Shri Kishorbhai K.Parikh, Baroda V. The Income tax Officer,Ward-4(3), Baroda

ITA 1480/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94333 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Capital asset; Bonafide belief; Reasonable cause; Bonafide mistake; Ignorance of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) I.T. A. NO. 1480/AHD/2012 (ASSES SMENT YEAR: 2007-08) SHRI KISHORBHAI K. PARIKH 70, MEGHDOOT SOCIETY, KARELIBAUG, VADODARA-390 018 V/S THE ITO, WARD 4(3), BARODA (APPELLANT) (RESPONDENT) PAN: ADKPP1880E APPELLANT BY : SHRI M.K. PATEL, A.R. RESPONDENT BY : SHRI NARENDRA SINGH, SR. D.R . ( )/ ORDER DATE OF HEARING : 28-08-2015 DATE OF PRONOUNCEMENT : 04-09-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-III, BARODA DATED 26.04.2012 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM SALARY, BUSINESS AND INCOME FROM OTHER SOURCES. ASSESSEE FILED HIS R ETURN OF INCOME FOR A.Y. 2007-08 ON 02.04.2008 DECLARING TOTAL INCOME AT RS. 3,92,820/-. THE CASE ITA NO 1480 /AHD/2012 . A.Y. 2007-08 2 WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESS MENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 15.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 28,99,030/- INTERALIA BY MAKING T HE ADDITION ON ACCOUNT OF CAPITAL GAIN ON SALE OF AGRICULTURAL LAND WHICH WAS NOT OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME. ON THE AFORESAID ADDITION OF CAPITAL GAINS MADE, A.O VIDE ORDER DATED 18,05,2010 HELD THAT ASS ESSEE HAD WILLFULLY, KNOWINGLY AND WITHOUT REASONABLE CAUSE FURNISHED IN ACCURATE PARTICULARS OF INCOME AND HAD TRIED TO CONCEAL THE INCOME SO AS TO EVADE THE PAYMENT OF TAX AND THE ASSESSEE WAS THEREFORE LIABLE FOR PENAL TY U/S. 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS. 5,64,930/ -. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A) WHO UPHELD THE PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), AS SESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. ASSESSING OFFICER ERRED IN LEVYING AND THE LD. CIT( A)-III, ERRED IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TA X ACT, 1961 AMOUNTING TO RS. 5,64,930/ - 5. BEFORE US, AT THE OUTSET, LD. A.R. SUBMITTED THAT I N THE PRESENT CASE THE PENALTY FOR CONCEALMENT OF INCOME WAS LEVIED ON THE CAPITAL GAINS THAT AROSE ON SALE OF LAND, WHICH ASSESSEE HAD OWNED WITH OTHE R CO-OWNERS. LD. A.R. FAIRLY CONCEDED THAT IN THE CASE OF CO-OWNER, SHRI GOPALBHAI PARIKH ON SIMILAR ADDITION THE PENALTY LEVIED U/S. 271(1)(C) WAS CONFIRMED BY THE CO- ORDINATE BENCH OF TRIBUNAL IN ITA NO. 1481/A/2012 O RDER DATED 21.08.2015. ITA NO 1480 /AHD/2012 . A.Y. 2007-08 3 HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID ORDER. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A ). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE PENALTY U/S. 271(1)(C) FOR CONCEAL MENT OF INCOME WAS LEVIED BY A.O FOR THE REASON THAT ASSESSEE HAD NOT VOLUNTA RILY DISCLOSED THE INCOME OF THE SALE PROCEEDS OF AGRICULTURAL LAND WHICH WAS OWNED BY THE ASSESSEE TOGETHER WITH TWO OTHER PERSONS NAMELY SHRI KRISHAN ALAL PARIKH AND SHRI GOPALBHAI PARIKH. THE PENALTY LEVIED BY A.O WAS UPH ELD BY LD. CIT(A) VIDE ORDER DATED 26.04.2012 BY HOLDING AS UNDER:- 3.2 I HAVE CONSIDERED THE APPELLANT'S SUBMISSION. A S ALREADY STATED ABOVE, PENALTY ORDER IN THE CASE OF APPELLANT FOR THE A.Y. 2006-07 ON SIMILAR FACTS HAS ALREADY BEEN CONFIRMED BY MY PREDECESSOR BY STA TING AS FOLLOWS: 'THE ONLY DEFENCE OF THE APPELLANT IS THAT THE AMOU NT NOT OFFERED TO TAX BECAUSE OF IGNORANCE OF LAW AS IN THE OPINION OF TH E APPELLANT SINCE THE LAND WAS ORIGINALLY AN AGRICULTURAL LAND, THERE WAS A BONAFI DE BELIEF THAT SALE PROCEED WAS NOT TAXABLE, BEING AN AGRICULTURAL LAND. THIS DEFENCE IS NOT CONVINCING. THE APPELLANT HAD THE KNOWLEDGE THAT SALE OF AGRICULTURAL LAND IS NOT TAXABLE, AS STATED ABOV E. THIS MEANS THAT THERE WAS NO LACK OF KNOWLEDGE OR IGNORANCE OF LAW. THIS COULD A T BEST BE A MISAPPRECIATION OF THE FACT WHETHER LAND WAS STILL AN AGRICULTURAL LAN D OR NOT AT THE TIME OF SALE. THEREFORE , THE QUESTION WHICH IS REQUIRED TO HE ANSWERED IS W HETHER THE APPELLANT COULD HAVE GENUINELY HELD A BELIEF THAT LAND AN AGR ICULTURAL LAND AT THE TIME OF SALE. FROM THE BARE FACTS, IT WOULD BE IMPOSSIBLE T O PRESUME THAT ANYONE COULD HAVE GENUINELY HELD THE BELIEF THAT LAND WAS AN AGR ICULTURAL LAND AT THE TIME OF SALE. FIRSTLY, THE RATE FOR AGRICULTURE LAND AND UR BAN LAND IS DIFFERENT. NO AGRICULTURAL LAND OF THE MEASUREMENT WOULD BE FOR S UCH A HUGE CONSIDERATION. IN FACT THE LAND PURCHASED FOR RS. 96,660/- ONLY BE FO R THAN 53 LAKHS IN 15 ONLY IT WAS NO LONGER AN AGRICULTURAL LAND. MORE SO, THE DE ED CLEARLY MENTIONS THE LOCATION OF THE LAND, LEAVING NO AMBIGUITY AS TO WH ETHER LAND IS AGRICULTURAL OR NOT. AND FINALLY PAYMENT OF STAMP DUTY AGAIN SETTLES THE ISSUE. FROM THE BARE READING ITA NO 1480 /AHD/2012 . A.Y. 2007-08 4 OF FACTS, IT WOULD BE FAIR TO CONCLUDE THAT THERE W AS NO REASON FROM THE APPELLANT TO HOLD A VALID BELIEF THAT LAND WAS AN AGRICULTURA L LAND. THE APPELLANT MIGHT HAVE GOT BENEFIT OF DOUBT IF THE AMOUNT WAS SHOWN IN THE RETURN AND THEN CLAIMED AS NON-TAXABLE. BUT NOT SHOWING THE AMOUNT ALTOGETHER MAKES IT NOT A BONAFIDE EXERCISE. IN MY CONSIDERED OPINION THE A.O. HAS RIG HTLY LEVIED PENALTY IN THIS CASE.' 7. WE FIND THAT IN THE CASE OF CO-OWNER, PENALTY LEVI ED U/S. 271(1)(C) SHRI GOPALBHAI PARIKH WAS CONFIRMED BY THE CO-ORDINATE BENCH OF TRIBUNAL (IN ITA NO. 1481/A/2012 ORDER DATED 21.08.2015) BY HOLD ING AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEE HAS BEEN EARNING INC OME FROM BUSINESS, REMUNERATION AS DIRECTOR OF THE COMPANY. THE PROVIS IONS OF SEC. 271(L)(C) IS ATTRACTED WHEN ANY PERSON FAILS TO DISCLOSE TRUE AN D CORRECT PARTICULARS OF INCOME OR FURNISHES INACCURATE PARTICULARS OF INCOME. IN T HE CASE ON HAND, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE W AS REQUIRED TO DISCLOSE CAPITAL GAIN ACCRUED OUT OF TRANSFER OF CAPITAL ASSET FALLI NG WITHIN THE MUNICIPAL LIMIT OF VADODARA MUNICIPALITY. THEREFORE, THE DEFENCE OF TH E ASSESSEE THAT DUE TO BONAFIDE MISTAKE HE DID NOT DISCLOSE CAPITAL GAIN I S NOT ACCEPTABLE IT WAS ONLY WHEN THE ASSESSING OFFICER RECEIVED INFORMATION FRO M THE CONCERNED AUTHORITY WITH REGARD TO THE TRANSFER OF THE LAND, THE ASSESS EE CAME WITH AN EXPLANATION THAT HE WAS UNDER BONAFIDE BELIEF THAT SUCH GAIN WO ULD BE SUBJECTED TO CAPITAL GAIN TAX AS THE CAPITAL ASSET BEING AGRICULTURAL LA ND. 6. IN OUR CONSIDERED VIEW THERE IS NOTHING ON RECOR D TO SUGGEST BONAFIDE OF THE ASSESSEE WITH REGARD TO THE CONTENTION THAT DUE TO MISTAKE HE COULD NOT OFFER THE CAPITAL GAIN FOR TAXATION. UNDER THESE FACTS, IF WE ALLOW THE APPEAL OF THE ASSESSEE IT WOULD SET A WRONG PRECEDENT THAT ANY PE RSON WHO IS APPROACHED BY THE AUTHORITIES WOULD COME WITH DEFENCE THAT DUE TO BONAFIDE MISTAKE HE COULD NOT DISCLOSE THE TAXABLE INCOME. THEREFORE, WE DISM ISS THE GROUND OF APPEAL OF THE ASSESSEE . ITA NO 1480 /AHD/2012 . A.Y. 2007-08 5 8. IN THE PRESENT CASE, SINCE THE PENALTY ON THE SALE OF SAME LAND IN THE CASE OF ANOTHER CO-OWNER HAS BEEN CONFIRMED BY THE CO-ORDIN ATE BENCH OF TRIBUNAL, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD . CIT(A) AND THUS UPHOLD THE LEVY OF PENALTY IN THE PRESENT CASE. IN THE RES ULT, THIS GROUND OF ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04- 09 - 2015 . SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD