Shiva Satva Gavali, Jalgaon V. Income-tax Officer,

ITA 2290/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1094 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C V CHITALE
• Section: 54B; 54F; 142(1); 131; 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 2290 /PN/20 1 4 / ASSESSMENT YEAR : 20 07 - 08 SHRI SHIVA SATVA GAVALI, AT POST: MOHADI, TAL: & DIST: JALGAON. . / APPELLANT PAN: BDNPG4487N VS. THE INCOME TAX OFFICER , WARD - 2(3), JALGAON . / RESP ONDENT / APPELLANT BY : S HRI C.V. CHITALE / RESPONDENT BY : S HRI SUHAS KULKARNI / DATE OF HEARING : 1 0 . 0 8 .201 6 / DATE OF PRONOUNCEMENT: 12 . 0 8 .201 6 / ORDER PE R SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF C I T (A) - 2 , NASHIK , DATED 1 2 . 11 .20 1 4 RELATING TO ASSESSMENT YEAR 20 07 - 08 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) . ITA NO . 2290 /PN/20 1 4 SHRI SHIVA SATVA GAVALI 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1] ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT DELETING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2] ON THE FA CTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT DELETING THE ENTIRE PENALTY WHEN THE APPELLANT HAS NOT CONCEALED ANY PARTICULARS OF INCOME. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST L EVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN AGRICULTURIST AND HAD SOLD HIS AGRICULTURAL LAND SITUATED IN VILLAGE MOHADI, DIST. JALGAON IN THE YEAR 2006 FOR TOTAL CONSIDERATION OF RS. 31,32,00 0/ - . THE SAID LAND WAS SITUATED WITHIN EIGHT KILOMETERS OF MUNICIPAL LIMITS OF JALGAON. THE ASSESSING OFFICER HAD RECEIVED CERTAIN INFORMATION THAT THE ASSESSEE HAD MADE INVESTMENT IN RBI BONDS. SINCE THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME , NOT ICE UNDER SECTION 148 OF THE ACT WAS ISSUED. THE ASSESSEE DID NOT FURNISH ANY RETURN OF INCOME IN RESPONSE TO THE SAME. SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED TO THE ASSESSEE AND HIS SON APPEARED BEFORE THE ASSESSING OFFICER AND ADMITTED THAT T HE ASSESSEE HAD SOLD TWO PIECES OF AGRICULTURAL LAND AND INVESTED THE SALE PROCEEDS IN PURCHASE OF AGRICULTURAL LAND AND CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. HOWEVER, THERE WAS TOTAL NON COOPERATION BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND THE ASSESSING OFFICER HAD TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. INCOME FROM LONG TERM CAPITAL GAINS WAS DETERMINED AT RS. 30,07,296/ - ON ACCOUNT OF SURPLUS ARISING FROM SALE OF ITA NO . 2290 /PN/20 1 4 SHRI SHIVA SATVA GAVALI 3 AGRICULTURAL LAND. THE CIT(A) PARTIALLY ACCEPTE D THE CLAIM OF ASSESSEE BY GRANTING EXEMPTION UNDER SECTION 54 OF THE ACT TO THE EXTENT OF 60% OF THE AMOUNT UTILIZED BY THE ASSESSEE FOR CONSTRUCTION OF NEW RESIDENTIAL HOUSE. HOWEVER, THE CLAIM OF ASSESSEE UNDER SECTION 54B OF THE ACT TOWARDS PAYMENT OF COMMISSION WAS REJECTED BY THE CIT(A). THE ASSESSEE WA S IN APPEAL BEFORE THE TRIBUNAL AND CLAIMED THAT HE WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 54F AND 54B OF THE ACT . THE ASSESSEE FURTHER CLAIMED THAT HE HAD NOT INVESTED THE SURPLUS ARISING FROM SAL E OF LAND TOWARDS PURCHASE OF RBI BONDS. THE TRIBUNAL AFTER CONSIDERING THE EXPLANATION OF ASSESSEE NOTED THAT THE ASSESSEE HAD CLAIMED THE EXEMPTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF CONSTRUCTION OF RESIDENTIAL HOUSE. THE ASSESSEE CLAIMED THAT IT HAD INVESTED RS. 23,07,000/ - TOWARDS CONSTRUCTION OF NEW HOUSE AND THE NEW HOUSE WAS COMPLETED ON 30.08.2008. THE ASSESSEE HAD SOLD THE LAND IN THE YEAR 2006 AND HENCE THE ASSESSEE WAS ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT. TH E TRIBUNAL FURTHER NOTED THAT THE CIT(A) HAD RESTRICTED THE EXEMPTION TO 60% OF THE AMOUNT CLAIMED AS THE ASSESSEE WAS NOT ABLE TO SHOW FROM RECORDS THE EXTENT OF INVESTMENTS. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE HIS CLAIM. HOWEVER, IN ORDER TO MEET THE ENDS OF JUSTICE, THE DISALLOWANCE WAS RESTRICTED TO 15%. THUS, THE ASSESSEE WAS ALLOWED EXEMPTION TO THE EXTENT OF 85% OF RS. 23,07,000/ - I.E. 19,60,950/ - . THE SECOND CLAIM OF ASSESSEE FOR ALLOWING THE DEDUCTION UNDER SECTIO N 54B OF THE ACT WAS AGAINST THE PURCHASE OF AGRICULTURAL LAND. THE TRIBUNAL NOTED THAT THE ASSESSEE HAD PURCHASED THE SAID LAND IN THE NAME OF HIS SON. THE AUTHORITIES BELOW DENIED THE CLAIMS SINCE THE LAND WAS NOT PURCHASED BY THE ASSESSEE. HOWEVER, T HE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE, BUT THE ISSUE WAS REMITTED BACK TO THE FILE OF ITA NO . 2290 /PN/20 1 4 SHRI SHIVA SATVA GAVALI 4 ASSESSING OFFICER TO DETERMINE THE EXEMPTION UNDER SECTION 54B OF THE ACT AFTER VERIFYING THE INVESTMENT MADE BY THE ASSESSEE TOWARDS PURCHASE OF AGRICULTURAL LAND. THE ASSESSING OFFICER AFTER FINALIZATION OF ASSESSMENT PROCEEDINGS UNDER SECTION 144 OF THE ACT, LEVIED PENALTY OF RS. 6,74,838/ - UNDER SECTION 271(1)(C) OF THE ACT. 5. THE CIT(A) WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME THOUGH IT HAD SOLD TWO PIECES OF AGRICULTURAL LAND AND HAD FURTHER FAILED TO COMPLY WITH THE NOTICES ISSUED UNDER SECTION 148 AND 142(1) OF THE ACT, THE ASSESSEE HAD CONCEALED ITS CAPITAL GAINS AND WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS DIRECTED TO RE - COMPUTE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AFTER GIV ING APPEAL EFFECT TO THE ORDER OF TRIBUNAL , NO INCOME WOULD BE ASSESSED IN THE HANDS OF ASSESSEE AND HENCE, NO BASIS FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF ITA NO . 2290 /PN/20 1 4 SHRI SHIVA SATVA GAVALI 5 INCOME. IN THE F ACTS OF PRESENT CASE, THE ASSESSEE HAD SOLD TWO PIECES OF AGRICULTURAL LAND AND HAS INVESTED THE SALE PROCEEDS IN PURCHASE OF ANOTHER AGRICULTURAL LAND AND ALSO IN CONSTRUCTION OF RESIDENTIAL PROPERTY. ACCORDINGLY, THE ASSESSEE HAS CLAIMED THAT IT IS ELIG IBLE FOR EXEMPTION UNDER SECTION 54B OF THE ACT FOR INVESTMENT IN ANOTHER AGRICULTURAL LAND AND UNDER 54F OF THE ACT FOR CONSTRUCTION OF RESIDENTIAL PROPERTY. THE EXEMPTION CLAIMED UNDER SECTION 54B OF THE ACT WAS DENIED TO THE ASSESSEE SINCE THE NEW AGRI CULTURAL LAND WAS PURCHASED IN THE NAMES OF SONS OF ASSESSEE. HOWEVER, THE TRIBUNAL (SUPRA) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ASSESSEE AFTER VERIFYING THE INVESTMENT MADE BY THE ASSESSEE TOWARDS PURCHASE OF AGRICULTURAL LAND, HENCE, THE SAID EXEMPTION UNDER SECTION 54B OF THE ACT IS THUS ALLOWED IN THE HANDS OF ASSESSEE. 10. THE SECOND CLAIM OF ASSESSEE WAS IN RESPECT OF INVESTMENT IN CONSTRUCTION OF NEW RESIDENTIAL HOUSE WHICH HAS BEEN ALLOWED TO THE EXTENT OF 85% OF TOTAL INVESTME NT CLAIMED AT RS.23,07,000/ - , HENCE, THE CLAIM OF ASSESSEE HAS BEEN ALLOWED AT RS. 19,60,950/ - . THE CAPITAL GAIN WHICH HAS BEEN COMPUTED IN THE HANDS OF ASSESSEE IS RS.26,22,667/ - , AGAINST WHICH THE EXEMPTION UNDER SECTION 54F OF THE ACT IS TO BE ALLOWED A T RS. 19,60,950/ - . THE ASSESSEE IS ALSO ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 54B OF THE ACT WHICH IS TO BE ALLOWED AFTER VERIFICATION. THE ASSESSING OFFICER SHALL VERIFY THE CLAIM OF ASSESSEE AND IN CASE INCOME FROM LONG TERM CAPITAL GAIN ON S ALE OF AGRICULTURAL LAND IS REDUCED TO NIL IN THE HANDS OF ASSESSEE, THEN THERE IS NO MERIT IN LEVY OF ANY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER SHALL ACCORDINGLY, ALLOW THE SAID CLAIM MADE BY THE ITA NO . 2290 /PN/20 1 4 SHRI SHIVA SATVA GAVALI 6 ASSESSEE AFTER AFFORDING REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE . ORDER PRONOUNCED ON THIS 12 TH D AY OF AUGUST , 201 6 . SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 12 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - 2 , NASHIK ; 4. / THE C I T - 2 , NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE