Dr. Satish N. Shah, Baroda V. The ACIT, Circle 5, Baroda

ITA 2000/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0551 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2000/AHD/2013 / ASSTT. YEAR: 2008-2009 DR.SATISH N. SHAH C/O.BARODA NURSING HOME ANANDPURA, NR.GOVT. PRESS RAOPURA, BARODA. VS ACIT, CIR.5 VADODARA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI SATISH SOLANKI, SR.DR / DATE OF HEARING : 27/07/2016 / DATE OF PRONOUNCEMENT: 08/09/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD.C IT(A)-V, BARODA DATED 8.4.2013 PASSED FOR THE ASTT.YEAR 2008-09. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1,06,000/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RET URN OF INCOME ON 30.9.2008 DECLARING TOTAL INCOME AT RS.13,16,930/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT REVEALED TO THE AO THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.6 LAKHS IN THE BALANCE SHEET AS AN AD VANCE AGAINST SALE OF SAMIR FLATS ON THE LIABILITY SIDE. WHEN THE AO HAS CONFR ONTED THE ASSESSEE, HE DISCLOSED THAT TWO FLATS AT SAMIR BUILDINGS WERE SO LD BY THE ASSESSEE AT A PRICE OF RS.6 LAKHS. THE PRICE RECEIVED HAS BEEN SHOWN I NADVERTENTLY AS ADVANCE ITA NO.2000/AHD/2013 2 AGAINST SALE OF SAMIR FLATS. ACCORDING TO THE ASSE SSEE, AMOUNT OF RS.6 LAKHS REPRESENTED AGGREGATE CONSIDERATION RECEIVED BY HIM FOR BOTH FLATS. ACCORDINGLY, HE OFFERED LONG TERM CAPITAL GAIN ON T HESE FLATS. THE LD.AO, ACCORDINGLY, COMPUTED LONG TERM CAPITAL GAIN AND IN ITIATED PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. HE IMPOSED PENALTY O F RS.1,06,000/- WHICH HAS BEEN CONFIRMED BY THE LD.CIT(A). 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE ISSUE. THEREFORE, IT IS PERTINENT TO TAKE NOTE OF THE SECT ION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR ITA NO.2000/AHD/2013 3 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 5. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. ITA NO.2000/AHD/2013 4 UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 6. IN THE LIGHT OF THE ABOVE, IF I CONSIDER THE FAC TS OF THE PRESENT CASE, THEN, IT WOULD REVEAL THAT QUESTION BEFORE ME WHETHER NON -DISCLOSURE OF THE CAPITAL GAIN ON SALE OF TWO FLATS AT THE END OF THE ASSESSE E IS DELIBERATE ACTION OR IT WAS A BONA FIDE MISTAKE. THE EXPLANATION OF THE ASSESSEE IS THAT IN THE BOOKS IT HAS WRONGLY BEEN SHOWN AS AN ADVANCE. WHEN THIS MISTAK E WAS REALISED, THEN IMMEDIATELY, IT WAS RECTIFIED AND THE LONG TERM CAP ITAL GAIN WAS COMPUTED. TO MY MIND, THE AO FAILED TO BRING ANY EVIDENCE ON THE RECORD, WHICH DEMONSTRATE THAT THIS EXPLANATION WAS FALSE OR NOT A BONA FIDE ONE. HAD THE ASSESSEE AN INTENTION TO WITHHOLD PAYMENT OF TAXES ON CAPITAL GAIN, HE WOULD HAVE NOT RECORDED THE AMOUNT IN THE BOOKS, BECAUSE THAT COULD AVOID VERIFICATION OF THE ACCOUNTS BY THE REVENUE AUTHORI TIES. CONSIDERING ALL THE ITA NO.2000/AHD/2013 5 FACTS AND CIRCUMSTANCES, I AM OF THE VIEW THAT IT W AS A BONA FIDE MISTAKE COMMITTED BY THE ASSESSEE, WHICH IS HUMANLY POSSIBL E, THEREFORE, THE ASSESSEE SHOULD NOT BE EXPOSED TO THE PENALTY PROCEEDING, AN D I ALLOW THE APPEAL OF THE ASSESSEE AND DELETE PENALTY. 7. IN THE RESULT, APPEAL OF THE APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER