Sh. Ashok Kumar Sachedeva, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 219/ASR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5599 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 19-04-2017
• Assessment Year: 1996-1997
• Appeal Filed On: 18-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Capital asset; Bonafide belief; Wrong claim; Corroborative evidences; Bonafide mistake
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR (SMC) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A NO.219(ASR)/2016 ASSESSMENT YEAR:1996-97 SH. ASHOK KUMAR SACHDEVA, 17, AMRITSAR CANTT., AMRITSAR. PAN:AJTPS -6648E VS. INCOME TAX OFFICER, WARD-5(1), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PADAM BAHL (C.A) RESPONDENT BY: SH. RAHUL DHAWAN (DR.) DATE OF HEARING : 19.04.2017 DATE OF PRONOUNCEMENT : 09.05.2017 ORDER PER DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILIN G THE CORRECTNESS OF THE ORDER DATED 16.02.2016 OF CIT(A)-2, A MRITSAR, PERTAINING TO 1996-97 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-2, AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF INCOME TA X OFFICER, WARD 5(1), AMRITSAR IN LEVYING PENALTY OF RS.96,778/- U/S 271(1)(C). THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (APPE ALS)-2, AMRITSAR AND INCOME TAX OFFICER, WARD 5(1), AMRITSAR HAVE FAILED TO APPRECIATE THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT HE HAD SOLD AGRICU LTURAL LAND WHICH WAS EXEMPT FROM CAPITAL GAIN. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (APPE ALS)-2, AMRITSAR AND INCOME TAX OFFICER, WARD 5(1), AMRITSAR HAVE FAILED TO APPRECIATE THAT THE ASSESSEE HAD DULY RECORDED THE LONG TERM GAINS IN HIS BALANC E SHEET FILED WITH THE DEPARTMENT ALONGWITH THE RETURN. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-2, AMRITSAR AND INCOME TAX OFFICER, WARD 5(1), AMRITSAR HAVE FAILED TO APPRECIATE THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HE WAS ENTI TLED TO DEDUCTION U/S 54F OF THE INCOME TAX ACT, 1961. 2. THE RELEVANT FACTS OF THE CASE ARE THAT AGAINST THE ORIGINAL ASSESSMENT MADE BY THE ASSESSING OFFICER VIDE ORDER DAT ED 19.02.1999 PLACED AT (PB-6 TO 8) WHEREIN AN ADDITION WAS MADE ON ACC OUNT OF SALE OF AGRICULTURAL LAND, THE ISSUE HAD TRAVELED TO THE CIT(A) A ND THEREAFTER, TO THE ITAT, WHEREIN IT WAS SET ASIDE BACK TO THE ASSE SSING OFFICER. THE ASSESSING OFFICER IN THE SET ASIDE PROCEEDINGS REJECTED TH E CLAIM OF EXEMPTION U/S 54F WHICH, THEN WAS CHALLENGED BEFORE THE L D. CIT(A) AND THEREAFTER, SINCE IT WAS CONFIRMED BY THE CIT(A), IT WAS CARRIED IN APPEAL BEFORE THE ITAT WHERE ALSO VIDE ORDER DATED 6 TH JUNE, 2008 IN ITA NO.219 (ASR)/2016 ASST. YEAR: 