Shri N. Bhaskar Reddy, Bangalore V. ITO, Bangalore

ITA 221/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9522 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: N NAGARAJU
• Keywords: Capital Gains
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.L. KALRA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.221/BANG/2009 ASSESSMENT YEAR : 2005-06 SHRI N. BHASKAR REDDY, NO.29/2B, JARAGANAHALLI, KANAKAPURA ROAD, BANGALORE 560 078. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 4(3), BANGALORE. : RESPONDENT APPELLANT BY : SHRI N. NAGARAJU RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE CIT(APPEALS) ORDER DATED 29.1.09. THE ASSESSMENT YE AR CONCERNED IS 2005-06. THE ORDER OF THE CIT(APPEALS) EMANATES FR OM THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. 2. THERE ARE 7 GROUNDS RAISED, ALL THE GROUNDS ARE DIRECTED AGAINST THE CIT(APPEALS) ORDER IN CONFIRMING THE LEVY OF PENALT Y U/S. 271(1)(C) AMOUNTING TO RS.1,97,131. ITA NO.221/B/09 PAGE 2 OF 5 3. BRIEFLY THE FACTS ARE AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL. HE FILED RETURN OF INCOME FOR THE CONCERNED ASSESSMENT YEAR DECLARING A TOTAL INCOME OF RS.1,56,300. THE ASSESSMENT U/S. 143(3) W AS COMPLETED VIDE ORDER DATED 31.12.07 WHEREIN A SUM OF RS.8,05,122 W AS ADDED UNDER LONG TERM CAPITAL GAINS. THE LONG TERM CAPITAL GAINS WA S ON ACCOUNT A DEVELOPMENT AGREEMENT (1.12.03) ENTERED WITH M/S. G AANA BUILDERS & DEVELOPERS IN RESPECT OF A PROPERTY SITUATED AT NO.29/2B, J.P. NAGAR, KANAKAPURA ROAD, BANGALORE. THE ABOVE PROPERTY WAS AN ANCESTRAL PROPERTY RECEIVED FROM THE ASSESSEES FATHER. IT W AS STATED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS TH AT FOR THE CONCERNED ASSESSMENT YEAR HE HAD RECEIVED TOTAL CON SIDERATION OF RS.19,23,000 BY SELLING A PORTION OF RIGHTS IN THE SAID PROPERTY TO THE VARIOUS PERSONS WHO HAVE PURCHASED THE FLATS CONSTR UCTED BY M/S. GAANA BUILDERS & DEVELOPERS AS PER THE ABOVE SAID A GREEMENT. HOWEVER, THE ASSESSING OFFICER HAD SUMMONED THE PROPRIETOR O F M/S. GAANA BUILDERS & DEVELOPERS. THE PROPRIETOR OF M/S. GAANA BUILDE RS & DEVELOPERS HAD FURNISHED THE DEVELOPMENT AGREEMENT AND ALSO STATED THAT AS PER THE AGREEMENT HE HAD PAID TO THE ASSESSEE FOR THE CONCE RNED ASSESSMENT YEAR A SUM OF RS.30,90,850. WHEN THIS INFORMATION WAS PUT TO THE ASSESSEES AR, IT WAS AGREED TO ADOPT A FIGURE OF R S.30,90,850 FOR THE COMPUTATION OF LONG TERM CAPITAL GAINS AND CAPITAL GAINS WAS COMPUTED BY THE AO IN THE FOLLOWING MANNER : ITA NO.221/B/09 PAGE 3 OF 5 SALE CONSIDERATION RECEIVED IN RESPECT OF PROPERTY SURRENDERED TO M/S. GAANA BUILDERS AND DEVELOPERS : RS.30,90,850/- LESS: COST OF THE PROPERTY ADOPTED AT RS.2,00,000/- I.E. AS ON 01.04.81 INDEXED COST IS CALCULATED AS UNDER: 2000000X 480/100 = : RS. 9,60,000/- BALANCE CONSIDERATION : RS.21,30,850/- LESS: AMOUNT INVESTED IN CONSTRUCTION OF RESIDENTIAL HOUSE OF RS.19,23,000/- AS PER PROVISIONS OF SECTION 54F, THE AMOUNT EXEMPTED IS WORKED OUT AS UNDER:- CAPITAL GAINS X INVESTMENTS IN RESIDENTIAL HOUSE NET SALE CONSIDERATION RS.21,30,850 X 19,23,000 : RS.13,25,727/- RS.30,90,850 BALANCE LONG TERM CAPITAL GAINS : RS. 8,05,122/- 4. CONSEQUENT TO THE ASSESSMENT BEING COMPLETED, PE NALTY PROCEEDINGS WERE INITIATED AND THE AO LEVIED PENALT Y BY HOLDING THUS: 5. THAT THE ASSESSEE HAS CO-OPERATED IN THE SCRUTI NY PROCEEDINGS AND IN PAYMENT OF TAXES IS NOT DENIED. HOWEVER, THE FACT IS THAT THE ASSESSEE HAS NOT FURNISHED THE COR RECT SALE CONSIDERATION AND HAD NOT ARRIVED AT THE CORRECT LO NG TERM CAPITAL GAIN IN HIS RETURN OF INCOME. I CONCLUDE T HAT THE ADDITIONAL INCOME OF RS.8,05,122/- WOULD NOT HAVE B EEN BROUGHT TO TAX BUT FOR THE FACTS UNEARTHED BY THE DEPARTMEN T DURING THE COURSE OF SCRUTINY PROCEEDINGS. I THEREFORE HOLD T HAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND HAS ALS O FURNISHED INACCURATE PARTICULARS. 5. ON FURTHER APPEAL, THE CIT(APPEALS) FOLLOWED THE DECISION OF THE SUPREME COURT IN THE CASE OF UNION OF INDIA & OTHERS V. DHARMENDRA TEXTILES PROCESSORS & ORS. (306 ITR 277) AND HELD THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF CAPITAL GAINS AND T HE SAME WOULD NOT HAVE ITA NO.221/B/09 PAGE 4 OF 5 COME TO LIGHT HAD THE ASSESSING OFFICER NOT MADE TH E ENQUIRIES. THE LEARNED CIT(APPEALS) THUS DISMISSED THE APPEAL OF T HE ASSESSEE. THE ASSESSEE BEING AGGRIEVED, IS IN SECOND APPEAL BEFOR E US. 6. THE LD. AR FURNISHED A COPY OF THE AGREEMENT WIT H THE DEVELOPER AND ALSO FURNISHED SOME PARTICULARS WITH REFERENCE TO THE DATE OF SALE AND THE CONSIDERATION RECEIVED IN A TABULAR FORM. THE LD. AR SUBMITTED THAT HE HAD RECEIVED ONLY RS.19,23,500 DURING THE CONCERNED ASSESSMENT YEAR. THEREFORE ADOPTING A FIGURE OF RS.30,90,850 FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IS UNJUSTIFIED AND HENCE LEVY OF PENA LTY IS NOT WARRANTED IN THIS CASE. 7. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ER OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE DEFENSE TAKEN BY THE ASSESSEE BEF ORE THE AUTHORITIES BELOW AGAINST LEVY OF PENALTY WAS, ASSESSEE HAD CO- OPERATED WITH THE ASSESSING AUTHORITY IN FURNISHING ALL DETAILS AND A DDITIONS WERE AGREED UPON TO BUY PEACE AND AVOID LITIGATION. BEFORE US, IT W AS CONTENDED THAT HE HAS RECEIVED ONLY A SUM OF RS.19,23,500 AND NOT RS.30,9 0,850. HOWEVER, THE FACTS BELIE THE STAND OF THE ASSESSEE BEFORE US. T HE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD SUMMONED SRI H.S. HA RIKRISHNA, PROPRIETOR OF M/S. GAANA BUILDERS AND DEVELOPERS AN D OBTAINED A COPY OF THE DEVELOPMENT AGREEMENT AND DETAILS OF AMOUNT PAI D TO THE ASSESSEE. IN THE STATEMENT RECORDED FROM THE DEVELOPER, HE CATEG ORICALLY STATED THAT THE AMOUNT PAID TO THE ASSESSEE WAS A SUM OF RS.30,90,8 50 AND NOT RS.19,23,000 AS CLAIMED IN THE RETURN OF INCOME FIL ED ON 31.10.05. WHEN ITA NO.221/B/09 PAGE 5 OF 5 THIS MATTER WAS PUT TO THE ASSESSEE, THE ASSESSEE A GREED TO THE ADDITION. THEREFORE, THE ABOVE FACTS CLEARLY POINT OUT THAT T HE ASSESSEE HAD FILED INACCURATE PARTICULARS OF CAPITAL GAINS AND THE SAM E WOULD NOT HAVE COME TO THE LIGHT HAD THE ASSESSING OFFICER NOT MADE ENQ UIRIES AND RECORDED THE STATEMENT FROM THE DEVELOPER OF THE ABOVE SAID LAND . IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CIT(APPEALS) HAS CORRECTLY RELIED ON THE DECISION O F THE SUPREME COURT IN THE CASE OF UNION OF INDIA & OTHERS V. DHARMENDRA TEXTILES PR OCESSORS & ORS. (SUPRA) AND SUSTAINED THE LEVY OF PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF AUGUST, 2009. SD/- SD/- ( N.L. KALRA ) (GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEM BER BANGALORE, DATED, THE 28 TH AUGUST, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.