ITO, Bhiwani V. Sh. Ram Kumar, Bhiwani

ITA 2367/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3521 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-07-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Keywords: Capital asset; Salary income; Difference of opinion; Capital receipt; Set aside; Capital Gains
• Section: 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 2367/DEL/2010 ASSESSMENT YEAR: 1996-97 INCOME TAX OFFICER, WARD 1, SCO NO. 222, HUDA COMPLEX, BHIWANI. VS. RAM KUMAR, S/O SH. PURAN SINGH, LOHAR BAZAR, GUJRON KI DHANI, BHIWANI. PAN NO. - (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. BANITA DEVI NAOREM, SR. DR RESPONDENT BY: NONE O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 05.03.2010FOR A.Y. 1996-97. GROUNDS O F APPEAL READ AS UNDER: - (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY IMPOSED U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THAT THE ASSESSE E HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY NOT INCLUDING T HE INCOME RECEIVED IN RESPECT OF ENHANCED COMPENSATION AND INTEREST ON ENHANCED COMPENSATION IN THE RETURN OF INCOME FILED SHOWING NIL INCOME IN PURSUANCE TO NOTICE U/S 148 OF THE INCOME TAX ACT, 1961, WHICH FINALLY WAS HELD AS TAXABLE. (II) THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2 ITA NO. 2367/DEL/2010 2. RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 W AS FILED AT NIL DESPITE THE FACT THAT ASSESSEE HAD RECEIVED SUBSTANTIAL AMO UNT OF ENHANCED COMPENSATION OF INTEREST. THE ASSESSEE CLAIMED NON -TAXABILITY OF THE AMOUNT OF ENHANCED COMPENSATION AND INTEREST THEREIN ON TH E GROUND OF ITS BEING AGRICULTURAL INCOME. THE FOLLOWING NOTE WAS ATTACH ED WITH THE RETURN OF INCOME TO MAKE SUCH CLAIM: - ASSESSEE HAS RECEIVED ENHANCED COMPENSATION AGAINS T ACQUISITION OF AGRICULTURAL LAND WHICH WAS PUT TO U SE FOR AGRICULTURAL PURPOSES AND THE SAME WAS NOT A CAPITA L ASSETS IN TERMS OF SEC. 2(14)(III) OF THE I.T. ACT. LD. SH. A.S. GARG, DISTT. SESSION JUDGE, BHIWANI IN AN ENHANCEMENT PETITION OF COMPENSATION HAS AWARDED ENHANCED COMPENSATION. INTEREST @9% FOR THE 1 ST YEAR AND 15% FOR THE SUBSEQUENT PERIOD WILL ALSO BE ALLO WED DUE TO LATE PAYMENT ON DEFAULT OF DEPTT. ALL THE A MOUNT RECEIVED BY THE ASSESSEE ON ACQUISITION OF AGRICULT URAL LAND SHOWN AS COMPENSATION WHICH IS ACTUALLY AGRICULTURA L RECEIPTS AND NOT A CAPITAL RECEIPT AS DEFINED U/S 2 (14)(III) AND CLAIMED EXEMPT. ASSESSEE HAS ALSO PURCHASED AGRICULTURAL LAND AND CONSTRUCTED RESIDENTIAL HOUSE FROM THE COMPENSATION AMOUNT, WHICH IS ALSO CLAIMED, THEREFO RE, RETURNED INCOME BE ACCEPTED. 3. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 11,06,770/- IN WHICH THE INCOME WAS COMPUTED AS UNDER: - I) INCOME FROM SALARY RS. 44,870/- II) INCOME FROM CAPITAL GAINS RS. 1,76,515/- III) INCOME FROM OTHER SOURCES RS. 8,85,377/- TOTAL RS. 11,06,770/- 3 ITA NO. 2367/DEL/2010 4. LATER ON THE INCOME OF THE ASSESSEE WAS RECTIFIE D VIDE ORDER DATED 20 TH SEPTEMBER, 2000 AS UNDER: - INCOME FROM SALARY RS. 36,000/- INCOME FROM CAPITAL GAINS RS. 1,76,515/- INCOME FROM OTHER SOURCES RS. 8,85,377/- TOTAL RS. 10,97,890/- 5. THE APPEAL OF THE ASSESSEE IN QUANTUM WAS DISMIS SED BY CIT(A). 6. IN RESPONSE TO SHOW CAUSE NOTICE FOR LEVY OF CON CEALMENT PENALTY IT WAS SUBMITTED THAT THERE WAS A DIFFERENCE IN OPINION AB OUT THE HEAD OF THE INCOME AS WELL AS THE TAXABILITY OF THE ENHANCED COMPENSAT ION AND INTEREST. THE ASSESSEE HAD SUBMITTED THE COMPLETE INFORMATION IN RESPECT OF AN ENHANCED COMPENSATION AND INTEREST RECEIVED FROM LAC OFFICE. IT WAS SUBMITTED THAT ASSESSEE HAD DEPOSITED ALL THE TAX AND HAS COOPERAT ED WITH THE DEPARTMENT. IT WAS SUBMITTED THAT MATTER IN RESPECT OF ENHANCEMENT COMPENSATION WAS DECIDED BY HONBLE SUPREME COURT OF INDIA RECENTLY BY WHICH AN AMOUNT OF RS. 79.78 PER SQ. YD WAS ALLOWED AND BALANCE EXCESS PAI D TO THE ASSESSEE WAS TO BE RECOVERED AND THUS, IT WAS SUBMITTED THAT PENALT Y PROCEEDINGS SHOULD BE DROPPED. 7. THE AO DID NOT ACCEPT SUCH EXPLANATION OF THE AS SESSEE. HE HAS OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT THE AM OUNT RECEIVED BY ASSESSEE IS NOT IN RESPECT OF CAPITAL ASSET WAS NOT ACCEPTAB LE. HE OBSERVED THAT BY FURNISHING THE INFORMATION THE ASSESSEE HAS TRIED T O AVOID TAX AND THUS, HE IS 4 ITA NO. 2367/DEL/2010 LIABLE FOR PENALTY U/S 271(1)(C). ACCORDINGLY PENA LTY OF RS. 3,76,995/- IS CALCULATED AND LEVIED. 8. LEVY OF PENALTY WAS UPHELD BY LD. CIT(A) BY WAY OF AN EX-PARTE ORDER DATED 14 TH MAY, 2003 AND THE SAID ORDER OF LD. CIT(A) WAS SET ASIDE BY THE TRIBUNAL VIDE ITS ORDER DATED 6 TH MAY, 2005. IN PURSUANCE OF THE SAID ORDER OF ITAT IMPUGNED ORDER HAS BEEN PASSED BY LD. CIT(A) W HICH IS DATED 05.03.10. IT IS OBSERVED IN THE SAID ORDER THAT TO GIVE EFFEC T TO THE ORDER OF HONBLE SUPREME COURT REGARDING ENHANCED COMPENSATION THE A O HAS PASSED THE ORDER U/S 154 DATED 24.12.03 WHEREBY THE AMOUNT OF CAPITAL GAIN AS WELL AS INTEREST HAS BEEN REDUCED. THE ASSESSED INCOME HAS BEEN REDUCED TO RS. 7,10,000/- FROM 11,06,762/- ASSESSED VIDE ORDER DAT ED 10.03.2000. 9. BEFORE CIT(A) IT WAS SUBMITTED THAT NO PARTICULA R WAS CONCEALED FROM THE DEPARTMENT AND ALL THE ACCURATE PARTICULARS WERE FU RNISHED. DUE TO DIFFERENCE OF OPINION THE INCOME HAS BEEN ASSESSED IN THE HAND S OF THE ASSESSEE. ACCORDING TO ASSESSEE THE INCOME WAS IN THE NATURE OF AGRICULTURE AND IN THE OPINION OF DEPARTMENT IT WAS IN THE NATURE OF CAPIT AL GAIN. IT WAS SUBMITTED THAT UNDER SIMILAR CIRCUMSTANCES PENALTY FOR A.Y. 1997-9 8 WAS DROPPED BY THE AO. CONSIDERING THESE SUBMISSIONS THE LD. CIT(A) HAS OB SERVED THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR OF FURNISHING INACCURAT E PARTICULARS OF INCOME. HE OBSERVED THAT THERE MAY BE A DIFFERENCE OF OPINION AS TO THE HEAD OF INCOME UNDER WHICH THE INCOME IS DECLARED OR ASSESSED. TH ERE WAS ALSO DIFFERENCE IN QUANTUM OF COMPENSATION WHICH WAS FINALLY DECIDED B Y HONBLE SUPREME COURT AND FROM THAT IT CAN BE SEEN THAT IT IS A CASE WHER E NO MENS-REA WAS INVOLVED. 5 ITA NO. 2367/DEL/2010 HE ALSO OBSERVED THAT UNDER SIMILAR FACTS AND CIRCU MSTANCES, THE SAME AO NAMELY SH. B.N. NASA HAS DROPPED THE PENALTY PROCEE DINGS IN RESPECT OF A.Y. 1997-98 VIDE HIS ORDER DATED 11.12.02 AND THEREFORE , LD. CIT(A) HAS CANCELLED THE PENALTY. THE DEPARTMENT IS AGGRIEVED, HENCE IN APPEAL. 10. WE HAVE HEARD LD. DR ON THIS ISSUE WHO HAS RELI ED UPON THE ORDER OF AO. THE FACT THAT UNDER SIMILAR FACTS AND CIRCUMST ANCES PENALTY WAS DROPPED BY THE AO FOR A.Y. 1997-98 HAS NOT BEEN CONTROVERTE D BY LD. DR. IF THE PENALTY UNDER SIMILAR FACTS AND CIRCUMSTANCES IN THE CASE O F THE ASSESSEE HAS BEEN DROPPED FOR ANOTHER YEAR, DIFFERENT APPROACH CANNOT BE ADOPTED BY THE SAME OFFICER IN RESPECT OF ANOTHER ASSESSMENT YEAR. MOR EOVER, IT HAS BEEN MENTIONED IN THE ORDER OF AO AND LD. CIT(A) THAT CO MPLETE PARTICULARS WERE SUBMITTED BY THE ASSESSEE AND IT WAS ONLY THE CLAIM OF THE ASSESSEE THAT THE AMOUNT CANNOT BE TAXED. IN THIS VIEW OF THE SITUAT ION, WE ARE OF THE OPINION THAT THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A) VI DE WHICH THE IMPUGNED PENALTY HAS BEEN DELETED. WE DECLINE TO INTERFERE. 11. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23.7.2010 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 23.07.2010 *KAVITA 6 ITA NO. 2367/DEL/2010 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR