Ali Asghar Ceizure, Hyderabad V. ITO, Ward - 7(1), Hyderabad

ITA 1354/HYD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2551 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-01-2018
• Assessment Year: 1998-1999
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Search and seizure
• Section: 143(3); 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1354/HYD/2014 ASSESSMENT YEAR: 1998-99 ALI ASGHAR CEIZURE, HYDERABAD [PAN: ARDPA5861B] VS THE INCOME TAX OFFICER, WARD-7(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.C. YADAV, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 17-01-2018 DATE OF PRONOUNCEMENT : 31-01-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-18, MUMBAI, DA TED 24-03-2014 HAVING CONCURRENT JURISDICTION AT HYDERABAD . 2. BRIEFLY STATED, ASSESSEE IS A RESIDENT OF SWITZERLA ND AND HAVING PASSPORT OF SWITZERLAND. HE OWNED A PARTIC ULAR PIECE OF LAND TO AN EXTENT OF 2.30 ACRES AT ROAD NO. 1 0, BANJARA HILLS, HYDERABAD. DURING THE SEARCH AND SEIZURE OP ERATIONS IN THE CASE OF M/S NAGARJUNA CONSTRUCTION COMPANY LTD, INVESTIGATION OFFICERS HAVE COME TO KNOW THAT THERE WAS A PURCHASE OF OPEN LAND TO AN EXTENT OF 13.560 SQ. YDS ., BY THE SAID COMPANY AND HAS PAID VARIOUS AMOUNTS TO SEVEN PE OPLE, ONE SUCH BEING AN AMOUNT OF RS. 15 LAKHS IN THE NAM E OF ALI ASGHAR CEIZURE AT 10-2-247, ASIF NAGAR, HYDERABAD. THE SAME I.T.A. NO. 1354/HYD/2014 :- 2 -: WAS INTIMATED TO THE ASSESSING OFFICER (AO), WHO INITIA TED PROCEEDINGS U/S. 147 OF THE INCOME TAX ACT [ACT] FOR A Y. 1998- 99, AS THE SAID TRANSACTION SEEMS TO HAVE HAPPENED BET WEEN OCTOBER TO DECEMBER, 1997. IT WAS THE CONTENTION OF ASS ESSEE THAT HE WAS IN SWITZERLAND AND NO NOTICES U/S. 148 AND 142(1) OR 143(2) WERE SERVED ON HIM. HOWEVER, AO PASSED A N ORDER U/S. 143(3) R.W.S. 148 ON 28-03-2003, WHEREIN THE AO HAS NOTED THAT THE SAID AMOUNT WAS RECEIVED, NOT AS OWNER OF THE LAND BUT AS BROKERAGE AND HENCE THE SAME IS TAXABLE. T HE REASONS FOR SHIFTING THE ADVANCE SALE CONSIDERATION TO BROKERAGE IS NOT STATED IN THE ORDER. THIS ORDER WAS NOT SERVED IMMEDIATELY ON ASSESSEE, AS IT WAS SERVED ON SOME OTHE R PERSON, WHO RETURNED THE SAME TO THE DEPARTMENT AS WRONGL Y SERVED. 2.1. ULTIMATELY, A COPY OF THE ORDER WAS SENT BY MAIL AFTER OBTAINING THE ADDRESS FROM THE COURT PROCEEDING S AND ASSESSEE ACKNOWLEDGED THE RECEIPT OF THE ORDER ON 03-0 1-2005. SUBSEQUENTLY, ASSESSEE FILED A PETITION U/S. 264 BEFOR E THE CIT, WHO DISMISSED U/S. 264 WITH THE FOLLOWING OBSERVATION: ANY WAY, THE MATTER IS SUBJUDICE IN THE CIVIL COUR TS AND THE DECISION OF THE COURTS ON OWNERSHIP OF LAND AND WHE THER IMPERSONATION AS CLAIMED HAS TAKEN PLACE, IS VITAL TO DECIDE THE TAXABILITY OR OTHERWISE OF SUCH AMOUNTS IN THE HAND S OF THE PETITIONER. HENCE, I DECLINE TO INTERFERE WITH THE IMPUGNED ASS ESSMENT ORDER. 3. AFTER REJECTION OF 264 BY THE ORDER DT. 30-03-2007 , AO FINALIZED THE PROCEEDINGS U/S. 271(1)(C) AND LEVI ED PENALTY U/S. 271(1)(C), WHILE ACKNOWLEDGING THAT THE MATTER IS SUBJUDICE IN THE CIVIL COURT AND THE DECISION OF THE C OURT ON I.T.A. NO. 1354/HYD/2014 :- 3 -: OWNERSHIP OF LAND AND WHETHER IMPERSONATION HAS CLAIM ED HAS TAKEN PLACE IS YET TO BE DECIDED. AO ACKNOWLEDGES THAT HE HAS NO OTHER ALTERNATIVE, IN VIEW OF THE TIME LIMITATION, FO R FINALIZATION OF PENALTY PROCEEDINGS AND ACCORDINGLY , HE LEVIED A MINIMUM PENALTY OF RS. 4,25,000/-. 4. ASSESSEE CONTESTED THE PENALTY BEFORE THE LD.CIT(A ) THAT HE IS NOT IN RECEIPT OF ANY AMOUNT BUT THE ASSESSMEN T MADE WAS BASED ON WRONG INFORMATION, THAT THERE WAS IMPERSONATION AND ALIENATION OF LANDS AND ASSESSEE IS STILL CONTESTING THE TRANSFER OF PROPERTY AND HENCE PROCEEDI NGS U/S. 271(1)(C) ARE NOT WARRANTED. LD.CIT(A), HOWEVER, REJ ECTED ALL THE CONTENTIONS AND CONFIRMED THE PENALTY. HENCE THE PRESEN T APPEAL. 5. IN THIS APPEAL, ASSESSEE RAISED VARIOUS GROUNDS NOT ONLY ON THE ISSUE ON MERITS BUT ALSO ON TWO ISSUES I. E., (I) THAT THE NOTICE ISSUED DOES NOT CONTAIN WHETHER PENALTY IS F OR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PA RTICULARS; (II) THAT THE ORDER OF PENALTY IS BARRED BY LIMITATION; 5.1. SINCE THE LATER ADDITIONAL GROUND WAS NOT CONTEST ED BEFORE THE LD.CIT(A), THE DR WAS ASKED TO OBTAIN COMME NTS OF THE AO. AO HAS SENT THE FOLLOWING REPORT DT. 11-01-2008, PLACED ON RECORD, AS UNDER: 2. IN THIS CASE THE SUBJECT MATTER IS LEVY OF PENA LTY U/S 271(1)(C). THE ASSESSEE PREFERRED APPEAL, BEFORE TH E HON'BLE ITAT, AGAINST THE ORDER OF THE CIT(APPEALS) WHICH WAS IN FAVOUR OF THE DEPARTMENT. THE LD CIT(APPEALS) DISMISSED THE APPEA L, AS THE I.T.A. NO. 1354/HYD/2014 :- 4 -: ASSESSEE FAILED TO GIVE ANY PROPER EXPLANATION STAT ING THAT THE MATTER IS PENDING BEFORE THE CIVIL COURT FOR DECISION AND THE ASSESSEE REQUESTED TO KEEP THE PENALTY PROCEEDINGS IN ABEYAN CE. THE ASSESSEE PREFERRED APPEAL BEFORE THE ITAT AGAINST THE ABOVE ORDER ON 28.07.2014. 3. THE ASSESSEE HAS PREFERRED ADDITIONAL GROUND ON 27.12.2017, THAT THE PENALTY ORDER WAS PASSED BEYO ND THE DUE DATE. THIS GROUND WAS PREFERRED BEFORE THE HON'BLE ITAT F OR THE FIRST TIME. THIS GROUND WAS NOT PREFERRED BY THE ASSESSEE BEFOR E THE CIT(APPEALS) DURING FIRST APPELLATE PROCEEDINGS. TH EREFORE, THE ADDITIONAL GROUND MAY NOT BE ADMITTED AT THIS JUNCT URE, SINCE HE HAD NOT POINTED OUT THIS ISSUE EITHER AT THE STAGE OF R ECEIVING THE ORDER OR DURING THE FIRST APPEAL PROCEEDINGS. 4. AS PER THE RECORDS FOR THE ASST YEAR 1998-1999 I N THE CASE OF THE ASSESSEE, THE DATE OF ISSUE OF PENALTY ORDER U/ S 271(1) IS 28.09.2007. IN THIS CASE, ORDER U/S 264 OF THE INCO ME TAX ACT, 1961 WAS PASSED BY THE CIT-VI, HYDERABAD VIDE ORDER F NO :17(1)/CIT-6, HYD/ 05-06 ON 30.03.2007. THEREFORE, THE PENALTY OR DER U/S 271(1)(C), ISSUED ON 28.09.2007, WAS WITHIN 6 MONTHS FROM THE DATE OF ISSUE OF ORDER U/S 264. 6. LD. COUNSEL SUBMITTED THAT THE PENALTY NOTICE IS A COMMON NOTICE FOR TWO PENALTIES, EVEN THOUGH IT WAS STA TED AS FOR 271(1)(C) AND REFERRED TO PAGE 2 OF THE NOTICE, W HEREIN THE NOTICE WAS ALSO ISSUED FOR NON-COMPLIANCE OF THE NOTI CES U/S. 142(1)/143(2) AND ALSO FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS O F SUCH INCOME. IT WAS THE CONTENTION THAT NOTICE ISSUED PER SE IS NOT CORRECT. MOREOVER, THE ASST. ORDER WAS PASSED IN MARCH , 2003, WHEREAS THE PENALTY SHOULD HAVE BEEN FINALIZED BY SE PTEMBER, 2003. THE PROVISIONS OF SECTION 271(1)(C) PUTS THE LIMITATION OF SIX MONTHS FROM THE END OF MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED. THEREFORE, ORDER PASSED IN SEPTEMBER, 2007 IS BARRED BY LIMITATION. IT WAS FURTHE R SUBMITTED THAT SUBSEQUENT PROCEEDINGS U/S 264, AFTER THE I.T.A. NO. 1354/HYD/2014 :- 5 -: EXPIRY OF THE TIME PRESRIBED, DOES NOT GIVE LIFE TO PRO CEEDINGS U/S. 271(1)(C) WHICH HAVE ALREADY BEEN LAPSED. IT W AS FURTHER SUBMITTED THAT ON MERITS, THE MATTER IS STILL SUBJUDICE AND REVENUE HAS NOT ESTABLISHED THAT ASSESSEE HAS RECEIVED CONSIDERATION AND HAS TRANSFERRED THE PROPERTY. IN THE SE CIRCUMSTANCES, IT WAS THE SUBMISSION THAT PENALTY IS N OT WARRANTED. 7. LD.DR, HOWEVER, DEFENDED THE ORDERS OF AO AND CIT(A). 8. I HAVE CONSIDERED THE ISSUE AND EXAMINED THE DOCUMENTS PLACED ON RECORD. AS PER THE COMMUNICATION OF AO DT. 25-01-2005, THE COMMUNICATION RECEIVED FROM INVESTI GATION WING OF THE DEPARTMENT ON 03-04-2002 CLEARLY INDICATES THAT M/S. NAGARJUNA CONSTRUCTION COMPANY HAD PAID ADVANCE MONEY TOWARDS PURCHASE OF OPEN LAND TO SEVEN INDIVIDU ALS, FIRST ONE BEING SHRI ALI ASGHAR CEIZURE, RS. 15 LA KHS. WHEN THE COMMUNICATION IS VERY CLEAR THAT IT WAS THE RECE IPT OF ADVANCE MONEY TOWARDS PURCHASE OF OPEN LAND, AT BEST R S. 15 LAKHS COULD HAVE BEEN CONSIDERED AS SALE CONSIDERATI ON AND ASSESSEES CAPITAL GAINS COULD HAVE BEEN WORKED OUT. FOR THE REASONS BEST KNOWN TO THE AO, HE TREATED THE SAME AS BROKERAGE AND TAXED THE ENTIRE AMOUNT AS THE INCOME OF ASSESSEE IN EX-PARTE ORDER, WHICH WAS NOT SERVED ON ASSESSEE IMMEDIATELY. THE PENALTY PROCEEDINGS INITIATED ON 28- 03-2003 STATED TO BE FOR CONCEALMENT OF INCOME ALSO HAVE NOT BEE N SERVED IMMEDIATELY. I.T.A. NO. 1354/HYD/2014 :- 6 -: 8.1. BE THAT AS IT MAY, THE PROVISIONS OF 271(1)(C) CL EARLY COMES INTO PICTURE WHICH STATES THAT NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE PASSED AFTER EXPI RY OF FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED OR COMPLETED OR SIX MONTHS FROM THE END OF MONTH IN WHICH ACTION FO R IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. THUS, SINCE THERE IS NO APPEAL ON THE ORDER U /S. 143(3), AO SHOULD HAVE FINALIZED PENALTY PROCEEDINGS ON OR BEFORE 30- 09-2003. SINCE THE ORDER HAS NOT BEEN PASSED BY THAT D ATE, THE PENALTY PROCEEDINGS GOT LAPSED. SUBSEQUENT ACTION U/S. 264 IN THE YEAR 2005 DOES NOT GIVE ANY LIFE TO THE PENA LTY PROCEEDINGS, EVEN THOUGH 275(1)(B) OF THE ACT GIVES EX TENDED PERIOD OF TIME TILL THE COMPLETION OF REVISION PROCEED INGS. IT IS TO BE NOTED THAT THE APPLICATION U/S. 264 HAS BEEN FILED ON 08- 01-2005. BY THAT TIME, TIME LIMIT FOR COMPLETION OF PENA LTY PROCEEDINGS HAS ALREADY BEEN EXPIRED. THEREFORE, THE SUBSEQUENT ACTION OF AO IN FINALISING THE PENALTY PROC EEDINGS AFTER THE COMPLETION OF ORDER U/S. 264 CANNOT BE CONSI DERED PROPER AND THEREFORE, THE PENALTY PROCEEDINGS FINALIZ ED ARE TO BE HELD AS BARRED BY LIMITATION, HENCE BAD IN LAW. 8.2. APART FROM THAT, IT IS ALSO SEEN THAT THE NOTICE DO ES NOT INDICATE WHETHER THE PENALTY PROCEEDINGS INITIATED I S FOR CONCEALMENT OR FOR FURNISHING OF INACCURATE PARTICULAR S. AS SEEN FROM THE RECORD, ASSESSEE IS NOT IN INDIA AT THE R ELEVANT POINT OF TIME. THERE MAY BE MERIT IN ASSESSEES CONTEN TIONS THAT HE WAS IMPERSONATED AND BEING OWNER OF THE LAND IS CONTESTING THE MATTERS BEFORE THE COURT OF LAW. NOT ONLY TH E I.T.A. NO. 1354/HYD/2014 :- 7 -: CIT ACKNOWLEDGES THE SAME FACT, AS STATED IN THE ORDER U/S. 264, THE AO ALSO IN THE PENALTY PROCEEDINGS ACKNOWLED GED THE SAME. IN VIEW OF THAT, THERE IS MERIT IN ASSESSEES C ONTENTION THAT HE HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS, SO AS TO ATTRACT PENALTY PROCEE DINGS. BOTH ON MERITS AS WELL AS ON LIMITATION OF TIME, THE OR DER OF PENALTY BY AO CANNOT BE UPHELD. I HAVE NO HESITATION IN DELETING THE PENALTY SO LEVIED. GROUNDS OF ASSESSEE A RE ACCORDINGLY CONSIDERED ALLOWED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST JANUARY, 2018 TNMM I.T.A. NO. 1354/HYD/2014 :- 8 -: COPY TO : 1. ALI ASGHAR CEIZURE, C/O. MRS. ZEHARA SULTANA, C/O. M.M. FIRDOS, ADVOCATE, 11-3-942, 1 ST FLOOR, NEW MALLEPALLY, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-7(1), HYDERABAD. 3. CIT (APPEALS)-18, MUMBAI. 4. CIT-VI, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.