Sh. Gurdev Singh S/O Santokh Singh, SBS Nagar V. The Income Tax Officer, Nawanshahr

ITA 202/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7755 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: SUDARSHAN KAPOOR LD
• Keywords: Capital asset; Bonafide belief; Cost of acquisition
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.202(ASR)/2016 ASSESSMENT YEAR:2009- 10 GURDEV SINGH S/O SANTOKH SINGH, VPO, SUJJON, DIST: S.B.NAGAR. PAN:BEMPS-4875J VS. INCOME TAX OFFICER, NAWASHAHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUDARSHAN KAPOOR (LD. ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (LD. D.R) DATE OF HEARING:17.08.2017 DATE OF PRONOUNCEMENT: 08.11.2017 ORDER PER N.K.CHOUDHRY: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 30.07.201 2 PASSED BY THE LD. CIT(A), JALANDHAR, IN APPEAL NO.169/12-13 FOR A SST. YEAR:2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-I, JALANDHAR HAS GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE PENALTY OF RS.8,47,410/- LEVIED U/S.271(L)(C) OF INCOME TAX AC T BY THE A.O. THE PENALTY WAS WRONGLY LEVIED AND THE SAME HAS BEEN WR ONGLY UPHELD BY THE LD.CIT(A). 2. THAT THE PENALTY PROCEEDINGS WERE WRONGLY STAR TED WITHOUT ANY LAWFUL BASIS AND THE PENALTY HAD ALSO BEEN WRONGLY IMPOSED AND THE SAME IS UNJUST, UNLAWFUL AND HIGHLY EXCESSIVE. 3. THAT THE APPELLANT HAD NOT CONCEALED THE PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND THE PENALTY HAS BEEN IMPOSED WITHOUT ANY LEGAL JUSTIFICATION. ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 2 4. THAT THE OBSERVATIONS MADE ARE AGAINST FACTS A ND ARE BASED ON SURMISES & CONJECTURES AND DO NOT AFFORD ANY LEGAL JUSTIFICATION TO THE IMPOSITION OF PENALTY. IN ANY CASE, ALL THE FACTS & CIRCUMSTANCES OF THE CASE AND THE EXPLANATION GIVEN AND EVIDENCE AVAILAB LE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND HAVE NOT BEEN JUDICIAL LY INTERPRETED AND THE PENALTY HAS BEEN WRONGLY IMPOSED. 5. THAT IN ANY CASE, THE ALLEGED APPROVAL OF THE J OINT COMMISSIONER OF INCOME TAX, RANGE-II, JALANDHAR U/S.274(2) VIDE HIS OFFICE LETTER DATED 25.06.2012, IS GRANTED WITHOUT APPLICATION OF MIND, IN A MECHANICAL MANNER AND WITHOUT AFFORDING OPPORTUNITY TO THE APP ELLANT AND THE | IMPOSITION OF PENALTY IS UNLAWFUL EVEN ON THIS ACCO UNT. 6. THAT PENALTY IS NOT AUTOMATIC AND THE PENALTY CAN NOT BE IMPOSED MERELY ON THE BASIS OF ANY J ADDITION MADE. UNDER THE CIRCUMSTANCES, THE PENALTY IMPOSED IS ILLEGAL, UNJUST AND UNLAWFUL. 7. THAT THE SURRENDER WAS MADE TO AVOID LITIGATIO N AND TO BUY PEACE OF MIND SUBJECT TO NO PENALTY AND ANY OTHER PENAL ACTI ON AND WITH FURTHER SPECIFIC SUBMISSION THAT IT SHOULD BE TREATED AS AD MISSION ON THE PART OF THE ASSESSEE. THE LD. A.O. HAS NOT BROUGHT ON RECOR D ANY FURTHER INDEPENDENT EVIDENCE THAT THE AMOUNT ACTUALLY BELON GS TO THE ASSESSEE AND THE PENALTY HAS BEEN WRONGLY IMPOSED AND THE SA ME IS UNJUST AND UNLAWFUL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: IN THE INSTANT CASE, THE ASSESSEE BEING AN INDIVIDUAL FI LED ITS RETURN OF INCOME ON 8 TH OCTOBER, 2009 BY DECLARING INCOME OF RS.1,40,000/- AS WELL FROM AGRICULTURAL AT RS.3,00,000/ - AND THE SAME WAS PROCESSED U/S 143(1) OF THE I.T. ACT AND LATER ON, IT WAS REVEALED BY THE DEPARTMENT THAT THE ASSESSEE HAS CASH DEPOSIT OF RS.22,50,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH THE HDFC BANK, NAWANSHAR DURING THE FINANCIAL YEAR 2008-09 IN ACCOUNT NO.69, 602 & 25275, AND ON CONFRONTATION, THE ASSESSEE SURRENDER ED THE AMOUNT OF RS.22,50,000/- FOR THE ASST. YEAR 2009-10 I N ORDER TO BUY PEACE OF MIND AND VIDE LITIGATION AND SUBJECT TO NO PE NALTY AND ANY OTHER PENALTY ACTION ON THE PART OF THE DEPARTMENT. FURTHER, IT WAS ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 3 ALSO REVEALED THAT INTEREST OF RS.2,89,769/- ALSO STANDS CREDITED IN THE SAVING BANKS ACCOUNTS OF ASSESSEE HELD WITH HDFC BANK, NAWAN SHAR AND THE ASSESSEE HAD ONLY DECLARED SAVING BANK INTEREST OF RS.22,000/- ONLY IN HIS RETURN OF INCOME AND ON QUESTI ONING THE ASSESSEE ADMITTED THE MISTAKE AND AFTER DISCUSSION, THE ASSESSI NG OFFICER MADE ADDITION OF RS.2,69,769/- IN THE TAXABLE INCOME OF THE ASSESSEE AND FINALLY THE ASSESSING OFFICER INITIATED THE PEN ALTY PROCEEDINGS WHILE ISSUING OF NOTICE U/S 271(1) (C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME. SUBSEQUENTLY, VIDE ORDER DATED 26.06.2012 THE LD. A SSESSING OFFICER PASSED AN ORDER U/S 271(1) (C) OF THE ACT WHILE LEVYING OF PENALTY OF RS.8,47,410/- WHICH WAS CHALLENGED BY THE ASS ESSEE BEFORE THE LD. CIT(A). THE ASSESSEE HAS RELIED UPON THE MANY JU DGMENTS AND ALSO FILED DETAILED REPLY IN SUPPORT OF ITS CASE, HOWEVE R, THE LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER FOR LE VYING OF PENALTY BY HOLDING AS UNDER: 14. THE PROVISIONS OF EXPLANATION TO 271(1)(C) OF I.T. ACT READS AS UNDER:- ' 1. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT. (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [COMMISSION ER(APPEALS)][OR THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER] TO BE FAL SE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE [AND JAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM] 15. IT CAN BE SEEN FROM THE ASSESSMENT ORDER, PARA 5.4 THAT THE ASSESSEE HAS NOT FILED SCHEDULE AIR IN THE RETURN OF INCOME CORR ECTLY AND OMITTED THE INFORMATION REGARDING CASH DEPOSITS, COULDNT SUBST ANTIATE IT AT ALL DURING THE ASSESSMENT PROCEEDINGS, THE EXPLANATION ADVANCE D ALSO CANT BE SAID TO BE BONAFIDE AND CORRECT IN VIEW TO THIS. TILL NO W, EXCEPT CONTESTING THE CASE ON SOME LEGAL ARGUMENTS, NOTHING ON FACTS HAVE BEEN ADDED BY THE ASSESSEE, AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION ON THAT THE LEVY OF PENAL TY U/S 271(1) (C) OF I.T. ACT HAS TO BE UPHELD. 16. IN THE RESULT, THE PENALTY LEVIED U/S 271(1)(C) OF I.T. ACT AT RS.8,47,410/- IS HEREBY CONFIRMED. GROUND NO.2 IS THUS DECIDED. ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 4 4. THE ASSESSEE FURTHER CARRIED THE MATTER BEFORE THE ITAT BENCH AT AMRITSAR AND IN SUPPORT OF ITS CASE FILED AN APPLICATION UNDER RULE-29 OF THE ITAT AND ALSO FILED THE RELEVANT DOCUMENT WITH REGARD TO THE TRANSACTION OF RS.22,50,000/- IN HIS SAVING BANK ACCOUNT. THE LD. AR SUBMITTED THAT ASSESSEE HAD RECEIVED THE AMOUNT OF RS.22 ,50,000/- FOR A PROPERTY DEAL AND DUE DOCUMENTS WERE EXECUTED, HOWEVER, DUE TO CERTAIN REASONS, THE DEAL COULD NOT MATURED AND BEIN G IGNORANT OF INTRICACIES OF THE INCOME TAX ACT, THE ASSESSEE COULD NOT RE TAIN THE DOCUMENTS PERTAINING TO DEAL. FURTHER, IT WAS SUBMITTE D ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE ALTHOUGH TRIED TO CONTACT MR. GURNAM SINGH (WHO WAS THE PURCHASER OF THE PROPERTY) BUT HE W AS OUT OF SATIATION, THEREFORE COULD NOT BE PRODUCED BEFORE THE REVENUE AUTHORITIES. EVEN OTHERWISE, IT WAS ALSO SUBMITTED THE D OCUMENTS PERTAINING TO THE LAND WAS ALSO LYING WITH HIM, HOWEV ER, BEING A LAW ABIDING CITIZEN AND DO NOT WANT TO ENTER INTO MUCH LI TIGATION AND KEEPING IN VIEW TO AVOID LITIGATION, THE ASSESSEE HAD SU RRENDERED THE AMOUNT OF RS.22,50,000/- IN HIS INCOME FOR THE ASST. YEA R.2009-10 IN ORDER TO BUY PEACE OF MIND AND TO AVOID LITIGATION A ND SUBJECT TO NO PENALTY AND ANY OTHER PENAL ACTION. FURTHER THE ASSESSEE RELIED UPON THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH C OURT IN 121 ITR 834 (P&H) WHEREIN IT WAS HELD THAT WHERE THERE IS NO MATERIAL BEFORE THE ITO TO GIVE DEFINITE FINDING AND HE DID NOT PROBE INTO THE MATTER ON THE BASIS OF OFFER MADE BY THE ASSESSEE, THE A SSESSEE CANNOT BE PENALIZED AND THE OFFER OF THE ASSESSEE TO AD D A CERTAIN AMOUNT IN HIS TOTAL INCOME FOR ASSESSMENT PURCHASE CANNOT BE CALLED A DEFINITE INCOME OF THE ASSESSEE FOR PENALTY PURPOSES. AS OB SERVED EARLIER, IT WAS ONLY TO AVOID FURTHER LITIGATION AND TO HAVE PEACE OF MIND THAT THE ASSESSEE AGREED TO AFORESAID ADDITION OF RS.23,054/- FOR THE ASSESSMENT PURPOSES. IF IN SUCH CASES THAT STRICT VIEW IS TA KEN AND ON A VOLUNTARY OFFER OF A CERTAIN AMOUNT FOR ASSESSMENT PURPOSES THE ASSESSEE ARE TO BE PENALIZED, THEN NOT ASSESSEE WOULD COME F ORWARD ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 5 FOR ASSESSMENT ON AN AGREED AMOUNT AND THIS WOULD INVOLV E LOT OF TIME OF ENFORCEMENT STAFF IN MAKING INQUIRIES ABOUT THE REA L INCOME OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDE R PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE GONE THROUGH WITH THE FACT AND CIRCUMSTANCES OF THE CASE, AS WE REALIZE THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) TAKEN INTO CONSIDERATION THAT THE ASSESSEE OMITTED INFOR MATION REGARDING CASH DEPOSITS AND COULD SUBSTANTIATE AT ALL DU RING THE ASSESSMENT PROCEEDINGS, AND TILL NOW NOTHING OF FACTS HAV E BEEN ADDED BY THE ASSESSEE, THEREFORE, THE PENALTY WAS LEVI ED. BEFORE US, THE ASSESSEE HAS FILED AN APPLICATION U/S 29 O F THE I.T. RULES ALONG WITH THE AFFIDAVIT OF THE ASSESSEE AND BROKE R SH. RAJ KUMAR AND COMPUTER TYPE WRITER SH. SARSHAN RAM. FROM THE REVENUE RECORDS THE ASSESSEE HAS TRIED TO ESTABLISH THAT HE IS THE CO- OWNER ALONG WITH OF 4 KANALS, 8 MARLAS LAND BEARING K HASRA NO.3003/16 SITUATED AT VILLAGE SURAPUR, NAWANSHAHR , ALONG WITH HIS YOUNGER BROTHER SH. HARJEET SINGH AND WHOSE GENERAL P OWER ATTORNEY WAS ALSO IN FAVOUR OF ASSESSEE AND THE ASSESSEE HAD AGREED TO SELL THE SAID AGRICULTURAL LAND TO SH. GURNAM SINGH RESIDENT O F VPO, JHANDER KALAN, NAWANSHAHAR FOR RS.80,00,000/- DURING THE FINA NCIAL YEAR 2008-09 AND HAD RECEIVED AMOUNT OF RS.22,50,000/- BY CASH AS ADVANCED AND OUT OF THAT THE ASSESSEE HAD DEPOSITED RS.2 0,00,000/- BY CASH IN HIS SAVING BANK ACCOUNTS. FURTHER, THE PURCHASER SH. GURNAM SINGH HAD GONE ABROAD AND DEAL COULD NOT MATU RED AND THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS STILL OWNER O F THE SAID AGRICULTURAL LAND WHICH REFLECTS FROM THE ORIGINAL JAMA BANDI. FURTHER IN THE AFFIDAVIT THE ASSESSEE SUBMITTED THAT HIS INTENTION WAS TO RETURN THE AMOUNT WITH INTEREST TO SH. GURNAM SINGH AND THE REFORE, THE ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 6 AMOUNT AS WELL AS THE INTEREST AMOUNT FROM THE BANK WA S NOT DECLARED AS HIS INCOME. THE AFORESAID DEPOSITIONS FURTHER CORROBORA TED BY THE AFFIDAVITS OF SH. RAJKUMAR (PURCHASER BROKER) , ALSO CO NFIRMED THE SAID DEAL AS WELL AS RECEIVING OF ADVANCE OF RS.22.50 LACS AND SH. RAJ KUMAR FURTHER DEPOSED THAT THE TOTAL SALE CONSIDERATIO N OF THE AGRICULTURAL LAND WAS RS.80,00,000/- AND THAT BEING A PROPERTY BROKER HAD RECEIVED AN AMOUNT OF RS.20,000/- AS BROKERAGE FRO M SH. GURNAM SINGH. FURTHER ESTABLISHED THAT THE SALE AGREEMENT WA S COMPUTER TYPED FROM SH. DARSHAN RAM S/0 SH. SAT PAL WHO IS A D EED WRITER IN THE TEHSIL, NAWANSHAHAR. FURTHER HE ALSO WITNESSED THE SA LE AGREEMENT. FURTHER BY AFFIDAVIT OF SH. DARSHAN RAM, IT WAS ESTABLISHED THAT SH. DARSHAN RAM HAVE BEEN WORKING AS COMPUTER DEED WRITER IN THE TEHSIL, NAWANSHAHAR FOR THE LAST MA NY YEARS AND HE HAD TYPED THE SALE AGREEMENT EXECUTED BETWEEN SH. GURNAM SINGH AND SH. GURDEV SINGH AND BOTH HAD SIGNED THE SALE AGR EEMENT AT HIS SHOP SITUATED IN TEHSIL, NAWANSHAHAR, HOWEVER, THE SALE AGREEMENT WAS NOT REGISTERED WITH THE SUB-REGISTRAR. AS IN THE INSTANT CASE, IT WAS FAIRLY SUBMITTED BY THE LD. AR THAT ALTHOUGH APEX COURT JUDGMENT PASSED IN THE CASE OF MAK DATA P. LTD. VS. CIT ( (2014) 1 SCC 674) IS AGAINST THE ASSESSEE , HOWEVER, THE DIFFERENCE CAN DRAWN BETWEEN THE COMPANIES AND RUSTIC V ILLAGERS OR COMMON MAN. LET US TO REPRODUCE RATIO LAID DOWN BY APEX COURT IN MAK DATA CASE (SUPRR):- PARA 7. THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AW AY BY THE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEACE', 'AVOID LITIGATION' , 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 7 THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS S HIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCO ME AND NOT OTHERWISE. 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDI TIONAL SUM OF RS.40,74,000/- WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. STATUTE DO ES NOT RECOGNIZE THOSE TYPES OF DEFENSES UNDER THE EXPLANATION 1 TO SECTI ON 271(L)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES N OT RELEASE THE APPELLANT-ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDING S. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLO SURE OF HIS CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALTY. 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN TH IS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT TH E SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APP LICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, A FFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER HTTP://WWW.ITATONLINE.ORG PAGE 8 8 DEEDS DUL Y SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECT ION 133A CONDUCTED ON16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF TH E ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED T HE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED L ATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLE AR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT I S THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE B OOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DE CLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR.THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATI SFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIAB LE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. FROM THE JUDGMENT REFERRED ABOVE, IT IS TRITE TO SA Y THAT SURRENDER OF INCOME SUBJECT TO BUY PEACE OF MIND OR TO AVOID LITIGATION AND NO PENAL ACTION IS NO MORE ACCEPTABL E. HOWEVER, AS THE LD. AR RESPECTFULLY SUBMITTED THAT IN THE AFORE SAID CASE, THE ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 8 HON'BLE SUPREME COURT DEALT WITH THE CASE OF THE COM PANY BUT IN THE INSTANT CASE, THE ASSESSEE IS RUSTIC VILLAGER A ND DID NOT KNOW ABOUT THE INTRICACIES OF THE LAW, THEREFORE, SURREN DERED THE INCOME, WE FEEL THAT THE ID. COUNSEL HAS BONAFIDE CORRECT B ELIEF, HOWEVER WE FEEL IT APPROPRIATE TO DEAL THE INSTANT CASE UNDER THE PARAMETERS OF INCOME TAX LAWS AND LAW SETTLED BY APEX COURT. RECENTLY THE HON'BLE APEX COURT , IN CIVIL APPEAL NO . 15619 OF 2017 COMMISSIONER OF INCOME TAX VERSUS BALBIR SI NGH MAINI, WHILE DEALING WITH ISSUE OF CAPITAL GAIN AND SALE O F PROPERTY LAID DOWN THE FOLLOWING RATIO:- 17. THE RELEVANT SECTIONS THAT ARE NECESSARY FOR US TO DECIDE THE PRESENT MATTER ARE AS UNDER: TRANSFER OF PROPERTY ACT 53A. PART PERFORMANCE. WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDER ATION ANY IMMOVEABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE A SCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMA NCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERF ORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, A ND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT WHERE THERE IS AN INSTRUMENT O F TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESC RIBED THEREFORE BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSF EREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF W HICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGH T EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF. INCOME TAX ACT SECTION 2 - DEFINITIONS IN THI S ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, - (4 7) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES, - (I)TO (IV) XXX XXX XXX (V) ANY TRANSACTION INVOLVING THE ALLOWING OF TH E POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSF ER OF PROPERTY ACT, 1882 (4 OF 1882); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMIN G A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 9 PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEME NT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, O R ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. 45. CAPITAL GAINS (1) ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVI DED IN SECTIONS 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G AND 54H, BE CHARGEAB LE TO INCOME-TAX UNDER THE HEAD *CAPITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. 48. MODE OF COMPUTATION THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS ' SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOL LOWING AMOUNTS, NAMELY: (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; II) THE COST OF ACQUISITION OF THE ASSET AND THE CO ST OF ANY IMPROVEMENT THERETO: 18. SECTION 53A, AS IS WELL KNOWN, WAS INSERTED BY THE TRANSFER OF PROPERTY AMENDMENT ACT, 1929 TO IMPORT INTO INDIA THE EQUITA BLE DOCTRINE OF PART PERFORMANCE. THIS COURT HAS INSHRIMANT SHAMRAO SURY AVANSHI & ANR. V. PRALHAD BHAIROBA SURYAVANSHI (D) BY LRS. & ORS., (2002) 3 SCC 676 AT 682 STATED AS FOLLOWS: 16. BUT THERE ARE CERTAIN CONDITIONS WHICH ARE REQ UIRED TO BE FULFILLED IF A TRANSFEREE WANTS TO DEFEND OR PROTECT HIS POSSESSIO N UNDER SECTION 53- A OF THE ACT. THE NECESSARY CONDITIONS ARE: (1) THERE MUST BE A CONTRACT TO TRANSFER FOR CONSIDERAT ION OF ANY IMMOVABLE PROPERTY; (2) THE CONTRACT MUST BE IN WRITING, SIGNED BY THE TRA NSFEROR, OR BY SOMEONE ON HIS BEHALF; (3) THE WRITING MUST BE IN SUCH WORDS FROM WHICH THE T ERMS NECESSARY TO CONSTRUE THE TRANSFER CAN BE ASCERTAINED; (4) THE TRANSFEREE MUST IN PART-PERFORMANCE OF THE CON TRACT TAKE POSSESSION OF THE PROPERTY, OR OF ANY PART THEREOF; (5) THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTHERA NCE OF THE CONTRACT; AND (6) THE TRANSFEREE MUST HAVE PERFORMED OR BE WILLING T O PERFORM HIS PART OF THE CONTRACT. 19. IT IS ALSO WELL-SETTLED BY THIS COURT THAT THE PROT ECTION PROVIDED UNDER SECTION 53A IS ONLY A SHIELD, AND CAN ONLY BE RESORT ED TO AS A RIGHT OF DEFENCE. SEE RAMBHAU NAMDEO GAJRE V. NARAYAN BAPUJI DHGOTRA (DEAD) THROUGH LRS. (2004) 8 SCC 614 AT 619, PARA 10. AN AG REEMENT OF SALE WHICH FULFILLED THE INGREDIENTS OF SECTION 53A WAS NOT RE QUIRED TO BE EXECUTED THROUGH A ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 10 REGISTERED INSTRUMENT. THIS POSITION WAS CHANGED BY THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001. AMENDMENTS WERE MADE SIMULTANEOUSLY IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND SECTIONS 17 AND 49 OF THE INDIAN REGISTRATION ACT. BY THE AFORESAID AMENDMENT , THE WORDS THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGI STERED, OR IN SECTION 53A OF THE 1882 ACT HAVE BEEN OMITTED. SIMULTANEOUSLY, SEC TIONS 17 AND 49 OF THE 1908 ACT HAVE BEEN AMENDED, CLARIFYING THAT UNLESS THE D OCUMENT CONTAINING THE CONTRACT TO TRANSFER FOR CONSIDERATION ANY IMMOVABL E PROPERTY (FOR THE PURPOSE OF SECTION 53A OF 1882 ACT) IS REGISTERED, IT SHALL NO T HAVE ANY EFFECT IN LAW, OTHER THAN BEING RECEIVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE OR AS EVIDENCE OF ANY COLLATERAL TRANSACTION NOT RE QUIRED TO BE EFFECTED BY A REGISTERED INSTRUMENT. SECTION 1 7(1A) AND SECTION 49 OF THE REGISTRATION ACT, 1908 ACT, AS AMENDED, READ THUS: 17(1A). THE DOCUMENTS CONTAINING CONTRACTS TO TRA NSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) SHALL BE REGISTERED IF THEY H AVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELA TED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN THEY SHALL HAVE NO EFFECT FOR TH E PURPOSES OF THE SAID SECTION 53A. 49. EFFECT OF NON-REGISTRATION OF D OCUMENTS REQUIRED TO BE REGISTERED. NO DOCUMENT REQUIRED BY SECTION 17 OR B Y ANY PROVISION OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE R EGISTERED SHALL- (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN, OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFECTI NG SUCH PROPERTY OR CONFERRING SUCH POWER, UNLESS IT HAS BEEN REGIST ERED: PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IM MOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTERED MAY BE RECEIVED AS EVIDE NCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE UNDER CHAPTER II OF T HE SPECIFIC RELIEF ACT, 1887 (1 OF 1877) OR AS EVIDENCE OF ANY COLLATERAL T RANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT. 20. THE EFFECT OF THE AFORESAID AMENDMENT IS THAT, ON A ND AFTER THE COMMENCEMENT OF THE AMENDMENT ACT OF 2001, IF AN AGR EEMENT, LIKE THE JDA IN THE PRESENT CASE, IS NOT REGISTERED, THEN IT SHALL HAVE NO EFFECT IN LAW FOR THE PURPOSES OF SECTION 53A. IN SHORT, THERE IS NO AGREEMENT IN THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS BEING THE CASE, WE ARE OF THE VIE W THAT THE HIGH COURT WAS RIGHT IN STATING THAT IN ORDER TO QUALIFY AS A TRANSFER OF A CAPITAL ASSET UNDER SECTION 2(47)(V) OF THE ACT, THERE MUST BE A CONTRACT WHICH CAN BE ENFORCED IN LAW UNDER SECTION 53A OF THE TRAN SFER OF PROPERTY ACT. A READING OF SECTION 17(1 A) AND SECTION 49 OF THE REG ISTRATION ACT SHOWS THAT IN THE EYES OF LAW, THERE IS NO CONTRACT WHICH CAN BE TAKEN COGNIZANCE OF, FOR THE PURPOSE SPECIFIED IN SECTION 53A. THE IT AT WAS NOT CORRECT IN REFERRING TO THE EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A IN SECTION 2(47)(V)IN ORDER TO ARRIVE AT THE OPPOSITE CONCLUSION. THIS EXPRESSION WAS USED BY THE LEGISLATURE EVER SINCE SUB-SECTION (V) WAS INSERTED BY THE FINANCE ACT OF 1987 W.E.F. 01.04.1988. ALL THAT IS ME ANT BY THIS EXPRESSION IS TO REFER TO THE INGREDIENTS OF APPLICABILITY OF SECTION 53A TO THE CONTRACTS MENTIONED THEREIN. IT IS ONLY WHERE THE CONTRACT CO NTAINS ALL THE SIX ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 11 FEATURES MENTIONED IN SHRIMANT SHAMRAO SURYAVANSHI (SUPRA), THAT THE SECTION APPLIES, AND THIS IS WHAT IS MEANT BY THE E XPRESSION OF THE NATURE REFERRED TO IN SECTION 53A. THIS EXPRESSION CANNOT BE STRETCHED TO REFER TO AN AMENDMENT THAT WAS MADE YEARS LATER IN 2001, SO AS TO THEN SAY THAT THOUGH REGISTRATION OF A CONTRACT IS REQUIRED BY TH E AMENDMENT ACT OF 2001, YET THE AFORESAID EXPRESSION OF THE NATURE R EFERRED TO IN SECTION 53A WOULD SOMEHOW REFER ONLY TO THE NATURE OF CONTR ACT MENTIONED IN SECTION 53A, WHICH WOULD THEN IN TURN NOT REQUIRE RE GISTRATION. AS HAS BEEN STATED ABOVE, THERE IS NO CONTRACT IN THE EYE OF LAW IN FORCE UNDER SECTION 53A AFTER 2001 UNLESS THE SAID CONTRACT IS R EGISTERED. THIS BEING THE CASE, AND IT BEING CLEAR THAT THE SAID JDA WAS N EVER REGISTERED, SINCE THE JDA HAS NO EFFICACY IN THE EYE OF LAW, OBVIOUSLY NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE UNDER THE AFORESAID DOCUME NT. SINCE WE ARE DECIDING THIS CASE ON THIS LEGAL GROUND, IT IS UNNE CESSARY FOR US TO GO INTO THE OTHER QUESTIONS DECIDED BY THE HIGH COURT, NAME LY, WHETHER UNDER THE JDA POSSESSION WAS OR WAS NOT TAKEN; WHETHER ONLY A LICENCE WAS GRANTED TO DEVELOP THE PROPERTY; AND WHETHER THE DEVELOPERS WERE OR WERE NOT READY AND WILLING TO CARRY OUT THEIR PART OF THE BA RGAIN. SINCE WE ARE OF THE VIEW THAT SUB-CLAUSE (V) OF SECTION 2(47) OF THE ACT IS NOT ATTRACTED ON THE FACTS OF THIS CASE, WE NEED NOT GO INTO ANY OTHER F ACTUAL QUESTION. 22. THE OBJECT OF SECTION 2(47)(VI) APPEARS TO BE TO BR ING WITHIN THE TAX NET A DE FACTO TRANSFER OF ANY IMMOVABLE PROPERTY. THE EXPRE SSION ENABLING THE ENJOYMENT OF TAKES COLOR FROM THE EARLIER EXPRESSI ON TRANSFERRING, SO THAT IT IS CLEAR THAT ANY TRANSACTION WHICH ENABLES THE ENJOYM ENT OF IMMOVABLE PROPERTY MUST BE ENJOYMENT AS A PURPORTED OWNER THEREOF. THE IDEA IS TO BRING WITHIN THE TAX NET, TRANSACTIONS, WHERE, THOUGH TITLE MAY NOT BE TRANSFERRED IN LAW, THERE IS, IN SUBSTANCE, A TRANSFER OF TITLE IN FACT . 23. A READING OF THE JDA IN THE PRESENT CASE WOULD SHOW THAT THE OWNER CONTINUES TO BE THE OWNER THROUGHOUT THE AGREEMENT, AND HAS A T NO STAGE PURPORTED TO TRANSFER RIGHTS AKIN TO THE MAXIM NOSCITUR A SOCII S HAS BEEN REPEATEDLY APPLIED BY THIS COURT. A RECENT APPLICATION OF THE MAXIM IS CONTAINED IN COASTAL PAPER LIMITED V. COMMISSIONER OF CENTRAL EXCISE, VI SAKHAPATNAM, (2015) 10 SCC 664 AT 677, PARA 25. THIS MAXIM IS BEST EXPLAIN ED AS BIRDS OF A FEATHER FOCKING TOGETHER. THE MAXIM ONLY MEANS THAT A WORD IS TO BE JUDGED BY THE COMPANY IT KEEPS QWNERSHIP TO THE DEVELOPER. AT THE HIGHEST, POSSESSION ALONE IS GIVEN UNDER THE AGREEMENT, AND THAT TOO FOR A SP ECIFIC PURPOSE , THE PURPOSE BEING TO DEVELOP THE PROPERTY, AS ENVISAGED BY ALL THE PARTIES. WE ARE, THEREFORE, OF THE VIEW THAT THIS CLAUSE WILL ALSO N OT ROPE IN THE PRESENT TRANSACTION. 24. THE MATTER CAN ALSO BE VIEWED FROM A SLIGHTLY DIFFE RENT ANGLE. SHRI VOHRA IS RIGHT WHEN HE HAS REFERRED TO SECTIONS 45 AND 48 OF THE INCOME TAX ACT AND HAS THEN ARGUED THAT SOME REAL INCOME MUST ARISE ON THE ASSUMPTION THAT THERE IS TRANSFER OF A CAPITAL ASSET. THIS INCOME M UST HAVE BEEN RECEIVED OR HAVE ACCRUED UNDER SECTION 48 AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. 27. IN THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THE INCOME FROM CAPITAL GAIN ON A TRANSACTION WHICH NEVER MATERIALIZED IS, AT BEST, A HYPOTHETICAL INCOME. IT IS ADMITTED THAT, FOR WANT OF PERMISSIONS, THE ENTIRE TRANSACTION OF DEVELOPMENT ENVISAGED IN THE JDA FELL THROUGH. IN POINT OF FACT , INCOME DID NOT RESULT AT ALL FOR THE AFORESAID REASON. THIS BEING THE CASE, IT I S CLEAR THAT THERE IS NO PROFIT OR ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 12 GAIN WHICH ARISES FROM THE TRANSFER OF A CAPITAL AS SET, WHICH COULD BE BROUGHT TO TAX UNDER SECTION 45 READ WITH SECTION 48 OF THE INCOME TAX ACT. 28. IN THE PRESENT CASE, THE ASSESSEE DID NOT ACQUIRE A NY RIGHT TO RECEIVE INCOME, INASMUCH AS SUCH ALLEGED RIGHT WAS DEPENDENT UPON T HE NECESSARY PERMISSIONS BEING OBTAINED. THIS BEING THE CASE, IN THE CIRCUMSTANCES, THERE WAS NO DEBT OWED TO THE ASSESSEES BY THE DEVELOPERS AND THEREFORE, THE ASSESSEES HAVE NOT ACQUIRED ANY RIGHT TO RECEIVE IN COME UNDER THE JDA. THIS BEING SO, NO PROFITS OR GAINS AROSE FROM THE TRAN SFER OF A CAPITAL ASSET SO AS TO ATTRACT SECTIONS 45 AND 48 OF THE INCOME TAX ACT . FROM THE OBSERVATION OF THE APEX COURT IT CONSTRUE THAT IF AN AGREEMENT TO SELL IS NOT REGISTERED, THEN IT SHALL HAVE NO EFFECT IN LAW FOR THE PURPOSES OF SECTION 53A. IN SHORT, THER E IS NO AGREEMENT IN THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND THAT IN ORD ER TO QUALIFY AS A 'TRANSFER' OF A CAPITAL ASSET UNDER SECTION 2(47)(V ) OF THE ACT, THERE MUST BE A 'CONTRACT' WHICH CAN BE ENFORCEABLE IN LA W UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERT Y TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF TH E NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) CAN ONLY BE SUBJECTED TO TAXATION. A READING OF SECTION 17(1A) AND SECTION 49 OF THE REGISTRATION ACT SHOWS THAT IN TH E EYES OF LAW THAT AS UNREGISTERED AGREEMENT, THERE IS NO CONTRACT WHI CH CAN BE TAKEN COGNIZANCE OF, FOR THE PURPOSE SPECIFIED IN SECTION 53A. THEREFORE IT CAN BE EASILY CONSTRUED AS HAS BEEN STATED ABOVE, T HERE IS NO CONTRACT IN THE EYE OF LAW IN FORCE UNDER SECTION 5 3A AFTER 2001 UNLESS THE SAID CONTRACT IS REGISTERED. WHILE COMING TO THE INSTANT CASE, UNDISPUTEDLY THE AGREEMENT TO SELL WAS NOT REGISTERED AND IT HE SAME WOULD HAVE B EEN REGISTERED THEN CERTAINLY THE ASSESSEE INSTEAD OF FILLING SECO NDARY EVIDENCE, COULD HAVE PRODUCED THE CERTIFIED COPY OF THE AGREE MENT TO SELL OR COULD HAVE SUMMONED THE REGISTRATION AUTHORITY TO B RING ON RECORD ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 13 THE SAID AGREEMENT. AS THE ASSESSEE HAD ONLY RECEIVED PART PAYMENT AND DID NOT HAND OVER POSSESSION OF PROPERT Y AND UNREGISTERED AGREEMENT DOES NOT GIVE ANY RIGHT IN F AVOUR OF THE ASSESSEE TO CLAIM THE CAPITAL GAIN AND ALTHOUGH HE WAS OF THE BONAFIDE BELIEF THAT RECEIVING THE PART PAYMENT AS EARNEST MONEY, HE HAS NOT EARNED ANY INCOME, HOWEVER IN LAW ALSO, WITHOUT EXECUTING THE REGISTERED SALE DEED AND AGREEMENT TO SELL REGISTERING , NO CAPITAL GAIN CAN BE CONSTRUED AS C HARGEABLE UNDER SECTION 45 OF THE INCOME TAX ACT AND THEREFORE THE ASSESSEE WAS NOT LIABLE TO DISCLOSE THE EARNEST MONEY RECEIVED U NTIL AND UNLESS THE AGREEMENT GETS REGISTERED AND DEAL COULD HAVE F INALIZED BY REGISTERED SALE DEAD . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE P ECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, AS THE ASSESSEE BEIN G AN UN- EDUCATED AND RUSTIC VILLAGER ON BONAFIDE BELIEFS, K EPT THE EARNEST MONEY IN HIS BANK ACCOUNT AND WAITED FOR MATURITY O F DEAL AND DID NOT SHOW THE EARNEST MONEY IN HIS INCOME TAX RETURN , AND WAS UNABLE TO DEMONSTRATE HIS TRANSACTIONS OF RS.22,50, 000/- TO THE REVENUE AUTHORITIES, HOWEVER BY FILING AN APPLICATI ON U/S 29 OF THE I.T. RULES TRIED TO SUBSTANTIATE HIS CLAIM IN RESPE CT OF RECEIVING EARNEST MONEY OF RS.22,50,000. NO DOUBT THE SUBMISS IONS OF THE ASSESSEE TO THE EFFECT THAT THE ASSESSEE HAD SURREN DERED THE AMOUNT IN ORDER TO BUY PEACE AND SUBJECT TO NO PENA L ACTION LACKS MERITS. HOWEVER, IN VIEW OF THE JUDGMENT REFERRED AB OVE, WE ARE OF THE VIEW THAT BECAUSE THE ASSESSEE SOLD HIS PROPERT Y BY MAKING UNREGISTERED AGREEMENT TO SELL AND RECEIVED PART PA YMENT ONLY AND SOMEHOW, THE SAID DEAL COULD NOT BE FINALIZED , THE REFORE HE UNDER THE IMPRESSION THAT HE WILL RETURN THE EARNEST MONE Y TO THE BUYER THEREFORE HAS NOT SHOWN THE SAID AMOUNT IN HIS INCO ME, ALTHOUGH THE SAID CIRCUMSTANCES HAVE BEEN EXPLAINED TO THE R EVENUE AUTHORITIES HOWEVER DID NOT YIELD ANY RESULT , THER EFORE WE ARE OF ITA NO.202 (ASR)/2016 ASST. Y EAR:2009-10 14 THE CONSIDERED VIEW THAT THE PENALTY PROCEEDINGS AR E QUASI- CRIMINAL IN NATURE CANNOT BE FASTENED ONLY ON THE P ROBABILITIES AND FROM THE FACTS AS EMERGED THAT THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME, HENCE, WE ORDER FOR DELETION OF PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED AND PENALTY STANDS DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.11.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:08.11.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER