ON 1-4-1 981 AT RS.250/- AND THE ALLOWED A RELIEF OF RS.17,055/- ON THIS COUNT. IT IS ALSO SEEN THAT ANOTHER OBJECTION OF THE ASSESSEE IN THE QUANTUM APPEAL DUR ING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT(A) WAS THAT TH E A.O. WAS NOT JUSTIFIED IN REDUCING THE DEPRECIATION TO 67% WHILE WORKING O UT THE COST OF CONSTRUCTION OF BUILDING IN QUESTION AS ON 1-4-1981 . THE CIT(A) HELD THAT THE BUILDING IS ADMITTEDLY VERY OLD AND HE, THEREFO RE, RESTRICTED THE DEPRECIATION OF 60% AND ALLOWED A RELIEF OF RS.46,3 68/-. THUS, IT IS CLEAR THAT ALL THESE FACTORS WERE ESTIMATED BY THE ASSESS EE, THE A.O. AND THE APPELLATE AUTHORITY. IN OUR VIEW, THE ESTIMATE REMA INS THE ESTIMATE AND CAN NEVER REPLACE ACTUAL. WE ALSO FIND THAT THE A.O. E STIMATED THE COST BASED ON SALE OF DIFFERENT PROPERTIES. ACCORDING TO SHRI K.R . JAIN, ADVOCATE, THE LEARNED COUNSEL FOR THE ASSESSEE, THE SAID PROPERTY IS DIFFERENT FROM THE PROPERTY OF THE ASSESSEE. THEREFORE, IT CANNOT BE SAID THAT THE ESTIMATE MADE BY THE A.O. IS ACCURATE AS HAS BEEN ORDERED IN THE APPEAL ORDER WHICH CHANGED THE FIGURE ESTIMATED BY THE A.O. IT IS WEL L SETTLED LAW THAT IF ANY ADDITION IS MADE ON ESTIMATE BASIS, NO PENALTY UNDE R SECTION 271(1)(C) OF THE ACT CAN BE VALIDLY LEVIED. CONSIDERING THE ENTIRE FACTS AND THE CIRCUMSTANCES 4 OF THE PRESENT CASE AS WELL AS SETTLED LEGAL POSITI ON, WE HOLD THAT THERE WAS NO JUSTIFICATION IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND, THEREFORE, WE CANCEL THE SAME. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2011. SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER. VICE PRESIDENT. DATED: 8 TH JUNE, 2011. KC/- COPY OF THE ORDER FORWARDED TO: (1) THE SHRI BALWANT RAI C/O ARORA SWEETS, NEAR BUS STA ND, GONIAN. (2) THE DCIT, CIRCLE II, BTD. (3) THE CIT, BTD. (4) THE CIT(A), BTD. (5) THE SR.D.R., ITAT, ASR. TRUE COPY BY ORDER ASSTT. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, AMRITSAR.