1996-97 2 ITA NO.116(ASR)/2008, THE ADDITION STOOD CONFIRMED. THE PENA LTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED BY THE A.O. WHICH WA S CONFIRMED IN THE APPEAL BEFORE THE CIT(A). AGGRIEVED BY THI S ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 3. IN THE SAID BACKGROUND, THE LD. AR SUBMITTED THAT NO DOUBT, THE ASSESSEE DID NOT SUCCEED BEFORE THE ITAT IN ITS CLAIM FOR EXEMPTION UNDER SECTION 54F OF THE ACT AS AT THAT TIME, THE ASS ESSEE ALREADY HAD A HOUSE AND BECAUSE OF THIS TECHNICAL BONAFIDE MISTAKE, PENALT Y HAS BEEN VISITED UPON HIM. THE CLAIM, IT WAS SUBMITTED THOUGH NOT ALLOW ED IN THE QUANTUM PROCEEDINGS, IT WAS SUBMITTED, CANNOT BE A GROUN D TO DISMISS THE APPEAL IN THE PENALTY PROCEEDINGS AS IT WAS A BONAFIDE BELIEF OF THE ASSESSEE THAT THE EXEMPTION UNDER LAW WAS ALLOWABLE. ON QUERY, IT WAS SUBMITTED THAT THIS WAS THE ONLY INSTANCE OF SALE OF HOUS E. RELIANCE WAS PLACED UPON VARIOUS DECISION INCLUDING RELIANCE PETRO PRODUC TS PRIVATE LIMITED CASE OF APEX COURT 322 ITR 158(SC) THAT IT WAS A BONAFIDE MISTAKE AND BEING A TECHNICAL MISTAKE OF LAW, THE PENALTY MA Y BE QUASHED. THE OTHER DECISIONS RELIED UPON ARE ; ITO VS. B URMAH SHELL OIL STORAGE & DISTRIBUTING CO. OF INDIA LTD. 112 ITR 592, C IT VS. DEEP TOOLS PVT. LTD. 274 ITR 603 (P&H), CIT VS BUDHEWAL CO-OP SUGAR MILLS LTD. 312 ITR 92 (P&H), CIT VS. SSP (P) LTD. 302 ITR 43 (P&H ), CIT VS. MEHTA ENGINEERS LTD. 300 ITR 308, CIT VS. SANGRUR VANAS PATI MILLS LTD. 303 ITR 53 (P&H), CIT VS. ARAAR NATH 173 TAXMAN 39 5 (P&H) AND CIT VS. HIMACHAL AGRO FOODS LTD. 9 DTR (P&H). 4. THE SR. DR INVITED ATTENTION TO THE ORDER PASSED BY T HE ITAT IN THE QUANTUM PROCEEDINGS. RELYING ON THE SAME, IT WAS SUB MITTED THAT THE OCCASION TO CLAIM THAT IT WAS A BONAFIDE MISTAKE OF LAW , DOES NOT ARISE. IN THE FACTS OF THE PRESENT CASE, IT WAS SUBMITTED THE ASSESSEE HAS FAILED TO ESTABLISH ITS PRIMARY CLAIM ITSELF THAT THE OLD HO USE WAS DEMOLISHED AND IT WAS REMODELED. THE ASSESSEE HAS ALREADY BEEN FOUND TO HAVING BEEN FAILED TO SATISFY THAT THE CONDITIONS ITSELF CONTEMPLATED U/S 54F WERE APPLICABLE AS THE CLAIM OF DEMOLITION AND REMODE LING ITSELF HAS NOT BEEN ACCEPTED BY THE ITAT AS ON FACTS IT WAS A WRONG CLAIM UNSUPPORTED BY ANY EVIDENCE TILL DATE. IT WAS HIS SUBMISSION THAT IT IS A CASE OF INCORRECT FACTS RELIED UPON TO SUPPORT THE CLAIM A S ORIGINALLY, IT WAS WRONGLY CLAIMED THAT THE DISTANCE OF THE LAND WAS BE YOND THE PERMISSIBLE MUNICIPAL LIMITS. THEREAFTER, ON BEING PROVED WRONG , THE ASSESSEE HAD THEN FLOATED THE FACT OF WRONG CLAIM OF DEMOLIT ION AND ITA NO.219 (ASR)/2016 ASST. YEAR: 1996-97 3 RE-MODELING OF THE HOUSE WHICH, TILL DATE HAS NOT BEEN WAS PROVED BY THE ASSESSEE. 4.1 THUS, REPEATEDLY THE ASSESSEE IS MAKING PATENTLY WRONG CLAIMS AS AN AFTER THOUGHT. FOR READY REFERENCE RELIANCE WAS PLACE D UPON THE FOLLOWING SPEAKING ORDER OF THE ITAT PASSED IN THE QUANTUM PROCEEDINGS: 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS TRANSFERRED THE AGRICULTURAL LAND ON 1 8.03.1996. THE CONTENTION OF THE ASSESSEE IS THAT HE HAS STARTED CONSTRUCTION OF NEW HOUSE AT NO. 17, AMRITSAR CANTT., AMRITSAR BY DEMOLISHING THE EXISTI NG HOUSE. THE ASSESSEE FILED IN THE FORM OF PAPER BOOK DETAILS OF EXPENDITURE IN CURRED BY THE ASSESSEE UPTO 31-3-1995 AT RS.4,07,130/25 BY SHOWING THIS EXPENDI TURE, THAT INCURRED BEFORE 31-3-1995, IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THE CONSTRUCTION WAS TAKEN PLACE BEFORE THE SALE OF AGR ICULTURAL PROPERTY AND AS ON THE DATE OF TRANSFER OF EXISTING PROPERTY, THE ASSE SSEE WAS NOT IN POSSESSION OF RESIDENTIAL HOUSE. HENCE THE ASSESSEE IS ENTITLED T O EXEMPTION UNDER SECTION 54F. HOWEVER, THE ASSESSEES COUNSEL UNABLE TO LEAD ANY EVIDENCE TO SHOW THE DEMOLITION OF THE RESIDENTIAL HOUSE BEFORE THE DATE OF TRANSFER OF THE EXISTING PROPERTY. AS PER SECTION 54F, NOTHING CONTAINED IN THE SECTION SHALL APPLY WHERE THE ASSESSEE OWNS ON THE DATE OF THE TR ANSFER OF THE ORIGINAL ASSETS OR PURCHASE WITHIN THE PERIOD OF ONE YEAR AFTER SUC H DATE OR CONSTRUCTION WITHIN THE PERIOD OF THREE YEARS, ANY RESIDENTIAL HOUSE, T HE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY, OTHER THAN THE NEW ASSET. ON THE DATE OF TRANSFER OF THE CAPITAL ASSET , THE ASSESSEE SHALL BE NOT OWNING RESIDENTIAL HOUSE FOR CLAIMING DEDUCTION UND ER SECTION 54F. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS DEMOLISHED T HE EXISTING HOUSE BEFORE THE DATE OF TRANSFER AND THE ASSESSEE HAS CO NSTRUCTED NEW HOUSE THEREON. WHEN THE ASSESSEE HAS STATED THAT IT HAS D EMOLISHED THE OLD HOUSE, THE ASSESSEE REQUIRED TO SHOW THE EVIDENCE I N SUPPORT OF THE CLAIM OF DEMOLITION OF THE HOUSE AS WELL AS CONSTRU CTION OF HOUSE WHICH REQUIRED PERMISSION OF THE LOCAL AUTHORITIES DOES N OT MAKE AVAILABLE NEITHER BEFORE THE LOWER AUTHORITIES NOR BEFORE THE TRIBUNAL/ THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE ASSESSEE HAD C ONSTRUCTED NEW RESIDENTIAL HOUSE FOR THE PURPOSE OF EXEMPTION UNDE R SECTION 54F OF THE INCOME TAX ACT. IT IS STATED BY THE-ASSESSEE THAT THE ASSESSEE HAD CONSTRUCTED THE RESIDENTIAL HOUSE, BUT THERE WAS UN AUTHORIZED CONSTRUCTION AND SAME UNAUTHORIZED CONSTRUCTION ENTERED INTO THE BOO KS OF ACCOUNT. IF THE ASSESSEE HAS NOT DEMOLISHED THE HOUSE FOR THE PURPO SE OF CONSTRUCTING THE NEW HOUSE AND IF HE HAD ONLY MODIFIED THE EXISTING BUIL DING, WHICH WILL NOT GIVE THE BENEFIT TO THE ASSESSEE AS CONTEMPLATED UNDER SECTI ON 54F OF THE ACT. MERELY CONSTRUCTION BY WAY OF EXISTING HOUSE WOULD NOT MEA N CONSTRUCTION OF RESIDENTIAL HOUSE AS CONTEMPLATED UNDER SECTION 54F OF THE ACT. THE ASSESSEE IN THE PRESENT CASE HAS NOT BEEN ABLE TO LEAD ANY EVIDENCE IN THE FORM OF GOVT. APPROVED PLAN OR LICENSE FOR THE CONSTRUCTION OF NEW RESIDENTIAL ON THE DEMOLITION OF EXISTING RESIDENTIAL HOUSE. THE ASSESSEE SHOWED THE COST INC URRED BY THE ASSESSEE AT RS.4,076,130/25 UPTO THE ASSESSMENT YEAR 1994-95 AN D NOT ABLE TO ESTABLISH WHETHER THIS COST IS INCURRED ON THE CONSTRUCTION O F NEW HOUSE OR ON THE MODIFICATION OF OLD EXISTING HOUSE. THERE IS NO EVI DENCE OR CIRCUMSTANTIAL DOCUMENTS AVAILABLE TO SHOW THAT THERE WAS CONSTRUC TION OF NEW HOUSE BEFORE THE SALE OF AGRICULTURAL PROPERTY. IN OUR OPINION, THE ASSESSEE FAILED TO SATISFY THE CONDITIONS CONTEMPLATED UNDER SECTION 54F OF THE AC T. THE ASSESSEE RELIED ON THE JUDGMENTS CITED SUPRA. WE HAVE GONE THROUGH IT. THE SE ARE NOT RELEVANT TO THE FACTS OF THIS CASE. HENCE, WE ARE NOT DEALING WITH THE SAME. ACCORDINGLY, WE DISMISS THE GROUNDS TAKEN BY THE ASSESSEE. (EMPHASIS PROVIDED ) 4.2 IT WAS SUBMITTED THAT EVEN IN THE PENALTY PROCEEDING S, NO NEW CONTRARY SUPPORTING EVIDENCE HAS BEEN FILED. IT WAS REIT ERATED THAT THE ASSESSEE NEVER MADE A CLAIM OF SEC.54F ORIGINALLY. INITIALLY T HE CLAIM ITA NO.219 (ASR)/2016 ASST. YEAR: 1996-97 4 WAS THAT AGRICULTURAL LAND WAS EXEMPTED AS IT WAS OUTSIDE THE MUNICIPAL LIMITS. THE SAID CLAIM WAS FOUND TO BE NOT CORRECT AND THEREAFTER IN THE ORIGINAL PROCEEDINGS, THE ASSESSEE CAME UP WITH A FRESH CLAIM THAT THE CLAIM MAY BE CONSIDERED U/S 54F, THUS , THE ASSESSEE WAS AFFORDED AN OPPORTUNITY BY THE ITAT AND T HE MATTER WAS RESTORED FOR ADDRESSING THE FACTS. THE ISSUE WAS CONSIDER ED AND REJECTED RIGHT UPTO THE ITAT. ACCORDINGLY, IT WAS HIS SU BMISSION THAT IT IS A FIT CASE FOR CONFIRMING THE PENALTY AS THE CLAIM HAS BE EN PROVED TO BE FACTUALLY INCORRECT. THE JUDGMENTS RELIED UPON BY THE ASSESSEE, IT WAS SUBMITTED, ARE OF NO HELP AS IT CANNOT BE SAID TO BE A CASE OF BONAFIDE MISTAKE OR TECHNICAL FACT OR MISUNDERSTANDING. IT WAS HIS SUBMISSION THAT INFACT, THERE ARE MULTIPLE DECISIONS IN FAVOUR OF THE DEPARTMENT ALSO ON THE ISSUE. 5. THE LD. AR SUBMITTED THAT NO DOUBT IN THE ORIGINAL ROUN D BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD MADE A CASE THA T THE LAND WAS SITUATED 8 KM. BUT THE ITAT HAD DIRECTED THE ASSESSING OFFICER TO CONSIDER THE ALLOWABILITY OF THE CLAIM U/S 54F PUT UP BY THE ASSESSEE BEFORE IT. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. I FIND THAT IN THE FACTS OF THE PRESENT CASE, IT IS NOT A CASE OF INCORRECT UNDERSTANDING OF LAW AS CANVASSED BY T HE LD. AR. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS BEEN FO UND TO HAVE PUT A CLAIM OF DEMOLISHING AND REMODELING THE SPECIFIC PROPERTY WHICH CLAIM IN VERY SPEAKING TERMS HAS BEEN HELD TO BE NOT ALLOWABLE BY THREE CONSECUTIVE FORUMS. EVEN TODAY, APART FROM RELYING ON D ECISIONS WHICH PROCEED ON DIFFERENT SET OF FACTS AND CIRCUMSTANCES, NO E VIDENCE HAS BEEN LED OR ARGUMENT OR PRAYER HAS BEEN ADVANCED EITH ER FOR ADMITTING OR FOR CONSIDERING FRESH EVIDENCE TO SUPPORT ITS CLAIM. SINCE , THE ISSUE IS PURELY FACTUAL IN NATURE, THUS RELIANCE PLACED ON DECISIONS WHICH PROCEED ON DIFFERENT SET OF FACTS AND CIRCUMSTANCES WOULD NOT BE OF ANY HELP IN THE PRESENT PROCEEDINGS. HAD IT BEEN A CASE THAT THE TAX PAYER HAVING MADE A SOLE SALE FOR THE VERY FIRST TIME HAS INCORRE CTLY UNDERSTOOD THE PROVISIONS OF LAW, THE CASE OF A BONAFIDE BE LIEF MAY HAVE BEEN MADE OUT, HOWEVER, SINCE IT IS A FACTUAL CLAIM WHICH HAS BEEN FOUND TO BE WRONGLY MADE AS EVIDENCES IN SUPPORT OF THE SAME HAVE NEVER BEEN MADE AVAILABLE TO THE TAX AUTHORITIES OR THE ITAT IN THE QUANTUM PROCEEDINGS OR THE PENALTY PROCEEDINGS OR EVEN IN THE PRESENT ITA NO.219 (ASR)/2016 ASST. YEAR: 1996-97 5 PROCEEDINGS AS NO PRAYER FOR FILING FRESH SUPPORTING EVIDENC E OR ARGUMENT HAS BEEN MADE BY THE LD. AR TO SHOW THAT ON FACTS, THE CORRECTNESS OF THE EVIDENCE THOUGH CONSIDERED DOUBTFUL W AS ONLY ON ACCOUNT OF INSUFFICIENT FACTS OR BONAFIDE CONFUSION IN UNDERSTA NDING THE LAW. THUS, THE ARGUMENT ADVANCED ON THE JUDICIAL PRECED ENT CITED IS OF NO HELP FOR THE ASSESSEE. IT IS WELL SETTLED THAT PENALTY AND QUANTUM PROCEEDINGS ARE SEPARATE AND DISTINCT. IT IS EQUALLY SET TLED THAT THE EXPLANATION OFFERED IN THE PENALTY PROCEEDINGS HAS TO BE C ONSIDERED SEPARATELY QUA THE REQUIREMENTS OF THE PENAL PROVISIONS. HOWEVER, IN THE ABSENCE OF ANY EXPLANATION ON THE FACTUAL ASPECT WHIC H STANDS CONCLUDED BY HOLDING THAT FOR LACK OF SUPPORTING EVIDENCE I T HAS BEEN CONCLUDED IN THE QUANTUM PROCEEDINGS THAT THERE WAS NO DEMOLISHING AND REMODELING AND NO CONTRARY EVIDENCE HAS BEEN FILED. T HE INCORRECT CLAIM MADE ON FACTS IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE SAID TO BE A BONAFIDE MISTAKE. THE DECISIONS R ELIED UPON BY THE PARTIES OPERATE PURELY ON FACTS PECULIAR TO THEIR OW N. THE ISSUE BEING FACTUAL, IS DECIDED ON THE BASIS OF FACTS AVAILABLE ON RE CORD. THE GROUNDS OF THE ASSESSEE ARE ACCORDINGLY DISMISSED. AS P RONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY,2017. SD/- (DIVA SINGH) JUDICIAL MEMBER /PK/PS/POONAM(CHD). 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