Chunduru Venkata Subba Rao, Hyderabad V. ACIT, Circle-8(1), Hyderabad

ITA 1576/HYD/2013

• Counselvise Citation: 157622514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 25-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA B
• Assessee Lawyers: S RAMA RAO
• Keywords: Salary income; Wrong claim; Revised return
• Section: 54; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1576/HYD/13 : ASSESSMENT YEAR 2008 - 09 SHRI CHUNDURU VENKATA SUBBA RAO, HYDERABAD (PAN AAJPC 7193 F) V/S. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 8(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : S HRI RAMAKRISHNA B., DR DATE OF HEARING 10.12.2014 DATE OF PRONOUNCEMENT 31.12.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL FIL E D BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD, WHEREBY HE CONFIRMED THE PENALTY OF RS.47,35,554 IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) OF THE ACT. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO THIS APPEAL ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL, WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 14.10.12008 DECLARING TOTAL INCOME OF RS.68,64,847. THE SAID RETURN COMPRISED OF SALARY INCOME OF RS.30,50,000 AND LONG TERM CAPITAL GAINS OF RS.39,14,847. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD CERTAIN SHARES GIVING RISE TO CAPITAL GAINS OF RS.6,51,10,447, AND AFTER CLAIMING EXEMPTION UNDER S.54F, THE NET CAPITAL GAIN OF RS.39,14,847 WAS OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME. THE EXEMPTION UNDER S.54F WAS CLAIMED BY I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 2 THE ASSESSEE ON ACCOUNT OF PURCHASE OF A PLOT OF LA ND FOR RS.4,02,93,000, REGISTRATION EXPENSES OF RS.38,27,935 AND CONSTRUCTION OF HOUSE ON THE SAID PLOT OF LAND AMOUNTING TO RS.1,25,00,000. THE AMOUNT OF RS.1,25,00,000 ON ACCOUNT OF CONSTRUCTION OF HOUSE WAS CLAIMED TO BE PAID BY THE ASSESSEE TO ONE M/S. ROBO INFRASTRUCTURE PVT. LTD. AND AS PER THE INFORMATION RECEIVED BY THE ASSESSING OFFICER, THE SAID AMOUNT WAS NOT ELIGIBLE FOR EXEMPTION UNDER S.54F. HE, THEREFORE, ISSUED A NOTICE UNDER S.148 TO THE ASSESSEE ON 18.11.2011 , IN RESPONSE TO WHICH N O RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE ASSESSEE HOWEVER, APPEARED BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE ISSUED UNDER S.143(2) DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS AND PRODUCED EVIDENCE TO SHOW THAT THE AMOUNT T O THE E XTENT OF RS.39,19,855 ONLY WAS SPENT ON THE CONSTRUCTION OF HOUSE. IT WAS ACCEPTED BY THE ASSESSEE THAT THE BALANCE AMOUNT OF RS.85,80,145 PAID TO M/S. ROBO INFRASTRUCTURE PVT. LTD. WAS NOT SPENT ON THE CONSTRUCTION OF HOUSE AND THE SAME HAVING BEEN RE FUNDED BY THE SAID PARTY, IT WAS NOT ELIGIBLE FOR EXEMPTION UNDER S.54F. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F WAS RESTRICTED BY THE ASSESSING OFFICER AND THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 30.12.2011, MAKING ADDITIO N TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAINS. 3. PENALTY PROCEEDINGS UNDER S.271(1)(C) WERE ALSO INITIATED BY THE ASSESSING OFFICER IN RESPECT OF THE ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN AND IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF THE SAID PROCEEDINGS, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE IN WRITING - I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 3 ' ... IN RESPECT OF LEVY OF PENALTY FOR CONCEALMENT, I SUBMIT THAT YOU HAVE PROPOSED TO IMPOSE PENALTY FOR CONCEALMENT OF INCOME FOR ADDITIONS M ADE , DURING THE COURSE OF SCRUTINY PROCEEDINGS, ON THE GROUND THAT THE ADDITIONS WERE MADE TO THE EXTENT OF NON UTILISATION OF SALE CONSIDERATION FOR CONSTRUCTION OF HOUSE PROPERTY. IN THIS REGARD, I HEREWITH STATE THAT I HAVE ALREADY FURNISHED AND DISCLOSED ALL THE INFORMATION IN THIS REGARD AND AT THE TIME OF SUBMITTING THE RETURN OF INCOME. I HAVE PAID THE CAPITAL GAIN T AX ON THE PART AMOUNT WHICH IS NOT BEING US ED FOR CONSTRUCTION OF HOUSE VOLUNTARILY AT THE TIME FILING OF RETURN O F INCOME. DUE TO MY OTHER PREOCCUPATIONS, I COULD NOT UTILISE THE ENTIRE SALE CONSIDERATION TOWARDS CONSTRUCTION AND THIS RESULTED IN CAPITAL GAIN FOR WHICH APPROPRIATE TAX WAS PAID. LATER ON THE CASE WAS SELECTED FOR SCRUTINY, I HAVE SUBMITTED THE NECESSARY INFORMATION & EXPLANATIONS. I HAVE NOT CONCEALED ANY AMOUNT IN THE RETURN OF INCOME FILED U/S. 139(1). I HAVE ACCEPTED FOR THE ADDITIONS MADE BY THE AO TO THE EXTENT OF NON UTILISATION FOR CONSTRUCTION OF HOUSE AND I HAVE ALREADY PAID THE ENTIRE TAX DEMAND RAISED BY THE AO. IN VIEW OF THE ABOVE COMPLIANCES FROM MY SIDE, I KINDLY REQUES T YOU T O DROP THE PENALTY PROCEEDINGS PROPOSED TO BE INITIATED BY YOU U/S.271 (1)(C).' 4. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE ASSESSEE WAS WELL AWARE OF THE PROVISIONS LAID DOWN IN S.54F OF THE ACT, AND THIS BEING SO, HE SHOULD HAVE COMPLETELY UTILISED THE ENTIRE AMO UNT OF RS.1,25,00,000 PAID TO M/S. ROBO INFRASTRUCTURE PVT. LTD. FOR THE CONSTRUCTION OF HOUSE DURING THE PRESCRIBED PERIOD. HE ALSO HELD THAT THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN BY WAY OF RESTRICTION OF THE ASSESSEES CLAIM FOR EXEMPTION UN DER S.54F WAS NOT ACCEPTED BY THE ASSESSEE VOLUNTARILY, AND IT WAS ONLY AS A RESULT OF ENQUIRIES MADE BY HIM, WHICH REVEALED THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F WAS NOT FULLY ADMISSIBLE. THE ASSESSING OFFICER HELD THAT THE CASE OF THE ASSESSEE THUS WAS A FIT CASE TO IMPOSE THE PENALTY UNDER S.271(1)(C) AND ACCORDINGLY HE IMPOSED PENALTY OF RS. 47,35,554 BEING 100% OF THE TAX SOUGHT TO I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 4 BE EVADED BY THE ASSESSEE IN RESPECT OF THE ADDITION MADE BY WAY OF RESTRICTING THE CLAIM FOR EXEMPTI ON UNDER S.54 F. 5. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN APPEAL PREFERRED BEFORE THE LEARNED CIT(A), AND THE FOLLOWING SUBMISSIONS WERE MADE ON ITS BEHALF BEFORE THE LEARNED CIT(A) IN SUPPORT OF THE CASE THAT PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) WAS NOT SUSTAINABLE - AFTER PAYING THE AMOUNT OF RS.1,25,00,000/ - TO THE BUILDER ON 03.10;2008, AS SOME DIFFERENCES OF OPINION CROPPED U P BETWEEN THE BUILDER AND THE APPELLANT, THERE WAS NO PROGRESS IN THE CONSTRUCTION OF THE RESIDENTIAL HOUSE AND ULTIMATELY THE APPELLANT RECEIVED BACK THE AMOUNT OF RS.L.25 CRORE FROM THE BUILDER IN THE NEXT YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS ING OFFICER REQUIRED THE APPELLANT TO FURNISH EVIDENCE WITH REGARD TO THE PAYMENT OF RS.1,25,00,000/ - TO THE BUILDER. THE APPELLANT FURNISHED ALL THE INFORMATION AS WAS REQUIRED BY THE ASSESSING OFFICER SUCH AS COPY OF SALE DEED AND BANK ACCOUNT EVIDENCIN G PAYMENT OF RS.L.25 CRORE TO M/S. ROBO INFRASTRUCTURE (P) LTD ETC. AFTER GOING THROUGH THE INFORMATION FURNISHED BY THE APPELLANT, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AMOUNT WAS MENTIONED IN THE COMPUTATION OF INCOME STATEMENT AS INVESTMENT IN ROBO INFRASTRUCTURE (P) LTD., THE S A ME WOULD NOT QUALIFY FOR DEDUCTION UNDER SEC. 54 OF THE I. T. ACT. ACCORDINGLY HE PROPOSED TO BRING THE SAME TO TAX. THE APPELLANT AGREED FOR SUCH A PROPOSITION AS THERE WAS NO PROGRESS I N THE CONSTRUCTION OF THE BUILDIN G AS ALREADY THERE EXISTED A DISPUTE BETWEEN THE APPELLANT AND THE BUILDER AND AS THE BUILDER WAS NOT LIKELY TO COMPLETE THE CONSTRUCTION WITHIN THE STIPULATED PERIOD AS CONTEMPLATED IN SECTION 54F OF THE I T. ACT. HENCE THE APPELLANT AGREED FOR ADDING THE AMOUNT OF RS.L.25 CRORE IN THE ASSESSMENT I N ORDER NOT TO PROTRACT THE LITIGATION AND TO PURCHASE PEACE WITH THE DEPARTMENT. THE ASSESSING OFFICER A CCORDINGLY COMPUTE D THE INCOME OF THE APPELLANT IN THE ASSESSMENT BY ALLOWING AN AMOUN T OF RS.4,60,68,798/ - AS DEDUCTION UNDER SEC.54F OF THE IT ACT AND AFTER SETTING OFF OF THE LOSS FROM THE SALE OF SHARES OF M/S.ROSHNI POWER TECH AND ALSO THE CAPITAL GAIN RETURNED BY THE APPELLANT. THUS WORKING OUT, THE ASSESSING OFFICER BROUGHT TO TAX AN AMOUNT OF RS.1,39,32,201/ - AS LONG I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 5 TERM CAPITAL GAIN BY INITIATING PENALTY PROCEEDINGS UNDER SEC. 271(1)( C) OF THE I T ACT. THE PENALTY PROCEEDINGS SO INITIATE D WERE FINALIZED ON 26.08.2012 BY IMPOSING A PENALTY OF RS.47,35,554/ - . IT IS AGAINST THE SAID ORDER OF PENALTY THE PRESENT APPEAL IS PREFERRED BEFORE THE HON'BLE C I T (APPEALS). IN THIS CONNECTION IT IS SUBMITTED THAT THE APPELLANT H AS NOT CONCEALED HIS PARTICULARS OF INCOME. ALL THE RECEIPTS AND EXPENSES WERE DULY DISCLOSED IN THE RETURN OF INCOME FILED. IN THE COMPUTATION OF STATEMENT OF INCOME FILED ALONG WITH THE RETURN OF INCOME, THE APPELLANT CLEARLY SHOWN THE WORKING OF LONG TERM CAPITAL GAIN AND ALSO FURNISHED THE BASIS FOR ARRIVING AT THE CAPITAL GAIN OF RS.39,14,847/ - . THE APPELLANT AGRE ED FOR DISALLOWANCE OF RS.1.25 CRORE AS HE WAS CLEARLY GIVEN TO UNDERSTAND THAT DUE TO THE DISPUTE WITH THE BUILDER, THERE WAS NO CHANCE FOR COMPLETING THE CONSTRUCTION OF THE HOUSE WITHIN THE PERIOD OF TIME ALLOWED UNDER THE PROVISIONS OF SEC. 54F OF THE LT. ACT. IN FACT, THE ASSESSING OFFICER WANTED TO DISALLOW THE AMOUNT OF R S .1.25 CRORE DUE TO WRONG NOMENCLATURE USED BY THE APPELLANT AND NOT BY UNEARTHING ANY UNDISCLOSED INCOME. ALL THE PARTICULARS WERE FURNISHED BY THE APPELLANT IN THE RETURN OF INCOME FILED ITSELF WITHOUT LEAVING ANY SCOPE TO THE ASSESSING OFFICER TO DISCOVER ANY CONCEALMENT. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE APPELLANT HAS CONCEALED ANY PARTICULARS OF HIS INCOME. MERE USING OF WRONG NOMENCLATURE DOES NOT I PSO - FACTO WARRANT INITIATION OF CONCEALMENT PENALTY PROCEEDINGS. THE APPELLANT HUMBLY SUBMITS THAT AT THE TIME OF FILING THE RETURN OF INCOME THE AMOUNT OF R S .1.25 CRORE WAS PAID TO THE BUILDER. SUCH PAYMENT IS FOR CONSTRUCTION OF A RESIDENTIAL HOUSE. THE CLAIM IN THE RETURN WAS THEREFORE, JUSTIFIED. THE ASSESSEE AGREED FOR DISALLOWANCE OF THE SAID AMOUNT AS THE BUILDER DID NOT CONSTRUCT THE HOUSE AS EXPECTED AND RETURNED THE AMOUNT. THE AMOUNT RETURNED WAS MUCH LATER TO THE FILING OF THE RETURN. THE APPELLANT AGREED F OR SUCH AN ADDITION IN ORDER NOT TO PROTRACT THE LITIGATION AND TO PURCHASE PEACE WITH THE DEPARTMENT. THEREFORE, THERE IS NO CONCEALMENT OF INCOME IN THE RETURN OF INCOME FILED. 6. THE ABOVE SUBMISSIONS MADE BY T HE ASSESSEE DID NOT FIND FAVOUR WITH THE LEARNED CIT(A), WHO PROCEEDED TO CONFIRM THE PENALTY IMPOSED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH 4.2 AND 4.3 OF THE IMPUGNED ORDER - I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 6 4.2 I HAVE SEEN CAREFULLY THE FACTS AND EVIDENC E. WITHOUT GOING INTO THE CASE LAW, THE FACTS ARE FIRSTLY EXAMINED. UPON EARNING INCOME FROM THE TRAN S FER O F SHARES AS DI S CUS S ED SUPRA, APART FROM OTHER AMO U NTS, THE APPELLANT ALSO PAID AN AMOUNT O F RS .1,25,00,000 TO M/S. ROBO INFRASTRUCTURE PRIVATE LIMITED. APART FROM THIS AMOUNT THE APPELLANT HAD SPENT RS. 4,41,20,935/ - ON PURCHASE OF THE PLOT, RS.33,79,865/ - FOR LEVELLING OF THE GROUND, FOR ERECTION OF COMPOUND WALL ET CETERA. THEREFORE THE APPELLANT HAD SPENT APPROXIMATELY RS. 6 CRORE ON THE CONSTRU CTION OF THE HOUSE. HE CLAIMED THIS ENTIRE AMOUNT AS DEDUCTION U/S 54F OF THE INCOME TAX ACT. THE CLAIM OF THE APPELLANT THAT THE AMOUNT OF RS.1.25 CRORE WAS PAID TO THE BUILDER IN THE GOOD - FAITH OF CONSTRUCTION OF HOUSE IS NOT CORRECT AND IS RIDDLED WITH LOOPHOLES AND INCONSISTENCIES. FIRST OF ALL THE AMOUNT OF RS.1.25 CRORE PAID TO M/S ROBO INFRASTRUCTURE WAS NOT DONE FOR THE PURPOSE OF HOUSE BUILDING. RATHER IT WAS SHOWN IN THE APPELLANT'S OWN FINANCIAL STATEMENTS AS INVESTMENT IN THE AFOREMENTIONED CO MPANY. SUCH AN INVESTMENT WOULD NOT QUALIFY FOR DEDUCTION U/S 54F. AS PER THE APPELLANT, HE AGREED FOR REDUCING THIS AMOUNT FROM THE AFOREMENTIONED DEDUCTION AS HE WAS SURE THAT THIS AMOUNT WOULD NEVER BE SPENT ON THE CONSTRUCTION OF THE HOUSE AND FURTHE R THAT THE HOUSE CONSTRUCTION WOULD NOT BE COMPLETED WITHIN THE TIME LIMIT SET AS PER SECTION 54F. 4.3 IT IS CLEAR FROM ABOVE THAT THE APPELLANT HAD DECIDED TO CLAIM FALSE DEDUCTION AND NOT PAY TAXES ON THE CAPITAL GAINS AMOUNTING TO RS.6 CRORE . FIRSTLY, IT WAS IN THE KNOWLEDGE OF THE APPELLANT THAT THE HOUSE WOULD BE INCOMPLETE AND THAT INCOMPLETE HOUSES DO NOT GET DEDUCTION U/S 54F. SECONDLY, HE GAVE SOME MONEY TO M/S ROBO INFRASTRUCTURE AND SHOWED IT AS INVESTMENT IN THAT COMPANY. HE FULLY KNEW THAT SUCH INVESTMENT WOULD NOT QUALIFY FOR DEDUCTION U/S 54F. YET, IN ORDER TO EVADE TAXES HE CLAIMED, DEDUCTION ON BOTH THE COUNTS AS DISCUSSED ABOVE.' THE' STORY ABOUT DISPUTE WIT H THE COMPANY IS TOTALLY SELF - SERVING IN NATURE AND DOES NOT REST ON ANY PILLAR OF EVIDENCE. MOREOVER, DISPUTE OR 'NO DISPUTE, DEDUCTION HAS TO BE ALLOWED IF THE HOUSE IS COMPLETED WITHIN THE TIME PERIOD SPECIFIED AND ALSO ON THE ACTUAL AMOUNT SPENT ON TH E CONSTRUCTION OF THE HOUSE. IT IS BEYOND HUMAN PROBABILITY THAT THE APPELLANT WOULD HAVE NO KNOWLEDGE ABOUT THE EXTENT TO WHICH HIS HOUSE HAD BEEN CONSTRUCTED AND THE AMOUNT OF MONEY WHICH HAD BEEN SPENT IN THE CONSTRUCTION OF THE HOUSE. IT IS VERY CLEA R FROM THE FACTS OF THE CASE THAT THE APPELLANT HAD PLANNED THE ENTIRE STRATEGY IN SUCH A MANNER SO AS TO EVADE TAXES. IT IS NOT A BONE FIDE MISTAKE, RATHER IT IS A WELL - PLANNED TAX EVASION DEVICE. HAD THE ASSESSING OFFICER NOT CONDUCTED SCRUTINY OF THE CASE AND HAD HE NOT OBTAINED THE RELEVANT INFORMATION, TAXES ON AN AMOUNT OF RS.6 CRORE, ESPECIALLY ON THE AMOUNT OF I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 7 RS.1.25 CRORE WOULD NEVER HAVE BEEN PAID BY THE APPELLANT. THEREFORE, THIS IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C), AND THE SAME I S ACCORDINGLY CONFIRMED. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE THE FILING OF THE RETURN OF IN C OM E FOR THE YEAR UN D ER CONSIDERATION ON 14. 10.2008, THE ASSESSEE NOT ONLY MADE INVESTMENT IN PU R CHA S E OF PLOT O F LAND , BUT EVEN PAYMENT OF R S .1.25 CRORES WAS ALSO MADE TO THE CONTRACTOR FOR CON S T R UC T ION OF TH E HOU S E ON TH E SAID PLOT O F LAND. HE CONTENDED THAT THE CLAIM MADE BY THE ASSESSEE UNDER S.54F IN THE ORIGINAL RETURN OF INCOME THUS WAS A BONA FIDE CLAIM AND IT WAS ONLY BECAUSE OF THE SUBSEQUENT UNFORESEEN DEVELOPMENTS, THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F COULD NOT BE ALLOWED FULLY. HE EXPLAINED THAT SOME DISPUTE AROSE BETWEEN THE ASSESSEE AND THE CONTRACTOR SUBSEQUENTLY, AS A RESULT OF WHICH, THE CONTRACTOR LEFT THE CONSTRUCTION WORK INCOMPLETE. HE INVITED OUR ATTENTION TO THE COPIES OF THE RELEVANT BILLS RAISED BY THE CONTRACTOR ON 9.7.2009 AND 27.3.2010, TO POINT OUT THAT CONSTRUCTION WORK OF THE VALUE OF ABOUT RS.39 LAKHS ONLY WAS COMPLETED BY THE CONTRACTOR AND THE BALANCE AMOUNT WAS REFUNDED BY HIM. HE CONTENDED THAT KEEPING IN VIEW THE SUBSEQUENT DEVELOPMENT, THE ASSESSEE VOLUNTARILY SURRENDERED HIS CLAIM FOR EXE MPTION UNDER S.54F PARTLY DURING THE RE - ASSESSMENT PROCEEDINGS AND ACCEPTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER S.54F TO THAT EXTENT. HE CONTENDED THAT THE REAL INTENTION OF THE ASSESSEE, HOWEVER, WAS ALWAYS TO INVEST THE AMOUNT OF RS.1 .25 CRORES IN THE CONSTRUCTION OF HOUSE AND IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F WAS WRONGLY MADE BY THE ASSESSEE, IN ORDER TO ATTRACT THE PENALTY UNDER S.271(1)(C). HE ALSO CONTENDED THAT T HE I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 8 CONSTRUCTION OF HOUSE WA S STOPPED AT INCOMPLETE STAGE IN THE MONTH OF MARCH, 2010 AND SINCE THE DATE FOR FILING OF THE REVISED RETURN WITHDRAWING PARTLY THE CLAIM FOR EXEMPTION UNDER S.54F BY THE ASSESSEE HAD ALREADY EXPIRED, THE ASSESSEE COULD NOT FILE THE REVISED RETURN. WI THOUT PREJUDICE TO HIS MAIN CONTENTIONS, THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE QUANTUM OF PENALTY WORKED OUT BY THE ASSESSING OFFICER IS WRONG AND THE SAME IS REQUIRED TO BE RESTRICTED TO 100% OF THE TAX AS CALCULATED BY APPLYING THE LOWER RATE OF 20% APPLICABLE TO CAPITAL GAINS ON THE ADDITION MADE BY WAY OF RESTRICTING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW IN SUPPORT OF THE REVENUES CASE THAT THE CLAIM FOR EXEMPTION UNDER S.54F PARTLY HAVING BEEN WRONGLY MADE BY THE ASSESSEE , PENALTY PROVISION S OF S.271(1)(C) ARE CLEARLY ATTRACTED. HE CONTENDED THAT THERE WAS NO BASIS WHATSOEVER TO PAY THE LUM P SUM AMOUNT OF RS.1.25 CRORES TO THE CONTRACTOR FOR THE CONSTRUCTION OF HOUSE, AND THIS PAYMENT WAS ACTUALLY MADE BY THE ASSESSEE, IN ORDER TO MAKE A WRONG CLAIM FOR EXEMPTION UNDER S.54F. HE CONTENDED THAT THIS WRONG CLAIM MADE BY THE ASSESSEE CAME TO LIGHT ONLY AS A RESULT OF RE - ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER AND HAVING BEEN CORNERED BY THE ASSESSING OFFICER, THE ASSESSEE WAS LEFT WITH NO CHOICE BUT TO WITHDRAW PARTLY HIS CLAIM FOR EXEMPTION UNDER S.54F. HE CONTENDED THAT IT IS THUS NOT A CASE WHERE THE ASSESSEE HAS WITHDRAWN ITS CLAIM VOLUNTARILY AND IT IS A FIT CASE TO IMPOSE PENALTY UNDER S.271(1)(C) . HE READ OUT AND RELIED ON THE SPECIFIC ADVERSE FINDINGS RECORDED BY THE LEARNED CIT(A) IN PARAGRAPH 4.3 OF THE IMPUGNED ORDER AND URGED THAT THE SAME MAY BE TAKEN INTO CONSIDERATION, WHILE DECIDING THE ISSUE INVOLVED IN THIS APPEAL RELATING TO IMPOSITION OF PENALTY UNDER S.271(1)(C) . I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 9 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT BESIDES INVESTMENT MADE IN THE PURCHASE OF PLOT OF LAND, EXEMPTION UNDER S.54F WAS ALSO CLAIMED BY THE ASSESSEE IN RESPECT OF PAYMENT OF RS.1.25 CRORES SAID TO BE MADE TO THE CONTRACTOR FOR THE CONSTRUCTION OF HOUSE ON 29 TH SEP TEMBER, 2008. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL OR THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN OR GIVE US ANY CONVINCING BASIS FOR PAYING SUCH A HUGE AMOUNT IN LUMP SUM FOR CONSTRUCTION OF HOUSE. THE FAILURE OF THE ASSESSEE TO EXPLAIN ANY SUCH BASIS CREATES A DOUBT ABOUT THE BONA FIDE CLAIM OF THE ASSESSEE AS SOUGHT TO BE MADE BY THE LEARNED COUNSEL, ESPECIALLY WHEN IT IS SEEN IN THE LIGHT OF THE FACT THAT THE BUILDING PLAN FOR THE CONSTRUCTION OF HOUSE WAS SANCTIONED BY THE CORNERED AUTHO RITIES MUCH LATER AND EVEN THE CONSTRUCTION OF HOUSE ONLY TO THE EXTENT OF ABOUT RS.39 LAKHS WAS COMPLETED BY THE CONTRACTOR UPTO MARCH, 2010, I.E. AFTER A PERIOD OF MORE THAN ONE AND HALF YEAR AFTER THE PAYMENT OF ADVANCE. 10 . IT IS ALSO OBSERVED THAT IN THE MONTH OF MACH, 2010, THE CONTRACTOR HAD LEFT THE CONSTRUCTION OF HOUSE INCOMPLETE AND ALSO REFUNDED THE BALANCE AMOUNT OF ADVANCE TO THE ASSESSEE. THE ASSESSEE THUS HAD BECOME FULLY AWARE IN THE MONTH OF MARCH, 2010 ITSELF THAT THE CLAIM MADE BY HI M FOR EXEMPTION UNDER S.54F IN THE ORIGINAL RETURN WAS EXCESSIVE. IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED BEFORE US THAT THE DATE FOR FILING OF THE REVISED RETURN BY THIS TIME HAD ALREADY EXPIRED AND THE ASSESSEE THUS WAS NOT IN A POSITION TO WITHDRAW ITS EXCESS CLAIM FOR EXEMPTION UNDER S.54F. THIS ARGUMENT, THOUGH LOOKS ATTRACTIVE AT THE FACE OF IT, ACTUALLY EXPOSES THE MALA FIDES OF THE ASSESSEE. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS REOPENED BY THE I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 10 ASSESSING OFFICER TO EXAMINE HIS ELIGIBILITY FOR EXEMPTION UNDER S.54F IN RESPECT OF THE AMOUNT OF RS.1.25 CRORES PAID TO THE CONTRACTOR AND IN RESPONSE TO NOTICE ISSUED UNDER S.148 ON 18.1.2011, WHICH WAS SERVED ON THE ASSESSEE ON 21.1.2011, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE WITHDRAWING ITS EXCESS CLAIM FOR EXEMPTION UNDER S.54F. IT CLEARLY PROVES THAT THE ASSESSEE HAD GOT AN OPPORTUNITY TO WITHDRAW HIS EXCESS CLAIM FOR EXEMPTION UNDER S.54F, W HEN NOTICE UNDER S.148 WAS ISSUED BY THE ASSESSING OFFICER IN THE MONTH OF JANUARY, 2011, AND IN SPITE OF HAVING FULL KNOWLEDGE THAT THE CLAIM MADE BY IT IN THE ORIGINAL RETURN FOR EXEMPTION UNDER S.54F WAS EXCESSIVE, THE ASSESSEE DID NOT AVAIL THE SAID O PPORTUNITY, AND AGREED FOR THE ADDITION BY WAY OF RESTRICTION OF THE CLAIM FOR EXEMPTION UNDER S.54F ONLY DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, WHEN HE WAS CORNERED BY THE ASSESSING OFFICER BY MAKING SPECIFIC ENQUIRIES, WHICH CLEARLY REVEALED T HAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F WAS EXCESSIVE. HAVING REGARD TO ALL THESE F ACTS OF THE CASE, WE FIND MERIT IN THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT IT IS NOT A CASE WHERE THE ASSESSEE CAN BE SAID TO HAVE VOLUNTARILY SURRENDERED HIS EXCESSIVE CLAIM FOR EXEMPTION UNDER S.54F. 11. IT IS A WELL SETTLED POSITION OF LAW THAT THE CONCEALMENT OF INCOME ENVISAGED IN S.271(1)(C) IS TO BE INFERRED FROM THE RETURN OF INCOME FILED BY THE ASSESSEE, AND SINCE THE P ENALTY PROCEEDINGS UNDER S.271(1)(C) IN THE PRESENT CASE WERE INITIATED BY THE ASSESSING OFFICER DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, IT IS THE RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER S.148 THAT HAS TO BE SEEN TO INF ER THE CONCEALMENT. AS ALREADY NOTED BY US, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE ISSUED BY THE ASSESSING OFFICER UNDER S.148 IN THE MONTH OF JANUARY, 2011 , WITHDRAWING THE I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 11 EXCESSIVE CLAIM FOR EXEMPTION UNDER S.54F, IN SPITE OF THE FACT THAT AT THAT JUNCTURE, THE ASSESSEE WAS FULLY AWARE THAT THE AMOUNT OF RS.1.25 CRORES PAID IN ADVANCE TO THE CONTRACTOR WAS NOT FULLY UTILISED FOR THE CONSTRUCTION OF THE HOUSE AND THE SAME HAVING BEEN ALREADY REFUNDED BY THE CONTRACTOR PARTLY IN THE MONTH OF MARCH, 2010, ITS CLAIM FOR EXEMPTION UNDER S.54F WAS EXCESSIVE. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE IS CLEARLY GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS RIGHTLY HELD BY THE AUT HORITIES BELOW, ATTRACTING PENALTY UNDER S.271(1)(C). 1 2 . AS REGARDS THE ALTERNATIVE CLAIM OF THE ASSESSEE THAT QUANTUM OF PENALTY WORKED OUT BY THE ASSESSING OFFICER IS WRONG, WE DIRECT THE ASSESSING OFFICER TO VERIFY THIS ALTERNATIVE C LAIM OF THE ASSES SEE AND TO ALLOW APPROPRIATE RELIEF ON SUCH VERIFICATION. 1 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED ORDER PRONOUNCED IN THE COURT ON 31 ST DECEMBER, 2014 SD/ - SD ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 31 ST DECEMBER, 2014 COPY FORWARDED TO: 1. SHRI CHUNDURU VENKATA SUBBA RAO, C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 . ASST. COMMISSIONER OF INCOME - TAX CIRCLE 8(1), HYDERABAD I TA NO. 1576 /H YD/20 1 3 SHRI CHUNDURU VENKATA SUBBA RAO HYDERA BAD 12 3. COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD 4. COMMISSIONER OF INCOME - TAX - II, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S