MAHENDRAKUMAR DULCHND JAIN, THANE V. ITO WD 1(2), KALYAN

ITA 2122/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5091 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Capital asset; Bonafide belief; Ignorance of law
• Section: 27; 271(1)(c); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM ITA NO. 2122 /MUM/ 2017 (ASSESSMENT YEAR: 2010 - 11 ) M/. MAHENDRA KUMAR DULCHAND JAIN H. NO. 1443, B. NO. 204, RAHUL APARTMENT, AGRA ROAD, KANERI, BHIWANDI, DIST. THANE: 421 302 VS. ITO WARD 1(1), KALYAN PAN/GIR NO. ADCPJ 0194 P ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 04.12.2018 DATE OF PRONOUNCEMENT : 07.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, THANE (LD.CIT(A) FOR SHORT) DATED 17.06.2016 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2010 - 11, RELATING TO LEVY OF PENALTY U/S. 271(1)(C) OF RS.5,10,369/ - . 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. THE LD. CIT APPEAL FAILED TO CONSIDER THAT THE APPELLANT HAD AGREED FOR THE ADDITION ON THE CONDITION THAT NO PENALTY PROCEEDING SHALL BE INITIATED AGAINST HIM. THEREFORE THE IMPUGNED PENALTY AMOUNTS TO BREACH OF CONDITION ON THE PART OF AO, AND AS SUCH, LIABLE TO BE ANNULLED. 2. THE LD. CIT APPEAL ERRED IN NOT CONSIDERING THE FACT THAT THE LD. AO DID NOT CONSIDER THE WRI TTEN SUBMISSION FILED BY THE APPELLANT AND PASSED THE IMPUGNED PENALTY ORDER MECHANICALLY AND THEREFORE THE SAME IS CONTRARY TO LAW AND FACTUALLY INCORRECT. 3. THE LD. CIT APPEAL ALSO FAILED TO CONSIDER THAT THE APPELLANT WAS UNDER BONAFIDE BELIEF THAT THE TRANSACTION OF LAND IN QUESTION IS EXEMPT FROM TAXATION, SINCE THE STATUS THEREOF IS AGRICULTURAL LAND IN REVENUE RECORDS, AND AS SUCH, THE NON - DISCLOSURE OF PROFIT THERE FROM IS DUE TO IGNORANCE OF LAW AND THEREFORE THE IMPUGNED PENALTY ORDER IS CONTRARY TO LAW AND FACTS. 2 ITA NO.2122/MUM/2017 3. BRIEF FACTS OF THE CASE ARE AS UNDER: IN THIS CASE, THE RETURN OF INCOME WAS FILED ON 24.03.2011, DECLARING TOTAL INCOME AT RS 6.50,000/ - , FROM TRANSPORT BUSINESS, AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, THE STATUTORY NOTICES U/S 143(2) / 142(1) OF THE ACT, WERE ISSUED AND SERVED UPON THE ASSESSEE TO EXAMINE THE DETAILS OF IMMOVABLE PROPERTY/ LAND SOLD ON 09.02.2010, F OR TOTAL CONSIDERATION OF RS .61,36,000/ - . THE ASSESSEE HAD NOT DISCLOSED ANY DETAILS, ABOU T THE TRANSACTION OF THE SAID LAND, IN THE RETURN OF INCOME, FILED WITH T HE DEPARTMENT. IN COMPLIANCE , DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED WORKING OF S T CG AND CLAIMED THE S AME AS EXEMPT BEING AGRICULTURAL LAND. THE LAND UNDER QUESTION CLAIMED TO HAVE BEEN PURCHASED ON 18.01.2008 FOR RS 15 LAKHS AND THE SAME WAS SOLD WITHIN SPAN OF TWO YEARS. THE ASSESSEE CLAIMED TO HAVE INCURR ED THE BROKERAGE EXPENSES OF RS. 15,0,000/ - AGAINS T PURCHASE OF LAND AND RS. 5 , 25 , 000/ - AGAINST SALE OF LAND. THE A.O., HOWEVER, RESTRICTED THE ABOVE EXPENSES @2% OF THE PURCHASE AS WELL AS SALE CONSIDERATION AND THE BALANCE WAS DISALLOWED. IN ADDITION TO THE ABOVE, THE ASSESSEE CLAIMED TO HAVE INCURRED STAMP DU TY AND EXPENSES OF RS. 3 , 13 , 200/ - AGAINST PURCHASE OF LAND AND RS . 23 , 50 , 000/ - FOR CONSTRUCTION OF WALL AROUND THE PLOT AND RS . 1,68,400/ - FOR STAMP DUTY FOR SALE OF LAND. IN COMPLIANCE, THE ASSESSEE COULD NOT ESTABLISH THE CLAIM OF AGRICULTURAL LAND WITH CREDIBLE DOCUMENTS AS THE LAND WAS SITUATED WITHIN THE MUNICIPAL LIMITS, AS PER THE PROVISION OF THE SECTION. 4. AFTER CONSIDERING THE ABOVE EXPENSES, THE ASSESSES HAS DETERMINED THE STCG AT RS . 10,54,600 / - AND OFFERED THE SAME FOR TAXATION, VIDE L E TTER DATED 02.03.2013. THE AO. HOWEVER, DETERMINED THE VALUE OF THE CAPITAL GAIN AT RS .16, 51 , 680/ - AND ASSESSED THE 3 ITA NO.2122/MUM/2017 INCOME AT RS . 23 , 01,680/ - , AS AGAINST THE RETURNED INCOME OF RS .6, 50 , 000/ - AND ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT. THE AS SESSEE DID NOT CHALLENGE THE ABOVE ORDER OF THE AO. ACCORDINGLY, A LETTER WAS ISSUED TO THE ASSESSEE TO SHOW - CAUSE AS WHY THE PENALTY U/S. 271(L)(C) OF THE ACT, SHOULD NOT BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME . 5. THE ASSESSEE RESPONDED AS UNDER: 'IN THE RETURN OF INCOME, MY CLIENT HAD DECLARED NIL CAPITAL GAIN ON SALE OF AGRICULTURAL LAND, THE REASON BEING AGRICULTURAL LAND BEING EXEMPTED FROM THE DEFINITION OF CAPITAL ASSETS. MY CLIENT HAS ALSO INCURRED CERTAIN EXPENSES LIKE BROKERAGE, SOIL FILLING EXPENSES ETC ON SALE OF THE SAID LAND. HOWEVER, DURING THE COURSE OF ASSESSMENT THE SOLD LAND WAS NO T TREATED AS AGRICULTURAL LAND AS THE SAID LAND WAS LOCATED WITHIN THE JURIS DICTION OF BHIWANDI MUNICIPAL CORPORATIO N. HENCE THE ADDITIONAL CAPITAL GAIN OF RS .10,54,600/ - WAS ACCEPTED BY ME ON THE CONDITION THAT NO PENALTY BE INITIATED U/S 271 ( L)(C) OF THE INCOME - TAX ACT, 1961, ALSO DURING THE COURSE OF ASSESSMENT OUT OF TO T AL BROKERAGE ON PURCHASE OF RS 1 ,50,000/ - WHIC H WAS SUPPORTED BY STAMPED VOUCHER WAS DISALLOWED. THE ADDITION O F RS.1 ,20, 000/ - WAS ACCEPTED ON THE CONDITION THAT NO PENALTY BE INITIATED U/S 271(L)(C) OF THE INCOME - TAX ACT, 1961. ALSO DURING THE COURSE OF ASSESSMENT OUT OF TOTAL BROKERAGE ON SALE OF RS . 5,25,000/ - WHICH WAS SUPPORTED BY STAMPED VOUCHER AND PAID BY A/C PAYEE CHEQUE RS 4.02.280/ - WAS DISALLOWED. THE ADDITION OF RS .4,02,280/ - WAS ACCEPTED ON T HE CONDITION THA T NO PENALTY BE INITIATED U /S. 27L(L)(C) OF THE INCOME - TAX ACT. 1961. ALSO DURING THE COURSE OJ ASSESSMENT DISALLOWANCE OF RS. 74,800/ - BEING GATE EXPENSES WAS ACCEPTED ON THE CONDITION THAT NO PENALTY BE INITIATED U/S 271(L)(C) OF THE INCOME - TAX ACT, 1961. SO CONSIDERING THE ABOVE FACTOR AND THERE BEING NO CONCEALMENT, I REQUEST YOU TO DROP THE PENALTY PROCEEDING U/S 27 1 ( 1 )(C) IN RESPECT O F MY CLIENT FOR A YR 2010 - 1 7.'' 6. HENCE, THE A.O. WAS NOT CONVINCED. HE LEVIED A PENALTY OF RS .5,10,369/ - . THE LD. CIT(A) CONFIRMED THE SAME. 7. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE DESPITE NOTICE SENT. THE NOTICE SENT HAS RETURNED UNSERVED. 4 ITA NO.2122/MUM/2017 HENCE, WE PROCEEDED TO A DJUDICATE THE ISSUE BY HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS . 9. WE FIND THAT ALL THE PARTICULARS OF ASSESSEES CLAIM WERE DULY AVAILABLE BEFORE THE A.O. THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULAR S OF INCOME. JUST BECAUSE THE A.O. WAS NOT IN AGREEMENT WITH THE CLAIM OF THE ASSESSEE, WHICH CANNOT BE SAID TO BE EX - FACIE BOGUS, PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. THIS PROPOSITION IS DULY SUPPORTED BY THE HON'BLE APEX COURT DECISION IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). 10. ACCORDINGLY, WE SET ASIDE THE ORDER S OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 11. IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 . 0 2 . 2 0 1 9 S D / - S D / - ( SANDEEP GOSAIN ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 0 7 . 0 2 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI