Nandu M. Gadalkar, L/h of Late Shri Malu Balaji Gadalkar, Ahmednagar V. Income-tax Officer, Ahmednagar

ITA 1478/PUN/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3490 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Capital Gains
• Section: 271(1)(c); 143(3); 54F; 274; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM . / ITA NO.1478/PUN/2016 / ASSESSMENT YEAR : 2008-09 MALU BALAJI GADALKAR, BURUDGAON ROAD, AHMEDNAGAR-414001. PAN : AEXPG6347M ....... / APPELLANT / V/S. ITO, WARD- 3, AHMEDNAGAR. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 11.11.2020 / DATE OF PRONOUNCEMENT : 11.11.2020 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, PUNE (CIT(A) FOR SHORT) DATED 08.02.2016 CONFIRMING THE LEVY OF PENALTY OF RS.2,08,399/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) FOR THE ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- THE APPELLANT IS AN INDIVIDUAL AND DERIVING INCOME UNDER THE HEAD SALARIES. THE ORIGINAL RETURN OF INCOME WAS FILED ON 30.06.2008 DISCLOSING TOTAL INCOME OF RS.1,17,530/- UNDER THE HEAD SALARY. SUBSEQUENTLY, BASED ON THE AIR INFORMATION THAT THE ASSESSEE HAD SOLD IMMOVABLE PROPERTY FOR 2 ITA NO.1478/PUN/2016 RS.20,00,000/- THE INCOME TAX OFFICER, WARD- 3, AHMEDNAGAR (THE ASSESSING OFFICER FOR SHORT) BELIEVED THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. ACCORDINGLY, A NOTICE U/S 148 OF THE ACT DATED 15.03.2011 WAS ISSUED. IN RESPONSE TO THE SAME, THE ASSESSEE HAD FILED THE RETURN OF INCOME. THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER VIDE ORDER DATED 01.02.2013 AT THE TOTAL INCOME OF RS.10,40,290/- U/S 143(3) R.W.S. 147 OF THE ACT ASSESSING THE CAPITAL GAINS ARISING ON ACCOUNT OF ENTERING INTO A DEVELOPMENT AGREEMENT ON 28.11.2006 WITH SHRI KAILASH CHABBAN FULARI FOR RS.11,00,000/- FOR THE AGRICULTURAL LAND ADMEASURING 24R, SITUATED AT SURVEY NO.37/2/2 AT MAUJE CHAHURANA KHURD (WITHIN MUNICIPAL LIMIT OF AHMEDNAGAR CITY) NEAR ITI COLLEGE, AHMEDNAGAR AND ASSESSEE AGREED TO ASSESS THE SAME UNDER THE HEAD LONG TERM CAPITAL GAINS. ACCORDINGLY, THE ASSESSING OFFICER MADE ADDITION OF RS.9,22,755/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE SAID ADDITION WAS NOT CONTESTED BEFORE THE LD. CIT(A). THUS, THE ASSESSMENT ORDER REACHED FINALITY. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT ON 01.02.2013 FOR LEVY OF PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE VIDE LETTER DATED 16.08.2013 SUBMITTED THAT THE PENALTY PROCEEDINGS SHOULD BE DROPPED AS THE ASSESSEE WAS IGNORANT OF THE LEGAL POSITION AS WELL AS THE SALE PROCEEDS WERE UTILIZED FOR THE CONSTRUCTION OF NEW HOUSE WHICH QUALIFIES FOR EXEMPTION FOR DEDUCTION U/S 54F OF THE ACT IF THE EXEMPTION IS ALLOWED THERE WAS NO CAPITAL GAINS EXIGIBLE TO TAX. THE ASSESSING OFFICER HAD REJECTED THE ABOVE EXPLANATION BY HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THE CAPITAL GAINS CHARGEABLE TO TAX CAME TO LIGHT ONLY AFTER THE RECEIPT OF THE AIR INFORMATION AND BASED ON THE SAID AIR INFORMATION THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS GUILTY OF CONCEALING THE 3 ITA NO.1478/PUN/2016 PARTICULARS OF INCOME ACCORDINGLY, LEVIED THE PENALTY OF RS.2,08,399/- VIDE ORDER DATED 23.08.2013 U/S 271(1)(C) OF THE ACT. 3. BEING AGGRIEVED AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 08.02.2016 CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BY PLACING RELIANCE ON THE FOLLOWING DECISIONS :- (I) SHANTI SWARUP BHATNAGAR VS. CIT, 279 ITR 451 (ALL); AND, (II) DURGA TIMBER WORKS VS. CIT, 79 ITR 63 (DEL). 4. BEING AGGRIEVED BY THE ABOVE DECISION OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US IN THE PRESENT APPEAL. 5. BEFORE US, WHEN THE MATTER WAS CALLED ON FOR HEARING TODAY, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THROUGH A WRITTEN NOTE PLEADED TO DELETE THE PENALTY ON THE GROUND THAT THE CAPITAL GAINS, IF ANY, WOULD ARISE IN THE ASSESSMENT YEAR 2007-08 NOT IN ASSESSMENT YEAR 2008-09 AS THE REQUIREMENTS OF PROVISIONS OF SUB-SECTION (2) OF SECTION 47 OF THE ACT WERE NOT FULFILLED IN THE ASSESSMENT YEAR 2007-08 BUT NOT THE ASSESSMENT YEAR 2008- 09. HE FURTHER CONTENDED THE MERE FACT THAT THE ASSESSEE HAD NOT CONTESTED THE ADDITION IN APPELLATE PROCEEDINGS DOES NOT MEAN THE PENALTY IS LEVIABLE. 6. ON THE OTHER HAND, THE LD. SR. DR PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HEARD THE LD. SR. DR AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL RELATES TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER MADE ADDITION OF RS.9,22,755/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ARISING ON ENTERING INTO DEVELOPMENT AGREEMENT WITH SHRI 4 ITA NO.1478/PUN/2016 KAILASH CHABBAN FULARI. IT IS UNDISPUTED FACT THAT THESE CAPITAL GAINS WERE NOT RETURNED IN THE ORIGINAL RETURN OF INCOME OR IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT AND ALSO THE APPELLANT HAD AGREED TO THE SAID ADDITION DURING THE ASSESSMENT PROCEEDINGS AND THE ADDITION WAS NOT CHALLENGED IN THE APPELLATE FORUM AND THE INFORMATION RELATING TO THE CAPITAL GAINS WAS DETECTED BY THE ASSESSING OFFICER BASED ON THE AIR INFORMATION. HOWEVER, FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THE DEVELOPMENT AGREEMENT WITH SHRI KAILASH CHABBAN FULARI WAS ENTERED BY THE ASSESSEE ON 28.11.2006 I.E. PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08. THEREFORE, PRESUMABLY THE TRANSFER OF THE PROPERTY HAD TAKEN PLACE ON THE DATE OF TRANSFER AGREEMENT IN TERMS OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA, 260 ITR 491 BUT NOT IN THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008-09. IT IS SETTLED PROPOSITION OF LAW THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE IS ENTITLED TO MAKE NEW PLEADINGS AS TO HOW INCOME IS NOT CHARGEABLE TO THE INCOME TO TAX. THE FACTS EMANATING FROM THE ASSESSMENT ORDER CLEARLY ESTABLISHED THAT THE CAPITAL GAINS ARISING ON ACCOUNT OF ENTERING INTO DEVELOPMENT AGREEMENT WITH SHRI KAILASH CHABBAN FULARI IF ANY IS TO BE CONSIDERED IN THE ASSESSMENT YEAR 2007-08 BUT NOT IN THE ASSESSMENT YEAR 2008-09. FURTHER, MERE FACT THAT THE ADDITION WAS MADE ON THE BASIS OF CONCESSION MADE BY THE ASSESSEE DOES NOT MEAN THAT THE ADDITION ENTAILS THE LEVY OF PENALTY. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY, WE QUASH THE PENALTY OF RS.2,08,399/- LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL STAND ALLOWED. 5 ITA NO.1478/PUN/2016 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF NOVEMBER, 2020. SD/- SD/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 11 TH NOVEMBER, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, PUNE. 4. THE PR. CIT-1, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.