Abdulwaris Chandsab Shaikh, Pune V. Income-tax Officer,

ITA 2340/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4331 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Initiation of penalty proceedings
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 2340/PUN/2016 / ASSESSMENT YEAR : 2006-07 SHRI ABDULWARIS CHANDSAB SHAIKH, S. NO. 53/18, DHANKAWADI, PUNE- SATARA ROAD, PUNE-411 043 PAN : AIAPS4183J ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 2(1), PUNE / RESPONDENT ASSESSEE BY : SHRI KISHORE PHADKE REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 31.07.2018 / DATE OF PRONOUNCEMENT : 01.08.2018 / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER O F CIT (APPEALS)-4, PUNE, DATED 28.07.2016 FOR THE A.Y. 2006-07. 2. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RUNNING OF GARAGE AN D ALSO HIRING TRUCKS. ASSESSEE FILED THE RETURN OF INCOME ON 27.01.2007 D ECLARING TOTAL INCOME OF RS.1,90,640/-. ASSESSEE PURCHASED A LAND ADMEASU RING 5000 SQ.FT. LOCATED AT PLOT NO.11, S.NO.30/1 AT DHANAKWADI, TALUKA HA VELI, DIST. PUNE FOR A SUM OF RS.27,500/-. ASSESSEE INCURRED CE RTAIN EXPENSES ON THE SAID LAND/SHOPS. IN THE ABSENCE OF AN Y MATERIAL, AO 2 ITA NO.2340/PUN/2016 SHRI ABDULWARIS CHANDSAB SHAIKH WORKED OUT THE TOTAL COST OF ACQUISITION AND CONSTRUCTION THERE ON AT RS.1,85,900/-. AO ALSO NOTICED THAT ASSESSEE HAS TAKEN A LOAN FROM JIJAMATA SAHAKARI BANK LTD. BY MORTGAGING THESE SHOPS. HOWEVER, HE DID NOT REPAY THE LOAN. THE ASSESSEE SOLD THESE SHOPS TO REPAY THE LOAN. THE SALE PRICE AS PER THE SALE DEED IS AT RS.16,31,129/- IN CLUDING STAMP DUTY. THUS, THE AO INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.16,37 ,797/-. AO LEVIED PENALTY OF RS.2,97,775/- U/S.271(1)(C) OF THE ACT FOR F URNISHING IN ACCURATE PARTICULARS OF INCOME. THE CORE ISSUE IN THIS APPEAL IS THAT A SUM OF RS.16,00,000/ - WAS CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE BEING SALE OF SHOPS AT DHANKAWADI, TALUKA HAVELI, DIST. PUNE BUT NO CAPITAL GAIN WAS OFFERED FOR TAXATION. 3. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED THE SAID PENALTY LEVIED BY THE AO U/S. 271(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS. 1. THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON F ACTS IN CONFIRMING LEVY OF PENALTY AMOUNTING TO RS. 2,97,775/- U/S 271 (L)(C) OF ITA, 1961 ON ADDITION MADE ON ACCOUNT OF LTCG AMOUNTING TO RS.14 ,45,229/-. THE LEARNED CIT(A) AND LEARNED AO OUGHT TO HAVE APPRECI ATED THAT APPELLANT HAS NOT OFFERED SUCH CAPITAL GAIN UNDER BONA-FIDE B ELIEF THAT CAPITAL GAIN DOES NOT ARISE ON TRANSFER OF ASSET DUE TO OVERRIDI NG TITLE. 2. THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY ON THE ANALOGY THAT APPELLANT HAS CONCEALED PARTICULARS OF INCOME; WITHOUT APPRECIATING THAT THE APPELLANT HAS SHOWN T HE SALE PROCEEDS OF SAID SHOPS IN ITS CAPITAL ACCOUNT, SUBMITTED ALONG WITH RETURN OF INCOME. 3. THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING LEVY OF PENALTY WITHOUT APPRECIATING THAT EXPLANATI ON OFFERED BY APPELLANT WAS FOUND TO BE BONA-FIDE & HAS NOT BEEN REJECTED BY REVENUE AUTHORITIES. 3 ITA NO.2340/PUN/2016 SHRI ABDULWARIS CHANDSAB SHAIKH 4. THE LEARNED CIT(A)-4, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING LEVY OF PENALTY WITHOUT APPRECIATING FACT THAT LEARNED AO RECORDED SATISFACTION WITH RESPECT BOTH THE LIMBS, I.E. 'CON CEALING PARTICULARS OF INCOME' AS WELL AS 'FURNISHING INACC URATE PARTICULARS OF INCOME' WITH RESPECT TO SAME ADDITIO N. LEARNED I-T AUTHORITIES ERRED IN NOT SPECIFYING ANY PARTICULAR LIMB OUT OF THE TWO LIMBS FOR JUSTIFYING THE PENALTY. 5. THE APPELLANT CRAVES LEAVE TO ADD / MODIFY / ALT ER / DELETE ALL / ANY OF THE GROUNDS OF APPEAL. 5. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRING TO GROUND NO.4 (LEGAL IN NATURE) SUBMITTED THAT THIS IS A CAS E WHERE THE AO FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER DURING WHICH THE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING THE LEGA L REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LI MB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BIND ING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN T HE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUS TAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESS MENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 6. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDER S OF AO/CIT(A). 7. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE PERUSED THE ORDER OF THE AO AND FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE P ENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACT ION. THEREFORE, THE SAME IS REPRODUCED AS UNDER : 4 ITA NO.2340/PUN/2016 SHRI ABDULWARIS CHANDSAB SHAIKH 5. .IN VIEW OF THE PROVISIONS OF SEC. 50C OF THE ACT, THE SALE CONSIDERATION IS TAKEN AT RS.16,31,129/- TO WHICH A SSESSEE HAS NO OBJECTION. HE HAS NOT DISPUTED THE VALUATION BEFORE STAMP VALUATION OFFICER. PENALTY PROCEEDINGS U/S.271 (1)(C) HAVE BEEN INITIA TED FOR CONCEALMENT OF INCOME/FURNISHING INACCURATE PARTICU LARS OF INCOME. 7.1 WE ALSO PERUSED THE PENALTY ORDER DATED 27.05.2009 A ND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UN DER: 7. FROM THE FACTS MENTIONED ABOVE, IT IS EVIDENT TH AT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN T HE MEANING OF PROVISIONS OF SECTION 271(1)(C) AND HAS ALSO FAILED TO CONSIDER CORRECT AMOUNT OF RS.16,31,129/- BEING THE FULL VALUE OF CO NSIDERATION U/S.50C OF THE I.T ACT, 1961. THE ASSESSEE IS, THEREFORE, LIAB LE FOR PENALTY U/S.271(1) (C) OF THE I.T. ACT. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED BOTH LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. BUT IN THE PENALTY ORDER, THE AO MENTIONED ONLY ONE LIMB I.E. FURNISHED INACCURATE PARTICULARS OF INCOME . THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMB IGUITY IN THE MIND OF THE AO WITH REFERENCE TO THE APPLICABLE LIMB OF CLAUSE (C). THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABOV E REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LA W LEGALLY. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE A BOVE DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE PENALTY ORDE R IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, WE SET ASIDE THE O RDER OF CIT(A) DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED ON TECHNICAL GROUND. 5 ITA NO.2340/PUN/2016 SHRI ABDULWARIS CHANDSAB SHAIKH 8. CONSEQUENTLY, THE ADJUDICATION OF THE GROUNDS RAISED BY THE ASSESSEE ON MERITS BECOMES AN ACADEMIC EXERCISE. THERE FORE, THE RELEVANT GROUNDS ON MERITS ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON IST DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 01 ST AUGUST, 2018. SATISH # # # # / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-4, PUNE. 4. THE PR. CIT-3, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.