MURADULA AGARWAL, Jaipur V. ITO, Jaipur

ITA 176/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5127 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Sale consideration of property below Jantri Value; Gift; Bonafide belief; Wrong claim
• Section: 50C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 176/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. MRS. MR A DULA AGARWAL, 395, NARNOLI MANSION, SANGANERI GATE, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AASPA 6312 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.09.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16/09/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, JAIPUR DATED 01.01.2016 PERTAINING TO A.Y. 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARN ED ASSESSING OFFICER IN IMPOSING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ON ADDITION OF RS. 25,52,137/- MADE U/S 56(2)(VII)(B) OF THE INCOME TAX ACT, 1961 FOR GIFT RECEIVED FROM NEPHEW. 2. DURING THE COURSE OF HEARING, THE ASSESSEE HAS A LSO TAKEN AN ADDITIONAL GROUND THAT READS AS UNDER :- 2 ITA NO. 176/JP/2016 SMT. MRADULA AGARWAL ADDITIONAL GROUND : IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LE ARNED CIT (A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) WHICH IS ILLEGAL, UNLAWFUL AND JUSTIFIED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO INITIATED PENALTY PROCEEDINGS AND PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS LEVIED VID E ORDER DATED 17.03.2015 ON ADDITION OF INCOME UNDER SECTION 56(2)(VII)(B) OF R S. 25,52,137/- AND CAPITAL GAIN UNDER SECTION 50C OF RS. 30,08,667/-. THE ASSESSEE AGGRIEVED BY THIS ORDER, CARRIED THE MATTER BEFORE LD. CIT (A), WHO AFTER CONSIDERIN G THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. THE LD. CIT (A) DELETED THE PENALTY ON ADDITION MADE BY INVOKING PROVISIONS OF SECTION 50C OF THE ACT OF RS. 30,08,6 67/- AND CONFIRMED THE PENALTY ON THE ADDITION MADE UNDER SECTION 56(2)(VII)(B) OF RS . 25,52,137/-. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE ONLY EFFECTIVE GROUND IS AGAINST CONFIRMATIO N OF PENALTY BY THE LD. CIT (A). HOWEVER, THE ASSESSEE HAS ALSO TAKEN AN ADDITI ONAL GROUND AS REPRODUCED ABOVE. 5.1. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSE SSEE ON THIS GROUND IS THAT THE NOTICE INITIATING PENALTY PROCEEDINGS WAS NOT PROPE R AS IT DOES NOT SPECIFY THE REASON FOR LEVYING OF PENALTY. THE LD. COUNSEL HAS RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . MANJUNATH COTTON AND GINNING FACTORY, 359 ITR 565 (KAR.). THE LD. COUNSEL SUBMIT TED THAT THE AO HAS NOT GIVEN ANY SPECIFIC REASON IN THE SHOW CAUSE NOTICE DATED 13 TH MARCH, 2013 ISSUED TO THE 3 ITA NO. 176/JP/2016 SMT. MRADULA AGARWAL ASSESSEE CALLING UPON HER TO STATE AS TO WHY PENALT Y ON THE ADDITION MADE SHOULD NOT BE MADE. 5.2. ON THE OTHER HAND, THE LD. D/R OPPOSED THE SUB MISSIONS AND SUPPORTED THE ORDER OF THE AO. 5.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS NOT FILED ANY PAPER BOOK. HOWEVER, ALONG WITH THE WRITTEN SUBMISSION, ASSESSEE HAS FILED A COPY OF LETTER DAT ED 16 TH FEBRUARY, 2015. IN THE NOTICE DATED 13.3.2013, THE AO HAS TICKED ON STEREO TYPED FORMAT THE REASON WHICH READS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, WHILE LEVYING PENALTY, THE AO HA S LEVIED THE PENALTY ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCO ME AND CONCEALING THE INCOME. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MAN JUNATH COTTON AND GINNING FACTORY (SUPRA) HAS HELD AS UNDER :- HELD ACCORDINGLY, DISMISSING THE APPEALS, (I) THA T MERELY BECAUSE THE ASSESSEE AGREED TO THE ADDITION AND THE ASSESSMENT ORDER WAS PASSED ON THE BASIS OF THIS ADDITION, WHEN THE ASSESSEE HA D PAID THE TAX AND THE INTEREST THEREON IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE CONCEALMENT OF INCOME, IT COULD NOT BE INFERRED THAT THE ADDITION WAS ON ACCOUNT OF CONCEALMENT. MOREOVER, THE ASSESS EE HAD OFFERED AN EXPLANATION. THE EXPLANATION WAS NOT FOUND TO BE FALSE. ON THE CONTRARY, IT WAS HELD TO BE BONA FIDE. THE CANCELL ATION OF PENALTY BY THE TRIBUNAL WAS JUSTIFIED. (II) THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THA T THE ENTIRE PENALTY PROCEEDINGS WERE VITIATED ON THE GROUND THAT THE NO TICE ISSUED WAS NOT IN ACCORDANCE WITH LAW. (III) THAT THE SUBJECT MATTER OF THE PENALTY PROCEE DINGS WAS THE ORDER OF THE APPELLATE AUTHORITY AND NOT THE ORDER PASSED BY THE ASSESSING OFFICER. HENCE, THE ORDER OF PENALTY BY T HE ASSESSING OFFICER WAS NOT VALID. 4 ITA NO. 176/JP/2016 SMT. MRADULA AGARWAL (IV) THAT WHEN TWO FACT FINDING AUTHORITIES WERE SA TISFIED THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FALSE A ND IT WAS A BONA FIDE THOUGH THE ASSESSEE HAD FAILED TO CONCLUSIVELY PROVE THE EXPLANATION THE LEVY OF PENALTY WAS NOT JUSTIFIED. IN THE PRESENT CASE ALSO NOTICE HAS BEEN ISSUED BY TICKING THE STEREOTYPED FORMAT. THIS FACT IS NOT CONTROVERTED BY THE REVENUE. THERE FORE, IN OUR CONSIDERED VIEW, PENALTY PROCEEDING IS NOT VALIDLY INITIATED. HENCE THE INITIATION OF PENALTY ON THE BASIS OF THE NOTICE DATED 13 TH MARCH, 2013 IS NOT IN ACCORDANCE WITH THE REQUIREM ENT OF LAW IN VIEW OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT REFERRED ABOVE. THE ADDITIONAL GROUND IS ALLOWED. 6. THE SOLITARY GROUND RAISED IN THE ASSESSEES APP EAL IS AGAINST CONFIRMATION OF PENALTY. THE CONTENTION OF THE ASSESSEE IS THAT TH E ASSESSEE RECEIVED A GIFT OF RESIDENTIAL PLOT FROM SHRI PARESH AGARWAL SON OF SH RI CHANDRA MOHAN AGARWAL RESIDENT OF 3, SETHANI KA BAGH, MOTI DOONGARI ROAD, JAIPUR THROUGH GIFT DEED DULY REGISTERED ON 10.11.2009. THE CONTENTION OF THE ASS ESSEE IS THAT THE GIFT HAS BEEN RECEIVED FROM THE NEPHEW AND THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT HE IS COVERED UNDER THE DEFINITION OF RELATIVE AS GIVEN IN EXPLANATION TO CLAUSE (VI) OF SUB-SECTION (2) OF SECTION 56. 6.1. ON THE OTHER HAND, THE LD. D/R OPPOSED THE SUB MISSIONS AND SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE SUBMITTED THAT EX-F ACIE THE DEFINITION AS GIVEN IN THE EXPLANATION DOES NOT COVER THE ASSESSEE. HENCE THE ASSESSEE HAS MADE A WRONG CLAIM DELIBERATELY. 5 ITA NO. 176/JP/2016 SMT. MRADULA AGARWAL 6.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. WE FIND THAT ASSESSEE HAS DISCLOSED THE FAC TUM OF GIFT. HOWEVER, CLAIMED EXEMPTION UNDER SECTION 50(2)(VII)( B) WAS FOUND TO BE NOT AVAILABLE TO THE ASSESSEE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) WHICH HAS HELD AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS U SED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT C LAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS AR E FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS O R 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 PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING INACCURATE PARTICULARS. IT IS A SETTLED POSITION OF LAW THAT MERELY A CLAIM WHICH WAS MADE BONAFIDE IN RESPECT OF EXEMPTION OR DEDUCTION IS REJECTED OR NO T ONLY ON THE BASIS OF LEVY OF PENALTY, THE AO IS REQUIRED TO GIVE THE CLEAR FINDI NG THAT THE CLAIM OF EXEMPTION AS 6 ITA NO. 176/JP/2016 SMT. MRADULA AGARWAL MADE WAS WITH AN INTENTION TO EVADE TAX. THEREFORE , RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT, COUPLED WITH THE FACT THAT PENALTY PROCEEDINGS ARE NOT VALIDLY INITIATED, THE AO IS DIRECTED TO DE LETE THE PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/09/2 016. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 16/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SMT. MRADULA AGARWAL, JAIPUR. 2. THE RESPONDENT THE ITO, WARD 5(2), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 176/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR