Rajinder Kumar Jain (HUF), New Delhi V. ACIT, New Delhi

ITA 2350/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77630 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAURABH GOEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. R. S. SYAL, AM AND SH. A. T. VARKEY, JM ITA NO. 2350/DEL/2013 : ASS TT. YEAR : 2007-08 RAJINDER KUMAR JAIN (HUF) 82, VEER NAGAR, JAIN COLONY, DELHI-110007 VS ACIT, CIRCLE 20(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAFHR1987J ASSESSEE BY : SHRI RAJ KUMAR & SAURABH GOEL REVENUE BY : MS ME ENAKSHI VOHRA DATE OF HEARING : 9.4.2014 DATE OF PRONOUNCEMENT : 11.4.2014 ORDER PER R. S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 20.12.2012 UPHOLDING PENALTY OF RS. 2,74, 126/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-T AX ACT, 1961 (ACT) IN RELATION TO THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE RECEIVED COMPENSATION OF RS. 97,88,994/- AGAINST ACQUISITION OF LAND MEASURING 18,600 SQ. YARDS SITUATED IN HOLABMIKALAN. THIS AMO UNT WAS CLAIMED AS EXEMPT U/S 10(37) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O THAT A PART OF SUCH LAND, ADMEASURING AROUND 2500 SQ. YARDS WAS SUCH ON WHICH FARM HOUSE WAS ITA NO. 2350/DEL/2013 RAJINDER KU MAR JAIN (HUF) 2 CONSTRUCTED WHICH WAS SIMULTANEOUSLY ACQUIRED. THUS IT WAS HELD THAT SUCH PART OF THE LAND COULD NOT BE TREATED AS LAND USED FOR AGRICULTURAL PURPOSES QUALIFYING FOR EXEMPTION U/S 10(37) OF THE ACT. THE ASSESSEE ADMITTED THE POSITION AND AGREED TO BE ASSESSED ON PROPORTIONATE BASIS SUBJECT TO NON-IMPOSITION OF PENALTY U/S 271(1)(C). AMOUNT OF CAPITAL GAIN IN RESPECT OF 2500 SQ. YARDS WAS COMPUTED ON P RO-RATA BASIS AT RS. 12,21,593/-. THEREAFTER PENALTY WAS IMPOSED AT THE RATE OF 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE ASSESSEE. THERE WAS NO RELIEF IN THE FIRST APPEAL, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSE ES LAND TOTALING 18600 SQ. YARDS WAS COMPULSORILY ACQUIRED. A FARM HOUSE W AS CONSTRUCTED BY THE ASSESSEE WAY BACK ON LAND MEASURING AROUND 2500 SQ YARDS ON SUCH TOTAL LAND. COMPENSATION OF RS. 97.88 LACS WAS AWAR DED ON ACCOUNT OF TOTAL LAND ACQUISITION. A FURTHER SUM OF RS. 80,37, 242/- WAS AWARDED AS COMPENSATION FOR COMPULSORY ACQUISITION OF FARM HOU SE ON LAND OF AROUND 2500 SQ. YARDS INCLUDED IN THE TOTAL LAND AC QUIRED AT 18600 SQ. YARDS. THE ASSESSEE PROMPTLY OFFERED FOR TAXATION THE SUM OF RS. 80.37 LACS AS CAN BEEN SEEN FROM COMPUTATION OF TOTAL INC OME PLACED BEFORE US. INVESTMENT IN CAPITAL GAIN BONDS WAS MADE TO THE EX TENT OF RS. 50 LACS AS AGAINST THE LONG TERM CAPITAL GAIN OF RS. 45.39 LACS ON THE COMPENSATION RECEIVED FOR COMPULSORY ACQUISITION OF FARM HOUSE TO THE ITA NO. 2350/DEL/2013 RAJINDER KU MAR JAIN (HUF) 3 TUNE OF RS. 80.37 LACS. THE FACT THAT THE ASSESSEE RECEIVED COMPENSATION OF RS. 97.88 LACS ON COMPULSORY ACQUISITION OF 1860 0 SQ. YARDS WHICH IS OTHERWISE EXEMPT U/S 10(37) OF THE ACT BUT FOR 2500 SQ. YARDS, HAS NOT BEEN DISPUTED. THE ASSESSING OFFICER DID ALLOW EXEM PTION UNDER THIS SECTION BUT CHARGED THE AMOUNT TO TAX IN RESPECT OF THE LAND OF AROUND OF 2500 SQ. YARDS ON WHICH SUCH FARM HOUSE WAS CONSTRU CTED. THE FACT THAT THE ASSESSEE OFFERED FOR TAXATION A SUM OF RS. 80. 37 LACS, BEING THE COMPENSATION ON COMPULSORY ACQUISITION OF THE STRUC TURE OF FARM HOUSE, FAIRLY DEMONSTRATES THAT THERE WAS NO INTENTION OF THE ASSESSEE TO CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS OF INC OME. NON-OFFERING OF THE PROPORTIONATE AMOUNT TO TAX IN RESPECT OF THE L AND ON WHICH FARM HOUSE WAS ERECTED CONSTITUTES A BONA FIDE MISTAKE WHEN SEEN IN THE LIGHT OF THE TOTALITY OF FACTS. IF THE INTENTION OF THE A SSESSEE HAD BEEN TO CONCEAL ITS INCOME THEN IT WOULD NOT HAVE SEPARATEL Y SHOWN COMPENSATION OF RS. 80.37 LACS FOR TAXATION. THE AS SESSEE INADVERTENTLY ENTERTAINED A VIEW THAT CAPITAL GAIN ON SUCH PART O F THE LAND WAS ALSO EXEMPT FOR TAXATION AS IT WAS COMPULSORILY ACQUIRED . THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS P. LTD. VS CIT (2012) 348 ITR 306 (SC) HAS HELD THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED FOR A BONA FIDE MISTAKE OR A NORMAL HUMAN ERROR. SIMILAR VIEW HAS BEEN REITERATED BY THE HONBLE BOMBAY HIGH COUR T IN CIT VS SOMANY EVERGREE KNITS LTD. (2013) 352 ITR 592 (BOM) . WHEN WE CONSIDER THE ENTIRETY OF THE FACTS OBTAINING IN THE PRESENT CASE, THERE ITA NO. 2350/DEL/2013 RAJINDER KU MAR JAIN (HUF) 4 REMAINS NO DOUBT IN OUR MIND THAT NON-OFFERING OF T HE AMOUNT TOWARDS ACQUISITION OF LAND UNDERNEATH THE STRUCTURE WAS A BONA FIDE MISTAKE COMMITTED BY THE ASSESSEE, WHICH WAS SET RIGHT AS S OON AS IT CAME TO BE POINTED OUT BY THE AO. THE FACT THAT THE ASSESSEE A CCEPTED SUCH MISTAKE BEFORE THE A.O AND AGREED TO BE TAXED WITHOUT AGITA TING THE MATTER FURTHER IN APPEAL GOES TO SHOW THE BONA FIDE OF THE ASSESSEE IN THE PRESENT PECULIAR FACTS OF THE CASE. WE, THEREFORE, OVERTURN THE IMPUGNED ORDER AND ORDER FOR THE DELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/4/2014. SD/- SD/- (A. T. VARKEY) (R. S . SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 11/4/2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR