ACIT, Pune V. Late Ramchandra M Jhamtani L/H Shri Manohar M Jhatmani, Pune

ITA 1519/PUN/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89014 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Business income; Bonafide belief; Revised return
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1519/PN/2012 (ASSESSMENT YEAR : 2007-08) ASSTT. COMMISSIONER INCOME TAX, (CENTRAL)-8, PUNE. . APPELLANT VS. LATE RAMCHANDRA M. JHAMTANI LEGAL HEIR SHRI MANOHAR M. JHAMTANI FLAT NO.3, MONICA APARTMENT PIMPRI, PUNE PAN : AANPJ8573C . RESPONDENT ASSESSEE BY : MR. PRAMOD SHINGTE DEPARTMENT BY : MR. P.S. NAIK DATE OF HEARING : 01.01.2015 DATE OF PRONOUNCEMENT : 04.03.2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE, IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE, D ATED 18 TH APRIL 2012, WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30 TH JUNE 2010, PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT Y EAR 2007-08. 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE RE VENUE IS AGAINST THE ACTION OF THE LEARNED COMMISSIONER (APPEALS) IN DEL ETING THE PENALTY OF RS.47,37,930/-, IMPOSED BY THE A.O. U/S 271(1)(C) O F THE ACT. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE AS FOLLOWS:- THE ASSESSEE INDIVIDUAL FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 20 07-08 ON 24 TH OCTOBER 2007, DECLARING A TOTAL INCOME OF RS.1,08,73,528/-, WHICH INTER-ALIA, INCLUDED INCOMES UNDER THE HEAD HOUSE PROPERTY, BUSINESS INCOME, CAPITAL GAINS AS WELL AS INCOME FROM OTHER SOURCES. IT EMERGES FROM RECORD THAT THE ASSESSEE EXPIRED ON 30 TH DECEMBER 2007 AND SUBSEQUENTLY ON 22 ND JANUARY 2009, A SURVEY ACTION U/S 133A OF THE ACT WAS CARRI ED OUT AT THE BUSINESS PREMISES OF SHRI JAIRAM R. JHAMTANI, SON OF THE DEC EASED ASSESSEE. DURING THE COURSE OF SURVEY, A DEVELOPMENT AGREEMENT DULY REGISTERED ON 22 ND FEBRUARY 2007, WAS FOUND WHICH WAS ENTERED BY THE D ECEASED ASSESSEE WITH OTHERS IN RESPECT OF THE SALE OF LAND BEARING SURVE Y NO.1326, CHIKHALI. IT WAS NOTICED THAT IN THE ORIGINAL RETURN OF INCOME FILED ON 24 TH OCTOBER 2007, FOR THE ASSESSMENT YEAR 2007-08, GAIN ARISING FROM THE AFOR ESAID TRANSACTION WAS NOT DECLARED. THE LEGAL HEIR OF THE DECEASED ASSESSEE S HRI MANOHAR R. JHAMTANI, ADMITTED IN A STATEMENT RECORDED U/S 131 OF THE ACT THAT THE TOTAL SALE CONSIDERATION WAS RS.1.77 CRORES AND THE COST OF AC QUISITION OF THE LAND WAS RS.57 LAKHS. THE SAID LEGAL HEIR ADMITTED THAT THER E WAS A SHORT TERM CAPITAL GAIN OF RS.1.20 CRORES FOR WHICH HE AGREED TO FILE A REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08, WHICH WAS FILED ON 20 TH MARCH 2009, DECLARING A TOTAL INCOME OF RS.2,28,73,530/- WHICH, INTER-ALIA, INCLUDED SHORT TERM CAPITAL GAIN ON SALE OF CHIKHALI LAND WHICH WAS HITHERTO NO T DECLARED IN THE ORIGINAL RETURN OF INCOME FILED BY THE DECEASED ASSESSEE. TH E AFORESAID RETURN OF INCOME WAS SUBJECT TO THE SCRUTINY ASSESSMENT U/S 1 43(3) DATED 31 ST DECEMBER 2009, WHEREBY THE RETURNED INCOME WAS ACCE PTED. SUBSEQUENTLY, THE A.O. HELD THAT THE ASSESSEE GUILTY OF FURNISHIN G OF INACCURATE PARTICULARS OF INCOME QUA THE NON-DECLARATION OF SHORT TERM CAPITA L GAIN ON CHIKHALI LAND IN THE ORIGINAL RETURN OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE A.O., VIDE ORDER DATED 30 TH JUNE 2010, IMPOSED PENALTY OF RS.47,37,930/- U/S 271(1)(C) OF THE ACT. 4. IN APPEAL, THE ASSESSEE CONTENDED BEFORE THE LEA RNED COMMISSIONER (APPEALS) THAT, AS A LEGAL HEIR, THE REVISED RETURN OF INCOME WAS FILED INCORPORATING HITHERTO UNDECLARED INCOME ON A BONAF IDE GROUND. THE LEGAL HEIR, WHO WAS REPRESENTING THE ASSESSEE, ASSERTED THAT TH E RETURN OF INCOME WAS REVISED IMMEDIATELY AFTER KNOWING THE FACTS WHICH S HOWED HIS BONAFIDE INTENT. THE LEGAL HEIR ALSO POINTED OUT THAT HE WAS UNDER A BONAFIDE BELIEF THAT THE INCOME WAS TO BE OFFERED ON RECEIPT BASIS AND FOR T HAT MATTER AN AMOUNT OF RS.59 LAKHS WAS SHOWN IN THE BOOKS OF ACCOUNT FOR T HE ASSESSMENT YEAR 2008- 09. IT WAS POINTED OUT THAT THE AMOUNT REFLECTED IN THE ASSESSMENT YEAR 2008- 09, WAS REDUCED FROM THE TOTAL AMOUNT OF CAPITAL GA IN AFTER FILING THE REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08. T HE LEARNED COMMISSIONER (APPEALS) OBSERVED THAT CONSIDERING THE STATEMENT O F THE LEGAL HEIR AS WELL AS THE FACT THAT THE ASSESSEE HAD EXPIRED ON 30 TH DECEMBER 2007, THE PENALTY U/S 271(1)(C) OF THE ACT COULD NOT BE LEVIED. ACCORDING LY, HE DIRECTED THE A.O. TO DELETE THE PENALTY OF RS.47,37,930/- U/S 271(1)(C) OF THE ACT. AGAINST THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 5. BEFORE US, THE LEARNED D.R. HAS ASSAILED THE ORD ER OF THE LEARNED COMMISSIONER (APPEALS) BY POINTING OUT THAT IN THIS CASE, THE UNDECLARED CAPITAL GAIN WAS DETECTED AS A CONSEQUENCE OF A SUR VEY ACTION WHICH TOOK PLACE ON THE BUSINESS PREMISES OF THE LEGAL HEIRS O F THE DECEASED ASSESSEE ON 22 ND JANUARY 2009. IT WAS ALSO POINTED OUT THAT IN THE ORIGINAL RETURN OF INCOME FILED ON 24 TH OCTOBER 2007, ASSESSEE DID NOT DECLARE ANY INCOME ON SALE OF CHIKHALI LAND AND, THEREFORE, THE SAID INCO ME DECLARED IN THE REVISED RETURN OF INCOME FILED ON 20 TH MARCH 2009, WOULD NOT MITIGATE THE RIGORS OF SECTION 271(1)(C) OF THE ACT. 6. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE RESPONDENT ASSESSEE HAS RELIED UPON THE ORDER OF THE LEARNED C OMMISSIONER (APPEALS) IN SUPPORT OF THE CASE OF THE ASSESSEE. THE LEARNED RE PRESENTATIVE HAS ALSO FURNISHED A PAPER BOOK POINTING OUT THAT THE LEGAL HEIR BONAFIDELY FILED THE REVISED RETURN OF INCOME INCORPORATING THE INCOME R ELATABLE TO THE SALE OF LAND AT CHIKHALI AS AND WHEN IT CAME TO THE NOTICE DURIN G THE COURSE OF SURVEY ACTION U/S 133A OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. AS THE FACTS OF THE CASE SHOW THE INCOME IN DISPUTE IS THE SHORT TERM C APITAL GAIN EARNED BY THE DECEASED ASSESSEE ON SALE OF LAND AT CHIKHALI. THE QUESTION IS AS TO WHETHER THE DISCLOSURE OF RS.1.20 CRORES MADE BY THE ASSESS EE IN THE REVISED RETURN OF INCOME FILED BY THE LEGAL HEIR ON 20 TH MARCH 2009, CONSTITUTES A BONAFIDE DISCLOSURE, CONSIDERED IN THE BACKGROUND THAT IN TH E ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE HIMSELF ON 24 TH OCTOBER 2007, IT DID NOT CONTAIN THIS INCOME. FACTUALLY SPEAKING, THE SAID INCOME HAS ARI SEN ON ACCOUNT OF A DEVELOPMENT AGREEMENT DULY REGISTERED ON 22 ND FEBRUARY 2007 I.E., A DATE WHICH FALLS WITHIN THE PREVIOUS YEAR RELEVANT TO TH E ASSESSMENT YEAR UNDER CONSIDERATION. IN THE COURSE OF SURVEY ACTION ON 22 ND JANUARY 2009, THE LEGAL HEIR WAS CALLED UPON TO EXPLAIN THE TRANSACTION REF LECTED BY THE DEVELOPMENT AGREEMENT DATED 22 ND FEBRUARY 2007, WHICH WAS FOUND BY THE SURVEY PARTY IN THE COURSE OF SURVEY ACTION. OSTENSIBLY, THE LEGAL HEIR WAS CALLED UPON TO EXPLAIN THE TRANSACTION SINCE THE ASSESSEE HAD EXPI RED ON 30 TH DECEMBER 2007 AND INCOME FROM SUCH TRANSACTION WAS ALSO NOT FOUND DECLARED IN THE ORIGINAL RETURN OF INCOME FILED ON 24 TH OCTOBER 2007. IT IS QUITE REASONABLE TO INFER THAT THE LEGAL HEIR COULD NOT BE EXPECTED TO BE FULLY AWARE OF THE TRANSACTION AND ALSO THE REASON WHY IT WAS NOT DECL ARED BY THE DECEASED ASSESSEE WHILE FILING THE ORIGINAL RETURN OF INCOME ON 24 TH OCTOBER 2007. THE LEGAL HEIR EXPLAINED THAT HE WAS READY TO DISCLOSE THE INCOME FROM THIS TRANSACTION IN THE ASSESSMENT YEAR 2007-08 BY FILIN G A REVISED RETURN OF INCOME AND THAT AN AMOUNT OF RS.59 LAKHS FROM THE S AME TRANSACTION WAS ALREADY DISCLOSED FOR THE ASSESSMENT YEAR 2008-09. IT WAS EXPLAINED THAT THE LEGAL HEIR WAS UNDER BONAFIDE BELIEF THAT THE INCOM E WAS TO BE DISCLOSED ON RECEIPT BASIS AND FOR THAT REASON A SUM OF RS.59 LA KHS WAS DISCLOSED FOR THE SUBSEQUENT ASSESSMENT YEAR 2008-09. IN OUR CONSIDER ED OPINION, THE BONAFIDES OF THE LEGAL HEIR WHO HAS FILED THE REVIS ED RETURN OF INCOME INCORPORATING THE IMPUGNED INCOME CANNOT BE DOUBTED BECAUSE IN THE ABSENCE OF THE DECEASED ASSESSEE HIMSELF, THERE COU LD NOT BE ANY PERSON HAVING FIRST HAND KNOWLEDGE AS TO THE MANNER IN WHI CH THE INCOME WAS DECLARED IN THE ORIGINAL RETURN OF INCOME FILED ON 24 TH OCTOBER 2007. THEREFORE, IN OUR VIEW, IN THE INSTANT CASE, HAVING REGARD TO THE PECULIAR CIRCUMSTANCES, IT CAN BE DEDUCED THAT IT IS A CASE OF BONAFIDE DISCLO SURE DONE BY THE LEGAL HEIR WITH RESPECT TO AN INCOME TRANSACTED BY THE ASSESSE E HIMSELF DURING HIS LIFE TIME. UNDER THESE CIRCUMSTANCES ,TO SAY THAT THE AS SESSEE HAD DELIBERATELY MADE AN INCORRECT PARTICULARS OF INCOME IN THE ORIG INAL RETURN OF INCOME QUA THE IMPUGNED TRANSACTION WOULD BE UNJUSTIFIED BECAU SE THE ASSESSEE HAVING EXPIRED ON 30 TH DECEMBER 2007, HAD NO CHANCE OF CARRYING THROUGH H IS EXPLANATION, IF ANY. IN ANY CASE, EVEN THE REVENUE HAS NOT LEAD ANY MATERIAL TO POINT OUT REASONS WEIGHING WITH THE ASSESSEE TO DO SO IN THE ORIGINAL RETURN OF INCOME SO AS TO INVITE THE PENAL PROVISION OF SE CTION 271(1)(C) OF THE ACT. CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE FIND THAT THE LEARNED COMMISSIONER (APPEALS) MADE NO MIS TAKE IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS HEREBY AFFIRMED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 04 TH MARCH 2015. SD/- SD /- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 04 TH MARCH 2015. PRADEEP COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-CENTRAL, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE