SHRI SHANKAR SINGH SHERAWAT, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 230/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3637 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUP SINGH JCIT DHK
• Keywords: Capital asset; Recovery proceedings; Business income; Principle of natural justice; Cost of acquisition; Initiation of penalty proceedings; Fair market value; Wrong claim
• Section: 80C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 230/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 SHANKAR SINGH SHERAWAT, VILLAGE- SUKHIYA, WARD NO. 2, NEAR ADARSH PUBLIC SCHOOL, TEHSIL- SANGANER, JAIPUR. CUKE VS. INCOME TAX OFFICER WARD-7(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: BUEPS 3763 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ANUP SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/08/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 14/08/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13/12/2017 OF LD. CIT(A)-3, JAIPUR ARISING FROM THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE A.Y. 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED U/S 271(1)(C) IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,09,880/- U/S 271(1)(C) OF THE IT A CT, 1961 WITH THE DIRECTION TO RECALCULATE THE PENALTY BY REDUCING IN COME BY RS. 20,000/-.. ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 2 3. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 4. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. WE HAVE HEARD THE LD. AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE ALONGWITH H IS BROTHER SHRI KAILASH CHAND JAT SOLD THE LAND IN QUESTION AFTER S OME DEVELOPMENT WORK AND CARVING OUT OF PLOTS. THE ASSESSING OFFICER WAS O F THE VIEW THAT THE ASSESSEE HAS CONVERTED ITS CAPITAL ASSET INTO STOCK IN TRADE DURING THE YEAR UNDER CONSIDERATION AND THEN SOLD THE SAME IN PLOTS . THUS, THE ASSESSING OFFICER HAS BIFURCATED THE LONG TERM CAPITAL GAIN D ECLARED BY THE ASSESSEE INTO TWO PARTS I.E. LONG TERM CAPITAL GAIN AND BUSIN ESS INCOME AND CONSEQUENTLY MADE ADDITION. THE PENALTY U/S 271(1)(C ) OF THE ACT WAS LEVIED BY THE ASSESSING OFFICER AGAINST THE ADDITIO NS MADE ON ACCOUNT OF GAIN ARISING FROM THE LAND IN QUESTION AND FURTHER DISALLOWANCE OF DEDUCTION U/S 80C OF THE ACT OF RS. 20,000/-. AT TH E OUTSET, WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY US IN THE CASE OF KAILASH CHAND JAT VS ITO IN ITA NO. 229/JP/2018 VIDE ORDER DATED 09/8 /2018 IN PARA 6 TO 7.1 AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE HAS RAISED THE LEGAL GROUND OF VALIDITY OF INITIATION OF PROCEEDINGS AND CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. WE NOTE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OF FICER, THOUGH, ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 3 RECORDED ITS SATISFACTION FOR INITIATING THE PENALT Y PROCEEDINGS, HOWEVER, EXCEPT THE TERM THIS ISSUE IS FIT FOR INI TIATING THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS NOT MENTION ED WHETHER IT IS A CASE OF CONCEALMENT OF PARTICULARS OF INCOME O R FURNISHING INACCURATE PARTICULARS OF INCOME. SIMILARLY, IN THE NOTICE DATED 23/03/2015 ISSUED U/S 274 OF THE ACT FOR INITIATION OF PENALTY PROCEEDINGS DATED 23/3/2015 PLACED AT PAGE 8 OF THE PAPER BOOK IS ALSO WITHOUT SPECIFYING THE CHARGE AND DEFAULT O N THE PART OF THE ASSESSEE. THE RELEVANT PARA OF THE CHARGE MENTIONED IN THE SHOW CAUSE NOTICE IS AS UNDER: HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS, THE ASSESSING OFFICER HAS NEITHER STRIKE OF T HE IRRELEVANT PART NOR SPECIFIED THE GROUND AND CHARGE AGAINST WHICH T HE PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. TH US, IT IS CLEAR CASE OF NON-SPECIFYING THE GROUNDS AND CHARGE FOR W HICH THE PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY & ORS. (SUPRA), IN PARA 60 TO 63 HAS HELD AS UNDER: 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM G UILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEED LESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF THE GROUNDS MENTIO NED IN SECTION 271(L)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 4 AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PEN ALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE I S CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIM E OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSES SEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY W OULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ON CE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALT Y PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATIO N, FACTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUEN T TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF A NY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISH ING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSES SING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT W HETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF T. ASHOK PAI V. CIT [2007] 292 ITR 11/161 TAXMAN 340 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF CIT V. MANU ENGG. [1980] 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRGO MARKETING (P.) LTD. [2008] 171 TAXMAN 156 , HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTA INABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. INDEPENDENT PROCEEDING 62. THE PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSME NT PROCEEDINGS, AND INDEPENDENT THEREFROM. THE ASSESSMENT PROCEEDIN GS ARE TAXING PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATING FROM PROCEEDINGS OF ASSESSMENT ARE INDEPE NDENT AND SEPARATE ASPECTS OF THE PROCEEDING. SEPARATE PROVISION IS MA DE FOR THE IMPOSITION OF PENALTY AND SEPARATE NOTICES OF DEMAND ARE MADE FOR RECOVERY OF TAX AND AMOUNT OF PENALTY. ALSO SEPARATE APPEAL IS PROV IDED AGAINST ORDER OF IMPOSITION OF PENALTY. ABOVE ALL, NORMALLY, ASSESSM ENT PROCEEDINGS MUST ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 5 PRECEDE PENALTY PROCEEDINGS. ASSESSEE IS ENTITLED T O SUBMIT FRESH EVIDENCE IN THE COURSE OF PENALTY PROCEEDINGS. IT I S BECAUSE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS. THE ASSESS EE CANNOT QUESTION THE ASSESSMENT JURISDICTION IN PENALTY PROCEEDINGS. JURISDICTION UNDER PENALTY PROCEEDINGS CAN ONLY BE LIMITED TO THE ISSU E OF PENALTY, SO THAT VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSU ANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER IN PENALTY PROCEEDINGS. IT IS NOT POSSIBLE TO GIVE A FINDING THAT THE REASSESSMENT IS INVALID IN SUCH PENALTY PROCEEDINGS. CLEARLY, THERE IS NO IDENTITY BETWEEN THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS. THE LATTER ARE SEPARATE PROCEEDINGS THAT MAY, IN SOME CASES, FOLLOW AS A CO NSEQUENCE OF THE ASSESSMENT PROCEEDINGS. THOUGH IT IS USUAL FOR THE ASSESSING OFFICER TO RECORD IN THE ASSESSMENT ORDER THAT PENALTY PROCEED INGS ARE BEING INITIATED, THIS IS MORE A MATTER OF CONVENIENCE THA N OF LEGAL REQUIREMENT. ALL THAT THE LAW REQUIRES, SO FAR AS THE PENALTY PR OCEEDINGS ARE CONCERNED, IS THAT THEY SHOULD BE INITIATED IN THE COURSE OF T HE PROCEEDINGS FOR ASSESSMENT. IT IS SUFFICIENT, IF THERE IS SOME RECO RD SOMEWHERE, EVEN APART FROM THE ASSESSMENT ORDER ITSELF, THAT THE ASSESSIN G OFFICER HAS RECORDED HIS SATISFACTION THAT THE ASSESSEE IS GUILTY OF CON CEALMENT OR OTHER DEFAULT FOR WHICH PENALTY ACTION IS CALLED FOR. INDEED, IN CERTAIN CASES, IT IS POSSIBLE FOR THE ASSESSING OFFICER TO ISSUE A PENAL TY NOTICE OR INITIATE PENALTY PROCEEDINGS EVEN LONG BEFORE THE ASSESSMENT IS COMPLETED. THERE IS NO STATUTORY REQUIREMENT THAT THE PENALTY ORDER SHOULD PRECEDE OR BE SIMULTANEOUS WITH THE ASSESSMENT ORDER. IN POINT OF FACT, HAVING REGARD TO THE MODE OF COMPUTATION OF PENALTY OUTLINED IN THE STATUTE, THE ACTUAL PENALTY ORDER CANNOT BE PASSED UNTIL THE ASSESSMENT IS FINALISED. CONCLUSION 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMERGES IS AS UNDER: ( A ) PENALTY UNDER SECTION 271(L)(C) IS A CIVIL LIABILIT Y. ( B ) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING P ENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. ( C ) WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGR EDIENT FOR ATTRACTING CIVIL LIABILITY. ( D ) EXISTENCE OF CONDIT IONS STIPULATED IN SECTION 271(1 )(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. ( E ) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNI BLE FROM THE ASSESSME NT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REV ISIONAL AUTHORITY. ( F ) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 6 CONDITIONS MENTIONED IN SECTION 271(L)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DI SCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALME NT BECAUSE OF DEEMING PROVISION. ( G ) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESS MENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271(L )(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTI ON 1(B). ( H ) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO T HE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER . ( I ) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. ( J ) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. ( K ) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER O F ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID T AX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERN IBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNE ARTHING OR ENQUIRY CONCLUDED BY AUTHOR ITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUC H TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOU LD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER. ( L ) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANAT I ON OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PRO VE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOS ING PENALTY COULD BE PASSED. ( M ) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTAN TIATED BY THE ASSESSEE, BUT IS FOUND TO B E BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. ( N ) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECT ION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. ( O ) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATIS FACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDING S, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 7 HAVE TO BE INITIA TED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSIN G AUTHORITY. ( P ) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFIC ALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PA RTICULARS OF INCOME ( Q ) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. ( R ) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURA L JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. ( S ) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FI NDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. ( T ) THE PENALTY PROCEEDINGS ARE DIST INCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. ( U ) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS INSOFAR AS ' CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDING S ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT M ATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS INVALID IN THE PENALTY PROCEEDINGS. THERE IS NO DISPUTE THAT THE SAID DECISION OF HONB LE KARNATAKA HIGH COURT WAS FOLLOWED IN A SUBSEQUENT DECISION IN THE CASE OF CIT VS SSAS EMERALD MEADOWS (SUPRA) AND THE SLP FIL ED BY THE REVENUE AGAINST THE SAID DECISION WAS DISMISSED BY THE HON'BLE SUPREME COURT REPORTED IN 242 TAXMAN 180. FURTHER T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHEVETA CO NSTRUCTION CO. PVT. LTD. IN DBIT APPEAL NO. 534/2008 DATED 06.12.2 016 IN PARA 9 HAS HELD AS UNDER: ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 8 'TAKING INTO CONSIDERATION THE DECISION OF THE ANDH RA PRADESH HIGH COURT WHICH VIRTUALLY CONSIDERED THE SUBSEQUENT LAW AND THE LAW WHICH WAS PREVAILING ON THE DATE THE DECISION WAS RENDERE D ON 27.08.2012. IN VIEW OF THE OBSERVATION MADE IN THE SAID JUDGMENT, WE ARE OF THE OPINION THAT THE CONTENTION RAISED BY THE APPELLANT IS REQU IRED TO BE ACCEPTED AND IN THE FINDING OF ASSESSING OFFICER IN THE ASSESSME NT ORDER IT IS HELD THAT THE AO, HAS TO GIVE A NOTICE AS TO WHETHER HE PROPO SES TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS. HE CANNOT HAVE BOTH THE CONDITIONS AND IF IT IS SO HE HAS TO SAY SO IN THE NOTICE AND RECORD A FINDING IN THE PENALTY ORDER' (EMPHASIS SU PPLIED) IN VIEW OF THE ABOVE, PENALTY LEVIED BY THE LD. AO DESERVES TO BE DELETED AS THE SAME HAS BEEN LEVIED BY HIM IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND.' ACCORDINGLY AS HELD BY THE HON'BLE HIGH COURT, SPEC IFICATION OF THE EXISTENCE OF THE GROUND MENTIONED IN SECTION 271(1) (C) OF THE ACT IS MANDATORY FOR INITIATION OF PROCEEDINGS AND THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUND S. THEREFORE, THE GROUNDS HAS TO BE SPECIFICALLY STATED IN THE SH OW CAUSE NOTICE SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. THE ASSESSING OFFICER WHILE ENSUING THE NO TICE HAS TO COME TO THE CONCLUSION WHETHER IT IS A CASE OF CONC EALMENT OF INCOME OR IT IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEVY OF PENALTY HAS TO BE CLEAR AS TO T HE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR, PENALTY IS NOT SUSTAINABLE. THE AMBIGUITY IN SPECIFYING THE LIMB F OR INITIATING THE PROCEEDINGS FOR LEVY OF PENALTY RENDERS THE INITIAT ION INVALID AND CONSEQUENTIAL ORDER PASSED U/S 271(1)(C) OF THE ACT ALSO INVALID. HENCE, IN VIEW OF THE FACT THAT THE ASSESSING OFFIC ER HAS NOT SPECIFIED THE LIMB AND CHARGE FOR INITIATION OF PEN ALTY PROCEEDINGS IN THE SHOW CAUSE NOTICE THEN THE IMPUGNED ORDER PA SSED BY THE ASSESSING OFFICER IS NOT SUSTAINABLE AND LIABLE TO BE QUASHED. 6.1 IT IS PERTINENT TO NOTE THAT IN THE SHOW CAUSE NOTICE, THE ASSESSING OFFICER HAS MENTIONED THE CHARGE AS THE ASSESSEE FU RNISHED ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 9 INACCURATE PARTICULARS OF INCOME OR CONCEALED THE P ARTICULARS OF INCOME WHEREAS IN THE ORDER PASSED U/S 271(1)(C), T HE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED HIS INCOME, THE REFORE, THE CHARGE IN THE SHOW CAUSE NOTICE IS NOT CERTAIN WHER EAS THE LEVY OF PENALTY IN THE IMPUGNED ORDER IS FOR BOTH THE LIMBS WHICH IS INCONSISTENT WITH THE CHARGE AS MENTIONED IN THE SH OW CAUSE NOTICE. THE FINDINGS OF THE ASSESSING OFFICER IN T HE ORDER PASSED U/S 271(1)(C) HOLDING THE ASSESSEE GUILTY OF CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME IS ALSO CONTRARY TO THE FACTS OF THE CASE. THE PENALTY IN T HIS CASE WAS LEVIED AGAINST THE ADDITION MADE ON ACCOUNT OF BIFU RCATION OF CAPITAL GAIN INTO TWO PARTS ONE AS LONG TERM CAPITA L GAIN AND OTHER AS BUSINESS INCOME. THIS ACTION OF THE ASSESS ING OFFICER BIFURCATING IS BASED ON THE PREMISES THAT THE DEVEL OPMENT WORK ON THE LAND AND CARVING OUT OF PLOTS AMOUNT TO CONV ERTING THE CAPITAL ASSET INTO STOCK IN TRADE. THEREFORE, IT IS NOT A CASE OF SUPPRESSION OF PARTICULARS OR DETAILS OF INCOME BUT IT IS ONLY DIFFERENT OF VIEW ON THE MATTER BEFORE THE ASSESSIN G OFFICER. HENCE IT IS NOT A CASE OF CONCEALMENT OF PARTICULARS OF I NCOME BUT AT THE MOST CAN BE A CASE OF FURNISHING INACCURATE PARTICU LARS OF INCOME. AS REGARDS THE FAIR MARKET VALUE AS ON 01/4/1981, I T IS MATTER OF ESTIMATION AND CANNOT BE REGARDED BY SUPPRESSION OF PARTICULARS OF INCOME AND CONSEQUENTLY CHARGE OF CONCEALMENT OF PA RTICULARS OF INCOME. THE CLAIM OF DEDUCTION U/S 80C OF THE ACT R EGARDING THE TUITION FEE AND LIC PREMIUM IS ALSO NOT A BOGUS CLA IM AND DISALLOWANCE OF SAME FOR WANT OF PAYMENT RECEIPT CA N ONLY BE CONSIDERED AS FURNISHING THE INACCURATE PARTICULARS OF INCOME BUT NOT AS CONCEALMENT OF INCOME WHEN THE FACT REGARDIN G THE CHILDREN OF ASSESSEE STUDYING AND THE ASSESSEE IS H AVING LIC POLICY ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 10 IS NOT FOUND TO BE FALSE. HENCE, THE FINDINGS OF TH E A.O. HOLDING THE ASSESSEE GUILTY OF CONCEALMENT OF PARTICULARS O F INCOME IS CONTRARY TO THE FACTS OF THE CASE. ACCORDINGLY, WHE N THE ASSESSING OFFICER IS NOT ALLOWED TO LEVY THE PENALTY, WHICH I S CONTRARY TO THE CHARGE MENTIONED IN THE SHOW CAUSE NOTICE THEN THE IMPUGNED ORDER PASSED BY THE ASSESSING OFFICER IS NOT SUSTAI NABLE AND LIABLE TO BE QUASHED. 7. ON THE MERITS OF THE PENALTY, WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON R ECORD. THE ASSESSING OFFICER MADE ADDITION IN RESPECT OF GAIN ARISING FROM SALE OF ANCESTRAL LAND HELD BY THE ASSESSEE BY ESTI MATING THE COST OF ACQUISITION AS ON 01/4/1981 WHICH IS DIFFERENT F ROM THE ESTIMATION OF COST OF ACQUISITION BY THE ASSESSEE. THE SECOND ADDITION WAS MADE BY TREATING THE DEVELOPMENT WORK AND CARVING OUT THE PLOT OF THE LAND AS CONVERSION OF THE CAPIT AL ASSET INTO STOCK IN TRADE. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE BUT CLEA RLY STATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS DOING AGRICUL TURAL ACTIVITIES. THEREFORE, EVEN IF THE ASSESSEE HAS CARRIED OUT SOM E DEVELOPMENT WORK AND CARVING OUT THE PLOTS PRIOR TO THE SALE, T HE SAME WOULD NOT AMOUNT TO A TRADING OR BUSINESS ACTIVITY WHEN T HE LAND IN QUESTION WAS OTHERWISE ACCEPTED BY THE ASSESSING OF FICER UP TILL THIS YEAR AS CAPITAL ASSET. FURTHER THE ASSESSEE WA S HOLDING THIS LAND AS A SUCCESSOR AND THE COST OF ACQUISITION WAS DETERMINED BY ESTIMATION OF FAIR MARKET VALUE AS ON 01/4/1981, TH EREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON BOTH THE COUNTS WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OF INCOME. EVEN OTHERWISE IT IS A BONAFI DE CLAIM OF ASSESSEE TO OFFER THE ENTIRE GAIN AS LONG TERM CAPI TAL GAIN ARISING ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 11 FROM SALE OF THE LAND IN QUESTION WHICH IS THE ONLY TRANSACTION OF SALE AND NO TRANSACTION OF PURCHASE. SO FAR AS THE PENALTY LEVIED ON ACCOUNT OF ADDITION MADE BY THE ASSESSING OFFICE R IN RESPECT OF SALE OF LAND IN QUESTION, THE SAME IS OTHERWISE NOT SUSTAINABLE ON THE MERITS OF THE CASE. 7.1 AS REGARDS THE PENALTY LEVIED FOR DISALLOWANCE OF CLAIM U/S 80C OF THE ACT OF RS. 16,000/-, THE ASSESSING OFFICER HAS DISALLOWED THE SAME FOR WANT OF PRODUCTION OF EVIDENCE. THOUGH, IT WAS NOT A CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE BOGUS CLAIM BUT DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSEE BEING THE AGRICULTURISTS COULD NOT PRODUCE THE EVIDENCE O N ACCOUNT OF PAYMENT OF TUITION FEE OF RS. 6,000/- AND LIFE INSU RANCE PREMIUM OF RS. 10,000/-. ACCORDINGLY, ONLY BECAUSE THE ASSE SSEE COULD NOT PRODUCE THE RECEIPT OF PREMIUM AS WELL AS THE TUITI ON FEE WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS NO T PAID LIC PREMIUM OR TUITION FEE FOR THE CHILDREN. ACCORDINGL Y, EVEN IF THE SAID DISALLOWANCE IS MADE FOR WANT OF REQUISITE REC EIPT, THE CLAIM OF THE ASSESSEE CANNOT BE CONSIDERED AS BOGUS CLAIM . HENCE, THE PENALTY LEVIED BY THE ASSESSING OFFICER WITHOUT GIV ING A CONCLUDING FINDING THAT IT WAS A FALSE CLAIM, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR WANT OF RELEVANT EVIDENCE WOU LD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. HENCE, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS LIABLE TO BE CANCELED. WE ORDER ACCORDINGLY. 3. SINCE THE FACTS AND CIRCUMSTANCES AS WELL AS THE ISSUE INVOLVED IN THE CASE IN HAD IS IDENTICAL TO THE CASE OF ASSESSE ES BROTHER SHRI KAILASH ITA 230/JP/2018_ SHANKAR SINGH SHERAWAT VS ITO 12 CHAND JAT VS. ITO (SUPRA), ACCORDINGLY, FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL, WE DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/08/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH AUGUST, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SHANKAR SINGH SHERAWAT, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-7(2), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 230/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR