DCIT-CIRCLE-1, Nagpur V. M/S YOGASHEM BUILDERS & DEVELOPERS, Nagpur

ITA 219/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1585 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALLIK
• Keywords: Revised return
• Section: 143(3)

Judgement Text

1 ITA NO. 219 /NA G/2014 IN TH E INCOME TAX APPELLATE TRIBUNAL: NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 2 19/NAG/2014 ASSESSMENT YEAR: 2009 - 10 THE DY . COMMISSIONER OF INCOME TAX, CIRCLE - 1 , ROOM NO.51 0 , 5 TH FLOOR, MECL BUILDING, SEMINARY HILLS, NAGPUR - 4400 01 VS M/S. YOGASHEM BUILDERS & DEVELOPERS, PLOT NO.78, ANKIT APARTMENT, KOTWAL NAGAR, NAGPUR 440022 PAN: AAAFY6938R (APPELLANT) (RESPONDENT) APPELLANT BY SMT. SUMAN MALLIK (JCIT) RESPONDENT BY SHRI MANOJ G. MORYANI, ADVOCATE DATE OF HEARING: 17 - 11 - 2015 DATE OF PRONOUNCEMENT: 24 - 11 - 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE DEPARTMENT EMANATING FROM THE ORDER OF THE LEARNED CIT (A) - I, NAGPUR DATED 30 - 12 - 2013. THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED BELOW: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1) (C) AMOUNTING TO RS.10,97,104/ - ON THE GROUND THAT THERE WAS NO C ONCEALMENT OF INCOME BY THE ASSESSEE AND THAT THERE WAS NO MALA - FIDE INTENTION OF MENS - REA ON THE PART OF THE ASSESSEE; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD VOLUNTARILY OFFERED TO TAX THE INCOME FR OM SALE OF PROPERTY OF RS.36,04,300/ - WITHOUT APPRECIATING THE FACT THAT THE DISCLOSURE WAS MADE BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ONLY WHEN POINTED OUT BY THE AO ON THE BASIS OF AIR INFORMATION AVAILABLE WITH HIM; 3. ON THE F ACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) OUGHT TO HAVE CONSIDERED THE APEX COURT JUDGEMENTS IN THE CASES OF MAK DATA LTD. (350 ITR 2 ITA NO. 219 /NA G/2014 593), AUTL MOHAN BINDAL (236 ITR 977 ) AND B. A. BALASUBRAMANIAM & BROS. CO. (236 ITR 977 ) WHICH ARE IN FAVOUR OF THE DE PARTMENT; 2 . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) OF THE IT ACT DATED 30 - 12 - 2011 AND THE ORDER PASSED U/S 271 (1) (C) OF THE IT ACT DATED 28 - 06 - 2012 WERE THAT THE ASSESSEE FIRM WAS STATED TO BE IN REAL ESTATE BUSINESS. A RETURN WAS FILED DECLARING INCOME OF RS.28,35,520/ - , HOWEVER, THE AO RECEIVED AN INFORMATION THAT THE ASSESSEE HAD NOT DISCLOSED IN THE SAID RETURN THE SALE OF PROPERTY EXECUTED ON 18 - 08 - 2008. WHEN IT WAS CONFRONTED, THE ASSESSEE HAD INFORMED THAT ON 18 - 08 - 2008 A PROPERTY WAS SOLD FOR A CONSIDERATION OF RS.1,01,30,000/ - . IT W AS INFORMED THAT THE PROPERTY WAS SOLD BY ONE SHRI NILESH CHANDANWAR ALONG WITH THE ASSESSEE. THE SAID FACT WAS APPEARING IN AIR INFORMATION AND DUE TO WHICH THE ASSESSEE WAS HAVING ONE HALF SHARE ON THE SALE AMOUNT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD ACCEPTED THE SALE TRANSACTION AND OFFERED THE GAIN AT RS.36,04,300/ - AFTER DEDUCTING COST OF PURCHASE ETC. THE ASSESSMENT WAS COMPLETED ACCORDINGLY WITHOUT AN Y FURTHER ADDITION. DURING PENALTY PROCEEDINGS, IT WAS ALLEGED BY THE REVENUE DEPARTMENT THAT THE ASSESSEE HAD NOT DISCLOSED THE CORRECT INCOME AND FAILED TO FURNISH THE ACCURATE PARTICULARS OF INCOME. THE AO DETECTED THE CONCEALED INCOME WHICH WAS NOT OFF ERED VOLUNTARILY BY THE ASSESSEE. AS A RESULT, PENALTY OF RS.10,97,104/ - WAS LEVIED ON THE ASSESSEE U/S 271(1) (C) OF THE IT ACT. 3. THE ASSESSEE HAD CHALLENGED THE LEVY OF PENALTY AND PLEADED BEFORE THE LEARNED CIT (A) THAT IT WAS A BONA - FIDE MISTAKE, BE CAUSE ONE OF THE PARTNERS HAS EXECUTED THE TRANSACTION WHICH WAS NOT INFORMED CORRECTLY WHEN THE ACCOUNTS OF THE FIRM WERE FINALIZED. HOWEVER, AS SOON AS IT CAME TO THE KNOWLEDGE OF THE FIRM, IMMEDIATELY, THEREAFTER, THE AMOUNT WAS OFFERED BEFORE COMPLETI ON OF THE ASSESSMENT TO THE AO. ACCEPTING THE ARGUMENTS AND THE EXPLANATIONS OF THE ASSESSEE IN THE LIGHT OF FEW CASE LAWS, THE LEARNED CIT (A) HAS GRANTED RELIEF IN THE FOLLOWING MANNER: - 3 ITA NO. 219 /NA G/2014 5.4 ON PERUSAL OF THE BALANCE SHEET FILED BY THE APPELLANT IT IS S EEN THAT THE PROPERTY BEING A PLOT OF LAND, WHICH HAS BEEN SOLD BY ONE OF THE PARTNERS OF THE FIRMS, WITHOUT THE KNOWLEDGE OF OTHER PARTNERS OF THE FIRM IS FOUND DULY REFLECTED IN THE BALANCE SHEET OF THE APPELLANT AS ON 31.03.2008 & 31.03.2009. THAT BEING THE CASE, DEMONSTRATES THAT THE CONTENTION OF THE APPELLANT THAT THE PROPERTY IN QUESTION WAS SOLD BY ONE OF THE PARTNERS WITHOUT THE CONSENT AND KNOWLEDGE OF OTHER PARTNERS APPARENTLY SEEMS TO BE CORRECT. HAD IT BEEN A CASE THAT IT WAS DONE WITH A WILFUL ATTEMPT AND CONNIVANCE OF ALL THE PARTNERS, THE PROPERTY IN QUESTION WOULD NOT HAVE APPEARED IN THE BALANCE SHEET OF EARLIER YEAR AS ON 31.03.2008 AND IN THE BALANCE SHEET OF CURRENT FINANCIAL YEAR ENDING AS ON 31.03.2009. THEREFORE, THE CONTENTION OF THE APPELLANT IS ACCEPTABLE AND THERE APPEARS TO BE NO MALA FIDE AND ME NS - REA AS REGARDS TO THE TRANSACTION OF SALE OF PROPERTY OF THE FIRM. 4. FROM THE SIDE OF THE REVENUE, LEARNED DR, SMT. SUMAN MALLIK (JCIT) APPEARED AND PLEADED THAT THE CONCEALMENT W AS UNEARTHED BY THE REVENUE DEPARTMENT. IT WAS NOT A VOLUNTARY OFFER. THERE WAS NO EVIDENCE THAT THE PARTNER WAS HAVING ANY LITIGATION WITH THE OTHER PARTNERS OF THE FIRM. THE FINDING OF THE LEARNED CIT (A) THAT THE SALE WAS EXECUTED BY ONE OF THE PARTNERS , WITHOUT THE CONSENT O F THE OTHER PARTNERS, WAS ISOLATED FINDING WITHOUT ANY COGENT MATERIAL. EVEN, THIS IS NOT A CASE THAT THE AMOUNT WAS OFFERED BY FILING A REVISED RETURN. SHE HAS, THEREFORE, PLEADED TO CONFIRM THE PENALTY. 5. FROM THE SIDE OF THE RES PONDENT ASSESSEE, SHRI MANOJ G. MORYANI, ADVOCATE APPEARED AND PLACED VEHEMENT RELIANCE ON THE FINDINGS OF THE LEARNED CIT (A) BY PLACING RELIANCE ON THE FOLLOWING JUDGMENTS: - 1. CIT VS D & H SECHERON ELECTRODES LTD., 296 ITR 0193 2. ADDL. CIT VS DELHI C LOTH & GENERAL MILLS, 157 ITR 0822 3. CIT VS SURESH CHANDRA MITTAL, 241 ITR 0124 4. CIT VS SURESH CHANDRA MITTAL, 251 ITR 0009 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE CASE LAWS CITED. ALTHOUGH, IT IS TRUE THAT THE IMPUGNED SALE TRANSACTION WAS NOT DISCLOSED BY THE ASSESSEE AS PER THE RETURN FILED BUT, IT APPEARS THAT THERE WAS SOME MISUNDERSTANDING AMONG THE PARTNERS VIS - A - VIS THE ASSESSEE FIRM. IN THIS REGARD, A FINDING WA S GIVEN BY THE 4 ITA NO. 219 /NA G/2014 LEARNED CIT (A) THAT THE PROPERTY IN QUESTION WAS APPEARING IN THE BALANCE SHEET OF THE FIRM IN EARLIER YEAR AS WELL AS IN THE BALANCE SHEET OF THE CURRENT FINANCIAL YEAR ENDED ON 31 - 03 - 2009. HAD THE TRANSACTION WAS IN THE KNOWLEDGE OF THE A SSESSEE FIRM, THEN, NATURALLY IT WOULD NOT HAVE APPEARED IN THE BALANCE SHEET. IT HAS ALSO BEEN EXPLAINED THAT SHRI NILESH CHANDANWAR WAS HAVING A POWER OF ATTORNEY TO SELL THE PROPERTY ON BEHALF OF THE FIRM. HOWEVER, HE HAD NOT INFORMED THE SALE TRANSACTIO N TO THE ACCOUNTANT OF THE FIRM DUE TO WHICH NO ENTRY OF SALE WAS RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM. IN SUPPORT OF THE SAID CLAIM THAT ALL THE PARTNERS HAD NOT SIGNED THE SAID DEED, A COPY OF THE SAME IS ALSO PLACED IN THE COMPILATION. IN THE LI GHT OF THIS FACT, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER IS COVERED BY THE PROVISIONS OF EXPLANATION 1(A) OF SECTION 271(1) (C) OF THE IT ACT WHICH PRESCRIBE THAT WHERE IN RESPECT OF ANY FACTS, THE MATERIAL FOR COMPUTATION OF THE TOTAL INCOME OF ANY PERSON, AND SUCH PERSON FAILS TO OFFER OR EXPLAIN OR OFFERS EXPLANATION WHICH IS FOUND BY THE AO TO BE FALSE, THEN, FOR THE PURPOSE OF SECTION 271(1) (C) OF THE IT ACT SUCH INCOME REPRESENTS THE CONCEALED INCOME. HOWEVER, AS PER THE FACTS OF THIS CASE, THE ASSESSEE HAD OFFERED AN EXPLANATION AND THE EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE SAID TO BE ALTOGETHER A FALSE EXPLANATION. THEREFORE, THE EXCEPTION AS PROVIDED IN THIS EXPLANATION THAT IN A SITUATION WHEN THE EXPLANATION OFFERED BY THE AS SESSEE IS NOT UNTRUE OR FALSE, THEN OUT OF THE AMBITS OF CONCEALMENT PROCEEDINGS. IN THE CASE OF D & H SECHERON ELECTRODES LTD. , ( SUPRA), A VIEW WAS EXPRESSED BY THE HONBLE MADHYA PRADESH HIGH COURT THAT WHEN THE FACTUAL VERS I ON OF THE ASSESSEE HAS BEEN A CCEPTED, THEN IT IS NOT A GOOD GROUND TO IMPOSE CONCEALMENT PENALTY. THE HONBLE HIGH COURT HAS OPINED THAT THE ASSESSEE HAVING SURRENDERED THE INCOME AND THE TRIBUNAL HAVING GIVEN REASONS FOR ACCEPTING THE FACTUAL VERSION OF THE ASSESSEE AND FOUND THAT TH ERE WAS NO MENS - REA AS CONTEMPLATED U/S 271(1) (C) OF THE IT ACT. CANCELLATION OF PENALTY WAS JUSTIFIED. SO FAR AS, THE DECISION OF MAK DATA PVT. LTD. (358 ITR 593 (SC) IS CONCERNED, THERE WAS A VOLUNTARY DISCLOSURE BY THE ASSESSEE BUT, THE 5 ITA NO. 219 /NA G/2014 SURRENDER OF IN COME WAS NOT HELD AS VOLUNTARY, BECAUSE IT WAS MADE AFTER THE DETECTION IN THE SEARCH CONDUCTED BY THE REVENUE DEPARTMENT. SO FAR AS, THE DECISION OF AUTL MOHAN BINDAL 317 ITR 1 (SC) IS CONCERNED, AS STATED BY THE REVENUE DEPARTMENT, THE ORDER AS REFERRED TO IS DILIP N. SARAFF , 291 ITR 519 AND HELD THAT CONCEALMENT PENALTY IS A CIVIL LIABILITY, HENCE, MENS - REA IS NOT ESSENTIAL. LATER ON, IN THE CASE OF DHARMENDRA TEXTILES, 306 ITR 277 (SC) IT WAS HELD THAT THE SAID DECISION OF DILIP N. SARAFF HAD NOT LAID D OWN A CORRECT LAW, AS THERE WAS A DIFFERENCE BETWEEN THE PROVISIONS OF SECTION 271 (1) (C) AND SECTION 276C OF THE IT ACT WHICH LOST SIGHT OF THE HONBLE COURT. EVEN, IN THE CASE OF B. A. BALASUBRAMANIAM, 236 ITR 977 IT WAS EXPRESSED THAT WHEN THE ASSESSEE HAS NOT DELIVERED TO DISCHARGE THE ONUS WHICH WAS ON IT UNDER EXPLANATION TO SECTION 271(1) (C) THEN, IT WAS JUSTIFIED TO IMPOSE CONCEALMENT PENALTY. 7. IN OUR HUMBLE OPINION, THE DECISIONS CITED BY THE REVENUE DEPARTMENT IN THE GROUNDS OF APPEAL ARE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN THE RESULT, WE HEREBY AFFIRM THE FACTUAL AS WELL AS LEGAL FINDINGS OF THE LEARNED CIT (A) BY REJECTING THE GROUNDS OF APPEAL OF THE REVENUE. 8 . IN THE RESULT, THE REVENUES APPEAL IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2015. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGP UR, DATED: 24 TH NOV., 2015. LAKSHMIKANT DEKA/SR. PS 6 ITA NO. 219 /NA G/2014 COPY FORWARDED TO : 1. M/S. YOGASCHEM BUILDERS & DEVELOPERS, PLOT NO.78, ANKIT APARTMENT, KOTWAL NAGAR, NAGPUR 440022 2. THE INC OME TAX OFFICER, WARD 2(4), AAYAKAR BHAWAN, CIVIL LINES, NAGPUR 3. C.I.T., CONCERNED 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 7 .11.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18 .11.20 15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK