D.Harindran, CHENNAI V. ITO, CHENNAI

ITA 233/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8429 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 09-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: D ANAND
• Keywords: Capital asset; Wrong claim

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . , ! ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 233/MDS/2016 # $# /ASSESSMENT YEAR : 2011-12 SHRI D.HARINDRAN, NO.4/212A, MGR SALAI, PALAVAKKAM, CHENNAI 600 041. PAN : AGEPH2310N V. THE INCOME TAX OFFICER, BUSINESS WARD III (3), CHENNAI 600 034. ( %& /APPELLANT) ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : SHRI D.ANAND, ADVOCATE '(%&)* /RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT + ),! /DATE OF HEARING : 01.09.2016 -$ ),! /DATE OF PRONOUNCEMENT : 23.09.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A) -15, CHENNAI DATED 18.12.2015 AND PERTAINS T O ASSESSMENT YEAR 2011-12. 2 I.T.A. NO.233/MDS/2016 2. SHRI D.ANAND, THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SEC TION 271 (1) (C) OF THE ACT. ON APPEAL BY THE ASSESSEE, THE CIT(A) HAS ALSO CONFIRMED THE SAME. REFERRING TO THE PENALTY ORDER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54/54F IN RESPECT OF A CAPITAL GAIN ARISING ON THE SALE OF TH E LAND AT INJAMBAKKAM. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHE D ALL THE DETAILS OF TRANSACTION FOR SALE OF 10.03 GROUNDS ON 06.12.2010 FOR RS.4,00,00,000/-. IN FACT, THE ASSESSEE ACQUIRED THIS PROPERTY BY MEA NS OF A REGISTERED SETTLEMENT DEED FROM HIS FATHER SHRI P.V.DEVAKUMARA N ON 19.11.2010. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE UNDER SECTION 54/54F WHILE COMPUTING THE CAPITAL GAIN IN THE ASSE SSMENT PROCEEDING. DURING THE COURSE OF PENALTY PROCEEDING, THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE PURCHASED NANJA LAND TO THE EXTEN T OF 6.95 ACRES FROM M/S.CONCLAVE CONSTRUCTIONS PRIVATE LIMITED BY MEANS OF A REGISTERED SALE DEED DATED 06.03.2011 FOR A TOTAL CONSIDERATION OF RS.3,27,06,437/-. REFERRING TO THE COPY OF THE RETURN AND OTHER MATER IAL AVAILABLE ON RECORD, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE DISCLOSED THE PURCHASE OF AGRICULTURAL LAND IN THE RETURN AND CLAIMED THE STATUTORY DEDUCTION UNDER SECTION 54/54F OF THE ACT . THIS RS.3,27,06,437/- INCLUDES THE COST OF THE LAND AND THE DEVELOPMENT 3 I.T.A. NO.233/MDS/2016 CARRIED OUT BY THE ASSESSEE. THE EXISTENCE OF RESID ENTIAL HOUSE IS EVIDENCED FROM THE COPY OF THE PROPERTY TAX PAYMENT RECEIPT PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN CL AIMING THE EXEMPTION UNDER SECTION 54/54F OF THE ACT. 3 . ACCORDING TO THE LEARNED COUNSEL, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DISCLOSED THE SOURCE OF INHERITANCE OF PROPERTY FROM HIS FATHER. IT IS ALSO DISCLOSED BEFORE THE ASSESSING O FFICER THAT THE INVESTMENT MADE IN THE RESIDENTIAL HOUSE. THE ASSES SEE HAS ALSO PRODUCED THE COPY OF THE PROPERTY TAX PAID BY THE A SSESSEE TO THE VADAKADAMPADI PANCHAYAT AS THE PROOF FOR EXISTENCE OF RESIDENTIAL HOUSE IN THE LAND PURCHASED BY THE ASSESSEE. THEREFORE, I T CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULA RS. THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF THE INVESTMENT MADE OU T OF THE SALE PROCEEDS OF THE LAND AND CLAIMED EXEMPTION UNDER SECTION 54/ 54F. IF THE ASSESSING OFFICER FIND THAT THE ASSESSEE IS NOT ELI GIBLE FOR EXEMPTION UNDER SECTION 54/54F, ACCORDING TO THE LEARNED COUN SEL, IT DOES NOT MEAN THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PART ICULARS OF HIS INCOME. THE GAIN AROSE TO THE ASSESSEE ON TRANSFER OF CAPIT AL ASSET IS AVAILABLE BEFORE THE ASSESSING OFFICER. THEREFORE, IT IS FOR THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPT ION UNDER SECTION 4 I.T.A. NO.233/MDS/2016 54/54F OF THE ACT. AFTER EXAMINING THE CLAIM OF THE ASSESSEE, IF THE ASSESSING OFFICER FINDS THAT THE ASSESSEE IS NOT EL IGIBLE FOR DEDUCTION UNDER SECTION 54/54F OF THE ACT IN RESPECT OF INVES TMENT MADE OUT OF THE SALE PROCEEDS OF THE CAPITAL ASSET, IT DOES NOT MEA N THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. MAKING A CLAI M BEFORE THE ASSESSING OFFICER UNDER THE STATUTORY PROVISION CANNOT BE CON SIDERED TO BE AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONC EALING ANY PART OF THE INCOME. PLACING RELIANCE ON THE JUDGMENT OF THE APE X COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED IN [2010] 322 ITR 158 (SC), THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT MAKING A CLAIM BEFORE THE ASSESSING OFFICER AFTER FURNISHING ALL THE RELEVANT MATERIALS DOES NOT IN ANY WAY AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALING ANY PART OF INCOME. THERE FORE, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE A SSESSING OFFICER. THE LEARNED COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. GEM GRANIT ES (2013) 86 CCH 160. COPY OF WHICH WAS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 4. ON THE CONTRARY, SHRI A.V.SREEKANTH, THE LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE INHERITED 10.03 GROUNDS OF LAND ALONG WITH SUPERSTR UCTURE MEASURING APPROXIMATELY 200 SQUARE FEET FROM HIS FATHER SHRI P.V.DEVAKUMARAN BY 5 I.T.A. NO.233/MDS/2016 MEANS OF A SETTLEMENT DEED DATED 19.11.2010. THE AS SESSEE SOLD THE SAID PROPERTY ON 06.12.2010 FOR A TOTAL AMOUNT OF R S.4 CRORES. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT HE INVESTED RS.3,27,06,437/- IN A RESIDENTIAL HOUSE PROPERTY AN D CLAIMED EXEMPTION UNDER SECTION 54/54F OF THE ACT. THE ASSESSING OFFI CER FOUND THAT WHAT WAS PURCHASED BY THE ASSESSEE IS NOT A RESIDENTIAL HOUSE PROPERTY, IT IS AN AGRICULTURAL LAND. THE ASSESSING OFFICER ON VERI FICATION FOUND THAT THERE WAS A WELL FOR IRRIGATION TOGETHER WITH A ROOM WITH ASBESTOS ROOF. REFERRING TO THE PROPERTY TAX SAID TO BE PAID BY TH E ASSESSEE, THE LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT THE PROPER TY TAX WAS PAID FOR THE SUPER STRUCTURE AND THERE WAS NO BUILDING IN TH E NATURE OF THE RESIDENTIAL HOUSE. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS FOR T HE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 54/54F. ACCORDINGLY, THE AS SESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE CIT (A) ON EXAMINATION FOUND THAT THE ASSESSEE MADE INVESTMENT IN THE AGRI CULTURAL LAND HAVING KNOWN THAT THE INVESTMENT WAS NOT MADE IN A RESIDEN TIAL PROPERTY, THE ASSESSEE MADE A FALSE CLAIM BEFORE THE ASSESSING OF FICER UNDER SECTION 54/54F IN THE ASSESSMENT PROCEEDING. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. 6 I.T.A. NO.233/MDS/2016 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDL Y, THE ASSESSEE ACQUIRED 10.03 GROUNDS OF LAND ALONG WITH A SUPERST RUCTURE FROM HIS FATHER SHRI P.V.DEVAKUMARAN BY MEANS OF A SETTLEMEN T DEED DATED 19.11.2010. THE ASSESSEE HAS ALSO SOLD THE LAND SUB SEQUENTLY ON 06.12.2010 FOR A CONSIDERATION OF RS.4 CRORES. THE ASSESSEE FURTHER CLAIMED BEFORE THE ASSESSING OFFICER THAT HE INVEST ED THE SALE PROCEEDS IN RESIDENTIAL HOUSE AND CLAIMED DEDUCTION UNDER SECTI ON 54/54F. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE INVESTED THE FUNDS IN AGRICULTURAL LAND AND NOT IN RESIDENTIAL HOUSE AND THEREFORE NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54/54F OF THE ACT. THE FACT REMAINS THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF SALE AND PURCHASE OF THE PROPERTIES AND CLAIMED DEDUCTION UNDER SECTION 54/5 4F OF THE ACT. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSES SEE FURNISHED ALL THE PARTICULARS OF THE SALES AND THE INVESTMENT AND CLA IMED EXEMPTION UNDER SECTION 54/54F, WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. SECTION 271(1)(C) IN CATEGORI CAL TERMS SAYS THAT THE ASSESSING OFFICER MAY LEVY PENALTY IF HE IS SATISFI ED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE 7 I.T.A. NO.233/MDS/2016 PARTICULARS OF SUCH INCOME. IN THE CASE BEFORE US, THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF THE TRANSACTION OF THE SALE OF THE PROPERTY. IN OTHER WORDS, THE SALE OF THE PROPERTY FOR RS.4 CROR ES WAS DISCLOSED BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO COMPUT ED THE CAPITAL GAIN AND DISCLOSED THE CAPITAL GAIN BEFORE THE ASSESSING OFFICER. THE ASSESSEE CLAIMS EXEMPTION UNDER SECTION 54/54F IN RESPECT OF THE INVESTMENT MADE BY HIM IN ANOTHER LANDED PROPERTY. THE ASSESSE E CLAIMS THAT THE INVESTMENT WAS MADE IN RESIDENTIAL HOUSE. THE REVEN UE CLAIMS THAT THE ASSESSEE INVESTED IN THE AGRICULTURAL LAND. IT IS N OT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS CONCEALED A NY PART OF THE SALE PROCEEDS AND THEREBY CONCEALED THE CAPITAL GAIN ACC RUED TO HIM. IN THOSE CIRCUMSTANCES, MAKING A STATUTORY CLAIM UNDER SECTI ON 54/54F OF THE ACT, CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY PARTICULARS OF HIS INCOME. SIMILARLY, IT CANNOT ALSO BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IF IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS O F INCOME OR CONCEALED ANY PART OF THE INCOME, THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE LEVY OF PENALTY UNDER SECTION 271 (1) (C) IS NOT JU STIFIED. 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD . CITED SUPRA. THE APEX COURT AFTER CONSIDERING THE PROVISIONS OF SECT ION 271(1)(C) FOUND 8 I.T.A. NO.233/MDS/2016 THAT IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY UND ER SECTION 271(1)(C), THE CASE SHALL BE STRICTLY COVERED BY THE PROVISION S OF SECTION 271(1)(C). UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO NS OF SECTION 271(1)(C), PENALTY PROVISION CANNOT BE INVOKED. THE APEX COURT HAS FURTHER FOUND THAT BY NO STRETCH OF IMAGINATION, MAKING OF AN INC ORRECT CLAIM IN LAW TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE MADRAS HIGH COURT IN GEM GRANITES (SUPRA). THE MADRAS HIGH COURT AFTER REFERRING TO THE APEX COURT JUDGMENT IN RAJASTHAN S PINNING AND WEAVING MILLS FOUND THAT THE CONDITIONS STATED IN 271(1)(C) MUST EXIST FOR LEVYING PENALTY. 9. IN VIEW OF THIS JUDGMENT OF THE APEX COURT AND M ADRAS HIGH COURT, EVEN IF IT IS CONSIDERED THAT THE CLAIM MADE BY THE ASSESSEE UNDER SECTION 54/54F IS INCORRECT, IT WOULD NOT TANTAMOUN T TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. PENALTY CAN BE LE VIED ONLY IN RESPECT OF CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS. MAKING A CLAIM BEFORE THE ASSESSING OFFICER UNDER T HE STATUTORY PROVISIONS CANNOT BE CONSIDERED BY ANY STRETCH OF I MAGINATION THAT THE ASSESSEE HAS CONCEALED ANY PART OF THE INCOME OR FU RNISHED INACCURATE PARTICULARS OF INCOME. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT 9 I.T.A. NO.233/MDS/2016 MERELY BECAUSE CLAIM MADE BY THE ASSESSEE UNDER SEC TION 54/54F WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSME NT PROCEEDING, THAT CANNOT BE A REASON TO CONCLUDE THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR CONCEALED A NY PART OF HIS INCOME. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) IS NOT JUSTIFIED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE PENALTY LEVIED BY THE ASSESSING OFFICER IS DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 23 RD SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) ! /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, . /DATED, THE 23 RD SEPTEMBER, 2016. SP. ) ',/0 10$, /COPY TO: 1. %& /APPELLANT 2. '(%& /RESPONDENT 3. + 2, ( )/CIT(A) 4. + 2, /CIT, 5. 03 ', /DR 6. 4# 5 /GF.