Sajeetha Banu, CHENNAI V. ACIT, CHENNAI

ITA 1946/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4534 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 15-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-06-2016
• Court: TRIBUNAL
• Department Lawyers: PS L
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1946/MDS/2016 * * /ASSESSMENT YEAR: 2011-12 SMT.SAJEETHA BANU, #14, NARAYANA CHETTY STREET, PERIAMET, CHENNAI-600 003. VS. THE ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-6, CHENNAI-600 006. [PAN: ABYPS 3172 L ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.PHILIP GEORGE, ADV. ./- 0 /RESPONDENT BY : MR.A.V.SREEKANTH, JCIT 0 /DATE OF HEARING : 15.03.2017 0 /DATE OF PRONOUNCEMENT : 26.05.2017 / 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 04.04.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 5, CHENNAI, IN ITA NO.2011/CIT(A)-5/14-15 FOR THE AY 2011-12. ITA NO.1946/MDS/2016 :- 2 -: 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E LEVY OF PENALTY U/S.271(1)(C) OF INCOME TAX ACT (IN SHORT THE ACT ) FOR THE AY 2011-12. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.25,47,900/-. THE ASSESSMENT WAS COMPLETED ON TO TAL INCOME OF RS.36,72,463/-. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (IN SHORT AO) MADE THE FOLLOWING ADDITION TO THE RET URNED INCOME. (I) LONG TERM CAPITAL GAINS ON SALE OF LAND CLAIMED AS AGRICULTURAL LAND RS.1,86,605/-. (II) ADDITION ON ACCOUNT OF UNPROVED AGRICULTURAL I NCOME OF RS.5.00 LAKHS (III) ADDITION ON ACCOUNT OF UNDISCLOSED AMOUNT RS.3,63,3 79/-. 3.0 THE AO ALSO INITIATED PENALTY U/S.271(1)(C). D URING THE PENALTY PROCEEDINGS, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AND THE ASSESSEE HAS FILED THE REPLY. NOT BEING SATISFIED W ITH THE EXPLANATION OFFERED BY THE ASSESSEE, THE AO IMPOSED PENALTY OF RS.2,69,792/- U/S.271(1)(C) OF THE ACT. 4.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AND THE LD.CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5.0 APPEARING FOR THE ASSESSEE, LEARNED AUTHORIZED REPRESENTATIVE (IN SHORT LD.AR) MADE TWO FOLD ARGUMENTS. FIRSTLY, L D.A.R. RAISED THE ITA NO.1946/MDS/2016 :- 3 -: DEFECTS IN ISSUE NOTICE U/S.271(1)(C). THE LD.AR A RGUED THAT IN THE NOTICE ISSUED BY THE AO U/S.271(1)(C) HAS NOT STRUCK OFF T HE IRRELEVANT COLUMNS GIVING THE AMBIGUITY FOR WHICH REASONS THE PENALTY WAS INITIATED I.E. WHETHER FOR FURNISHING INACCURATE PARTICULARS OR FO R CONCEALMENT OF INCOME. THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN COMMISSIONER OF INCOME-TAX. V. MANJUNATHA COTTON & GINNING FACTORY, REPORTED IN [2013] 35 TAXMANN.COM 250 (KARNATAKA) A ND CASE OF M/S.SSAS EMERALD MEADOWS V. CIT IN ITA NO.380/2015 DATED 23.11.2015 WHEREIN THE HONBLE HIGH COURT HELD THAT THE FAILUR E TO INTIMATE THE NATURE OF OFFENCE IN THE PENALTY NOTICE U/S.271(1)(C) MAK ES THE ORDER PASSED U/S 274 R..W.S 271 MAKES THE ORDER INVALID. 5.1 SECONDLY, THE LD.AR ARGUED THAT ON MERITS OF TH E CASE ALSO. ON MERITS, THE FIRST ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON SALE OF AGRICULTURAL LANDS. THE ASSESSEE SOLD AGRI CULTURAL LANDS AND CLAIMED THE CAPITAL GAINS AS EXEMPT BEING AGRICULTU RAL LANDS ARE NOT CAPITAL ASSETS. THE ASSESSEE ALSO INVESTED A SUM OF RS.3,6 3,42,100/- IN CAPITAL GAINS BONDS. THE ASSESSEE HAS SOLD AGRICULTURAL LA NDS FOR A CONSIDERATION OF RS.3,63,42,100/- AND THE ENTIRE SALE PROCEEDS WE RE INVESTED IN CAPITAL GAINS BONDS. THE AO HELD THAT AGRICULTURAL LAND IN QUESTION WERE CAPITAL ASSETS AND PROPOSED TO INVOKE SEC.50C OF THE ACT. THE STAMP VALUATION AUTHORITIES MADE THE VALUATION FOR THE PURPOSE OF R EGISTRATION AT RS.7,08,93,000/- AND THE AO PROPOSED TO ADOPT SEC.5 0C OF I.T. ACT. THE ITA NO.1946/MDS/2016 :- 4 -: ASSESSEE OBJECTED FOR ADOPTING THE 50C VALUE FOR IN COME TAX, HENCE THE A.O. REFERRED THE VALUATION TO THE DISTRICT VALUATI ON OFFICER WHO VALUED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.3,73,59,000 /-. ACCORDINGLY, THE A.O. BROUGHT THE DIFFERENCE AMOUNT OF RS.1,86,605/- TO TAX. THE LD.AR CONTENDED THAT THE DIFFERENCE IN LONG TERM CAPITAL GAINS WAS ON ACCOUNT OF ESTIMATION MADE BY THE DVO AND IT WAS NEITHER CONCE ALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS. THE ENTIR E INFORMATION IS PLACED BEFORE THE AO AND ACCORDINGLY, PLEADED THAT PENALTY U/S.271(1)(C) IS NOT ATTRACTED ON THIS ISSUE. 5.2 THE NEXT ADDITION MADE BY THE AO WAS UNPROVED A GRICULTURAL INCOME OF RS.5.00 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE AD MITTED AGRICULTURAL INCOME OF RS.7,88,010/-. THE AO HAS C ALLED FOR THE DETAILS AND THE ASSESSEE FURNISHED PARTIAL DETAILS BUT COMP LETE EVIDENCE WAS NOT FURNISHED. THEREFORE, THE AO ESTIMATED THE AGRICUL TURAL INCOME AT RS.2,88,010/- AND THE BALANCES AMOUNT OF RS.5.00 L AKHS WAS ADDED TO THE RETURNED INCOME. THE LD.AR SUBMITTED THAT THE ASSESSEE IS OWNING AGRICULTURAL LAND OF 11.83 ACRES AND THE FAMILY HAS MINOR BENEFICIAL TRUST BY NAME AMUN BATCHA EDUCATION TRUST AND THE SAID M INOR TRUST IS HAVING AGRICULTURAL LAND OF 36.66 ACRES AND THE INCOME OF THE MINOR TRUST IS CLUBBED WITH THE ASSESSEE U/S.64(1) OF THE ACT AND THE AO HAS MADE PURE ESTIMATION WITHOUT ANY SCIENTIFIC BASIS OR THE EVID ENCE AND THE ASSESSEE HAS NOT GONE ON APPEAL ONLY WITH AN INTENTION TO PU RCHASE PEACE. SINCE ITA NO.1946/MDS/2016 :- 5 -: THE INCOME IS MADE ON ESTIMATION BASIS, NO PENALTY IS ATTRACTED AND REQUESTED TO CANCEL THE PENALTY. 5.3 THE THIRD ADDITION MADE BY THE AO WAS IN RELATI ON TO DEPOSITS IN UNDISCLOSED BANK ACCOUNT: THE ASSESSEE WAS HAVING SAVINGS BANK ACCOUNT WITH PUNJAB NATIONAL BANK WITH CLOSING BALANCE OF RS.3,63,378/- AS ON 31.03.2011. THE SAID BANK ACCOUNT WAS NOT DISCLOSED TO THE DEPA RTMENT AND THERE WAS AN OUTSTANDING BALANCE OF RS.3,63,378/- AS ON 31.03 .2011. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE SOURCE WAS RENT ADVANCE OF RS.3.00 LAKHS RECEIVED FROM THE TENANT B UT NO EVIDENCE WAS FURNISHED. SINCE NO EVIDENCE WAS FURNISHED AND THE BANK ACCOUNT WAS NOT DISCLOSED, THE AO MADE THE ADDITION AND IMPOSED PEN ALTY U/S.271(1)(C). THE LD.AR ARGUED THAT THE SOURCE WAS RENT ADVANCE R ECEIVED FROM THE TENANT AND ADMITTED THAT THE BANK ACCOUNT WAS NOT D ISCLOSED IN THE RETURN BY MISTAKE AND THERE WAS NO INTENTION TO CONCEAL TH E INCOME AND REQUESTED TO CANCEL THE PENALTY IMPOSED BY THE A.O. 6.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. 7.0 FIRSTLY, THE LD.AR ARGUED THE CASE ON TECHNICAL GROUNDS STATING THAT THE PENALTY NOTICE ISSUED U/S.271(1)(C) WAS INVALID SINCE THE ASSESSEE WAS NOT PUT ON NOTICE FOR WHICH OFFENCE, PENALTY IS INI TIATED AND ASSESSEE REQUIRED TO EXPLAIN. THE AO HAS NOT STRUCK OFF THE IRRELEVANT COLUMN IN THE PENALTY NOTICE THEREBY CAUSING CONFUSIONS IN THE MI ND OF THE ASSESSEE FOR ITA NO.1946/MDS/2016 :- 6 -: WHICH LIMB OF THE PROVISIONS PENALTY U/S.271(1)(C) OF THE ACT WAS INITIATED. THE ASSESSEE RELIED ON THE DECISION OF M/S.SSAS EM ERALD MEADOWS V. CIT & ANR. IN ITA NO.380/2015 DATED 23.11.2015 (CITED S UPRA) AND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNA THA COTTON JINNING MILLS REPORTED IN 359 ITR 565. WE HAVE GONE THROUGH THE OBJECTIONS RAISED BY THE LD.AR AND THE DECISION RELIED UPON BY THE ASSESSEE, AND LOWER AUT HORITIES ORDERS. THE PENALTY NOTICE U/S.271(1)(C) WAS ISSUED ON 27.03.20 14 ALONG WITH THE ASSESSMENT ORDER. IN THE ASSESSMENT ORDER, THE AO CLEARLY MENTIONED THAT THE PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SINCE THE AO HAS INITIATED PENALTY FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME WHICH IS EVIDE NT FROM THE ASSESSMENT ORDER, THE AO HAS RIGHTLY ISSUED NOTICE FOR BOTH THE LIMBS OF PROVISIONS U/S.271(1)(C). THEREFORE, THE DECISION RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE IN THE ASSESSEES CASE AND WE UPHOLD THE ISSUE OF NOTICE U/S.271(1)(C) AND ASSESSEES ARGUMENTS ON THIS ISSUE DOES NOT HOLD ANY MERIT ACCORDINGLY, REJECTED. 8.0 THE NEXT ISSUE IS LEVY OF PENALTY ON ESTIMATED INCOME OF LONG TERM CAPITAL GAINS ON SALE OF AGRICULTURAL LAND. AS PER THE ASSESSMENT ORDER, THE DIFFERENCE WAS ON ACCOUNT OF ESTIMATION OF THE FAIR MARKET VALUE BY THE DVO AND THE SALE PROCEEDS RECEIVED BY THE ASSESSEE. THERE WAS NO SUPPRESSION OF SALE CONSIDERATION AND THE ENTIRE SA LE PROCEEDS RELATING TO THE CAPITAL GAINS WERE INVESTED IN CAPITAL GAIN BON DS. SINCE THE ENTIRE SALE ITA NO.1946/MDS/2016 :- 7 -: PROCEEDS WERE INVESTED IN CAPITAL GAINS BONDS AND T HE DIFFERENCE WAS ON ACCOUNT OF ESTIMATION BETWEEN THE DVO AND THE ACTUA L SALE CONSIDERATION, WE HOLD THAT THERE IS NO CASE FOR IMPOSITION OF PEN ALTY U/S.271(1)(C) AND THE SAME IS CANCELLED. THE ORDER OF THE LOWER AUTH ORITIES ON IMPOSITION OF PENALTY ON SALE OF AGRICULTURAL LAND IS SET-ASIDE. 8.1 THE SECOND ISSUE FOR IMPOSITION OF PENALTY WAS ESTIMATION OF AGRICULTURAL INCOME. THE ASSESSEE WAS HAVING AGRICULTURAL LANDS TO THE EXTENT OF 11.83 ACRES AND THE MINOR TRUST WHOSE INCOME WAS CLUBBED U/S.64(1) WAS HAVING 33.36 ACRES OF AGRICULTURAL LAND. THE TOTAL AGRICULTURAL LAND WORKS OUT AROUND 48 ACRES. THE ASSESSEE ADMITTED AGRICUL TURAL INCOME OF RS.7,88,000/- AND THE AO HAS RESTRICTED IT TO RS.2, 88,010/- ON ESTIMATION BASIS. FROM THE PERUSAL OF THE ASSESSMENT ORDER, I T IS OBSERVED THAT THE AO HAS MADE PURE ESTIMATION WITHOUT ANY SCIENTIFIC BASIS. THE AO HAS NOT ESTABLISHED THAT THE ASSESSEE HAS CONCEALED THE INC OMEOR FURNISHED THE INACCURATE PARTICULARS. THEREFORE, WE CANCEL THE P ENALTY IMPOSED BY THE AO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. 8.2 THE THIRD ADDITION MADE BY THE AO WAS THE ADDIT ION ON ACCOUNT OF UNDISCLOSED BANK ACCOUNT. THE ASSESSEE WAS HAVING BALANCE AS ON 31.03.2011 A SUM OF RS.3,63,078/- IN PUNJAB NATIONAL BANK IN SB A/C NO. 692/- (PAGE NO.59). THE SAID ACCOUNT WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING S, IT HAS COME TO THE NOTICE OF THE AO REGARDING THE OUTSTANDING BALANCE IN THE BANK ACCOUNTS ITA NO.1946/MDS/2016 :- 8 -: AND ITS NON-DISCLOSURE. THE ASSESSEE TRIED TO EXPL AIN THE SOURCES AS RENT ADVANCE RECEIVED FROM TENANTS FOR LETTING OUT THE G ODOWN LAND AND BUILDING AT ALAMATHI VILLAGE BUT NO EVIDENCE HAS BE EN FURNISHED BY THE ASSESSEE. THE ASSESSEE HAS NOT GONE ON APPEAL AND THE ADDITION HAS BECOME FINAL. THE AO IMPOSED PENALTY AND THE LD.CIT (A) CONFIRMED THE PENALTY. THE LD.AR ADMITTED THAT NON-DISCLOSURE OF ACCOUNT WAS A MISTAKE AND NO EVIDENCE WAS PRODUCED IN SUPPORT OF LETTING OUT THE PREMISES FOR GODOWN DURING RELEVANT PERIOD. THEREF ORE, THE AO HAS RIGHTLY MADE THE ADDITION AND LEVIED PENALTY AND THE LD.CIT (A) CONFIRMED THE PENALTY. THIS IS A CLEAR CASE OF CONCEALMENT OF IN COME AND WE UPHOLD THE ORDER OF THE LD.CIT(A) IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 26 TH MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF