ITO, Ward-5(3), Hyderabad V. Smt. Parmila Bai, Hyderabad

ITA 1356/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53763 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: GVVS MURTHY
• Keywords: Gift; Revised return
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, AM AND SMT. ASHA VIJAYA RAGHAVAN, JM ITA NO.1356/HYD/2011 ASSESSMENT YEAR 2004-05 THE ITO, WARD 5(3), HYDERABAD VS SMT. PARMILA BAI, HYDERABAD. (PAN ABXPB9153H) APPELLANT RESPONDENT APPELLANT BY : SHRI K.J. RAO RESPONDENT BY : SHRI G.V.V.S. MURTHY DATE OF HEARING : 14.11.2011 DATE OF PRONOUNCEMENT : 16.11.2011 ORDER PER ASHA VIJAYARAGHAVAN: J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER PASSED BY THE CIT(A) V HYDERABAD DATED 1 6.5. 2011 AND PERTAINS TO THE ASSESSMENT YEAR 2004-05. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 U/S 143(3) WAS COMPLETED ON 29.5.2006 DETERMINING THE TOTAL INCOME AT RS.23,69, 340/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SEEN THAT THE ASSESSEE HAD RECEIVED GIFT OF GOLD ORNAMENTS WE IGHING 11652.000 GRAMS ON 10.1.2004 FROM HER SON, SRI SANJ AY KUMAR AGARWAL. ON 31.3.2004, SHE HAD SOLD THE SAID JEWELLERY TO M/S GHANSHAMDAS GEMS AND JEWELS, HYDER ABAD FOR A TOTAL CONSIDERATION OF RS.70,50,000/-. HOWEV ER, SHE HAD NOT DISCLOSED ANY CAPITAL GAINS ON THE ABOVE TRANSA CTION IN THE ORIGINAL RETURN OF INCOME FILED ON 4.1.2005. THE A SSESSEE WAS ITA NO.1356/HYD/2011 SMT. PARMILA BAI, HYDERABAD 2 QUESTIONED AS TO WHY THE INCOME DERIVED FROM SUCH S ALE OF JEWELLERY BE NOT TREATED AS INCOME FROM SHORT TERM CAPITAL GAINS. THE ASSESSEE STATED THAT SHE WAS UNDER THE IMPRESSION THAT THE GAINS ARISING ON THE TRANSFER OF THE JEWEL LERY RECEIVED AS GIFT WAS EXEMPT. THEREAFTER THE ASSESSEE HAD FI LED A REVISED RETURN ON 23.5.2006 BY OFFERING TO TAX THE SHORT TE RM CAPITAL GAIN OF RS.21,49,374/-. PENALTY PROCEEDINGS U/S 27 1(1)(C) WERE INITIATED FOR FAILURE TO DISCLOSE THE SHORT TE RM CAPITAL GAIN ON SALE OF JEWELLERY IN THE ORIGINAL RETURN. 3. AN OPPORTUNITY TO SHOW CAUSE AS TO WHY PENALTY U /S 271(1) (C) SHOULD NOT BE LEVIED WAS ISSUED TO THE A SSESSEE IN RESPONSE TO WHICH THE ASSESSEE HAS FILED HER REPLY. IN THE REPLY SUBMITTED, IT IS STATED THAT DUE TO GENUINE I MPRESSION THAT THE SALE OF GIFTED GOLD JEWELLERY WOULD NOT AT TRACT ANY CAPITAL GAIN TAX, NO CAPITAL GAIN WAS OFFERED TO TA X WHILE FILING THE ORIGINAL RETURN. IT WAS ALSO SUBMITTED THAT A REVISED RETURN WAS FILED AFTER RECEIPT OF SHOW CAUSE LETTER IN THIS REGARD FROM THE ASSESSING OFFICER. 4. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HA S COME FORWARD TO FILE THE REVISED RETURN ONLY AFTER THE D ETECTION OF ESCAPEMENT OF INCOME FROM SHORT TERM CAPITAL GAINS AND NOT EARLIER AND HENCE IT CANNOT BE SAID THAT THE ASSESS EE HAS VOLUNTARILY FILED THE RETURN ADMITTING CAPITAL GAIN S TAX. THEREFORE, THE ASSESSING OFFICER HAS IMPOSED MINIMU M PENALTY AT RS.7,01,542/- ON THE ASSESSEE UNDER THE PROVISIO NS OF SECTION 271(1) (C ) OF THE IT ACT. 5. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) AND SUBMITTED THAT FOR THE ASSESSMENT YEAR 2 004-05 FILED HER RETURN OF INCOME ON 4.1.2005 DECLARING NE T INCOME AT RS.1,11,590/-. TO THE SAID RETURN SHE HAD ENCLOSED HER ITA NO.1356/HYD/2011 SMT. PARMILA BAI, HYDERABAD 3 CAPITAL GAINS, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. BASED ON THE INFORMATION CONTAINED IN THE SAID FINA NCIAL STATEMENTS, THE ASSESSING OFFICER ASKED THE ASSESSE E AS TO WHY THE SHORT TERM CAPITAL GAINS ON SALE OF JEWELLERY R ECEIVED BY HER AS GIFT FROM HER SON SHOULD NOT BE BROUGHT TO T AX. TO THE ASSESSING OFFICER, THE ASSESSEE HAD REPLIED THAT SH E WAS UNDER THE BONA FIDE IMPRESSION THAT ON SALE OF JEWELLERY WHICH WAS RECEIVED AS GIFT BY HER FROM HER SON, CAPITAL GAINS WILL BE EXEMPT. HOWEVER, SHE FILED REVISED RETURN ON 23.5. 2006 OFFERING THEREIN THE SHORT TERM CAPITAL GAINS AT RS .21,49,374/- ON THE SALE OF JEWELLERY RECEIVED BY HER FROM HER S ON. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RE WAS NO DELIBERATE CONCEALMENT AND FURTHER THE ASSESSING OF FICER CAME TO KNOW ABOUT THE TRANSACTIONS THROUGH HER CAPITAL ACCOUNT. THE CIT(A) APPRECIATING THE FACT THAT SHE WAS AN EL DERLY PERSON AND UNEDUCATED, WHICH WAS EVIDENT FROM THE T HUMB IMPRESSIONS ON THE APPEAL DOCUMENTS, CONCLUDED THAT SHE HAD NO KNOWLEDGE OF INCOME TAX ACT AND PROCEEDINGS. THE CIT(A) OBSERVED THAT THE ASSESSEE HAD DISCLOSED THA T HER SON HAD GIFTED JEWELLERY IN THE ORIGINAL IT RETURNS AND HENCE IT IS NOT THE CASE THAT THE ASSESSING OFFICER OBTAINED TH E PARTICULAR INFORM FROM OUTSIDE SOURCE OR DURING SURVEY. THE C IT(A) ALSO OBSERVED THAT WHEN CONFRONTED THE ASSESSEE IMMEDIAT ELY FILED REVISED RETURN BY INCLUDING CAPITAL GAINS AND HENCE THERE HAS NOT BEEN ANY CONCEALMENT AS SUCH WHICH WARRANTS PEN ALTY U/S 271(1) (C ) OF THE ACT. THE CIT(A) DELETED THE PENALTY. 6. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDER OF THE ASSESSING OFFICER. THE LEARNED COUNSEL SUBMITTED T HAT THERE ITA NO.1356/HYD/2011 SMT. PARMILA BAI, HYDERABAD 4 WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE FOR LEVYING OF PENALTY U/S 271(1) (C ) OF THE ACT. 7. WE HEARD BOTH THE PARTIES. WE FIND THAT THE AS SESSEE IS AN OLD LADY, SUFFERING FROM BLOOD CANCER AND IN THE LAST STAGES OF HER LIFE. FURTHER, THE ASSESSEE IS IGNORANT OF THE INCOME TAX PROVISIONS. THE ASSESSEE HAS DISCLOSED THE CAPITAL GAINS AFTER SHE WAS TOLD ABOUT THE LEGAL POSITION BY THE ASSESS ING OFFICER AND FILED REVISED RETURN ADMITTING A SUM OF RS.21,4 9,374/- AS SHORT TERM CAPITAL GAIN ON THE SALE OF JEWELLERY R ECEIVED BY HER AS GIFT FROM HER SON. WE ALSO NOTE THAT THE ASSESS ING OFFICER CAME TO KNOW ABOUT THE SALE TRANSACTION WHEN GOING THROUGH THE CAPITAL ACCOUNT WHEREIN THE SALE PROCEEDS WERE CREDITED BY HER TO THE CAPITAL ACCOUNT. THE ASSESSEE HAD ENCLOS ED HER CAPITAL GAINS, PROFIT AND LOSS ACCOUNTS, BALANCE SH EET TO THE ORIGINAL RETURN FILED BY HER. IT IS OBVIOUS THAT T HE ASSESSING OFFICER DID NOT GET INFORMATION ABOUT THE SALE OF J EWELLERY FROM AN EXTRANEOUS OR OUTSIDE SOURCE BUT ONLY FROM THE M ATERIAL FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. HENCE, THERE HAS BEEN ONLY A BONA FIDE OMISSION OR MISTAKE BUT N OT A DELIBERATE CONCEALMENT TO WARRANT PENALTY U/S 271 ( 1) (C). THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CAS E OF CIT VS. RELIANCE PETRO PRODUCTS HELD AS FOLLOWS: IT WAS POINTED OUT THAT THE DISALLOWANCE MADE BY T HE ASSESSING AUTHORITY IN THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WERE SOLELY ON ACCOUNT OF DIFFERENT VIEWS TAKEN ON THE SAME SET OF FACTS AND, THEREFORE, THEY COULD, AT THE MOST, BE TERMED AS DI FFERENCE OF OPINION BUT NOTHING TO DO WITH THE CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME. IT WAS CLAIMED THAT MERE DISALLOWANCE OF TH E ITA NO.1356/HYD/2011 SMT. PARMILA BAI, HYDERABAD 5 CLAIM IN THE ASSESSMENT PROCEEDINGS COULD NOT BE TH E SOLE BASIS FOR LEVYING PENALTY UNDER SECTION 271(1)(C) O F THE ACT THE SUPREME COURT MADE FOLLOWING OBSERVATION WHILE DISMISSING THE PETITION BY INCOME TAX DEPARTMENT: FOR EVERY PENALTY U/S 271(1)(C) , ONE OF THE TWO CONDITIONS MUST BE SATISFIED: THERE MUST BE CONCEALMENT ; OR ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. IF NONE OF THESE ARE ALLEGED BY A.O VIDE HIS ORDER OF ASSESSMENT, PENALTY U/S 271(1)(C) CAN NOT BE IMPOSE D. 8. RESPECTFULLY, FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE CITED (SUPRA), WE DELETE THE PENALTY AND CONFIRM THE ORDER OF THE CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT 16.11.2011 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH NOV, 2011 ITA NO.1356/HYD/2011 SMT. PARMILA BAI, HYDERABAD 6 COPY FORWARDED TO: 1. THE ITO, WARD 5(3), 6 TH FLOOR, BASHEER BAGH, HYDERABAD 2. SMT. PARMILA BAI, 5-9-273, C1, MAYUR KUSHAL COMPLEX , GUNFOUNDRY, HYDERABAD 3. THE CIT(A)- V, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/