ITO, Faridabad V. Sh. Jeesukh (HUF), Faridabad

ITA 1556/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58817 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-02-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 08-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS Y KAKKAR
• Keywords: Capital asset; Bonafide belief
• Section: 45(5); 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER & SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 1556/DEL/2010 ASSESSMENT YEAR: 2000-01 ITO, VS. JEESUKH (HUF), WARD-1(5), BLOCK-1B, SH. JAGDISH & OTHERS, NEW CGO COMPLEX, NH-IV, VILLAGE UNCHA GAON, FARIDABAD. BALLABGARH, FARIDABAD. PAN NO. - (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. Y. KAKKAR, SR. DR RESPONDENT BY : SH. DINESH VERMA, ADV. ORDER PER B.C. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATES FRO M THE ORDER OF THE LD. CIT(A)-FARIDABAD DATED 19.02.2010. 2. ON THE BASIS OF INFORMATION RECEIVED FROM THE HA RYANA URBAN DEVELOPMENT AUTHORITY NOTICE U/S 147 WAS ISSUED TO THE ASSESSEE. THE ASSESSMENT WAS FRAMED U/S 144/147 OF THE INCOME TAX ACT, 1961 AND THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 50,81,71 5/- WHICH CONSISTS LONG TERM CAPITAL GAIN AS ENHANCED COMPENSATION OF RS. 32,98,055/- AND INTEREST ON ENHANCED COMPENSATION OF RS. 17,83,660/ -. 3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE CIT(A) HAS GRANTED THE RELIEF ON THE BASIS OF TWO DECISIONS OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. TEK RAM HUF, 300 ITR 354 (P&H) AND CIT VS. SONPAL ITA NO. 1556/D/10 2 HUF, 302 ITR 354, WHEREIN THE HONBLE HIGH COURT HA S HELD THAT NO PENALTY U/S 271(1)(C) IS EXIGIBLE IN THE MATTER OF ENHANCED COMPENSATION AND INTEREST THEREON. THE LD. DR SUBMITTED THAT FA CTS OF BOTH THESE CASES ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES C ASE AS IN THESE CASES THE ASSESSEE ITSELF HAS DECLARED THE AMOUNT IN THE RET URN OF INCOME BY WAY OF A NOTE. ASSESSEE HAS DISCLOSED THE FACT OF RECEIPT OF ENHANCED COMPENSATION AND INTEREST THEREON IN THE RETURN OF INCOME. HOWEVER, IN THOSE CASES, THESE HAVE NOT BEEN ADDED TO THE TAXAB LE INCOME. WHILE IN ASSESSEES CASE, IT HAS BEEN NOT DONE. NO RETURN O F INCOME FILED. NOTHING DECLARED TO THE INCOME-TAX DEPARTMENT. MOREOVER, TH E CONDUCT OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ALSO REM AINED UNCOOPERATIVE. THE UNCOOPERATIVE CONDUCT OF ASSESS EE IS EVIDENT FROM THE FACT THAT THE ASSESSMENT HAS BEEN FRAMED U/S 144/14 7 OF THE I.T. ACT, 1961. THE ASSESSMENT ORDER ITSELF SHOWN THAT THE ASSESSEE HAS BEEN UNCOOPERATIVE BY NOT FILING THE RETURN IN RESPONSE TO THE NOTICE U/S 148. ASSESSEE ALSO FAILED TO COMPLY WITH THE NOTICE U/S 142(1). LD. AR ALSO PLEADED THAT SO FAR AS TAXABILITY OF ENHANCED COMPE NSATION IS CONCERNED, THERE WAS NO DOUBT ABOUT THE TAXABILITY OF INCOME W HICH IS IN THE YEAR OF RECEIPT. IT HAS BEEN CLEARLY PROVIDED IN THE SECTI ON 45(5) OF I.T. ACT THAT ENHANCED COMPENSATION IS TAXABLE IN THE YEAR TO REC EIPT. THIS PROVISIONS IN SECTION 45 HAVE BEEN INSERTED W.E.F. 1.4.1988 BY TH E FINANCE ACT, 1987. IT CLEARLY PROVIDES THAT ANY ADDITIONAL COMPENSATION W OULD BE TAXED ON RECEIPT BASIS IRRESPECTIVE OF THE YEAR OF TRANSFER OF ASSET. IT WAS NEVER A ITA NO. 1556/D/10 3 DEBATABLE ISSUE. THEREFORE, THERE IS NO JUSTIFICAT ION IN THE CLAIM OF THE ASSESSEE THAT HE WAS UNDER BONAFIDE BELIEF THAT THE AMOUNT OF ENHANCED COMPENSATION IS NOT TAXABLE. IT WAS NEVER A DEBATA BLE ISSUE. IT MAKE IT CLEAR THAT THE ASSESSEE HAS AVOIDED THE PAYMENT OF TAXES DELIBERATELY BY NOT OFFERING THE ENHANCED COMPENSATION FOR TAXATION . BY NOT DOING SO THE ASSESSEE HAS BECOME LIABLE FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT. SHE FINALLY PLEADED TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE ORDER OF ASSESSING OFFICER FOR LEVYING PENALTY. 4. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT ON THE BASIS OF WHICH THE CIT(A) HAS GRANTED THE RELIEF BY DELETING THE PENALTY. 5. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE CASE LAW RELIED UPON, WE HOLD THAT THERE IS A VARIATION IN THE FACT S OF THE CASES WHICH THE LD. AR RELIED UPON. IN THE CASE OF CIT VS. TEK RAM HUF AND ALSO IN THE CASE OF CIT VS. SONEPAL HUF, THE ASSESSEES HAVE FIL ED THE RETURN OF INCOME. THEY HAVE ALSO MENTIONED THE FACT ABOUT TH E RECEIPT OF ENHANCED COMPENSATION AND INTEREST ON ENHANCED COMPENSATION IN THE COMPUTATION SHEET FILED WITH RETURN OF INCOME. THUS, THEY HAVE MENTIONED THIS FACT IN RETURN OF INCOME BUT NOT OFFERED FOR THE TAXES. TH US, IN THESE CASES, ASSESSEES HAVE NOT CONCEALED THE FACT OF RECEIPT OF ENHANCED COMPENSATION AND INTEREST THEREON FROM THE INCOME-T AX AUTHORITIES. IN THE CASE UNDER CONSIDERATION, NO RETURN APPEARS TO HAVE BEEN FILED. EVEN NO COMPLIANCE WAS MADE BY WAY OF FILING RETURN OF INCO ME TO NOTICE U/S 148 OF ITA NO. 1556/D/10 4 INCOME-TAX ACT. EVEN SUBSEQUENT NOTICE U/S 142(1) WAS NOT COMPLIED. THE ASSESSMENT ORDER HAD BEEN PASSED UNDER SECTION 144/147 ITSELF SHOWS THAT ASSESSEE HAS BEEN UNCOOPERATIVE. FURTH ER, THE ORDER MADE U/S 144 ALSO REFLECTS THAT THE AO HAS CONSIDERED ON LY THE LONG TERM CAPITAL GAIN ON THE ENHANCED COMPENSATION AND INTEREST ON T HE ENHANCED COMPENSATION AS AN INCOME OF THE ASSESSEE FOR THE Y EAR. AS FAR AS THE TAXABILITY OF THE ENHANCED COMPENSATION IS CONCERNE D THERE WAS A CLEAR PROVISION U/S 45(5) OF THE I.T. ACT W.E.F. 01.04.19 88 WHICH PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION ( 1), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A CAPITAL ASSET, B EING A TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH WAS DETERMINED OR APPROVED BY THE CENTRAL GOV ERNMENT OR THE RESERVE BANK OF INDIA, AND THE COMPENSATION OR THE CONSIDERATION FOR SUCH TRANSFER ENHANCED OR FURTHER ENHANCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY, THE CAPITAL GAIN SHALL BE DEALT WITH THE FOLLOWING MANNER NAMELY: A) .. B) THE AMOUNT BY WHICH THE COMPENSATION OR CONSIDE RATION IS ENHANCED OR FURTHER ENHANCED BY THE COURT, THE TRIB UNAL OR OTHER AUTHORITY SHALL BE DEEMED TO INCOME CHARGEABLE UNDE R THE HEAD CAPITAL GAINS OF THE PREVIOUS YEAR IN WHICH SUCH AMOUNT IS RECEIVED BY THE ASSESSEE; THUS, FROM THE CLEAR PROVISIONS OF THE ACT IT IS CL EAR THAT THE ENHANCED COMPENSATION WAS CHARGEABLE TO THE TAX UNDER THE HE AD CAPITAL GAIN IN ITA NO. 1556/D/10 5 THE YEAR IN WHICH IT IS RECEIVED BY THE ASSESSEE. THEREFORE, THE ASSESSEE CLAIMS THAT THE ISSUE WAS DEBATABLE IS UNJUSTIFIED. 5. IN THE CASE OF CIT VS. SOHAN PAL (HUF) ON WHICH THE ASSESSEE HAS PLACED RELIANCE, THE ISSUE REGARDING THE COMPENSATI ON WAS HELD TO BE DEBATABLE ON THE BASIS OF DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS. HINDUSTAN HOUSING & LAND DEVELOPMENT TRUST LTD. 161 ITR 524. THUS, IT IS CLEAR THAT THE DECISION OF HON'BLE SUPRE ME COURT FOR HOLDING THE TAXABILITY OF ENHANCED COMPENSATION WAS PRIOR TO TH E INSERTING THE PROVISIONS IN SECTION 45(5) OF THE INCOME-TAX ACT B Y FINANCE ACT, 1987, W.E.F. 1.4.1988. THE PROVISIONS OF SECTION 45 (5) START WITH NON-OBSTANTE CLAUSE BEGINNING WITH NOTWITHSTANDING ANYTHING CONT AINED IN SUB-SECTION (1), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFE R OF A CAPITAL ASSET BEING A TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW, OR A TRANSFER CONSIDERATION OF WHICH WAS DETERMINED ON THE APPROV AL OF THE CENTRAL GOVERNMENT OR THE RESERVE BANK OF INDIA, AND COMPEN SATION OR THE CONSIDERATION OF SUCH TRANSFER IS ENHANCED OR FURTH ER ENHANCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY, THE CAPITAL GAI N SHALL BE DEALT WITHIN THE MANNER, NAMELY, THE AMOUNT BY WHICH THE COMPENSATIO N OR CONSIDERATION IS ENHANCED OR FURTHER ENHANCED BY THE COURT, TRIBU NAL OR OTHER AUTHORITY SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE H EAD CAPITAL GAINS OF THE PREVIOUS YEAR IN WHICH SUCH AMOUNT IS RECEIVED BY THE ASSESSEE. THEREFORE, THE TAXABILITY OF ENHANCED COMPENSATION WAS NOT A DEBATABLE ISSUE AT THE RELEVANT TIME. AS FAR AS THE INTEREST ON THE ENHANCED ITA NO. 1556/D/10 6 COMPENSATION IS CONCERNED, WE ARE IN AGREEMENT WITH THE CLAIM OF THE ASSESSEE THAT THE ISSUE WAS DEBATABLE AT THE RELEVA NT TIME. NON-FILING OF INCOME AND NOT DISCLOSING FACT OF RECEIPT OF ENHANC E COMPENSATION TO THE INCOME-TAX DEPARTMENT MAKES THE FACTS OF THE CASE I N VARIANCE TO THE FACTS OF CASES RELIED UPON. SUBSEQUENTLY, NON-COOPERATIV E ATTITUDE BY WAY OF NOT FILING RETURN IN RESPONSE TO NOTICE U/S 148 AND FUR THER NOT COMPLYING WITH THE NOTICE U/S 142(1) SHOWS THAT ASSESSEE DID NOT WANT TO PAY THE TAXES. THESE FACTS MAKE ASSESSEE LIABLE FOR LEVYING PENALT Y OF CONCEALMENT U/S 271(1)(C) OF INCOME-TAX ACT. THEREFORE, WE SUSTAIN THE LEVY OF PENALTY ON THE AMOUNT OF THE ENHANCED COMPENSATION. IN VIEW O F THESE, WE SET ASIDE THE ORDER OF THE CIT(A) TO THAT EXTENT. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF FEBRUARY, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEEN A) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 29 TH DAY OF FEBRUARY, 2012 TS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR