ITO, New Delhi V. M/s Tarini Developers, New Delhi

ITA 1888/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7499 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 15-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P CHANDRAKAR
• Keywords: Capital asset; Business income; Wrong claim; Difference of opinion
• Section: 2(14)

Judgement Text

ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H N EW DELHI BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 1888/DEL/2013 ASSESSMENT YE AR: 2006-07 INCOME TAX OFFICER, VS M/S TARINI DEVELOPERS, WARD-27(2), ROOM NO.1909, A-10, MANSAROVAR GARDEN , E-2, DR. S.P.M.CIVIC CENTRE, NEW DELHI-110015 MINTO ROAD, (PAN: AAEFT4007C) NEW DELHI-110002 ITA NO. 1889/DEL/2013 ASSESSMENT YE AR: 2006-07 INCOME TAX OFFICER, VS VARDAN BUILDCON, WARD 27(2), A-10C, MANSAROVAR GARDNE, NEW DELHI. NEW DELHI. (PAN: AAFFV7307J) (APPELLANT) (RESPONDEN T) APPELLANT BY: SHRI SUDESH GARG , ADV. RESPONDENT BY: SHRI J.P. CHANDRA KAR, SR. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF CIT(A)-XXIV, NEW DELHI DATED 3.11.2009 IN APPEAL NO . 229/08-09 AND IN APPEAL NO.231/08-09 PERTAINING TO AY 2006-07. 2. THE SOLE GROUND RAISED BY THE REVENUE IN BOTH TH E APPEALS IS SIMILAR EXCEPT QUANTUM OF PENALTY WHICH READS AS UNDER:- ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) ERRED IN:- (I) DELETING THE PENALTY U/S 271(1)(C)OF THE INCOM E TAX ACT AMOUNTING TO RS.30,07,137/- IMPOSED BY AO. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THESE AP PEALS ARE AS UNDER:- 2. RETURN OF INCOME WAS FILED ON 31.10.2006 DECLARING BUSINESS LOSS OF RS.6,727/-, RS.7,182/- A ND RS.6.224/- RESPECTIVELY. THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS.87,39,150/-, RS.93,18,090/- AND RS.89,27,660/- AFTER MAKING AN ADDITION OF RS.87,45 ,880/-, RS.93,25,2701- AND RS.89,33,8801- RESPECTIVELY. THE SE ADDITIONS WERE MADE BY THE AO AFTER TREATING AGRICU LTURAL INCOME DECLARED BY THE ASSESSEE ON SALE OF AGRICULT URAL LAND AS INCOME UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION'. THE APPELLANT HAD TREATED THE PROFIT O N SALE OF LAND AS EXEMPT FROM TAX ON THE GROUND THAT THE LAND TRANSACTED IN WAS AGRICULTURAL LAND SITUATED AT A D ISTANCE OF MORE THAN 8 KM FROM THE LIMITS OF ANY MUNICIPALITY OR CANTONMENT AND HENCE, WAS NOT A CAPITAL ASSET IN TE RMS OF SECTION 2(14) OF THE ACT. ON THE OTHER HAND, THE AO HELD THAT THE TRANSACTION WAS A BUSINESS TRANSACTION AND THER EFORE, THE PROFIT ARISING OUT OF THESE TRANSACTIONS WERE B USINESS PROFITS. IN THE PENALTY ORDERS U/S 271(1)(C), THE A SSESSING OFFICER HAS MENTIONED THAT 'THE AO REJECTED THE ATT EMPT OF THE ASSESSEE TO BRING THE TRANSACTION WITHIN THE PU RVIEW OF INCOME FROM CAPITAL GAINS AND THEREBY ESCAPED TAXAT ION BY CLAIMING SHELTER U/S. 2(14).' THE APPEALS FILED BY THE ASSESSEE'S HAVE BEEN DISMISSED BY THE CIT(A), ITAT AND HON'BLE DELHI HIGH COURT. THE AO, THEREFORE, INITIA TED PENALTY PROCEEDINGS U/S 271(1)(C) AND ISSUED NOTICE S TO THE APPELLANTS GIVING THEM AN OPPORTUNITY TO EXPLAIN AS 10 WHY PENALTY U/S 271(1)( C) SHOULD NOT BE LEVIED ON THEM . IN RESPONSE, THE ARS OF THE APPELLANTS CA SURJIT SINGH AND CA SAMUDAR JANGIR ATTENDED THE PROCEEDINGS. THEY IMPUG NED THE PENALTY PROCEEDINGS IN ALL THE THREE CASES ON T HE GROUNDS THAT (I) THE PENALTY PROCEEDINGS WERE BARRE D BY LIMITATION; (II) THE AO HAD NOT RECORDED SATISFACTI ON FOR INITIATING PENALTY PROCEEDINGS BY PASSING THE ASSES SMENT ORDER; (III) PENALTY PROCEEDINGS ARE SEPARATE FROM ASSESSMENT PROCEEDINGS; (IV) ASSESSEES HAVE NEITHER ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 3 CONCEALED ANY PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME; (V) THE LAND TRAN SACTED IN WAS AGRICULTURAL LAND AND NOT A CAPITAL ASSET WITHI N THE MEANING OF SECTION 2(14) OF THE ACT; AND (VI) EXPLA NATION 1 TO SECTION 271(1)(C) FOR IMPOSING PENALTY WAS NOT ATTRACTED SINCE ASSESSEES HAD FURNISHED AN EXPLANATION WHICH WAS BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MA TERIAL TO THE COMPUTATION OF ITS TOTAL INCOME WERE DISCLOSED IN THEIR RESPECTIVE RETURNS OF INCOME. THE AO, IN TURN, REJE CTED EACH OF THE ABOVE CONTENTIONS OF THE APPELLANTS AND HELD THAT THE APPELLANTS HAD FURNISHED INACCURATE PARTICULARS OF THEIR INCOMES/CONCEALED THE PARTICULARS OF THEIR INCOMES AND THEREFORE, THEY WERE LIABLE FOR PENALTY U/S. 271 (1 )(C). HE TREATED THE APPELLANTS AS ASSESSEES IN DEFAULT AND IMPOSED INDIVIDUAL PENALTIES ON THEM U/S. 271(1)(C) OF THE ACT, AMOUNTING TO RS.29,43,863/- (MALIKA DEVELOPERS), RS.31,38,886/- (VARDAN BUILDCON), RS.30,07,137/- (T ARINI DEVELOPERS). 4. THE AGGRIEVED ASSESSEES PREFERRED APPEALS BEFORE THE CIT(A) WHICH WERE ALLOWED BY PASSING THE IMPUGNED ORDER DATED 23.1.20 13 AND THE CIT(A) DIRECTED THE AO TO DELETE RESPECTIVE PENALTIES IN A LL THREE APPEALS. CONSEQUENTLY, THE AGGRIEVED REVENUE FILED THREE SEP ARATE APPEALS BEFORE H BENCH OF THE TRIBUNAL WITH THE SOLE GROUND AS REPRO DUCED HEREINABOVE. 5. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD, INTER ALIA ASSE SSMENT ORDER, PENALTY ORDER AND IMPUGNED ORDER OF THE CIT(A) WHICH DELETED THE PENALTY. LD. AR, AT THE VERY OUTSET, SUBMITTED A COPY OF THE DECISION OF IT AT E BENCH DATED 30.5.2014 IN APPEAL NO. 1890/DEL/2013 FOR AY 2006-0 7 IN THE CASE OF ITO VS M/S MALIKA DEVELOPERS AND SUBMITTED THAT THE TRIBUN AL HAS DELETED THE PENALTY IN THE CASE OF MALIKA DEVELOPERS AND REMAINING TWO ASSESSEES VIZ. M/S VARDHAN ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 4 BUILDCON AND M/S TARINI DEVELOPERS ARE THE RESPONDE NTS IN THE PRESENT APPEALS. LD. AR, DRAWING OUR ATTENTION TOWARDS OPERATIVE PAR T OF THE ORDER OF THE TRIBUNAL DATED 30.5.2014, SUBMITTED THAT THE PENALT Y IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS BEEN FOUND TO BE NOT S USTAINABLE AND HENCE THE APPEAL FILED BY THE REVENUE IN THE CASE OF M/S MALI KA DEVELOPERS HAS BEEN DISMISSED, THEREFORE, THE PRESENT APPEALS PERTAININ G TO OTHER TWO ASSESSEES VIZ. M/S VARDHAN BUILDCON AND M/S TARINI DEVELOPERS ALSO DESERVE TO BE DISMISSED AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE, THEREFORE, PRESENT APPEALS SHOULD ALSO BE DISMISSED IN THE SAME MANNER. 6. REPLYING TO THE ABOVE, LD. DR FAIRLY ADMITTED TH AT THE APPEAL OF THE REVENUE IN THE CASE OF M/S MALIKA DEVELOPERS HAS BE EN DISMISSED BY THE ITAT E BENCH VIDE ITS ORDER DATED 30.5.2014 (SUPRA). HOWEVER, LD. DR SUPPORTED THE PENALTY ORDER AND SUBMITTED THAT THE CIT(A) DIR ECTED THE AO TO DELETE THE PENALTY ON WRONG PREMISES AND WITHOUT ANY JUSTIFIED REASON, THEREFORE, THE APPEAL OF THE REVENUE MAY BE ALLOWED BY SETTING ASI DE THE IMPUGNED ORDER AND RESTORING THAT OF THE AO. 7. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E OBSERVE THAT THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE WITH THE FOLLOWING CONCLUSION:- ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 5 4.15 THE CASE OF SUREN ARVIND BHAI VAKIL VS. ITO ( 2011) 137 TTJ 613 (AHM), THE HON'BLE TRIBUNAL HELD THAT 'MERE REJECTION OF CLAIM OF ASSESSEE BY RELYING ON DIFFERENT INTERP RETATIONS DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF IN COME OR FURNISHING INACCURATE PARTICULARS OF INCOME BY ASSE SSEE.' SIMILARLY, IN THE CASE OF DY. CIT VS. AJAY KUMAR LA L (2011) 12 TAXMANN.COM 491 (AHM. TRIB.), THE HON'BLE TRIBUNAL HELD THAT 'MERE ERRONEOUS CLAIM OR MISTAKEN BONA FIDE BELIEF IS NO GROUND FOR LEVYING PENALTY U/S. 271(1)(C)'. FURTHER , IN THE CASE OF ACIT VS. MEGJI MATHRADAS (2011) 7 ITR (TRIB.) 74 9 (MUM), THE HON'BLE TRIBUNAL HELD THAT 'WHERE ASSESSEE HAD DISCLOSED FULL FACTS IN CONNECTION WITH CLAIM MADE IN RETURN AND DISALLOWANCE IN QUANTUM ASSESSMENT WAS DUE TO DIFFE RENT OF JUDICIAL OPINION BETWEEN ASSESSING OFFICER AND ASSE SSEE, PENALTY COULD NOT BE LEVIED U/S 271(1)(C).' IN THE CASE OF MAHINDER SIDDHU VS. ACIT (2010) 39 DTR 233 (DEL TRI B.), THE HON'BLE TRIBUNAL HELD THAT 'IN THE ABSENCE OF ANY F ALSITY IN THE DETAILS SUBMITTED BY THE ASSESSEE REGARDING COMPUTA TION OF INCOME, PENALTY U/S 271(1)(C) IS NOT LEVIABLE IN RE SPECT OF INADVERTENT WRONG CLAIM MADE BY ASSESSEE FOR ADJUST MENT THE LONG TERM CAPITAL LOSS AGAINST SHORT TERM CAPITAL G AINS. 4.16 IN THE LIGHT OF THE DISCUSSIONS IN THE PRECEDI NG PARAGRAPHS AND THE JUDICIAL PRONOUNCEMENTS CITED TH EREIN, I AM OF THE CONSIDERED OPINION THAT IN THE INSTANT TH REE CASES, THE APPELLANTS HAD REVEALED ALL THE PARTICULARS OF THE TRANSACTION IN THEIR RETURNS OF INCOME. IT IS A DIF FERENT MATTER THAT ADDITIONS HAVE BEEN MADE IN QUANTUM ASSESSMENT , TREATING THE PROFITS ON PURCHASE AND SALE OF AGRICU LTURAL LAND AS BUSINESS PROFITS AND NOT AS CAPITAL GAINS. SINCE , THE APPELLANTS HAS NOT SHOWN ANY MALA FIDE INTENTIONS A ND HAS NOT FILED ANY INACCURATE PARTICULARS OF INCOME, PENALTY U/S 271(1)(C) OF THE ACT IS NOT IMPOSABLE IN THESE CASE S. THEREFORE, PENALTY IS IMPOSED IN THESE CASES U/S 271(1)(C) AR E HEREBY DELETED. 8. WE MAY POINT OUT THAT LD. DR HAS NOT DISPUTED TH E FACT THAT THE APPELLANTS HAD REVEALED ALL THE PARTICULARS OF TRANSACTIONS IN THEIR RETURN OF INCOME OF RESPECTIVE ASSESSMENT YEARS UNDER CONSIDERATION. W E MAY ALSO OBSERVE THAT DURING THE QUANTUM PROCEEDINGS, THE AO TREATED THE PROFITS ON PURCHASE AND SALE ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 6 OF AGRICULTURAL LAND AS BUSINESS PROFITS AND NOT AS CAPITAL GAINS AND IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE FILED ALL DETAILS PERT AINING TO THE PROFITS ON PURCHASE AND SALE OF AGRICULTURAL LAND ALONG WITH RETURN OF ITS INCOME. THEREFORE, UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THERE W AS SOME MALAFIDE INTENTION OF THE ASSESSEE AND ASSESSEE FILED INACCURATE PARTICUL ARS OF ITS INCOME OR HAS CONCEALED PARTICULARS OF ITS INCOME WITH CONSCIOUS INTENTION TO EVADE TAX. 9. FROM CAREFUL READING OF THE ORDER OF THE TRIBUNA L IN ITA NO. 1890/DEL/2013 DATED 30.5.2014, WE OBSERVE THAT THE TRIBUNAL IN THE CASE OF M/S MALIKA DEVELOPERS DELETED THE PENALTY WITH FOLLOWIN G OBSERVATIONS AND FINDINGS:- 6. AT THE OUTSET, THE LD DR SUBMITTED THAT ADDITI ONS WERE CONFIRMED BY ITAT AND FURTHER CONFIRMED BY HON 'BLE DELHI HIGH' COURT. IT WAS SUBMITTED THAT ASSESSEE D ELIBERATELY DECLARED THE BUSINESS PROFIT AS CAPITAL GAIN IN ORD ER TO AVOID TAXATION. THEREFORE, THERE WAS EXISTENCE OF MENS RE A AS THE ASSESSEE HAD DELIBERATELY FURNISHED WRONG PARTICULA RS AND IT WAS SUBMITTED THAT THE CASE LAWS RELIED UPON BY LD CIT(A) WERE NOT APPLICABLE TO THE FACTS OF THE PRESENT CAS E. 7. THE LD AR ON THE OTHER HAND, SUBMITTED THAT THE LAND WAS PURCHASED WITH A VIEW TO EARN CAPITAL GAIN, .THE AS SESSING OFFICER HAD MADE ADDITION ON DEEMED BASIS. IT WAS F URTHER SUBMITTED THAT LAND WAS SITUATED OUTSIDE THE MUNICI PAL LIMIT AND FULL PARTICULARS WERE FURNISHED AND THERE WAS N O SUPPRESSION OF FACTS. THE ASSESSING OFFICER HAD MAD E ADDITION DUE TO DIFFERENCE OF OPINION AND NOT BECAUSE OF ANY OTHER REASONS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THOUGH THE ASSESSEE HAD LOST UPTO THE HIGH COU RT IN THE QUANTUM PROCEEDINGS YET, LOSING A CASE IN QUANTUM PROCEEDINGS IS NOT A SUFFICIENT REASON FOR IMPOSING PENALTY U/S ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 7 271(1)( C) OF THE ACT. THE PENALTY PROCEEDINGS U IS 271 (1 )(C) ARE SEPARATE PROCEEDINGS DISTINCT FROM THE ASSESSME NT PROCEEDINGS AND WHERE REVENUE HAS TO ESTABLISH SEPA RATELY THE EXISTENCE OF MENS REA FOR IMPOSITION OF PENALTY. TH E ASSESSEE HAD SUBMITTED FULL PARTICULARS REGARDING. SALE AND PURCHASE OF LAND AND HAD CLAIMED THE PROFIT AS CAPITAL GAIN. FR OM THE PARTICULARS FILED BY THE ASSESSEE, THE ASSESSING OF FICER HAD COME TO KNOW ABOUT THE FACT OF SALE OF LAND, HOWEVE R, HE REJECTED THE CLAIM OF ASSESSEE AND ASSESSED THE GAI N.' AS' BUSINESS INCOME INSTEAD OF CAPITAL GAIN AS CLAIMED BY ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS HAS HELD THAT IF COMPLETE DETAILS OF TRANSACTIONS HAS BEEN REVEALED BY THE ASSESSEE IN ITS RETURN OF INCOME, PENALTY U/S 271(1)(C) WILL NOT BE IMPOSABLE JUST BE CAUSE THE CLAIMS OF THE ASSESSEE ARE FOUND TO BE LEGALLY NOT ALLOWABLE. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SQUARELY COVERED IN FAVOUR OF ASSESSEE VIDE THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. WHICH HAS BEEN RELIED UPON BY LD CIT(A). THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A). 10. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE COORDINATE BENCH OF THE TRIBUNAL ORDER DATED 30.5.2014 THAT AS PER DECISION OF HONBLE APEX COURT IN THE CASE O F RELIANCE PETROPRODUCTS (SUPRA), IF COMPLETE DETAILS OF TRANSACTION HAS BEE N REVEALED BY THE ASSESSEE IN ITS RETURN OF INCOME, THEN PENALTY U/S 271(1)(C) OF THE ACT WILL NOT BE IMPOSABLE JUST BECAUSE THE CLAIMS OF THE ASSESSEE ARE FOUND T O BE LEGALLY NOT ALLOWABLE. IN THE INSTANT CASE, THE ASSESSEE FURNISHED ALL PARTIC ULARS OF PURCHASE AND SALE OF AGRICULTURAL LAND WHICH BROUGHT PROFIT TO THE ASSES SEE. DURING THE QUANTUM PROCEEDINGS, THE AO TREATED THE PROFIT AS BUSINESS PROFIT INSTEAD OF CAPITAL GAINS AS CLAIMED BY THE ASSESSEE, THEREFORE, BY ANY STRET CH OF IMAGINATION, IT CANNOT BE ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 8 HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF ITS INCOME OR HAS CONCEALED PARTICULARS OF ITS INCOME. WE FURTHER HO LD THAT MERELY BECAUSE THE ASSESSEE PROPOSED THE IMPUGNED PROFITS FROM SALE AN D PURCHASE OF AGRICULTURAL LAND AS CAPITAL GAIN BUT THE AO ASSESSED THE SAME U NDER THE HEAD OF PROFITS AND GAINS FROM BUSINESS AND PROFESSION, IN THIS SITUATI ON, PENALTY U/S 271(1)(C) OF THE ACT IS NOT IMPOSABLE AS IN ANY CASE, IT CANNOT BE S AID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR H AS CONCEALED PARTICULARS OF ITS INCOME BEFORE THE AO DURING QUANTUM PROCEEDINGS. T HUS, THE CIT(A) WAS RIGHT IN DELETING THE PENALTY IMPOSED BY THE AO AND WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER O F THE CIT(A) IN THIS REGARD. ACCORDINGLY, SOLE GROUND IN BOTH THE APPEALS BEING DEVOID OF MERITS IS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2014. SD/- SD/- (B.C. MEENA) (CH ANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29 TH DECEMBER, 2014 GS ITA NO. 1888 & 1889/DEL/2013 ASSTT.YEAR: 2006-07 9 COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT