Shri Dhanjibhai N. Patel, Ahmedabad V. The Dy. CIT, Circle-3, Surat

ITA 2155/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2010 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A P NANAVATY
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Bonafide belief; Revised return
• Section: 271(1)(c); 54B; 50C

Judgement Text

DHANJIBHAI N.PATEL V. DCIT-3 SURAT /I.T.A. NO.2155 /AHD/2015/A.Y.11-12 PAGE 1 OF 4 , , INCOM TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT . . , . . , BEFORE C .M. GARG, JM & O. P. MEENA, AM . . ./ I.T.A NO. 2155/AHD/2015: / ASSESSMENT YEAR: 2011-12 SHRI DHANJIBHAI N. PATEL NANAVATY& ASSOCIATES A/18, 3 RD FLOOR NARAYAN CHAMBERS ASHRAM ROAD 380009 PAN: AEZPP 9747 E V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -3, SURAT APPELLANT /RESPONDENT ASSESSEE BY SHRI A. P. NANAVATY, CA REVENUE BY SHRI DILIP KUMAR, SR. D.R. DATE OF HEARING 12.10.2018 DATE OF PRONOUNCEMENT 15.10.2018 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER DATED03.06.2015 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II SURAT (IN SHORT THE CIT (A)) FOR THE ASSESSMENT YEAR 2011-12. 2. GROUND NO. 1 TO 4 ARE AGAINST THE CONFIRMATION OF PENALTY OF RS. 3,77,142 SECTION 271(1)(C) OF THE ACT BY CIT (A). 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CIT (A) HAS FAILED TO APPRECIATE THE ON THE BASIS OF RETURN FILED U/S.147 OF THE ACT , THERE IS NO VARIATION IN THE RETURNED INCOME AND ASSESSED INCOME , HENCE, PENALTY BASED ON RETURN FILED U/S.147 CANNOT BE LEVIED. FURTHER, THE PARTNERS IN SURVEY UNDER SECTION 133A, HAS ADMITTED CAPITAL GAINS ON THE GROUND AND THE PLEA OF TREATING CAPITAL GAINS IN ORDER DHANJIBHAI N.PATEL V. DCIT-3 SURAT /I.T.A. NO.2155 /AHD/2015/A.Y.11-12 PAGE 2 OF 4 TO AVOID LITIGATION CAPITAL GAINS ON SALE OF AGRICULTURAL LAND WHICH WAS EXEMPT AS SUCH AGRICULTURAL LAND ARE NOT CAPITAL ASSET AND THE ASSESSEE HAS ALSO ACQUIRED ANOTHER AGRICULTURAL LAND WITHIN ONE YEAR OF SALE OF ORIGINAL AGRICULTURAL LAND, THE ASSESSEE SHALL BE ENTITLED TO EXEMPTION UNDER SECTION 54B OF THE ACT. THE CIT (A) MERELY NOTED THAT RETURN FILED U/S.147 OF THE ACT CONCEDING CAPITAL GAINS AS TAXABLE CAPITAL GAINS HENCE; IT IS CONCEALMENT OF INCOME, IS NOT CORRECT AND IS NOT SUSTAINABLE IN LAW. 4. PER CONTRA, THE LD. SR. D.R. RELIED ABOUT LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSESSMENT HAS BEEN MADE ON THE RETURNED INCOME DISCLOSED IN THE RETURN FILED U/S.147 OF THE ACT. DURING THE COURSE OF SURVEY PROCEEDINGS, LONG-TERM CAPITAL GAIN OF RS. 36.61 LAKH WAS ADMITTED BY THE ASSESSEE ON THE GROUND THAT THE SALE CONSIDERATION SHOWN IN STAMP DUTY VALUATION WAS MORE THAN THE AMOUNT OF CONSIDERATION SHOWN IN AGREEMENT. HENCE, LONG-TERM CAPITAL GAIN WAS OFFERED AS PER PROVISION OF SECTION 50C OF THE ACT. THE ASSESSEE HAS NOT SHOWN CAPITAL GAINS IN ORIGINAL RETURN AS IT HAS CLAIMED EXEMPTION UNDER SECTION 54B OF THE ACT AS THE ASSESSEE HAS PURCHASED ANOTHER AGRICULTURAL LAND WITHIN THE PRESCRIBED PERIOD OF SALE OF ORIGINAL CAPITAL ASSET. IT HAS ALSO BEEN CLAIMED THAT AGRICULTURAL LAND IS NOT CAPITAL ASSET EXIGIBLE TO CAPITAL GAINS. IT IS ONLY DURING SURVEY THE ASSESSEE HAS ADMITTED CAPITAL GAINS TO AVOID LITIGATION AND BUY PEACE OF MIND. WE FIND THAT THE CLAIM OF THE ASSESSEE THAT THE AGRICULTURAL LAND IS NOT CHARGEABLE TO DHANJIBHAI N.PATEL V. DCIT-3 SURAT /I.T.A. NO.2155 /AHD/2015/A.Y.11-12 PAGE 3 OF 4 TAX IS APPEARS TO BE CORRECT. EVEN IF THIS IS NOT CONSIDERED AS AVAILABLE, EVEN THEN THE ASSESSEE HAS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54B OF THE ACT. FURTHERMORE, THE LONG-TERM CAPITAL GAIN HAS BEEN OFFERED AS PER PROVISION OF SECTION 50C; HENCE, THERE IS NO POSITIVE CONCEALMENT OF INCOME. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT PROCEEDINGS. THE FINDING RECORDED IN THE ASSESSMENT ORDER IS NOT CONCLUSIVE FOR DECIDING THE IMPOSITION OF PENALTY. IT ONLY HAS A PERSUASIVE VALUE. ANY FINDING RECORDED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE PENALTY HAS TO BE IMPOSED AUTOMATICALLY. JUST BECAUSE APPELLANTS EXPLANATION WAS NOT FOUND ACCEPTABLE BY THE AO, IT DOES NOT FOLLOW THAT THAT THE APPELLANT WAS UNABLE TO SUBSTANTIATE HIS EXPLANATION BY PROVIDING VARIOUS EVIDENCES AND JUDICIAL OPINIONS. EXPLANATION 1 TO SECTION 271(1) (C) OF THE ACT DOES NOT THEREFORE COVER THE CASE OF THE ASSESSEE. BASED ON THE ABOVE FACTS OF THE CASE; IT CAN BE HELD THAT THE ASSESSEE HAD MADE ALL THE NECESSARY DISCLOSURES ON A BONAFIDE BELIEF, WHICH IS NOT AGREEABLE TO THE AO, IT WILL NOT AUTOMATICALLY LEAD TO A CASE FOR PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT, 1961. WE ARE, THEREFORE, OF THE CONSIDERED VIEW, THAT THE PENALTY IS NOT SUSTAINABLE IN LAW IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF CIT V RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC); [2010] 189 TAXMAN 322(SC) WHEREIN IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE HAS CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE BY THE REVENUE, PENALTY UNDER SECTION 271(1) (C) OF THE ACT CANNOT BE ATTRACTED. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED IN THE CASE DHANJIBHAI N.PATEL V. DCIT-3 SURAT /I.T.A. NO.2155 /AHD/2015/A.Y.11-12 PAGE 4 OF 4 OF CIT V. GIRISH DEVCHAND RAJANI [2013] 33 TAXMANN.COM 17 (GUJARAT) WHICH HELD THAT WHERE THE ASSESSEE TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION FILED REVISED RETURN DISCLOSING ADDITIONAL INCOME, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS UPON THE ASSESSEE ON THE PLEA THAT FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS NOT JUSTIFIED. THE DECISION RELIED BY THE LD. CIT (A) OF MAK DATA (P.) LTD. VS. CIT [2013] 358 ITR 593(SC) / [2013] 38 TAXMANN.COM 448(SC) IS NOT APPLICABLE IN S CASE AS THE DISCLOSURE MADE ON INCORRECT ASSUMPTION OF FACTS AND DUE TO PROVISION OF SECTION 50C OF THE ACT. THE OTHER DECISION RELIED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND PLACED IN PAPER BOOK OF TRIBUNALS AS WELL AS HIGH COURTS AS RELIED BY THE ASSESSEE ARE ALSO SUPPORTS ITS CASE. IN THE LIGHT OF ABOVE DISCUSSION, THE PENALTY LEVIED AT RS.3,77,142 IS DELETED. THEREFORE, THE SOLE GROUNDS OF APPEAL IS THUS, ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 15.10.2018. SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 15.10.2018. / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) THE CIT(A)4. / PR. CIT 5. , / D.R. (ITAT) 6. / GUARD FILE ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT