A.Kishore Kumar, CHENNAI V. ITO, CHENNAI

ITA 1764/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7371 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Initiation of penalty proceedings; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 274

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1764/MDS/2016 * +* /ASSESSMENT YEAR: 2009-10 SHRI A. KISHORE KUMAR, NO.138/9, KAILASH COLONY, ANNA NAGAR WEST EXTENSION, CHENNAI-600 101. VS. THE INCOME TAX OFFICER, BUSINESS WARD-XIII(3), CHENNAI. [PAN: APMPK 5859 A ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.S.SRIDHAR, ADVOCATE ./,- 0 1 /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT # 0 2' /DATE OF HEARING : 02.02.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 31.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 29.04.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 7, CHENNAI, IN ITA NO.42/CIT(A)-7/2011-12 FOR THE AY 2009-10. ITA NO.1764/MDS/2016 :- 2 -: 2. ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE L EVY OF PENALTY U/S.271(1)(C) OF INCOME TAX ACT (IN SHORT THE ACT ). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (IN S HORT AO) FOUND THAT THE ASSESSE HAS SOLD PROPERTY DURING THE PREVIOUS Y EAR RELEVANT TO THE AY 2009-10 FOR RS.90,04,000/- AND HAS NOT ADMITTED THE CAPITAL GAINS IN THE RETURN OF INCOME. THE AO HAS RECEIVED INFORMATION FROM THE AIR AND FOUND THAT THE ASSESSEE WAS A JOINT OWNER ALONG WIT H THREE OTHERS AND SOLD THE LAND VIDE COMMON SALE DEED NO.989/2009 DAT ED 26.03.2009 TO M/S.LBK TRIPLE S BUILDERS PVT. LTD., AND RECEIVED HIS SHARE OF RS.56,27,500/-. THE AO ALLOWED THE COST OF ACQUISI TION OF RS.38,15,170/- AND BROUGHT TO TAX TO THE BALANCE AMOUNT UNDER THE HEAD SHORT TERM CAPITAL GAINS AND INITIATED PENALTY U/S.271(1)(C) O F THE ACT. THE AO HAS ASSESSED THE ADDITIONAL INCOME OF RS.18,12,330/- UN DER THE HEAD SHORT TERM CAPITAL GAINS RELATING TO SALE OF THIS PROPERT Y. THE AO ISSUED SHOW CAUSE NOTICE FOR WHICH ASSESSEE HAS FILED EXPLANATI ON, NOT BEING SATISFIED WITH THE EXPLANATION, THE AO LEVIED PENALTY OF RS.5 ,62,200/- ON CONCEALMENT OF INCOME OF RS.18,12,330/- BEING 100% TAX SOUGHT TO BE EVADED U/S 271(1)(C) OF INCOME TAX ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) CONFIRMED TH E PENALTY PLACING RELIANCE ON THE DECISION OF HONBLE APEX COURT IN MAK DATA PRIVATE LIMITED V. CIT REPORTED ON [2013] 358 ITR 593. AGG RIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1764/MDS/2016 :- 3 -: 4. APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT THE ASSESSEE HAS SOLD THE PROPERTY JOINTLY ALONG WITH OTHERS AND WAS UNDER THE BONA FIDE IMPRESSION THAT THE RETURN HAS TO BE FILED IN THE S TATUS OF AOP JOINTLY WITH OTHER CO-OWNERS AND THERE IS NO INTENTION TO EVADE THE TAX OR TO CONCEAL THE INCOME. THE AO RAISED THE ISSUE DURING THE ASS ESSMENT PROCEEDINGS ON THE BASIS OF AIR INFORMATION AND THE ASSESSEE HA S ACCEPTED THE ADDITION AND PAID THE TAXES WITH AN INTENTION TO AV OID LITIGATION. THE ASSESSE RELIED ON THE DECISION IN THE CASE OF THE P RICE WATER HOUSE COOPERS PVT. LTD. V. CIT REPORTED IN [2012] 348 ITR 306 & M/S.RELIANCE PETRO PRODUCTS (P) LTD. REPORTED IN 322 ITR 158 (SC ). FURTHER, THE LD.AR ALSO BROUGHT TO OUR NOTICE THAT THE NOTICE ISSUED U /S.271(1)(C) WAS DEFECTIVE IN AS MUCH AS NON-STRIKING OF THE IRRELEV ANT COLUMNS RELATING TO THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURA TE PARTICULARS. THE ASSESSE ALSO BROUGHT TO OUR NOTICE THAT THE AO WAS NOT CLEAR IN HIS MIND WHETHER THE PENALTY IS INITIATED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. IN THE ASSES SMENT ORDER ALSO, THE AO HAS WRITTEN PENALTY INITIATED U/S.271(1)(C) OF INCO ME TAX ACT BUT NOT SPECIFIED WHETHER IT WAS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS. ACCORDING TO THE LD.AR, NO N-STRIKING OF IRRELEVANT COLUMN IN THE NOTICE ISSUED U/S.271 R.W.S. 274 AND NON-MENTIONING OF THE RELEVANT OFFENCE OF THE ASSESSEE I.E. CONCEALMENT O R INACCURATE PARTICULARS IN THE NOTICE RENDERS THE NOTICE ISSUED U/S.271(1)( C) AS INVALID AND CONSEQUENT PENALTY PROCEEDINGS REQUIRED TO BE QUASH ED. THE LD.AR RELIED ON THE DECISION IN THE CASE OF MANJUNATHA COTTON GI NNING FACTORY 359 ITR ITA NO.1764/MDS/2016 :- 4 -: 565 KARNATAKA HIGH COURT. AND THE DISMISSAL OF THE DEPARTMENTAL SLP, DISMISSED BY THE DEPARTMENT ON THE SIMILAR ISSUE. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSE HAS SOLD THE PRO PERTY JOINTLY HELD BY THE ASSESSEE ALONG WITH THREE OTHERS. THE PROPERTY WAS SOLD ON 26/03/2009 AND THE DUE DATE FOR FILING OF RETURN EVEN AS AOP W AS 31/07/2009. THE ASSESSEE FILED HIS RETURN OF INCOME ON 22/12/2009 B UT NOT DECLARED THE CAPITAL GAINS ON SALE OF THE LAND. EVEN IF THE ASSE SSEE PRESUMES THAT THE RETURN HAS TO BE FILED JOINTLY IN THE CAPACITY OF A OP EQUAL RESPONSIBILITY CASTS WITH THE ASSESSEE TO ENSURE DECLARING THE CAP ITAL GAINS CORRECTLY. THE ASSESSEE HAS ACCEPTED THE UNDISCLOSED INCOME ONLY A FTER THE AIR INFORMATION FURNISHED TO THE ASSESSEE REGARDING NON DISCLOSURE OF CAPITAL GAINS. THEREFORE, IT IS CLEAR AND DELIBERATE CASE O F THE ASSESSEE TO CONCEAL THE INCOME AND THE CASE OF HONBLE APEX COURT IN TH E CASE OF MAK DATA (CITED SUPRA) IS APPLICABLE. THE ASSESSEE RELIED ON PRICE WATER HOUSE COOPERS PVT. LTD. V. CIT REPORTED ON [2012] 348 ITR 306 & M/S.RELIANCE PETRO PRODUCTS (P) LTD. REPORTED IN 322 ITR 158 (SC ). IN THE CASE OF PRICE WATER HOUSE COOPERS LTD THE ASSESSEE HAD DISCLOSED THE DISALLOWANCE IN THE AUDIT REPORT WHICH WAS FURNISHED ALONG WITH THE RETURN BUT OMITTED TO DISALLOW THE SAME AND THEREFORE THE HONBLE APEX CO URT HELD THAT THE MISTAKE WAS BONA FIDE. SIMILARLY IN THE CASE OF REL IANCE PETRO ITA NO.1764/MDS/2016 :- 5 -: PRODUCTS, ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE. IN THE I NSTANT CASE THE ASSESSEE HAS NEITHER FURNISHED THE PARTICULARS OF S ALE TRANSACTION IN THE RETURN OF INCOME NOR FILED THE RETURN IN THE CAPACI TY OF AOP. THEREFORE, THE CASE LAWS RELIED UPON BY THE ASSESSEE HAVE NO A PPLICATION IN THE ASSESSEES CASE. HOWEVER, THE ASSESSEE ARGUED ON TECHNICAL GR OUNDS ALSO FOR DEFECT IN THE NOTICE ISSUED U/S.271 R.W.S.274 WHERE IN THE AO HAS NOT EXPLICITLY SPECIFIED IN THE PENALTY NOTICE AS TO WHETHER THE P ENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING THE INACCURATE PARTI CULARS OR FOR CONCEALMENT OF INCOME. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF MANJUNATHA COTTON GINNING FACTORY 359 ITR 565 HELD THAT THE OMISSION OF AO TO EXPLICITLY MENTION INITIATION OF PENALTY PROC EEDINGS FOR FURNISHING INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME RENDERS THE NOTICE INVALID AND CONSEQUENT PENALTY LIABLE TO BE QUASHED . ON THE SIMILAR FACTS, THE HONBLE SUPREME COURT DISMISSED THE SLP FILED B Y THE DEPARTMENT IN THE CASE OF M/S.SSA EMERALD MEADOWS. 6. IN THE ASSESSEES CASE THE AO HAS NOT STRUCK OF TH E RELEVANT COLUMN RELATING TO INITIATION OF PENALTY PROCEEDINGS FOR C ONCEALMENT OF INCOME OR FUR FURNISHING OF INACCURATE PARTICULARS. IN THE A SSESSMENT ORDER ALSO, THE AO HAS NOT MENTIONED WHETHER THE PENALTY WAS INITIA TED FOR CONCEALMENT OF INCOME OR FOR INACCURATE PARTICULARS. THEREFORE , THE DECISION OF THE ITA NO.1764/MDS/2016 :- 6 -: HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON JINNING FACTORY IS SQUARELY APPLICABLE IN THE ASSESSEES CA SE. ACCORDINGLY, WE HOLD THAT THE NOTICE ISSUED U/S.271(1)(C) WITHOUT EXPLIC ITLY SPECIFYING WHETHER THE PENALTY IS INITIATED FOR INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME IS BAD IN LAW AND CONSEQUENT LEVY OF PENALTY LEVIED BY THE AO IS REQUIRED TO BE CANCELLED. THEREFORE, WE CANCEL THE PENALTY IMPOSED BY THE AO AND SET-ASIDE THE ORDERS OF THE LOWER AUTHORITIE S. 7. IN THE RESULT, THE APPEAL OF THE ASSESSE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 31 ST MARCH, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF