Late Chandubhai N. Patel, Nadiad V. The Income Tax Officer, Ward-2, Nadiad

ITA 1769/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0908 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-07-2016
• Assessment Year: 1995-1996
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TALATI
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI S.S.GODARA, JM, & SHRI MANISH BORAD, AM. ITA NO.1769/AHD/2013 ASST. YEAR: 1995-96 LATE CHANDULAL N.PATEL, C/O VIPINCHANDRA C. SHAH & CO., 134, SANTRAM SUPER MARKET, NR. BACKSIDE OF LAXMI CINEMA, NADIAD, VS. ITO, WD-2, NADIAD. APPELLANT RESPONDENT PAN AOMPP9170F APPELLANT BY SHRI S. H. TALATI, AR RESPONDENT BY SHRI PRASOON KABRA, SR.DR DATE OF HEARING: 26/7/2016 DATE OF PRONOUNCEMENT: 29/7/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL IS DIRECTED AGAINST THE ORDER OF LD. C IT(A) DATED 19.3.2013 VIDE APPEAL NO.CAB/IV-85/2011-12 FRAMED A GAINST ORDER U/S 271(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT ) PASSED ON 27.05.1998 BY ITO, WD-2, NADIAD. ASSESSEE HAS RAISE D SIX GROUNDS OF APPEAL :- 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIR MING THE PENALTY LEVIED ON CAPITAL GAIN DIFFERENCE OF RS.2,73,249/- U/S.271 (1 ) (C) OF THE IT. ACT ON THE GROUND THAT THE ASSESSEE HAD CONCEALED THE INCOME I N THE NATURE OF CAPITAL GAIN. IT IS SUBMITTED THAT ON THE FACTS AND CIRCUMS TANCES OF THE CASE THE LEARNED C.I.T. (APPEALS) HAS ERRED IN NOT APPRECIAT ING THE FACTS AND LAW ON THE ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 2 STATE OF AFFAIRS OF THE CAPITAL GAIN OFFERED BY THE APPELLANT. IN VIEW OF THIS IT IS SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED THE I NCOME OF CAPITAL GAIN AND THEREFORE, PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. IT IS SUBMITTED THAT THE PENALTY CONFIRMED LEVIABLE ON AMOUNT OF RS. 2,73,24 9/- ON DIFFERENCE OF CAPITAL GAIN BE DELETED. 2. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT SU BMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS NO JUSTIFICATION IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C). IT IS SUBMITTED THAT BASED O N THE FACT, EVIDENCES AND MATERIAL AND SETTLED POSITION OF LAW, PENALTY LEVIE D U/S. 271(1)(C) ON CAPITAL GAIN DIFFERENCE ON RS. 2,73,249/- BE DELETED. 3. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN NOT DE LETING THE PENALTY LEVIABLE ON RS.16,838/- U/S. 271(1)(C) WHEN FACTS, MATERIALS AN D RECORDS WERE APPARENT TO CONCLUSIVELY PROVE THAT LEGAL HEIR WAS MAINTAINING THE BOOKS OF ACCOUNTS ON CASH BASIS AND HAD SHOWN THE INTEREST INCOME ON REC EIPT BASIS. THE LEARNED C.I.T. (APPEALS) OUGHT TO HAVE DELETED THE PENALTY INSTEAD OF SETTING ASIDE FOR VERIFICATION BY THE ASSESSING OFFICER. IT IS SUBMIT TED THAT THE PENALTY OF RS. 16,838/-BE DELETED. 4. THE LEARNED CIT (A) HAS EARNED IN NOT DELETING T HE PENALTY LEVIABLE ON RS. 55578/- BEING SHARE INCOME OF UNITED PACKAGING INDI A ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE ORDER PASSED BY THE LEARNED C.I.T. (APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. WE OBSERVE THAT OUT OF ABOVE GROUNDS, GROUND NOS.1 TO 4 REVOLVE AROUND SINGLE ISSUE AGAINST THE ORDER OF LD. CIT(A) CONFIRMING PENALTY OF RS.83,618/- U/S 271(1)(C) OF THE ACT AND REMAINI NG GROUND NOS.5 & 6 ARE OF GENERAL NATURE. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND FILED HIS RETURN OF INCOME ON 30.6.2005 DECLARING TOTAL I NCOME OF RS.7,14,808/-. DURING THE YEAR ASSESSEE EARNED INCO ME FROM CAPITAL GAIN BUT WHILE CALCULATING THE CAPITAL GAIN ONLY SH OWED THE AMOUNT ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 3 WHICH WAS RECEIVED AT THE TIME OF AGREEMENT AND GIV ING POSSESSION AND THE REMAINING AMOUNT WAS DUE TO BE RECEIVED BY THE TIME OF FINAL DOCUMENTATION. AGREEMENTS FOR PLOT OF LAND NO.1 & 2 AT VILLAGE BODAKDEV, AHMEDABAD FOR MEASURING 505.84 SQ.M. AND 305.39 SQ.M. WERE ENTERED INTO ON 9.12.1994. DURING THE COURSE O F ASSESSMENT PROCEEDINGS WHEN THE SPECIFIC QUERIES WERE RAISED A S TO WHY TOTAL SALE CONSIDERATION I.E. RS.8,52,000/- HAS NOT BEEN SHOWN AS AGAINST RS.6,32,000/- SHOWN BY ASSESSEE IN THE RETURN OF IN COME. ASSESSEE FILED REVISED RETURN SHOWING SALE CONSIDERATION OF RS.8,52,000/- AND ALONG WITH THIS ALSO DISCLOSED INCOME FROM INTEREST OF RS.16,838/- FROM CORPORATION BANK AND INTEREST FROM PARTNERSHIP FIRM M/S UNITED PACKAGING INDUSTRIES OF RS.55,578/-. LD. ASSESSING OFFICER DID NOT GIVE COGNIZANCE TO THE REVISED RETURN FILED BY THE ASSESSEE AND ASSESSED THE INCOME AT RS.10,60,470/-. LD. ASSESSIN G OFFICER ALSO INITIATED PENALTY PROCEEDINGS ON THE CONCEALED INCO ME OF RS.3,45,665/- ON ACCOUNT OF FOLLOWING :- 1. CONCEALED CAPITAL GAIN - RS.2,73,439/- 2. INTEREST FROM CRPORATION BANK- RS. 16,838/- 3. INTEREST FROM PARTNERSHIP FIRM- RS. 55,578/- RS.3,45,665/- THE ORDER DATED 27.5.1998 IMPOSING PENALTY U/S 271( 1)(C) OF THE ACT AT RS.83,618/- WAS PASSED ON 27.5.1998 AGAINST WHIC H ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) AND GOT PART RELIE F. ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 4 3. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. LD. AR SUBMITTED THAT ASSESSEE IS A REGULAR TAX PAYER A ND FILING RETURN OF INCOME FOR LAST MANY YEARS AND NORMALLY SHOWS THE I NCOME WHICH IS RECEIVED DURING THE YEAR. FOR THE YEAR UNDER APPEAL , DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE REALIZED THAT TOTAL SALE CONSIDERATION HAS TO BE OFFERED TO TAX IRRESPECTIVE OF THE AMOUNT WHETHER RECEIVED COMPLETELY DURING THE YEAR OR IN S UBSEQUENT YEAR IF AGREEMENT IS DONE AND POSSESSION HANDED OVER. ACCOR DINGLY BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS ASSESSEE FILED REVISED RETURN ON 31.7.1996 OFFERING THE ENTIRE SALE PROCEEDS OF C APITAL OF RS.8,52,000/- AS AGAINST RS.6,32,000/- SHOWN IN THE ORIGINAL RETURN. ALONG WITH THIS ASSESSEE ALSO OFFERED TO TAX THE IN TEREST INCOME OF RS.16,838/- FROM CORPORATION BANK WHICH WAS ACCRUED BUT NOT RECEIVED AND INTEREST INCOME FROM UNITED PACKAGING INDUSTRIES AT RS.55,578/- WHEREIN ASSESSEE IS A PARTNER. LD. AR F URTHER SUBMITTED THAT LD. ASSESSING OFFICER HAS ALSO DENIED COST OF IMPROVEMENT TO THE EXTENT OF RS.53,029/- JUST ON ESTIMATE BASIS AND NO THING AGAINST THE ASSESSEE WAS PROVED THAT ANY INCOME HAS BEEN CONCEA LED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED. THERE A RE SERIES OF JUDGMENTS WHEREIN IT HAS BEEN HELD THAT IF THE ASSE SSEE HAS REVISED THE RETURN OF INCOME BEFORE THE COMPLETION OF ASSES SMENT PROCEEDINGS, THE ASSESSEE SHOULD NOT BE DEEMED IN D EFAULT FOR THE PURPOSE OF PENALIZING U/S 271(1)(C) OF THE ACT. 4. ON THE OTHER HAND, LD. DR SUBMITTED THAT IN THE RETURN OF INCOME ASSESSEE HAS NOT DISCLOSED THE TRUE INCOME AND IT W AS ONLY AFTER THE SPECIFIC QUERY BEING RAISED BY LD. ASSESSING OFFICE R THAT IT CAME TO THE ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 5 MIND OF ASSESSEE FOR OFFERING THE CONCEALED INCOME. LD. DR FURTHER SUBMITTED THAT IF AT ALL THE INTENTION OF THE ASSES SEE IS TO DISCLOSE THE INCOME IN THE SUBSEQUENT YEAR THEN IT SHOULD HAVE B EEN SUPPORTED BY ADVANCE TAX CHALLAN TO THAT EFFECT AND, THEREFORE, LD. CIT(A) HAS RIGHTLY CONFIRMED THE PENALY. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY GRIEVANCE OF THE ASSESSEE IS AG AINST THE ORDER OF LD. CIT(A) CONFIRMING THE PENALTY OF RS.83,618/-. W E OBSERVED THAT IMPUGNED PENALTY HAS BEEN LEVIED ON THE FOLLOWING T HREE ALLEGED CONCEALED INCOME :- 1. CONCEALED CAPITAL GAIN - RS.2,73,439/- 2. INTEREST FROM CRPORATION BANK- RS. 16,838/- 3. INTEREST FROM PARTNERSHIP FIRM- RS. 55,578/- RS.3,45,665/- WE OBSERVE THAT AS REGARDS CAPITAL GAINS, ASSESSEE HAS DISCLOSED TOTAL SALE CONSIDERATION OF RS.8,52,000/- BEFORE CO MPLETION OF ASSESSMENT AND HAS PAID DUE TAXES. REASON FOR SHOWI NG THIS AMOUNT OF SALE CONSIDERATION WAS DUE TO THE BONA FIDE BELI EF OF THE ASSESSEE THAT AMOUNT OF SALE CONSIDERATION WHICH IS RECEIVED DURING THE YEAR HAS TO BE TAXED AND THE REMAINING AMOUNT WHICH WOUL D BE RECEIVED IN THE SUBSEQUENT YEAR ON FINAL PREPARATION OF LAND REGISTRATION DOCUMENTATION THE SAME WILL BE OFFERED THEREAFTER. ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 6 6. WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS REALIZED BY THE ASSESSEE THAT THE RIGHT COURS E WOULD BE TO OFFER THE COMPLETE AMOUNT OF SALE CONSIDERATION OF RS.8,5 2,000/- AS PER AGREEMENT ENTERED INTO AND THE POSSESSION BEING HAN DED OVER TO THE BUYER DURING THE YEAR UNDER APPEAL ITSELF. FURTHER WE ALSO OBSERVE THAT LD. ASSESSING OFFICER DISALLOWED SOME PORTION OF IMPROVEMENT COST WHICH WAS CLAIMED BY ASSESSEE ALONG WITH DULY SUPPORTED BILLS BUT LD. ASSESSING OFFICER ON ESTIMATION BASIS DISAL LOWED RS.53,029/- OUT OF THE TOTAL COST OF IMPROVEMENT CLAIMED AT RS. 100780/-. LOOKING TO THESE FACTS, WE ARE OF THE VIEW THAT ASSESSEE HA S PAID DUE TAXES ON THE TOTAL VALUE OF SALE CONSIDERATION BY OFFERIN G IT TO TAX BY WAY OF REVISED RETURN BEFORE THE CLOSE OF ASSESSMENT PROCE EDINGS AND ALSO COST OF IMPROVEMENT WAS DULY SUPPORTED BY BILLS AND THERE CANNOT BE ANY CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS U/S 271(1)(C) OF THE ACT , WE DELETE TH E SAME. 7. AS REGARDS INTEREST OF CORPORATION BANK, WE OBSE RVE THAT ASSESSEE HAS NOT RECEIVED THE INTEREST DURING THE Y EAR AND RETURN OF INCOME WAS REVISED BY DISCLOSING ACCRUED INTEREST O N THE DEPOSIT WITH CORPORATION BANK AND WAS OFFERED TO TAX AT RS.16,83 8/-. CERTAINLY AS THE INCOME HAS BEEN OFFERED TO TAX BEFORE CLOSE OF ASSESSMENT, WE FIND NO REASON IN SUSTAINING PENALTY U/S 271(1)(C) OF THE ACT ON THIS AMOUNT. WE DELETE THE SAME. 8. FURTHER WE OBSERVE THAT PENALTY HAS ALSO BEEN IM POSED ON THE INTEREST AMOUNT FROM PARTNERSHIP FIRM M/S UNITED PA CKAGING INDUSTRIES AT RS.55,578/-. WE FIND THAT M/S UNITED PACKAGING ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 7 INDUSTRIES IS A PARTNERSHIP FIRM AND BOOKS OF ACCOU NTS ARE BEING AUDITED U/S 44AB OF THE ACT AND RETURN OF INCOME WA S FILED AFTER THE DATE OF ASSESSEES RETURN OF INCOME WHICH WAS ON 30 .6.1995. IT SEEMS TO BE A BONA FIDE REASON THAT AT THE TIME WHE N ASSESSEE WAS FILING ORIGINAL RETURN ON 30.6.1995, HE WAS NOT IN A POSSESSION OF THE REQUIRED INFORMATION ABOUT INTEREST FROM PARTNERSHI P FIRM M/S M/S UNITED PACKAGING INDUSTRIES AS THE BOOKS OF ACCOUNT WERE NOT AUDITED AND FINANCIAL STATEMENTS WERE UNDER PREPARA TION. NEVERTHELESS THIS IMPUGNED INCOME OF RS.55,578/- WA S INCLUDED IN THE TOTAL INCOME OFFERED IN THE REVISED RETURN OF I NCOME FILED ON 31.7.1996. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT DEEM IT PROPER THAT ASSESSEE SHOULD BE VISITED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND WE DELETE THE SAME . ACCORDINGLY GROUND NO. 1 TO 4 ARE ALLOWED. 9. GROUND NOS. 5 & 6 ARE OF GENERAL NATURE, WHICH N EED NO ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 29/7/2016 MAHATA/- ITA NO. 1769/AHD/2013 ASST. YEAR 1995-96 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 28/07/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 29/07/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 29/7/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: