Laxmansingh T.Bhosale (HUF), Nagpur V. Asstt.Commissioner of Income-Tax,Circle-6, Nagpur

ITA 17/NAG/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9627 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Capital asset; Gift; Depreciation; Wrong claim; Valuation report
• Section: 54

Judgement Text

- 1 - ITA 17/NAG/2011 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 17/NAG/2011 (ASST. YEAR: 2005-06) LAXMANSINGH T BHONSALE (HUF) APPELLANT JUNIOR BHONSLA PALACE, MAHAL NAGPUR. PAN : AAAHL1234M VS ACIT, CIRCLE - 6, RESPONDENT NAGPUR. APPELLANT BY : SHRI C J THAKAR & SC THAKAR (ADV) RESPONDENT BY : SHRI DR. MILIND BHUSARI (DR ) DATE OF HEARING: 18/10/2012 DATE OF ORDER : 09/11/2012 O R D E R PER D. T. GARASIA JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF CIT (A) II, NAGPUR, DT. 22/12/2010. 2 THE EFFECTIVE GROUND IN THIS APPEAL WHICH READS AS UNDER: - 1 LD. CIT (A) ERRED IN CONFIRMING PENALTY LEVIED BY AO U/S 271(1)(C) OF THE I.T. ACT, 1961 AT 300% OF THE ALLEGED TAX EVADED. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: - THE COST OF LAND SOLD AS ON 01/04/1981 WAS CLAIMED TO BE RS. 125/- PER SQ.FT BY THE ASSESSEE AND THE INDEXATION CLAIMED FROM 1983- 84. HOWEVER, A.O. HAS HELD THAT THE ASSESSEE INHERITED THIS LAND ONLY BY WILL DT. 16/04/1995. ACCORDING TO THE AO ASSESSEE HAS FURNISHED A - 2 - ITA 17/NAG/2011 BOGUS DEATH CERTIFICATE OF HIS FATHER WHICH SHOWED THE DATE OF DEATH OF HIS FATHER AS 26/04/1983 WHILE THE ACTUAL DATE OF DEATH WAS ONLY 26/04/1995. AO HAS HELD THAT BOGUS DEATH CERTIFICATE AND BOGUS WILL HAD BEEN FURNISHED TO CLAIM HIGHER DEDUCTION. AO HAS ALSO POINTED OUT THAT THE COPY OF SALE DEED FURNISHED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS (WAS TEMPERED WITH) AND SHOWED THE DESCRIPTION OF THE PROPERTY SOLD AS LAND OF 17200 SQ.FT ALONG WITH STRUCTURE OF 7450 SQ.FT. ON THE VERIFICATION WITH THE SUB REGISTRAR, IT CAME TO LIGHT THAT THE DESCRIPTION WAS ACTUALLY THAT OF A TEMPORARY STRUCTURE ADMEASURING 1150 SQ.FT. AO HAS POINTED OUT THAT THE ASSESSEE EFFACED THE WORD TEMPORARY IN PAGE 6 OF THE COPY OF THE SALE DEED AND CORRECTED THE FIGURE OF 1150 SQ.FT AT PAGE 3 AND PAGE 6 OF THE SALE DEED TO READ AS 7450 SQ.FT. THE ASSESSEE HAD CLAIMED THAT THE COST OF STRUCTURE WAS RS. 9,83,000/- AND CLAIMED AN INDEXED COST OF RS. 46,67,586/-. AO HAS HELD THAT THE STRUCTURE ADMEASURING 1150 SQ.FT. WAS ONLY A TEMPORARY STRUCTURE AND THE ACTION OF THE ASSESSEE IN FURNISHING A TAMPERED SALE DEED AMOUNTED TO DELIBERATELY FILING INACCURATE PARTICULARS OF INCOME AND ALS DELIBERATELY CONCEALING INCOME CHARGEABLE TO TAX. ASSESSEE HAD ALSO CLAIMED COST OF BOUNDARY WALL CONSTRUCTED IN 1987 AND REDUCED AN INDEXED COST OF RS. 3,20,194/- ON THIS FROM THE SALE CONSIDERATION, WHICH WAS DISALLOWED BY THE AO. ACCORDING TO THE AO ASSESSEE HAS DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME IN THIS REGARD. ASSESSEE FURTHER CLAIMED DEDUCTION OF INDEXED COST OF AN ADDITION MADE WHEN THE PROPERTY WAS LEASED TO HIS WIFE, SMT INDIRARAJE BHONSALE, WHO RUNNING A BUSINESS IN THE NAME OF MAHARAJA LAWNS. AO HAS DENIED THIS CLAIM AS THE CONSTRUCTION COST WAS INCURRED BY LESSEE AND HAS HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN THIS REGARD. AN AMOUNT OF RS. 50,00,000/- WAS ALSO REDUCED FROM THE CONSIDERATION RECEIVED BEING PAYMENT MADE TO FAMILY MEMBERS BASED ON WILL DT. 16/04/1983, WHICH AO HAS HELD WAS A BOGUS WILL. AO HAS POINTED OUT THAT WILL DT. 16/04/1995 WHICH IS GENUINE WILL CONTAINED NO MENTION OF PAYMENT TO OTHER FAMILY MEMBERS OF RS. 50,00,000/-. THIS ACCORDING TO THE AO WAS AN ACT OF DELIBERATELY FILING INACCURATE PARTICULARS OF INCOME. THE TAXABLE CAPITAL GAINS WAS THEREFORE, ASSESSED AT RS. 2,53,59,288/- AS AGAINST RS. 43,56,679/-. THUS AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON VARIOUS GROUNDS ON WHICH ADDITIONS WERE MADE IN THE ASSESSMENT ORDER. - 3 - ITA 17/NAG/2011 4. MATTER CARRIED TO CIT (A), CIT (A) HAS PARTLY ALLOWED THE PENALTY. 5. LD. AR SUBMITTED AS UNDER: - IT MAY BE NOTED HERE THAT THE ASSESSEE WHO WAS A MEMBER OF THE ROYAL FAMILY WAS WHOLLY DEPENDENT ON HIS EMPLOYEES, WHO WERE MOSTLY SEMI-EDUCATED AND DEPENDENT ON CONSULTANT FOR ALL THEIR LEGAL MATTERS INCLUDING TAX MATTER. HE HARDLY HAD ANY OCCASION, EVEN TO GO TO HIS CONSULTANT. IT WAS ONLY THE EMPLOYEES WHO USED TO GO TO CONSULTANT FOR INSTRUCTIONS. EVEN IN RESPECT OF INCOME TAX RETURNS AND OTHER PAPERS HE JUST USED TO SIGN THEM AS WERE PLACED BEFORE HIM BY THOSE EMPLOYEES WHO WERE OLD AND IN WHOM THE ASSESSEE HAD REPOSED FAITH AND TRUST. THERE WAS NO OCCASION FOR HIM TO ATTEND INCOME TAX OFFICE OR APPEAR BEFORE I.T. OFFICIALS. IT WAS ONLY WHEN SOME SERIOUS ISSUE AROSE REGARDING DOCUMENTS PRODUCED BY HIS EMPLOYEES BEFORE THE I.T. OFFICIAL IN ASSESSMENT PROCEEDINGS AND WHEN HE WAS PERSONALLY SUMMONED THAT THE ASSESSEE HAD AN OCCASION TO APPEAR BEFORE THE INCOME TAX DEPARTMENT OR ITS OFFICIAL TO UNDERSTAND WHAT ALL HAD HAPPENED AND TO CLARIFY HIS UNAWARENESS ABOUT THE SAME AND SET RIGHT THE TRUE STATE OF AFFAIRS. THESE FACTS ARE STATED WITH A VIEW TO CLARIFY CERTAIN ALLEGATIONS AND ASSUMPTIONS MADE BY A.O. IN ASSESSMENT AND PENALTY PROCEEDING BASED ON SOME UNSCRUPULOUS AND UNNECESSARY TINKERING OF DOCUMENTS BY THE EMPLOYEES WITHOUT THE SLIGHTEST KNOWLEDGE OF THE ASSESSEE. I) IN RESPECT OF COST OF LAND AS ON 1.04.1981 CLAIMED AT RS.125/- PER SQ.FT. THE ASSESSEE RELIED ON THE VALUATION REPORT OF VALUER AND ARCHITECT M/S. BEDI CONSULTANT. WHILE A.O. ON THE OTHER HAND OBTAINED SOME DETAILS OF TRANSFER DEEDS BY - 4 - ITA 17/NAG/2011 WAY OF SALE, GIFT ETC. FROM SUB-REGISTRAR NAGPUR IN RESPECT OF WARD NO.70 AND 71 WHICH IS ABOUT ONE KM. AWAY FROM THE LAND IN QUESTION. IN THE SAID DETAILS THE LAND VALUE FOR STAMP DUTY PURPOSES VARIED BETWEEN RS.15/- TO RS.80/- PER SQ.FT. HOWEVER THE A.O. ARBITRARILY TOOK THE VALUE OF LAND IN QUESTION AT RS.15/- PER SQ.FT. C.I.T.(A) IN APPEAL BY ASSESSEE TOOK THE VALUE AT RS.80/- PER SQ.FT. ASSESSEE HAS FILED APPEAL AGAINST THE SAME BEFORE ITAT AND HAVE ALREADY GIVEN DETAILED SUBMISSION AS TO WHY THE SAME SHOULD BE TAKEN AT RS.125/- PER SQ.FT. FROM THE ABOVE FACTS IT WILL BE SEEN THAT THE CLAIM OF THE ASSESSEE THAT THE LAND SHOULD BE VALUED AT RS.125/- PER SQ.FT. WAS BASED ON EVIDENCE AND MATERIAL AND WAS CORRECT. MERELY BECAUSE THE A.O. ASSUMED THE VALUE THEREOF AT RS.15/- PER SQ.FT. AND HON. C.I.T.(A) AT RS.80/- PER SQ.FT. AS AGAINST RS.125/- PER SQ.FT. CLAIMED BY THE ASSESSEE IT CANNOT BE SAID THAT THE ASSESSEE FILED ANY INACCURATE PARTICULARS OR CONCEALED ANY INCOME. THUS NO PENALTY IS EXIGIBLE FOR THE SAME. II) AS SAID ABOVE ASSESSEES EMPLOYEES WHO USED TO REPRESENT THE CASE HAD FILED A COPY OF WILL PURPORTING TO BE DATED 16.04.1983 WHILE IN FACT THE WILL WAS DT.16.04.1995 AND ASSESSEES FATHER DIED ON 26.04.1995. IT WAS CLAIMED BY THE EMPLOYEE REPRESENTING ASSESSEE BEFORE A.O. THAT ASSESSEES FATHER DIED ON 26.04.1963. HENCE ASSESSEE BECAME OWNER IN 1983 AND HENCE HE WAS ENTITLED TO INDEXATION OF COST OF LAND FROM 1983. IT WAS ON ABOVE BASIS INDEXATION WAS CLAIMED FROM 1983. THIS WAS THE PERCEPTION OF THE PERSON REPRESENTING ASSESSEE WHICH PERCEPTION WAS - 5 - ITA 17/NAG/2011 WRONG. IN FACT THE ASSESSEE WAS ALREADY ENTITLED TO INDEXATION FROM 1981 BECAUSE AS PROVIDED IN SECTION 49 WHEN THE ASSESSEE BECOMES OWNER OF CAPITAL ASSET IN A MODE PRESCRIBED THEREIN THEN HE IS ENTITLED TO DEDUCT COST THEREOF AS ON THE DATE WHEN THE PREVIOUS OWNER ACQUIRED THE PROPERTY AND ALSO INDEXATION THEREOF FROM THAT DATE. THE ASSESSEE HAVING ACQUIRED THE PROPERTY UNDER A WILL DT.16.04.1995 AND HE BECAME OWNER THEREOF ON DEATH OF HIS FATHER ON 26.04.1995 STILL THE ASSESSEE WAS ENTITLED TO COST AND INDEXATION THEREOF NOT FROM 26.04.1995 BUT FROM 01.04.1981 BECAUSE THE PREVIOUS OWNER VIZ. FATHER BECAME THE OWNER OF THE PROPERTY MUCH BEFORE 1981. THE PROPERTY BEING ANCESTRAL. IT WAS THUS REALLY UNSCRUPULOUS, UNNECESSARY AND UNCALLED FOR THE SAID EMPLOYEE TO SAY THAT THE WILL WAS DT.16.04.1983 OR THAT HIS FATHER DIED ON 26.04.1983. BECAUSE IN DOING SO THE INDEXATION CAME TO BE CLAIMED FROM 1983 WHEN IN FACT AND IN LAW ASSESSEE WAS ENTITLED TO CLAIM INDEXATION FROM 1981 AND WHICH INDEXATION HAS BEEN ALLOWED BY C.I.T.(A). IT WAS ONLY WHEN THE ASSESSEE WAS CALLED PERSONALLY BY LEARNED A.O. BY ISSUING SUMMONS U/S.131 TO CLARIFY THE FACTS REGARDING THE TRANSACTIONS AND DOCUMENTS FILED ON HIS BEHALF THAT THE ASSESSEE CAME TO KNOW ABOUT THE TINKERING WITH DOCUMENT BY HIS EMPLOYEE AND IT WAS THE ASSESSEE WHO HIMSELF FILED THE CERTIFIED COPY OF THE WILL DT.16.4.1995, SALEDEED DT.11.11.2004, AKHIV PATRIKA GIVING DETAILS OF PROPERTY AND STRUCTURE STANDING THEREON TO SCALES AND GAVE COMPLETE DETAILS OF THE ENTIRE TRANSACTION WHICH WAS HUNDRED PERCENT - 6 - ITA 17/NAG/2011 CORRECT. ASSESSEE ALSO POINTED OUT THAT THE PAPERS ARE HANDLED BY SEVERAL PEOPLE FROM TIME TO TIME AND HE WAS TOTALLY UNAWARES AS TO WHICH OF THE EMPLOYEE DID IT AND WHY. HE ALSO POINTED OUT THAT HE WILL TRY TO FIND OUT AS TO WHO DID IT AND ALSO EXPRESSED REGRET AND CATEGORICALLY SAID THAT HE NEVER HAD OR HAS ANY INTENTION TO CONCEAL ANY INCOME AND THAT HE WAS READY TO PAY CORRECT TAX. IT WAS ALSO POINTED OUT THE CLAIM OF INDEXATION WAS CORRECT AND ACCORDING TO LAW AND THERE WAS NO ACTUAL CONCEALMENT IN THAT REGARD AND HENCE THERE WAS NO CONCEALMENT OR UNDERSTATEMENT OF INCOME IN THIS REGARD. III) NEXT DEDUCTION CLAIMED BY THE ASSESSEE WAS WITH REGARD TO THE COST OF STRUCTURE EXISTING ON THE SAID LAND BEARING MUNICIPAL HOUSE NO.240-A. A.O. DID NOT ALLOW THE CLAIM OF SAID DEDUCTION ON THE GROUND THAT THE STRUCTURE EXISTING ON THE SAID LAND WAS DESCRIBED AS TEMPORARY STRUCTURE IN THE DESCRIPTION OF THE PROPERTY CONTAINED ON THE SALEDEED DT.11.11.2004 AND HENCE IT HAS NO VALUE. IT WAS POINTED OUT BY A.O. THAT IN THE COPY OF THE SALEDEED PRODUCED BEFORE HIM THE WORD TEMPORARY STRUCTURE WAS INTERPOLATED BY REMOVING THE WORD TEMPORARY AND THE AREA OF STRUCTURE WAS ALTERED FROM 1150 SQ.FT. TO 7450 SQ.FT. THIS WAS DISCOVERED ON COMPARING THE DOCUMENT PRODUCED BEFORE HIM BY ASSESSEES EMPLOYEE WITH THE COPY RECEIVED FROM SUB-REGISTRAR. ACCORDINGLY, AS STATED ABOVE, A.O. PERSONALLY CALLED THE ASSESSEE BY ISSUING SUMMONS U/S.131 TO CLARIFY THE ENTIRE TRANSACTION WITH SUPPORTING DOCUMENT. ACCORDINGLY ASSESSEE APPEARED BEFORE THE A.O. AND HE HIMSELF PRODUCED - 7 - ITA 17/NAG/2011 CERTIFIED COPY OF SALEDEED DT.11.11.2004 AND ALSO AKHIV PATRIKA GIVING DESCRIPTION OF THE HOUSE PROPERTY . AKHIV PATRIKA WITH MAP BEING A DOCUMENT FROM GOVT. RECORD IS THE MOST AUTHENTIC DOCUMENT GIVING FULL DESCRIPTION OF THE PROPERTY AND IT IS THIS DOCUMENT ONLY WHICH IS BELIEVED AND IS TAKEN TO BE CORRECT BY ALL OTHER GOVT. AGENCIES FOR ANY MATTER RELATED TO THE PROPERTY. AT THE TIME OF EXAMINATION OF THE ASSESSEE ON SOLEMN AFFIRMATION BY A.O. HE WAS ASKED TO CLARIFY ABOUT THE STRUCTURE ON THE SAID LAND. ASSESSEE ON SOLEMN AFFIRMATION STATED THAT THE THERE WAS A BUNGLOW ON THE LAND IN QUESTION. IT HAD TWO BIG HALLS AND FOUR ROOMS AND THE SAME WAS USED AS GUEST HOUSE. EXACT SIZE OF THE BUNGLOW WAS NOT KNOW BUT IT WAS MUCH BIGGER THAN THE SIZE MENTIONED IN THE SALEDEED. HE ALSO PRODUCED CERTIFIED COPY OF AKHIV PATRIKA FROM CITY SURVEY RECORD WHICH CLEARLY SHOWED U SHAPE BUILDING EXISTING ON THE LAND SOLD. HE ALSO PRODUCED HOUSE TAX RECEIPT, ELECTRICITY BILL ETC. TO SHOW THE EXISTENCE OF HOUSE PROPERTY ON THE SAID LAND WHICH WAS BEING USED AS A GUEST HOUSE. THUS THE EXISTENCE OF HOUSE ON THE SAID LAND WAS AN UNDENIABLE FACT CONCLUSIVELY ESTABLISHED BY AKHIV PATRIKA HOUSE TAX RECEIPT, ELECTRICITY BILL AND ASSESSEES STATEMENT ON SOLEMN AFFIRMATION. IT WAS ALSO REITERATED THAT THE ASSESSEE WAS NOT AWARE OF ANY INTERPOLATION IN THE COPY OF SALEDEED DT.11.11.2004 PRODUCED BEFORE A.O. BY HIS EMPLOYEE AND IT WAS REALLY UNSCRUPULOUS, UNNECESSARY AND UNCALLED FOR BECAUSE THE EXISTENCE OR OTHERWISE OF THE HOUSE PROPERTY ON THE LAND DID NOT MERELY DEPEND ON THE DESCRIPTION GIVEN IN THE SALEDEED. THE EXISTENCE OF HOUSE - 8 - ITA 17/NAG/2011 PROPERTY ON THE LAND IN QUESTION WAS A FACT WHICH WAS ESTABLISHED CONCLUSIVELY BY REVENUE RECORD OF CITY SURVEY VIZ. AKHIV PATRIKA GIVING MAP OF THE PROPERTY TO SCALES, MUNICIPAL TAX RECEIPT AND ELECTRICITY BILL ETC. THUS THERE WAS NO CONCEALMENT OR WRONG CLAIM IN RESPECT OF THE EXISTENCE OF HOUSE PROPERTY STANDING THEREON. LEARNED C.I.T.(A) HAS ALSO ACCEPTED THE EXISTENCE OF STRUCTURE AND HAS VALUED THE SAME AT RS. ONE LAC. ONLY THING IS THAT SHE TREATED THE STRUCTURE AS TEMPORARY. AGAINST THE SAID FINDING THE ASSESSEE IS AN APPEAL BEFORE ITAT AND FOR THE SAID ISSUE THE ASSESSEE HAS ALREADY GIVEN DETAILED SUBMISSION AND THE ASSESSEE IS HOPEFUL THAT HIS CONTENTION THAT THERE EXISTED A HOUSE ON THE SAID LAND WOULD BE ACCEPTED BY HON. ITAT. IN VIEW OF THE ABOVE THE FACT OF EXISTENCE OF A HOUSE ON PLOT OF LAND WAS ESTABLISHED AND ACCORDINGLY THE CLAIM OF THE ASSESSEE THAT THERE WAS A HOUSE PROPERTY ON THE SAID LAND AND THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION OF INDEXED VALUE OF THE SAID HOUSE IN COMPUTING THE CAPITAL GAIN WAS CORRECT. THE CLAIM AS MADE WAS CORRECT AND WAS CONCLUSIVELY ESTABLISHED BY REVENUE RECORD, MUNICIPAL TAX RECEIPT, ELECTRICITY BILL, ASSESSEES STATEMENT ETC. THUS MERELY BECAUSE THE ASSESSEES EMPLOYEE MADE SOME ALTERNATION IN THE COPY OF THE SALEDEED WITHOUT THE KNOWLEDGE OF THE ASSESSEE TO MAKE SOME CLAIM, WHICH CLAIM WAS EVEN OTHERWISE ALLOWABLE, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY INCOME BECAUSE OF UNSCRUPULOUS AND UNNECESSARY ACT OF THE EMPLOYEE. NO CONCEALMENT HAS RESULTED. THE RIGHT OF THE ASSESSEE TO CLAIM DEDUCTION OF INDEXED COST THEREOF HAS - 9 - ITA 17/NAG/2011 BEEN PROVED AND ALLOWED. THUS IT IS NOT A CASE AS IF THERE WAS NO HOUSE AND STILL THE ASSESSEE CLAIMED THE EXISTENCE OF HOUSE AND CLAIMED WRONG DEDUCTION. THERE IS THUS NO CONCEALMENT OF INCOME. THERE IS NO WRONG CLAIM. THE ONLY DIFFERENCE THAT REMAINED WAS WITH REGARD TO THE VALUE OF THE HOUSE. A.O. DID NOT ATTACH ANY VALUE TO THE STRUCTURE. C.I.T. (A) VALUED IT AT RS. ONE LAC. THE ASSESSEE HAS IN DETAILED WRITTEN SUBMISSION IN QUANTUM APPEAL BEFORE ITAT HAS ESTABLISHED THAT ITS VALUE, ON MOST CONSERVATION BASIS CANNOT BE LESS THAN RUPEES THREE LACS. ASSESSEE HAS FULL HOPES THAT THE SAID VALUE WOULD BE ACCEPTED BY HON. ITAT. IT IS SUBMITTED THAT DIFFERENT ESTIMATED VALUATION BY DIFFERENT AUTHORITIES THAN WHAT WAS VALUED BY ASSESSEE CANNOT BE SAID OR TERMED AS CONCEALMENT. IV) NEXT DEDUCTION WAS ABOUT CONSTRUCTION OF BOUNDRY WALL. A.O. STATED THAT WALL WAS CONSTRUCTED BY ASSESSEE IN 1987 WHEN HE WAS NOT THE OWNER AND HENCE THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF INDEXED COST THEREOF WAS WRONG AND AMOUNTED TO CONCEALMENT OF INCOME. THE SAID CLAIM HAS ALREADY BEEN ALLOWED BY C.I.T.(A) AND FINDING OF C.I.T.(A) IN THAT REGARD IS ACCEPTED BY REVENUE. HENCE THERE CANNOT BE ANY QUESTION OF CONCEALMENT OF INCOME IN RESPECT OF A CLAIM WHICH HAS BEEN ALLOWED. V) NEXT CLAIM WAS ABOUT ADDITION AND/OR IMPROVEMENT TO THE PROPERTY IN 2001-02 BY RS.6,68,587/- AND DEDUCTION THEREOF IN COMPUTATION OF CAPITAL GAIN. IN SUPPORT OF THE SAID CLAIM ASSESSEE POINTED OUT THAT HE HAD GIVEN THE LAND ON LICENCE - 10 - ITA 17/NAG/2011 TO HIS WIFE FOR THE BUSINESS OF MARRIAGE LAWN. SHE MADE ADDITION TO THE PROPERTY WHICH WAS SUPPORTED BY HER BALANCESHEET. ASSESSEE HAD FILED THE SAID BALANCESHEET AND HAD GIVEN FULL FACTS BEFORE THE A.O. WHEN THE LICENCE CAME TO AN END THE SAID PROPERTY WITH SAID IMPROVEMENT REVERTED BACK TO THE ASSESSEE. ASSESSEE BECAME THE OWNER OF SAID IMPROVEMENT AND HENCE THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION THEREOF. THESE FACTS ARE NOT IN DISPUTE. WHAT THE A.O. AND C.I.T.(A) STATED WAS THAT THE COST OF IMPROVEMENT WAS INCURRED BY ASSESSEES WIFE AND THAT SHE CLAIMED DEPRECIATION THEREON AND HENCE THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION. THUS MERE DISALLOWANCE ON CERTAIN INTERPRETATION OF LAW CANNOT BE TERMED AS ASSESSEE HAVING MADE A WRONG CLAIM OR CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS. VI) WITH REGARD TO THE CLAIM OF BROKERAGE AND DEDUCTION ON ACCOUNT OF CERTAIN OBLIGATION THE ASSESSEE HAD NOT CLAIMED IT OR PRESSED IT BEFORE C.I.T.(A). IN FACT SUCH CLAIM WAS NOT EVEN WITHIN THE KNOWLEDGE OF THE ASSESSEE AND HENCE EVEN NO GROUND OF APPEAL WAS TAKEN AGAINST THE SAME. HE WAS NOT AWARE OF ANY SUCH CLAIM MADE BY HIS EMPLOYEE IN THE COMPUTATION. AS FAR ASSESSEE IS CONCERNED IN FACT AND IN REALITY NO SUCH CLAIM WAS MADE BY HIM AND HE WAS NOT AWARE OF SUCH CLAIM HENCE THERE CANNOT BE ANY QUESTION OF CONCEALMENT OF INCOME IN RESPECT OF A CLAIM BY THE ASSESSEE WHICH IN REALITY AND IN SUBSTANCE IS NOT MADE BY THE ASSESSEE AND OF WHICH HE WAS NOT AWARE. - 11 - ITA 17/NAG/2011 VII) WITH REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION U/S.54 IN RESPECT OF A HOUSE (FLAT) PURCHASED BY HIM OUT OF THE SALE CONSIDERATION WITHIN THE STIPULATED TIME WAS A RIGHTFUL CLAIM AND ALL NECESSARY PARTICULARS WERE PLACED ON RECORD. LOWER AUTHORITIES DISALLOWED THE CLAIM ONLY BECAUSE THEY TREATED THE STRUCTURE ON PROPERTY SOLD ON 11.11.2004 AS TEMPORARY STRUCTURE AND NOT A HOUSE. BUT IN FACT WHAT WAS SOLD WAS A HOUSE AND THE ASSESSEE HAS CLAIMED THIS TO BE PUCCA RESIDENTIAL HOUSE BEFORE THE HON. TRIBUNAL IN APPEAL WHICH IS BEING HEARD AND ASSESSEE IS COMPLETELY HOPEFUL THAT HIS CLAIM WILL BE ALLOWED AND ACCORDINGLY THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.54. IN VIEW OF THE SUBSTANTIAL EVIDENCE ON RECORD THE ASSESSEE IS HOPEFUL THAT THE STRUCTURE ON PROPERTY SOLD ON 11.11.2004 WILL BE TREATED AS A PUCCA HOUSE AND CONSEQUENTLY THE ASSESSEES CLAIM U/S.54 WILL BE ALLOWED. IN ANY CASE THERE IS NO CASE FOR CONCEALMENT OF INCOME IN THIS REGARD. FROM THE ABOVE SUBMISSION IT WILL BE SEEN THAT THE ASSESSEE HAS GIVE SATISFACTORY EXPLANATION IN RESPECT OF EACH OF THE ITEM ADDED OR DISALLOWED IN COMPUTATION OF CAPITAL GAIN AND FURTHER THE CLAIM IN RESPECT OF EACH OF THE DEDUCTION CLAIMED IS SUPPORTED AND SUBSTANTIATED BY CONCLUSIVE EVIDENCE AND MATERIAL AND SUCH CLAIMS HAVE ALSO BEEN PARTLY ALLOWED BY C.I.A.(A) AND FURTHER CLAIM HAS BEEN MADE IN QUANTUM APPEAL BEFORE ITAT WHICH IS BEING HEARD. THE DIFFERENCE THAT HAS REMAINED BETWEEN THE REVENUE AND ASSESSEE IS OF THE NATURE WITH REGARD TO ESTIMATION OF COST AND SIMILAR MATTER. ALL NECESSARY PARTICULARS FOR COMPUTATION OF CAPITAL GAIN HAVE BEEN SUBMITTED AND EXPLAINED. THUS THE ASSESSEE HAS - 12 - ITA 17/NAG/2011 DISCHARGED THE BURDEN WHICH LAY ON HIM UNDER EXPLANATION 1 TO SECTION 271(1)(C) AND HENCE NO PENALTY IS EXIGIBLE. IT IS REITERATED THAT THE ASSESSEE HAD ABSOLUTELY NO KNOWLEDGE ABOUT THE UNSCRUPULOUS AND UNNECESSARY ACTS OF THE EMPLOYEE IN TEMPERING WITH THE DOCUMENT WHICH WAS REALLY UNNECESSARY AND UNCALLED FOR CLAIMING THE DEDUCTIONS WHICH WERE ALREADY SUPPORTED AND PROVED BY MORE AUTHENTIC DOCUMENTS. ASSESSEE HAS ALSO STATED ON SOLEMN AFFIRMATION THAT HE WAS ABSOLUTELY UNAWARES OF THE ACTS OF THE EMPLOYEE OR THE COMPUTATION OF INCOME MADE BY THEM IN THE RETURN AND THAT HE HAD JUST SIGNED THE RETURN AS WAS PUT TO HIM BY TRUSTED EMPLOYEES. AS ALREADY STATED ABOVE THE EMPLOYEES OF THE ASSESSEE WERE OLD, SEMI-EDUCATED AND TRUSTED BUT AT THE SAME TIME UNSCRUPULOUS AND HENCE IT IS LIKELY THAT IN THEIR OVERZEALOUSNESS TO RENDER BENEFIT TO THEIR MASTER OR UNDER SOME WRONG ADVISE THEY MIGHT HAVE DONE SUCH ACTS WITHOUT KNOWING THAT THEIR SUCH ACTS MAY CAUSE MORE HARM TO THEIR MASTER BOTH IN TERM OF MONEY AND REPUTATION THAN RENDER ANY BENEFIT. IT IS A WELL KNOWN STORY THAT A KING HAD A FAITHFULLY MONKEY IN HIS SERVICE. WHEN KING WANTED TO SLEEP HE ASKED THE MONKEY TO SEE THAT BUGS AND FLIES DO NOT DISTURB HIS SLEEP. WHILE KING WAS ASLEEP A FLY KEPT ON HOVERING OVER HIS FACE AND KEPT ON SITTING OVER HIS NOSE AGAIN AND AGAIN INSPITE OF MONKEYS EFFORT TO FLY IT AWAY WITH HAND AND THEN WITH CLOTH. STILL WHEN THE FLY PERSISTED MONKEY THOUGHT OF KILLING THE FLY WITH SWORD SO THAT HIS MASTER CAN SLEEP WELL. ACCORDINGLY HE TRIED TO KILL THE FLY WITH SWORD. BUT THE RESULT WAS THAT THE FLY FLIED AWAY AND KING GOT INJURED. THE MORAL OF THE STORY IS THAT HOW A FAITHFUL BUT UNSCRUPULOUS EMPLOYEE IS MORE DANGEROUS THAN AN ENEMY. AS SAID ABOVE THE ASSESSEE VOLUNTARILY - 13 - ITA 17/NAG/2011 FILED THE TRUE CERTIFIED COPY OF THE WILL OF HIS FATHER HIMSELF AT THE TIME OF HIS STATEMENT AND IT WAS ON THE BASIS OF THE WILL FILED BY THE ASSESSEE THAT THE A.O. CAME ACROSS DISCREPANCY IN THE WILL SUBMITTED EARLIER BY HIS EMPLOYEE. SIMILARLY THE ASSESSEE HIMSELF PRODUCED THE CERTIFIED TRUE COPY OF SALEDEED AND ALSO PRODUCED AKHIV PATRIKA AND OTHER DOCUMENTS WHICH PROVED THE EXISTENCE OF BUNGLOW BEYOND ANY SHADOW OF DOUBT. THIS WAS FURTHER SUPPORTED BY THE STATEMENT ON SOLEMN AFFIRMATION BY THE ASSESSEE GIVING FULL PARTICULARS OF TRANSACTION TRULY AND CORRECTLY WHICH WERE SUPPORTED BY DOCUMENTS PRODUCED BY HIM WHICH WERE HUNDRED PERCENT CORRECT. ALL THESE SHOWS THE BONAFIDES OF THE ASSESSEE. ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THE UNSCRUPULOUS OR EVEN CRIMINAL ACT, IF ANY, OF HIS EMPLOYEE. NOR ANY MENSE REA CAN BE IMPUTED AGAINST THE ASSESSEE FOR SUCH UNSCRUPULOUS OR EVEN CRIMINAL AT OF THE EMPLOYEE OF WHICH THE ASSESSEE WAS NOT EVEN AWARE OF; NOR SUCH ASSUMED MENSE REA CAN BE TAKEN AS A BASIS FOR JUSTIFYING PENALTY AT MAXIMUM RATE OF THREE HUNDRED PERCENT. FURTHER THE STATEMENT OF ASSESSEE ON SOLEMN AFFIRMATION HAS NOT BEEN REBUTTED OR DISPROVED BY ANY OTHER MATERIAL OR EVIDENCE AND HENCE THERE WAS NO MENSE REA ON THE PART OF THE ASSESSEE AS ASSUMED BY LOWER AUTHORITY FOR IMPOSING MAXIMUM PENALTY. IT IS TRUE THAT THE PENALTY IS A CIVIL LIABILITY. HOWEVER THE ASSESSEE CAN DISCHARGE THE BURDEN OF SAID CIVIL LIABILITY BY OFFERING A TRUE AND BONAFIDE EXPLANATION TO THE SATISFACTION OF THE COURT AND SUBSTANTIATING THE SAME BY MATERIAL EVIDENCE IN SUPPORT OF THE SAID EXPLANATION. AS STATED ABOVE IN DETAILS THE ASSESSEE HAS GIVE TRUE EXPLANATION OF WHAT ALL HAS HAPPENED AND HAS GIVEN SATISFACTORY EXPLANATION WITH REGARD TO ALL MATERIAL FACTS NECESSARY FOR COMPUTATION OF TOTAL - 14 - ITA 17/NAG/2011 INCOME AND HAS SUBSTANTIATED THE SAME BY AUTHENTIC DOCUMENTARY EVIDENCE AND STATEMENT ON SOLEMN AFFIRMATION WHICH HAS REMAINED UNREBUTTED. THUS THE ASSESSEE HAVING DISCHARGED THE BURDEN AS CONTEMPLATED IN EXPLANATION 1 TO SECTION 271(1)(C) IN RESPECT OF ALL FACTS MATERIAL TO THE COMPUTATION OF INCOME BY OFFERING BONAFIDE EXPLANATION AND SUBSTANTIATING THE SAME WITH ALL MATERIAL FACTS AND EVIDENCE NO PENALTY CAN BE LEVIED. IT IS SUBMITTED WITH RESPECT THAT THE A.O. HAS ERRED IN LEVYING AND C.I.T.(A) HAS ERRED IN CONFIRMING PENALTY AND THAT TOO AT 300% OF TAX WHEN IN FACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE NO PENALTY IS AT ALL LEVIABLE. THEY WERE UNNECESSARILY AND ARBITRARILY CARRIED AWAY BY THE UNSCRUPULOUS OR ILLEGAL ACTS OF EMPLOYEES OF WHICH THE ASSESSEE WAS NOT AWARE AND ARBITRARILY IMPUTING MENSE REA ON THE PART OF THE ASSESSEE. THUS NO MEASE REA COULD BE IMPUTED. AS FAR AS CIVIL LIABILITY IS CONCERNED THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM UNDER EXPLANATION-1 TO SEC.271(1)(C) AND HENCE PENALTY AT 300% WAS TOTALLY AR BITARY. IT IS PRAYED THAT THE PENALTY LEVIED U/S. 271(1)(C) READ WITH EXPLANATION 1 THERETO AT 300% OF TAX BE KINDLY CANCELLED AND APPROPRIATE RELIEF BE GRANTED IN THE INTEREST OF JUSTICE BY CANCELLING THE PENALTY. 6. LD. DR RELIED UPON THE ORDER OF REVENUE AUTHORITIES. 7. WE HAVE THE RIVAL CONTENTION OF BOTH THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS CLAIMED THE COST OF LAND IN 1981 AT RS. 125 PER SQ.FT FOR 17200 SQ.FT COST WAS WORKED OUT TO RS. 2150000/-. THE INDEX VALUE THEREOF WAS CLAIMED FROM 1983 AT RS. 8896552/-. THE CIT (A) APPEAL HAS DIRECTED TO TAKE THE COST OF LAND IN 1981 AT RS. 80 PER SQ.FT WHILE THE TRIBUNAL HAS DIRECTED TO TAKE THE COST OF LAND AT RS. 110/- PER SQ.FT. THEREFORE, IT CANNOT BE SAID THAT - 15 - ITA 17/NAG/2011 ASSESSEE HAS FILED ANY INACCURATE PARTICULARS OR CONCEALED ANY INCOME, THUS, THERE IS NO PENALTY EXIGIBLE FOR THE SAME. 8. THE ASSESSEE HAS CLAIMED INDEXATION FROM 1983 AS PER SECTION 49 OF I.T. ACT WHEN THE PERSONS BECOMES THE OWNER OF THE CAPITAL ASSETS IN MORE PRESCRIBE THEREIN THAN HE IS ENTITLED TO DEDUCT THE COST THEREOF ON THE DATE WHEN THE PREVIOUS OWNER ACQUIRED THE PROPERTY AND ALSO INDEXATION FROM THAT DATE. THE ASSESSEE HAS ACQUIRED THE PROPERTY UNDER A WILL ON 06/04/1995 AND HE BECOMES THE OWNER OF THE PROPERTY ON THE DEATH OF HIS FATHER ON 26/04/1995 STILL THE ASSESSEE ENTITLED TO COST AN INDEXATION FROM 01/04/9181 AS THE PROPERTY BEING ANCESTRAL. THUS, IT IS WELL SETTLED BY SPECIAL BENCH, THEREFORE, NO PENALTY CAN BE LEVIED BY MERELY CLAIMING COST AND INDEXATION FROM 01/04/1981. 9. IN RESPECT OF DEDUCTION CLAIMED BY ASSESSEE WITH REGARDS TO COST OF STRUCTURE EXISTING ON THE SAID LAND WHEREIN MUNICIPAL HOUSE NO. 240 A, AO DID NOT ALLOWED THE CLAIM OF THE SAID DEDUCTION ON THE GROUND THAT STRUCTURE EXISTING ON THE SAME LAND WAS DESCRIBED AS TEMPORARY STRUCTURE IN DESCRIPTION OF THE PROPERTY, HENCE, IT HAS NO VALUE. THE TRIBUNAL HAS HELD THAT THERE EXISTS A HOUSE ON THE SAID LAND. IN VIEW OF THIS FACT THE ASSESSEES CLAIM IN RESPECT OF DEDUCTION OF INDEXATION VALUE OF THE SAID HOUSE IN COMPUTING THE VALUE WAS CORRECT. THE TRIBUNAL HAS ACCEPTED THE VALUE OF THE HOUSE AT RS. 200,000/- THEREFORE, ONE HAS TO ESTIMATE THE VALUE OF THE HOUSE ON ESTIMATED BASIS THEREFORE, WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE ON THIS GROUND. 10. IN RESPECT OF THE CLAIM ABOUT ADDITION OR IMPROVEMENT TO THE PROPERTY IN 2001-02 BY RS. 668587/- AND DEDUCTION THEREOF IN COMPUTATION OF CAPITAL GAIN. THE AO AND CIT DID NOT ALLOW THIS CLAIM AND TRIBUNAL HAS CONFIRMED ACTION OF REVENUE AUTHORITIES. THE PENALTY CANNOT BE LEVIED ON MERELY CLAIMING SOME DEDUCTION ON IMPROVEMENT TO THE PROPERTY. THE ASSESSEE IN SUPPORT OF HIS CLAIM HE HAS PRODUCED SOME DOCUMENTARY EVIDENCE BUT THAT CLAIM WAS NOT ALLOWED. IN THE CASE OF RELIANCE PETRO, 322 ITR 158 (SC) HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE - 16 - ITA 17/NAG/2011 PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. WE RESPECTFULLY FOLLOWING THE SAME WE DELETE THE PENALTY ON THIS CLAIM. 11. IN RESPECT OF ASSESSEES CLAIM FOR DEDUCTION U/S 54 IN RESPECT OF HOUSE (FLAT) PURCHASED BY HIM OUT OF SALE CONSIDERATION WITHIN STIPULATED TIME. THIS CLAIM WAS NOT ACCEPTED BY AO AND CIT (A) BUT TRIBUNAL HAS HELD THAT ASSESSEE IS ENTITLED FOR THE CLAIM U/S 54 THEREFORE, NO PENALTY IS LEVIABLE ON THIS GROUND. 12. FROM THIS ABOVE FACT WE FIND THAT ASSESSEES CLAIM IN COMPUTATION OF CAPITAL GAIN IS ALLOWED BY THE TRIBUNAL. THE TRIBUNAL HAS ESTIMATED THE COST OF LAND AT RS. 110 INSTEAD OF RS. 125 PER SQ.FT CLAIMED BY THE ASSESSEE. THE DIFFERENCE THAT HAS REMAINED BETWEEN ASSESSEE AND REVENUE IS OF THE NATURE WITH REGARDS TO ESTIMATION OF COST AND SIMILAR MATTERS THEREFORE WE ARE OF THE VIEW ASSESSEE HAS DISCHARGED THE BURDEN WHICH LAYS ON HIM UNDER EXPLANATION 1 TO SECTION 271(1)(C) AND HENCE NO PENALTY IS LEVIABLE. 13. IN RESPECT OF TEMPERING WITH THE DOCUMENT WE ARE OF THE VIEW THAT IT WAS REALLY UNNECESSARY AND UNCALLED FOR CLAIMING THE DEDUCTION WHICH ARE ALREADY SUPPORTED AND PROVED BY MORE AUTHENTIC DOCUMENTS. THE ASSESSEE HAS NO KNOWLEDGE ABOUT THE SEMI EDUCATED AND OLD EMPLOYEE OF THE ASSESSEE THEREFORE WHEN ASSESSEES CLAIM IS ACCEPTED THEREFORE NO PENALTY CAN BE LEVIED FOR THE SAME. 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. JUDGMENT PRONOUNCED IN OPEN COURT ON 09/11/2012. SD/- SD/- (P. K. BANSAL) (D. T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR DATED: - 09.11.2012 *NANU* COPY TO : - 17 - ITA 17/NAG/2011 1. APPELLANT 2. RESPONDENT 3. CIT, NAGPUR 4. CIT(A), NAGPUR 5. D.R 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T., NAGPUR BENCH, NAGPUR.