Assistant Commissioner of Income Tax Circle-3(1), Hubballi V. Shri Sadashivayya S Soppimath , Hubbali

ITA 14/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4199 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S V RAVISHANKAR
• Assessee Lawyers: PRIYADARSHI MISRA
• Keywords: Revised return; Capital Gains
• Section: 271(1)(c); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.14/BANG/2018 ASSESSMENT YEAR : 2013-14 THE ACIT. COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), HUBBALLI-580 025. VS. SHRI SADASHIVAYYA S SOPPIMATH, ROSE S-1, AKRUTI GARDENS, BHAVANI NAGAR, HUBBALLI-24. PAN AGHPS 4167 K APPELLANT RESPONDENT ASSESSEE BY : SHRI PRIYADARSHI MISRA, JCIT (DR) REVENUE BY : SHRI S.V RAVISHANKAR, ADVOCATE DATE OF HEARING : 18.02.2020 DATE OF PRONOUNCEMENT : 28.02.2020 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 25/10/2017 PASSED BY LD CIT(A), HUBALLI AND I T RELATES TO ASST. YEAR 2013-14. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DELETING THE PENALTY OF RS.71,55,205/- LEVIED BY TH E AO U/S 271(1)(C) OF THE ACT. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. ITA NO.14/BANG/2018 PAGE 2 OF 10 4. THE FACTS THAT LEAD TO LEVY OF PENALTY U/S 271(C ) ARE STATED IN BRIEF: THE ASSESSEE IS AN INDIVIDUAL AND IS A DOCTOR. HE FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.23. 74 LAKHS. DURING THE COURSE OF ASST. PROCEEDINGS THE ASSESSEE SUBMITTED TO THE AO THAT HE HAS EARNED LONG TERM CAPITAL GAINS O N SALE OF A PLOT. THE TOTAL CONSIDERATION RECEIVED WAS STATED TO BE R S.3.50 CRORES. IT WAS SUBMITTED THAT LONG TERM CAPITAL GAIN WAS OMITT ED TO BE INCLUDED IN THE RETURN OF INCOME FILED BY HIM. ACC ORDINGLY THE ASSESSEE FURNISHED A STATEMENT OF WORKING OF CAPITA L GAIN AND DECLARED LONG TERM CAPITAL GAIN OF RS.3.13 CRORE. THE ASSESSEE ALSO CLAIMED EXEMPTION U/S 54F OF THE ACT TO THE TUNE O F RS.33.36 LAKHS AND ACCORDINGLY THE TAXABLE CAPITAL GAIN WAS DECLAR ED AT RS.2.77 CRORES. THE AO NOTICED THAT THE ASSESSEE HAS CLAIM ED COST OF IMPROVEMENT INCURRED ON LAND AS DEDUCTION AGAINST THE SALE CONSIDERATION. THE AO DISALLOWED THE CLAIM OF IMPR OVEMENT AND ACCORDINGLY COMPUTED LONG TERM CAPITAL GAIN AT RS. 3.32 CRORE. HE ALSO RESTRICTED THE EXEMPTION U/S 54F OF THE ACT TO RS.18.42 LAKHS. ACCORDINGLY THE AO COMPUTED THE TAXABLE CAPITAL GAI N AT RS.3.13 CRORES AS AGAINST RS.2.77 CORE DECLARED BY THE ASSE SSEE. 5. THE ASSESSEE HAD ALSO CLAIMED DEDUCTION OF INTER EST AGAINST HOUSE PROPERTY INCOME TO THE TUNE OF RS.1.50 LAKHS. SINCE THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY PROOF TO S UPPORT A CLAIM OF DEDUCTION OF INTEREST EXPENDITURE THE AO DISALLO WED THE SAME. ITA NO.14/BANG/2018 PAGE 3 OF 10 6. IT WAS STATED THAT THE ASSESSEE ACCEPTED THE ASS T. ORDER AND DID NOT PREFER APPEAL. THE AO INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.71,55 ,205/- ON THE AMOUNT OF LONG TERM CAPITAL GAIN AS WELL AS INTERES T DISALLOWANCE MADE BY HIM. THE LD CIT(A) DELETED THE PENALTY AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 7. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSEE HAS VOLUNTARILY DECLARED THE LONG TERM CAPITAL GAIN BEFORE THE AO DURING THE COURSE OF ASST. PROCEEDING S EVEN THOUGH THE SAME WAS NOT INCLUDED IN THE RETURN OF INCOME. THE LD AR SUBMITTED THAT THE ASSESSEE IS A DOCTOR AND HIS BOO KS OF ACCOUNT ARE MAINTAINED BY AN ACCOUNTANT. THE SAID ACCOUNTA NT HAS INADVERTENTLY INCLUDED THE SALE CONSIDERATION RECEI VED ON SALE OF LAND IN THE LIST OF SUNDRY CREDITORS INSTEAD OF CRE DITING THE SAME TO THE CAPITAL ACCOUNT OF THE ASSESSEE. HENCE WHILE C OMPUTING TOTAL INCOME AT THE TIME OF FILING RETURN OF INCOME, THE SAME HAS ESCAPED ATTENTION. HOWEVER, DURING THE COURSE OF ASST. PR OCEEDINGS, THE SAID OMISSION WAS BROUGHT TO THE NOTICE OF THE AO B EFORE IT IS BEING DETECTED BY HIM. ACCORDINGLY THE LD AR SUBMITTED T HAT THE LD CIT(A) HAS DELETED THE PENALTY ON THIS AMOUNT BY DULY APPR ECIATING THE ABOVE FACTS. 8. WITH REGARD TO THE DISALLOWANCE OF INTEREST EXP ENDITURE, THE LD AR SUBMITTED THAT THE AO HAS DISALLOWED THE CLAI M ONLY FOR WANT OF PROOF AND HENCE PENALTY IS NOT LEVIABLE ON SUCH KIND OF DISALLOWANCE. ITA NO.14/BANG/2018 PAGE 4 OF 10 9. ON THE CONTRARY THE LD DR SUBMITTED THAT THE ASS ESSEE DID NOT DECLARE LONG TERM CAPITAL GAIN AT THE TIME OF F ILING RETURN OF INCOME THOUGH HE WAS AWARE OF THE FACT OF SALE OF L AND. ACCORDINGLY THE LD DR SUBMITTED THAT THE SAID ACTION OF THE ASS ESSEE RESULTED IN CONCEALMENT OF PARTICULARS OF INCOME. SINCE THERE WAS DIFFERENCE IN THE AMOUNT OF LONG TERM CAPITAL GAIN COMPUTED BY TH E ASSESSEE AND THAT COMPUTED BY THE AO, THE SAME HAS RESULTED IN F URNISHING INACCURATE PARTICULARS OF INCOME ALSO. THE LD AR FU RNISHED STATEMENT THAT THE VOLUNTARY DISCLOSURE OF INCOME I S ALSO LIABLE FOR PENALTY AS PER THE DECISION RENDERED BY HONBLE SUP REME COURT IN THE CASE OF MAK DATA 38 TAXMAN.COM 448. 10. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ON PERUSAL OF THE ORDERS PASSED BY THE TAX AUTHORITIES , WE NOTICED THAT THERE WAS INADVERTENT OMISSION ON THE PART OF THE A SSESSEE TO DECLARE THE LONG TERM CAPITAL GAIN IN HIS RETURN OF INCOME, SINCE THE SALE CONSIDERATION RECEIVED ON SALE OF LAND WAS SHO WN AS SUNDRY CREDITORS IN THE BOOKS OF ACCOUNT. HOWEVER, THE AS SESSEE HAS VOLUNTARILY DECLARED THE FACT OF OMISSION TO DECLAR E LONG TERM CAPITAL GAIN IN THE RETURN OF INCOME BEFORE THE AO DURING T HE COURSE OF ASST. PROCEEDINGS. HENCE THE LD CIT(A) HAS TAKEN T HE VIEW THAT PENALTY IS NOT LEVIABLE ON THE LONG TERM CAPITAL G AIN DECLARED BY THE ASSESSEE. FOR THE SAKE OF CONVINCE WE EXTRACT BELO W THE OBSERVATIONS MADE BY THE LD CIT(A) IN THIS REGARD. 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE PENALTY ORDER CAREFULLY. IN BOTH THE ORDERS, THE AO HAS DRAWN AN INFERENCE THAT, THE ASSESSEE HAS FURNISHED ITA NO.14/BANG/2018 PAGE 5 OF 10 INACCURATE PARTICULARS OF INCOME AND HAS CAME TO CONCLUSION THAT PENALTY U/S.271(1)(C)IS LIVEABLE JU ST BECAUSE IN THE RETURN OF INCOME FIELD ORIGINALLY ON 30/09/2013 THE ASSESSEE HAS NOT SHOWN THE INCOME FROM CAPITAL GAINS. THE AO HIMSELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT, THE ASSESSEE DURING THE COUR SE OF HEARING BROUGHT TO THE NOTICE OF THE AO THAT, HE HA S NOT DISCLOSED THE SAME IN THE RETURN OF FILED. THE AO ACCEPTED THE ASSESSEE'S EXPLANATION THAT, BY THE TI ME THE ASSESSEE CAME TO KNOW OF THIS OMISSION, THE TIME TO FILE A REVISED RETURN OF INCOME EVEN BELATEDLY HAS EXPIR ED. THEREFORE, THE AO VIRTUALLY ACCEPTED THE ASSESSEE'S VERSION AND ASSESSED THE CAPITAL GAINS AFTER REWORK ING OUT THE SAME AS PER PROVISIONS OF THE ACT. FROM THI S IT IS VERY CLEAR THAT, THERE IS A VOLUNTARY ACT OF THE AS SESSEE IN BRINGING TO THE NOTICE OF THE AO THE OMISSION TO SHOW INCOME FROM CAPITAL GAINS IN THE RETURN FILED. THUS , THERE IS NO ESCAPEMENT OF INCOME AT ALL AND THERE WAS NO ATTEMPT BY THE AO TO DETECT THIS OMISSION. BEFORE T HE AO, WHILE FILING HIS EXPLANATION TO THE SHOW CAUSE NOTI CE ISSUED ULS.274 RWS 271(1)(C) THE ASSESSEE STATED TH AT, HE BEING A DOCTOR IGNORED WITH RESPECT TO THE SALE OF LAND LIABLE FOR CAPITAL GAIN TAX. HOWEVER, THIS TRANSACT ION WAS TAKEN INTO BOOKS OF ACCOUNT AND WAS DISCLOSED DURIN G THE ASSESSMENT PROCEEDINGS. THERE WAS NO MENSREA INVOLVED. TECHNICALLY HE WAS UNAWARE AS TO HOW THIS TRANSACTION WAS TO BE DISCLOSED. IF IT WERE THE INT ENTION OF THE ASSESSEE NOT TO SHOW THIS TRANSACTION AT ALL THEN ITA NO.14/BANG/2018 PAGE 6 OF 10 THE WHOLE TRANSACTION WOULD NOT HAVE BEEN ROUTED THROUGH THE BOOKS. IN SUPPORT OF HIS CONTENTION HE RELIED ON THE DECISIONS IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD., OF SUPREME COURT 322 ITR (2 010) 158. THE AO ON THE CONTRARY STATED IN THE PENALTY O RDER THAT, 'MERELY EXPRESSING IGNORANCE AS TO HOW CAPITA L GAINS ON SALE OF LAND ARE TO BE DISCLOSED DOES NOT HOLD WATER IN VIEW OF THE FACT THE ASSESSEE HAS BEEN ASSESSED TO TAX FOR MANY YEARS AND IS REPRESENTED B Y A CA. BASED ON THIS HE HAS COME TO THE CONCLUSION THA T THE ASSESSEE HAS BEEN ASSESSED TO TAX FOR MANY YEARS AN D IS REPRESENTED BY A CA. BASED ON THIS HE HAS DOME T O CONCLUSION THAT THE ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOME AT THE TIME OF FILING HIS RET URN OF INCOME BY NOT SHOWING THE INCOME FROM CAPITA! GAINS . 7. I HAVE GONE THROUGH THE AUDITED STATEMENT OF ACC OUNTS FOR THE EARLIER 3 YEARS INCLUDING THE ASSESSMENT YE AR UNDER CONSIDERATION. THE BALANCE SHEETS REVEAL THE FOLLOWING FINANCIAL AFFAIRS OF THE ASSESSEE. ITA NO.14/BANG/2018 PAGE 7 OF 10 8. IT CAN BE SEEN FROM THE ABOVE THAT DURING THE YE AR RELEVANT TO AY 2013-14 THE ASSESSEE'S FINANCIAL POS ITION HAS GONE UP FROM RS.44,90,723/- TO RS.6,36,23,4331- AND THIS IS MAINLY BECAUSE OF INCREASE IN CASH AT B ANK WHICH HAS GONE UP TO RS.2,09,96,187/- FROM RS.6,61,997/-. CONSIDERING THE INCOME OFFERED FROM HIS PROFESSION THE INCREASE IN BANK ACCOUNTS CLEARLY SP EAK OF THE FACT THAT THE SALE OF LAND HAS BEEN REFLECTE D IN THE BOOKS OF ACCOUNTS BUT THE ASSESSEE HAS OMITTED TO S HOW IN HIS SHEET OF INCOME COMPUTATION. WHEN THE SCRUTI NY PROCEEDINGS WERE IN PROGRESS, THE AG OUGHT TO HAVE GONE THROUGH THE BALANCE SHEET AND ENQUIRED ABOUT THE ABNORMAL INCREASE IN BANK ACCOUNTS. BEFORE POINTING OUT THIS THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE AG OF HIS OMISSION TO SHOW INCOME FROM CAPITAL GAINS, WHI CH THE AG HAS VIRTUALLY ACCEPTED AND AGREED WITH THE ASSESSEE AND BROUGHT TO TAX THE CAPITAL GAINS AFTER REWORKING OUT THE SAME AS PER PROVISIONS OF THE ACT . THUS, THERE HAS BEEN NO OMISSION TO SHOW HIS INCOME AT ALL. THEREFORE, THERE HAS BEEN NO FURNISHING OF INA CCURATE PARTICULARS OF INCOME AS FAR AS RS.2,77,152831- IS CONCEALED BECAUSE THE SAME IS DISCLOSED BY THE ASSESSEE VOLUNTARILY BEFORE THE AG COULD DETECT THE OMISSION. IF AT ALL THERE IS ANY FURNISHING OF INAC CURATE PARTICULARS IT IS WITH REFERENCE TO THE DIFFERENCE BETWEEN THE INCOME ASSESSED FROM CAPITAL GAINS AT RS.3,13,51,372/- AND RS.2,77,15,283/-. THUS THE AO COULD HAVE AT BEST CONSIDERED LEVYING PENALTY ITA NO.14/BANG/2018 PAGE 8 OF 10 U/S.271(1)(C) ONLY ON RS.36,36,0891-. BUT THIS ALSO WILL NOT COME FOR LEVY OF PENALTY BECAUSE THIS INCOME HA S ARISEN ON ACCOUNT OF REWORKING OF THE QUANTUM OF CA PITAL GAINS AND NOT BECAUSE OF ANY OMISSION TO SHOW THE INCOME. 9. I HAVE GONE THROUGH THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE WHO HAS TRIED TO ESTABLISH THE FACT THAT THERE HAS BEEN NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY REFERRING TO TH E REMARKS MADE BY THE AO IN HIS ASSESSMENT ORDER AT PAGE-3 AND ALSO THE COMMENTS AT PARA -7.2 OF THE ASSESSMENT ORDER. THESE REMARKS MADE BY THE AO CLEARLY SPELL OUT THE FACT THAT IT WAS THE ASSESSEE WHO BROUGHT TO THE NOTICE OF THE AO AS TO HOW HE WAS UN ABLE TO SHOW THE INCOME EARNED FROM CAPITAL GAINS IN THE RETURN AND HE VOLUNTARILY OFFERED THE INCOME OF RS.2,77,15,283/-. 11. WITH REGARD TO THE DISALLOWANCE OF INTEREST EXP ENDITURE OF RS.1.05 LAKHS, WE HAVE EARLIER NOTICED THAT SAID DI SALLOWANCE WAS MADE ONLY FOR WANT OF PROOF. IN OUR VIEW THE DECIS ION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HO USE COOPERS PVT. LTD., 348 ITR 306 WOULD SUPPORT THE CASE OF TH E ASSESSEE IN RESPECT OF LONG TERM CAPITAL GAIN AND THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD., 322 ITR 158 WOULD SUPPORT THE CASE OF THE ASSESSEE IN THE CASE OF INTEREST DISALLOWANCE. THE DECISION IN THE CASE OF MAK DATA PVT. ITA NO.14/BANG/2018 PAGE 9 OF 10 LTD. (SUPRA), IN OUR VIEW, WAS RENDERED BY HONBLE SUPREME COURT IN THE CONTEXT OF AMOUNTS SURRENDERED DURING THE CO URSE OF SURVEY PROCEEDINGS AND HENCE THE SAID DECISION IS NOT APPL ICABLE TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE WE DO NOT ANY INFIRMITY IN THE DECISION TAKEN BY THE LD CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDING LY WE CONFIRM HIS ORDER. 11. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2020. SD/- (N.V VASUDEVAN) VICE PRESIDENT SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 28 TH FEBRUARY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE