H.Ameerdeen, CHENNAI V. ITO, CHENNAI

ITA 249/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9584 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 09-02-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Charitable institution; Opportunity of being heard; Period of limitation; Reasonable cause; Wrong claim; Condonation of delay; Revised return; Reason to believe; Ignorance of law
• Section: 54B; 133A; 27; 148; 54; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER S. NO ITA NO. & ASST. YEAR ASSESSEE S/SHRI/SMT. REVENUE 1 2 237/MDS/2016 2010-11 253/MDS/2016 2010-11 S.S.M.AHMED HUSSAIN, C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN ABHPH5782J THE INCOME-TAX OFFICER, BUSINESS WARD-XV(1), CHENNAI 3 4 238/MDS/2016 2010-11 248/MDS/2016 2010-11 SITHI BASHEERA, C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AHGPB3590F THE INCOME-TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI 5 6 239/MDS/2016 2010-11 249/MDS/2016 2010-11 A.AMEERDEEN, C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AFFPA9526B THE INCOME-TAX OFFICER, BUSINESS WARD-XV(1), CHENNAI 7 8 240/MDS/2016 2010-11 246/MDS/2016 2010-11 S.A.NOORUL AMEENA, C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AFIPA9864P THE INCOME-TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI 9 10 241/MDS/2016 2010-11 255/MDS/2016 2010-11 RAHMATH ALIYA C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, ADYAR, CHENNAI 600 020. PAN AFKPA1728C THE INCOME-TAX OFFICER, BUSINESS WARD-XV(2), CHENNAI - - ITA 237, 248, 253/16 ETC. 2 11 12 242/MDS/2016 2010-11 245/MDS/2016 2010-11 ZULAIKA BANU C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AHGPB3589C THE INCOME-TAX OFFICER, BUSINESS WARD-XV(1), CHENNAI 13 14 243/MDS/2016 2010-11 247/MDS/2016 2010-11 K.S.M.AMINATH SHARIFA C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, ADYAR, CHENNAI 600 020. PAN AUKPS8081M THE INCOME-TAX OFFICER, BUSINESS WARD-XV(1), CHENNAI 15 16 244/MDS/2016 2010-11 250/MDS/2016 2010-11 N.D.S.SITHIQUA C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AUZPS6700L THE INCOME-TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI 17 251/MDS/2016 2010-11 H. SYED ABDUL KADER C/O S.SRIDHAR,ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, ADYAR, CHENNAI 600 020. PAN AKMPK6348P THE INCOME-TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI / APPELLANTS BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT / DATE OF HEARING : 06.04.2016 / DATE OF PRONOUNCEMENT : 04.05.2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER ALL THESE APPEALS BY DIFFERENT ASSESSEES ARE DIR ECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INC OME- TAX(APPEALS) DATED FOR THE ASSESSMENT YEAR 2010-11. - - ITA 237, 248, 253/16 ETC. 3 ITA NOS.245, 246, 247, 248, 249, 250, 253, 255/MDS/ 2016 : IN THESE APPEALS, THE ISSUE IS WITH REGARD TO SUSTA INING THE ADDITION BY THE COMMISSIONER OF INCOME-TAX(APPEALS) . ITA NOS.237, 238, 239, 240, 241, 242, 243, 244 & 25 1/MDS/2016 IN THESE APPEALS, THE ISSUE IS WITH REGARD TO LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. SINCE ISSUES ARE COMMON, WE CONSIDER THE FACTS NARRATED IN ITA NOS. 253 & 237/MDS/2016 F OR THE PURPOSE OF ADJUDICATION. 2. THE ASSESSEE HAS RAISED THE FIRST GROUND WITH RE GARD TO NON ADMITTING THE APPEAL BY THE COMMISSIONER OF INC OME- TAX(APPEALS) WITHOUT ASSIGNING REASONS IN RESPECT O F QUANTUM ADDITION. 3. THE FACTS OF THE CASE AS NARRATED IN ITA NO.253/MDS/2016 ARE THAT THE ASSESSEE, AN INDIVIDU AL IS HAVING INCOME FROM BUSINESS, CAPITAL GAINS AND OTHER SOUR CES. THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME FOR TH E A.Y 2010-11 - - ITA 237, 248, 253/16 ETC. 4 ON 29/3/2012 ADMITTING A TOTAL INCOME ( ` 7,31 , 544/-). IN THE STATEMENT OF INCOME FILED WITH THE RETURN OF INCOME FOR A.Y. 2010- 11, THE ASSESSEE HAD ADMITTED THE SALE OF AGRICULTU RAL LAND AT NEELANKARAI FOR ` 2,19,69,043/- AND CLAIMED AN EXEMPTION OF ` 1,90,00,000/- U/S.54B OF THE ACT TOWARDS THE INVEST MENT IN THE PURCHASE OF AGRICULTURE LAND AT MAHABALIPURAM. SUB SEQUENTLY, A COMBINED SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF SHRI AMEERDEEN OF M/S. ALPHA COMMERCIALS AND THE GROUP OF CASES ON 13/9/2012. IN THE SWORN STATEMENT OF SHRI AMEERDEEN STATED THAT HE HIMSELF AND HIS FAMILY MEMBERS (13 CO-OWNERS) TOGETHER HAD SOLD A LAND SITUATED NEELKANKARAI TO M/S. KANNAMMAL EDUCATIONAL TRUST AND ADMITTED THAT THE LAND SOLD W AS AN URBAN LAND ONLY AND NO AGRICULTURAL ACTIVITIES WERE CARRI ED OUT ON THE SAID LAND. HENCE, THE LAND WAS CAPITAL ASSET IN N ATURE. THE PRESENT ASSESSEE IS ONE SUCH CO-OWNER OUT OF THE TO TAL 13 CO- OWNERS OF THE IRNPUGNED LAND SOLD OUT. 3.1 THE A.O. NOTICED FROM THE ABOVE FACTS THAT THE INCOME CHARGEABLE TO TAX UNDER THE HEAD CAPITAL GAINS HA D ESCAPED ASSESSMENT. ACCORDINGLY, THE AO ISSUED A NOTICE U/ S 148 OF THE ACT TO THE ASSESSEE 25/10/2012. IN RESPONSE TO THE NOTICE U/S - - ITA 237, 248, 253/16 ETC. 5 148, THE ASSESSEE FILED A RETURN INCOME FOR THE A.Y 2010-11 ON 27/12/2012 ADMITTING AN INCOME ` 7,31 ,554/-(EXCLUDING CAPITAL GAINS OF ` 1,90,27,203/- ) AFTER WITHDRAWING EARLIER DEDUCTION CLAIMED U/S 54B AT ` 1,90,00,000/- AND PAID THE TAXES ON DECLARED SUCH CAPITAL GAINS. THE RE-ASSESSMENT WAS COMPLETED BY DETERMINING THE TOTAL INCOME OF ` 1,96,98,760/- (INCLUDING LTCG OF ` 1,90,27,203/-) ON 08/03/2014. 3.2 THE PENALTY PROCEEDINGS OF THE ACT FOR FURNISHI NG INACCURATE PARTICULARS OF INCOME AND FOR CONCEALING THE PARTICULARS OF INCOME, WERE ALSO INITIATED BY AO BY ISSUANCE OF A NOTICE U/S 271 (1)( C) OF THE ACT ON 08/03/2014 . 3 . 3 DURING THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS, THE LD. AR FURNISHED A LE TTER DATED 12/08/2014 WHICH READS AS FOLLOWS: 'OUT OF THE SALE CONSIDERATION, THE ASSESSEE HAS INSTRUCTED M/S ALPHA COMMERCIALS TO PAY THE MONEY TO THE SELLE R OF THE AGRICULTURE LAND AT MAHABALIPURAM AND CLAIMED EXEMP TION U/S 54B OF THE ACT BEING PART PERFORMANCE OF THE CONTRACT. AS THE SAID ALPHA COMMERCIALS HAS USED THE MONEY FO R THE BUSINESS PURPOSES AND HAS NOT PAID THE MONEY AS PER AGREEMENT. FROM THE ABOVE, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD NOT ACTUALLY EITHER INVESTED THE AMOUN T IN THE - - ITA 237, 248, 253/16 ETC. 6 PURCHASE OF THE PROPERTY OR INVESTED IN THE CAPITAL GAINS ACCOUNT SCHEME WITHIN THE STIPULATED TIME AS PROVID ED UNDER THE ACT. FURTHER, IT WAS OBSERVED BY THE AO CAPITAL GAINS ARISING OUT OF THE SALE PROCEEDS OF THE NEELANKARAI PROPERTY TO THE NOTICE OF THE DEPARTMENT ONLY WHEN THE SWORN STATEMENT OF SHR I AMEERDEEN WAS RECORDED DURING THE COURSE OF SURVEY OPERATIONS CONDUCTED AT THE BUSINESS PREMISES OF M/S ALPHA COM MERCIALS, WHICH OTHERWISE WOULD HAVE ESCAPED THE ASSESSMENT. ACCORDINGLY, THE AO OBSERVED THAT THE CLAIMS MADE B Y THE ASSESSEE, FIRSTLY, WITH REGARD TO THE ISSUE OF AGRI CULTURAL LAND AT THE FIRST INSTANCE AND, SECONDLY, REGARDING THE INV ESTMENT IN THE AGRICULTURE LAND FOR THE CLAIM OF DEDUCTION U/S.54B , WERE FACTUALLY WRONG. 3.4 ON THE BASIS OF THE FACTS MENTIONED ABOVE, THE AO RE- COMPUTED INCOME OF THE ASSESSEE AND ASSESSED THE IN COME AT ` 1,96,998,760/- U/S.143(3) R.W.S 147 OF THE ACT ON 08/03/2014 AS AGAINST THE TAXABLE INCOME DECLARED AT ` 7,31,554/- IN THE ORIGINAL RETURN OF INCOME FILED ON 29/3/2012. THE AO ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR FILING PARTICULARS OF INCOME AND FOR CONCEALING THE PARTIC ULARS OF - - ITA 237, 248, 253/16 ETC. 7 INCOME AND ORDER U/S 271(1) (C) WAS PASSED ON 26/9 /2014 BY LEVYING A PENALTY OF ` 39,13,426/-. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) CHALLENGING THE QUAN TUM ADDITION. 4. IN THIS CASE, THERE WAS A DELAY OF 175 DAYS IN F ILING ALL THESE APPEALS BEFORE THE CIT(APPEALS). THE ASSESSE E FILED A CONDONATION PETITION BEFORE THE CIT(APPEALS) STATIN G AS FOLLOWS : THE ASST. ORDER FOR THE A. Y 2010-11 DATED O8. 03. 2014 AND IN THIS REGARD THE ASSESSEE SUBMITS THAT T HE APPEAL AGAINST THE ASST. ORDER OUGHT TO HAVE BEEN FILED WITHIN 30 DAYS FROM THE SAID DATE OF SERVICE. HOWEVER, AS ADMITTED IN THE SWORN STATEMENT 13.09.2012 THE ASSESSEE WAS UNDER THE MISTAKEN IMPRESSION ABOUT THE CORRECTNESS OF SURRENDER OF CLAIM OF EXEMPTION U/S 54B OF THE ACT IN THE COMPUTATION OF TOTAL INCOME FORMED PART OF THE ORIGINAL RETURN OF INCOME. IN THE SWORN STATEMENT THE ASSESSEE ADMITTE D HIS/HIS IGNORANCE OF LAW IN AS MUCH AS THE SAID IGNORANCE SHOULD CONSTRUED IN BOTH WAYS CONSEQUENT TO THE INTERPRETATION OF SAID PROVISIONS IN THE ACT TO THE FACTUAL MATRIX OF THE CASE. THE ASSESSEE THEREFORE HAD REMITTED THE TAXES QUANTIFIED IN THE RE-ASSESSMENT ORDER AND WANTED TO PURCHASE PEACE WITH THE DEPARTMENT IGNORING THE PROFESSIONAL ADVICE RECEIVED ON THE WRONG ORDER PASSED WHICH WAS BASED ON THE INADMISSIBLE EVIDENCE OF SWORN STATEMENT RECORDED IN THE SURVEY PROCEEDINGS. AT THE SAME BREATH ASSESSEE SUBMITS THAT THE ACCEPTANCE OF STAND OF THE REVENUE AND PAYMENT OF - - ITA 237, 248, 253/16 ETC. 8 TAXES RELATION THERETO WOULD BRING DOWN THE CURTAIN S RELATING TO THE A. Y 2010-11 WHICH WAS HIS BONA FID E UNDERSTANDING AND HOWEVER, THE ASSESSING OFFICER HA S PROPOSED TO LEVY PENALTY U/S 271 (1) OF THE ACT IN SEPTEMBER 2014 WHICH ACTION OF THE A. 0 IS SEPARATELY OPPOSED ON ALL FACETS. BASED ON THE PROFESSIONAL ADVISE RECEIVED IN CONNECTION WITH THE PENALTY PROCEEDINGS IN SEPTEMBE R 2014 THE ASSESSEE WAS INFORMED ABOUT THE INVALID ORDER PASSED BY THE AO ON REOPENING THE PROCEEDINGS OF 147 OF THE ACT FOR THE A. Y 2010-11 BASED ON THE SWORN STATEMENT RECORDED AT THE TIME OF SURVEY AND THE SAID MISTAKE IN NOT CHALLENGING THE RE-ASSESSME NT ORDER UNDER CONSIDERATION WAS REALIZED IN THE PRESENTATION OF THE APPEAL BELATEDLY TODAY ALONG WITH THIS PETITION FOR CONDONATION OF DELAY. IN VIEW OF THE LEGAL COMPLEXITIES OF THE PRESENT CASE AND FURTHER IN VIEW OF UNREASONABLE ATTEMPT OF THE AO IN PENALIZING THE ASSESSEE ULS.271 (1) ( C) OF THE ACT WOULD CONSTITUTE REASONABLE CAUSE FOR THE BELATED FILING OF THE APPEAL FOR THE A.Y. 2010-11 AND ACCORDINGLY ASSESSEE PRAYS FOR THE ADMISSION OF THE APPEAL IN THE INTEREST OF JUSTICE. 4.1 HOWEVER, THE CIT(APPEALS) OBSERVED THAT THERE W AS NO SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING THE PRESENT APPEAL, BEFORE HIM, AGAINST THE REASSESSMENT ORDER DATED 8. 3.2014 WITHIN THE STIPULATED PERIOD OF 30 DAYS FROM THE RE CEIPT OF THE IMPUGNED ORDER AND REJECTED THE CONDONATION PETITIO N AND DECIDED THE ISSUE ON MERIT. AGAINST THIS, THE ASSE SSEE IS IN APPEAL BEFORE US. - - ITA 237, 248, 253/16 ETC. 9 5. AS SEEN FROM THE CONDONATION PETITION FILED BY T HE ASSESSEE BEFORE THE CIT(APPEALS), THE MAIN CONTENTI ON OF THE ASSESSEES COUNSEL IS THAT DUE TO WRONG PROFESSIONA L ADVICE AND AS PER THE BONA FIDE UNDERSTANDING WITH THE DEPARTM ENT, AT THE TIME OF SURVEY OPERATION, THE ASSESSEE HAS ACCEPTED THE QUANTUM ADDITION ON THE PREMISE THAT THE DEPARTMENT WOULD NOT INITIATE PENALTY PROCEEDINGS. HOWEVER, AFTER PASSI NG THE REASSESSMENT ORDER DATED 8.3.2014, THE AO INITIATED PENALTY PROCEEDINGS VIDE NOTICE DATED 8.3.2014 U/S.274 READ WITH SEC.271(1)(C) OF THE ACT. THE ASSESSEE REPLIED TO THAT NOTICE VIDE LETTER DATED 12.8.2014 THAT THE ASSESSMENT ORD ER DATED 8.3.2014 WAS DELIVERED ON 12.8.2014. THE ASSESSEE WAS OF THE OPINION THAT THE AO WOULD NOT LEVY PENALTY IN THIS CASE. HOWEVER, THE AO HAS GIVEN A FRESH OPPORTUNITY OF HE ARING TO THE ASSESSEE ON 25.9.2014, WHEREIN THE ASSESSEES REPRE SENTATIVE REQUESTED THE A.O. TO DROP THE PENALTY PROCEEDINGS, SINCE THE DEMAND RAISED HAS BEEN PAID. FINALLY, ON 25.9.2014 , THE ASSESSEE CAME TO THE CONCLUSION THAT THE AO WOULD L EVY PENALTY AND THEREFORE, HE TOOK A DECISION TO FILE THE APPEA L AGAINST THE REASSESSMENT ORDER DATED 8.3.2014. ACCORDINGLY, TH E ASSESSEE - - ITA 237, 248, 253/16 ETC. 10 FILED THE APPEAL BEFORE THE CIT(APPEALS) ON 26.9.20 14 ON THE BONA FIDE BELIEF THAT THE ASSESSING OFFICER WOULD N OT LEVY PENALTY HAS BEEN VANISHED. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSEE CANNOT WAIT FOR THE DECISION OF THE AO, TO LEVY PENALTY OR NOT TO LEVY PENALTY SO AS TO FILE THE APPEAL IN CASE OF QUANTUM ADDITION. THERE IS NO LEGITIMATE OR BONA FILE BELI EF IN FILING THE APPEAL BELATEDLY. SIMPLY BECAUSE, THE AO HAS INITI ATED PENALTY PROCEEDINGS AND PROPOSED TO IMPOSE PENALTY U/S.271( 1)(C) OF THE ACT AND AGAIN, QUANTUM ADDITION CANNOT BE DONE. TH E REASON FOR NOT FILING THE APPEAL IN TIME IS BASED ON HIS O WN ASSUMPTIONS AND PRESUMPTIONS. THE ASSESSEE CANNOT TAKE AWAY TH E LEGAL RIGHT OF THE AO IN TAKING PENALTY ACTION AGAINST TH E ERRING ASSESSEE. THE PLEA OF THE REVENUE IS THAT THE AO P ROPOSED TO IMPOSE PENALTY U/S.271(1)(C) OF THE ACT. THEREFORE , THE ASSESSEE INTENDED TO FILE THE PRESENT APPEAL BEYOND THE STIP ULATED TIME IS NOT A REASONABLE CAUSE TO FILE THE APPEAL BELATEDLY . ACCORDING TO THE DR, THE ASSESSEE IS SUPPORTED BY THE ADVOCATES AND CAS AND IT CANNOT BE SAID THAT THE ASSESSEE WAS IN LACK OF PROFESSIONAL ADVICE. THE LD. DR, RELIED ON THE ORD ER OF THE - - ITA 237, 248, 253/16 ETC. 11 CIT(APPEALS) AND SUBMITTED THAT THE APPEAL OF THE A SSESSEE WAS RIGHTLY UNADMITTED BY THE CIT(APPEALS). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE DELAY BEFORE THE COMM ISSIONER OF INCOME-TAX(APPEALS) IS ONLY 175 DAYS IN FILING THE APPEALS. THE ASSESSEE FILED CONDONATION PETITION AS NARRATED IN EARLIER PARA. THE REASONS STATED BY THE ASSESSEE IS THAT HE HAS B ONA FIDE BELIEF THAT THE ASSESSING OFFICER WOULD NOT LEVY PE NALTY AND CLOSE THE ISSUE. HOWEVER, FOR HIS SURPRISE, THE ASSESSIN G OFFICER INITIATED PENALTY PROCEEDINGS VIDE ORDER DATED 8.3. 2014. THE ASSESSEE REQUESTED THE ASSESSING OFFICER ON SEVERAL OCCASIONS NOT TO LEVY PENALTY AND THE ASSESSEE FILED REVISED RETURN OF INCOME ON THE BASIS OF MUTUAL UNDERSTANDING BETWEEN THE DEPARTMENT AND ARRIVED AT DURING THE SEARCH CONDUCT ED AND THERE WAS CERTAIN LAPSES ON THE PART OF THE ASSESSE E LIKE FILING OF ORIGINAL RETURN DUE TO LACK OF PROFESSIONAL ADVISE . FURTHER, IT WAS STATED THAT THE ASSESSEE HAS ALREADY PAID CAPITAL G AINS BEFORE FILING THE RETURN OF INCOME. HOWEVER, THE ASSESSIN G OFFICER FINALIZED THE PENALTY ORDER AND IT CAME TO THE NOTI CE OF THE ASSESSEE ON THE LAST DAY OF HEARING OF PENALTY PROC EEDINGS ON - - ITA 237, 248, 253/16 ETC. 12 25.9.2014 THAT THE AO IS GOING TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT IN THESE ASSESSMENT YEARS. HENCE, THE ASSE SSEE FILED APPEALS AGAINST THE QUANTUM ADDITION BEFORE THE COM MISSIONER OF INCOME-TAX(APPEALS) ON 26.9.2014. AS PER THE CO MMISSIONER OF INCOME-TAX(APPEALS), THIS CANNOT BE A REASONABLE CAUSE TO FILE THE APPEALS BELATEDLY AND THE ASSESSEE CANNOT WAIT FOR THE RESULT OF PENALTY PROCEEDINGS IN FILING THE APPEAL. THIS OBSERVATION OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IS UNWARRAN TED. THUS, IN OUR OPINION, THERE IS SUPERFICIAL APPROACH TO THE PROBLEM BY THE CIT(APPEALS). THE MATTER HAS TO BE CONSIDER ED IN THE LIGHT OF HUMAN PROBABILITIES. THE REASON STATED BY THE ASSESSEE IN THESE CASES IS THAT HE WAS WAITING FOR THE OUTCO ME OF THE PENALTY PROCEEDINGS. THEREFORE, WE HAVE TO CONSIDE R, WHETHER REASONABLE PRUDENT PERSON WOULD DO SO. THE INFEREN CE OF SUCH DELAY HAS TO BE DRAWN ON THE BASIS OF CIRCUMSTANCES AVAILABLE ON RECORD AND CONDUCT OF THE ASSESSEE. AFTER CON SIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES, ONE HAS TO REASONABLY CONCLUDE THAT THE PLEA OF THE ASSESSEE IS GENUINE. THE EXPLANATION OFFERED BY TH E ASSESSEE FOR THE DELAY CANNOT BE REJECTED AS FALSE OR DEVOID OF MERITS. AS - - ITA 237, 248, 253/16 ETC. 13 HELD BY THE MADRAS HIGH COURT IN THE CASE OF SREENI VAS CHARITABLE TRUST, VS. DCIT (280 ITR 357), THE EXPRE SSION SUFFICIENT CAUSE SHOULD BE INTERPRETED TO ADVANCE SUBSTANTIAL JUSTICE. THEREFORE, ADVANCEMENT OF SUBSTANTIAL JUS TICE IS THE PRIME FACTOR WHILE CONSIDERING THE REASON FOR CONDO NING THE DELAY. IN THESE CASES, THE ISSUE ON MERIT IS WITH REGARD TO ALLOWABILITY OF EXEMPTION U/S.54B OF THE ACT. THE ASSESSEE TOOK A PLEA THAT SALE CONSIDERATION WAS GIVEN TO M/S. AL PHA COMMERCIALS, WHEREIN ONE OF THE CO-PARTNERS OF THE PROPERTY IS A PARTNER OF THAT FIRM FOR THE PURPOSE OF INVESTMENT IN AGRICULTURAL LAND SO AS TO AVAIL DEDUCTION U/S.54B OF THE ACT. REFUSAL TO CONDONE THE DELAY WOULD RESULT IN A MERITORIOUS BEI NG THROWN AT THE VERY THRESHOLD, CAUSE OF JUSTICE BEING DEFEATED . AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CASE WOULD BE DECIDED ON MERIT AFTER HEARING THE PARTIES. ON THIS POINT, IT IS PERTINENT TO DRAW THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISI TION V. MST. KATIGI (167 ITR 471), WHEREIN IT WAS HELD AS UNDER : (1). ORDINARILY, A LITIGANT DOES NOT STAND TO BENEF IT BY LODGING AN APPEAL LATE. - - ITA 237, 248, 253/16 ETC. 14 (2). REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THR ESHOLD AND CAUSE OF JUSTICE BEINGDEFEATED. AS AGAINST THIS , WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARI NG THE PARTIES. (3). EVERY DAY'S DELAY MUST BE EXPLAINED DOES NOT MEAN THAT PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY, EVERY SECOND'S DELAY? THE DOCTR INE MUST BE APPLIED IN A RATIONAL, COMMON SENSE AND PRAGMATIC MANNER. (4). WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE C AUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FO R THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJ USTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. (5). THERE IS NO PRESUMPTION THAT DELAY IS OCCASION ED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT, HE RUNS SERIOUS RIS K. (6). IT MUST BE GRASPED THAT THE JUDICIARY IS RESPE CTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TE CHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUS TICE AND IS EXPECTED TO DO SO. 7.1 IN OUR OPINION, WHEN SUBSTANTIAL JUSTICE AND TE CHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTHER, THE CA USE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR T HE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT FOR INJUSTIC E BEING DONE BECAUSE OF NON-DELIBERATE DELAY. IN OUR OPINI ON, THE - - ITA 237, 248, 253/16 ETC. 15 DELAY IN THIS CASE IS VERY SHORT I.E. 175 DAYS AND THERE IS NO QUESTION OF INORDINATE DELAY, WHEN THE REASON STATE D BY THE ASSESSEE WAS A REASONABLE CAUSE FOR NOT FILING THE APPEAL. WE HAVE GONE THROUGH THE REASON FOR DELAY AS DISCUS SED IN EARLIER PARA. THE MADRAS HIGH COURT IN THE CASE OF CIT V. K.S.P.SHANMUGAVEL NADAR (153 ITR 596) CONSIDERED TH E DELAY OF CONDONATION AND HELD THAT THERE WAS SUFFIC IENT AND REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NO T FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION. ACCORD INGLY, THE MADRAS HIGH COURT CONDONED NEARLY 21 YEARS OF DELAY IN FILING THE APPEAL. WHEN COMPARED TO 21 YEARS OF DE LAY CONSIDERED BY THE COURT, THE DELAY OF 175 DAYS BEFO RE THE CIT(APPEALS) IN FILING THE APPEAL CANNOT BE CONSIDE RED TO BE INORDINATE OR EXCESSIVE. 7.2 FURTHER, THE CO-ORDINATE BENCH OF THE TRIBUNAL, CHENNAI IN THE CASE OF PEOPLE EDUCATION AND ECONOM IC DEVELOPMENT SOCIETY V. ITO (100 ITD 87)(THIRD MEMBE R) CONDONED THE DELAY OF MORE THAN 600 DAYS, WHEREIN, THE ACCOUNTANT MEMBER WAS A PARTY(DISSENTED). THUS, AS HELD BY THE MADRAS HIGH COURT IN THE CASE OF SRINIVAS CH ARITABLE - - ITA 237, 248, 253/16 ETC. 16 TRUST CITED SUPRA, THERE WAS NO HARD AND FAST RULE CAN BE LAID DOWN IN THE MATTER OF CONDONATION OF DELAY AND COURTS SHOULD ADOPT A PRAGMATIC APPROACH AND THE COURTS SH OULD EXERCISE THEIR DISCRETION ON THE FACTS OF THE EACH CASE KEEPING IN MIND THAT IN CONSTRUING, THE EXPRESSION SUFFICIENT CAUSE THE PRINCIPLE OF ADVANCING SUBST ANTIAL JUSTICE IS OF PRIME IMPORTANCE AND THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE A LIBERAL CONSTRUCTION. THE REFORE, THIS JUDGMENT OF THE MADRAS HIGH COURT SAYS THAT IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE, WHICH IS OF PRIME IMPO RTANT, THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE A LIBE RAL CONSTRUCTION. IN THESE CASES, IN OUR OPINION, THE SHORT DELAY OF 175 DAYS IS ON ACCOUNT OF BONA FIDE BELIEF BY TH E ASSESSEE THAT THE AO SHOULD NOT LEVY PENALTY AND TH E ASSESSEE WAS WAITING FOR THE DROPPING OF PENALTY DU RING THIS PERIOD AND WHEN THE ASSESSEE CAME TO KNOW ON 25.9.2 014 THAT THE AO IS GOING TO CONFIRM LEVY OF PENALTY, IM MEDIATELY ON 26.9.2014 THE ASSESSEE FILED APPEALS BEFORE THE CIT(APPEALS) CHALLENGING THE ADDITION. HENCE, IN O UR OPINION, WHEN DELAY IS FOR SHORT PERIOD OF 175 DAYS , IT IS TO - - ITA 237, 248, 253/16 ETC. 17 BE CONDONED AS HELD BY THE SUPREME COURT IN THE CAS E OF MRS. SANDHYA RANI SARKARV, SMT. SUDHA RANI DEBI AIR 1978 SC 537 SINCE THE CONDONATION OF DELAY IS THE DISCRETION OF THIS COURT AND IT WOULD DEPEND ON EAC H CASE. IN OUR OPINION, WHEN THERE IS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION, THE DEL AY HAS TO BE CONDONED AND IF WE DO NOT CONDONE THE DELAY, IT WOULD AMOUNT TO LEGALISE AN ILLEGAL ORDER AND IT IS APPRO PRIATE TO EXERCISE THE POWER WITH THE INTENTION THAT THIS TRI BUNAL WOULD DELIVER JUSTICE RATHER THAN LEGALISE INJUSTIC E ON TECHNICALITIES. THEREFORE, THIS SHORT DELAY OF 175 DAYS IS CONDONED. 8. THE GROUND RAISED BY THE ASSESSEE ON MERIT IS WI TH REGARD TO ALLOWABILITY OF DEDUCTION U/S.54B OF THE ACT. SINCE, THE CIT(APPEALS) DECIDED THE ISSUE ON MERIT WITHOUT CONDONING THE DELAY, IS NOT APPROPRIATE. HENCE, WE REMIT THE ISSUE TO THE FILE OF THE CIT(APPEALS) WITH DIRE CTION TO THE DECIDE THE SAME AFRESH. HE SHALL NOT BE PREJUDICED BY EARLIER FINDING OF THE CIT(APPEALS) ON MERIT IN THA T ORDER. ACCORDINGLY, THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. IN - - ITA 237, 248, 253/16 ETC. 18 THE RESULT, THE APPEALS IN ITA NOS.253, 248, 249, 2 46, 255, 245, 247, 250/MDS/2016 ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN ITA NO.237/MDS/2016, THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO LEVY OF PENALTY U/S.271( 1)(C) OF THE ACT. 10. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL IS HAVING INCOME FROM BUSINESS, CAPITAL GAINS AND OTHER SOURCES .THE ASSESSEE FILED HIS ORIGINAL RETU RN OF INCOME FOR THE A.Y 2010-11 ON 29.3.2012 ADMITTING A TOTAL INCOME OF ` 7,31,554/-. IN THE STATEMENT OF INCOME FILED WITH T HE RETURN OF INCOME, FOR AY 2010-11, THE ASSESSEE HAD ADMITTED T HE SALE OF AGRICULTURAL LAND AT NEELANKARAI FOR ` 2,19,69,043/- AND CLAIMED AN EXEMPTION OF ` 1,90,00,000/ - U/S 54B OF THE ACT TOWARDS THE INVESTMENT IN AGRICULTURAL LAND AT MAHABALIPURAM. S UBSEQUENTLY, A COMBINED SURVEY U/S 133A WAS CONDUCTED IN THE CAS E OF ONE SHRI AMEERDEEN OF M/S ALPHA COMMERCIALS AND THE GROUP OF CASES ON 13/9/2012 . IN THE SWORN STATEMENT OF SHRI AMEERDEEN, HE STATED THAT HE HIMSELF AND HIS FAMILY MEMBERS (1 3 CO-OWNERS) TOGETHER HAD SOLD A LAND SITUATED AT NEELKANKARAI T O M/S - - ITA 237, 248, 253/16 ETC. 19 KANNAMMAL EDUCATIONAL TRUST AND ADMITTED THAT THE L AND SOLD WAS AN URBAN LAND ONLY AND NO AGRICULTURAL ACTIVITI ES WERE CARRIED OUT ON THE SAID LAND. THE ASSESSEE, SHRI S.S.M. AHM ED HUSSAIN, IS ONE SUCH CO-OWNER OUT OF THE TOTAL 13 CO-OWNERS OF THE IMPUGNED LAND SOLD OUT. 10.1 FROM THE PERUSAL OF THE ABOVE FACTS, THE AO. NOTICED THAT THE INCOME CHARGEABLE TO TAX UNDER THE HEAD OF CAPI TAL GAINS HAD ESCAPED ASSESSMENT. ACCORDINGLY, THE AO ISSUED A NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON 25/10/2012. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE FILED A RETURN OF INCOME FOR THE AY 2010-11 ON 27/12/2012 ADMITTING AN INCOME OF ` 7,31,554/- (EXCLUDING CAPITAL GAINS OF ` 1,90,27,203/-) AFTER WITHDRAWING THE EARLIER DEDUCTION CLAIMED U/S 54B A T ` 1,90,00,0001- AND PAID THE TAXES ON THE DECLARED SU CH CAPITAL GAINS. THE RE-ASSESSMENT WAS COMPLETED IN DETERMINI NG THE TOTAL INCOME OF ` 1,96,98,760/-(INCLUDING LTCG OF ` 1,90,27,203/- ON 08/03/2014. 10.2 THE PENALTY PROCEEDINGS OF THE ACT FOR FURNISH ING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALING THE PARTICULARS OF INCOME, WAS INITIATED BY THE AO BY I SSUANCE OF A - - ITA 237, 248, 253/16 ETC. 20 NOTICE U/S 271 (1)( C ) OF THE ACT ON 08/03/2014. T HE FOLLOWING REASONS WERE RECORDED FOR THE ISSUANCE OF NOTICE U/ S 271 (1)( C): I . IN THE STATEMENT OF INCOME FILED ALONG WITH THE ORIGINAL RETURN OF INCOME THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54B OF THE ACT TOWARDS THE CAPITAL GAINS ARISING OU T OF THE AGRICULTURAL LAND SOLD AT NEELANKARAI, CHENNAI. II. DURING THE COURSE OF COMBINED SURVEY OPERATIONS CONDUCTED AT THE BUSINESS PREMISES OF SHRI AMEERDEE N, IT WAS STATED BY HIM THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT AT THE NEELANKARAI LAND AND THE LAND WAS ONLY A N URBAN LAND. THEREFORE, THE ASSESSEE'S CLAIM OF THE EXEMPT ION U/S 54 B OF THE ACT WAS WRONG. III. FURTHER, THE ASSESSEE NEITHER INVESTED THE AMO UNT OF SALE CONSIDERATION OF IMPUGNED LAND IN THE PURCHASE OF AGRICULTURAL LANDS NOR DID HE DEPOSIT IN THE CAPITA L GAINS ACCOUNT SCHEME, WITHIN THE STIPULATED PERIOD AS PRO VIDED IN THE ACT. HENCE, THE LONG TERM CAPITAL GAINS OF RS.1,90,27,2031- WAS BROUGHT TO TAX. IN RESPONSE TO THE PENALTY SHOW CAUSE NOTICE ISSUE D BY THE AO, THE LEARNED AR FURNISHED A LETTER DATED 12/8/20 14 WHICH READS AS FOLLOWS, 'OUT OF THE SALE CONSIDERATION, T HE ASSESSEE HAS INSTRUCTED MIS ALPHA COMMERCIALS TO PA Y THE MONEY TO THE SELLER OF THE AGRICULTURAL LAND AT MAHABALIPURAM AND CLAIMED EXEMPTION U/S 548 OF THE ACT BEING PART PERFORMANCE OF THE CONTRACT. AS THE SAID ALPHA COMMERCIALS HAS USED THE MONEY FOR THE BUSINESS PURPOSES AND HAS NOT PAID THE MONEY AS PER THE AGREEMENT.' 10.3 FROM THE ABOVE, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD NOT ACTUALLY EITHER INVESTED THE AMOUN T IN THE PURCHASE OF THE PROPERTY OR INVESTED IN THE CAPITAL GAINS - - ITA 237, 248, 253/16 ETC. 21 ACCOUNT SCHEME WITHIN THE STIPULATED TIME AS PROVID ED UNDER THE ACT. FURTHER, IT WAS OBSERVED BY THE AO THAT THE CA PITAL GAINS ARISING OUT OF THE SALE PROCEEDS OF THE NEELANKARAI PROPERTY CAME TO THE NOTICE OF THE DEPARTMENT ONLY WHEN THE SWORN STATEMENT OF SHRI AMEERDEEN WAS RECORDED DURING THE COURSE OF SURVEY OPERATIONS CONDUCTED AT THE BUSINESS PREMISE S OF M/S ALPHA COMMERCIALS, WHICH OTHERWISE WOULD HAVE ESCAP ED THE ASSESSMENT. 10.4 IN RESPONSE TO THE FRESH OPPORTUNITY OF BEING HEARD, THE LD. A.R. REQUESTED THE AO TO DROP THE PENALTY PROCE EDINGS SINCE THE DEMAND RAISED ON ACCOUNT OF THE CAPITAL GAINS W AS PAID BY THE ASSESSEE. HOWEVER, IT WAS HELD BY THE A.O THAT THE PENALTY PROCEEDINGS COULD NOT BE DROPPED JUST BECAUSE THE A SSESSEE HAD REMITTED THE DEMAND RAISED BY THE DEPARTMENT. F URTHER, IT WAS ALSO OBSERVED BY THE AO THAT THE ACT OF WITHDRA WAL OF EXEMPTION BY THE ASSESSEE WAS NOT VOLUNTARY AND THE SAME WAS UNDERTAKEN ONLY AFTER THE ACTION U/S 133A OF THE AC T IN ONE OF THE BUSINESS PREMISES OF SHRI AMEERDEEN, ONE OF THE CO- OWNERS OF THE IMPUGNED PROPERTY. ACCORDINGLY, IT WAS HELD BY THE AO THAT THE ASSESSEE HAD FAILED TO DISCLOSE ALL THE MATERIA L FACTS TRULY AND - - ITA 237, 248, 253/16 ETC. 22 THE WHOLLY IN THE ORIGINAL RETURN OF INCOME, THEREF ORE, HAD INTENTIONALLY AND WILLFULLY CLAIMED THE EXEMPTION U /S 54B OF THE INCOME TAX ACT TO EVADE PAYMENT OF TAXES KNOWING TH E FACT THAT NO SUCH TRANSACTION HAD ACTUALLY TAKEN PLACE. ACCOR DINGLY, THE AO IMPOSED A MINIMUM PENALTY U/S 271(1)(C) @ 100% O F THE TAX SOUGHT TO BE EVADED WHICH WORKED OUT AT ` 39,13,426/-. AGGRIEVE, THE ASSESSEE WENT IN APPEAL BEFORE THE CI T(APPEALS). 11. THE CIT(APPEALS) OBSERVED THAT THE ORIGINAL RET URN OF INCOME FOR AY 2010-11 WAS FILED ON 29/3/2012 WHICH WAS FILED BEYOND THE DUE DATE FOR FILING OF RETURN OF INCOME AS STIPULATED U/S 139 (1) OF THE ACT. THE RETURN OF INCOME FILED ON 27/12/2012 IN RESPONSE TO NOTICE U/S 148 OF THE ACT, CANNOT BE CONSIDERED AS REVISED RETURN OF INCOME AS CLAIMED BY THE ASSESSEE IN HIS WRITTEN SUBMISSIONS FILED BEFORE THE UNDERSIGNED. T HE REVISED RETURN OF INCOME CAN BE FILED ONLY WHEN THE ORIGINA L RETURN OF INCOME IS FILED U/S 139 (1) OF THE ACT. THE PRESENT RETURN WAS FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. 11.1 THE CIT(APPEALS) FURTHER OBSERVED THAT FROM T HE PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S 14 7 OF THE ACT DATED 08/03/2014 FOR THE AY 2010-11 IN THE CASE OF THE - - ITA 237, 248, 253/16 ETC. 23 ASSESSEE, IT IS REVEALED THAT A SURVEY OPERATION WA S CARRIED OUT IN THE CASE OF THE FIRM M/S ALPHA COMMERCIALS AT JH AVER PLAZA, NO. 1, NUNGAMBAKKAM, HIGH ROAD, CHENNAI-34, ON 13/9 /2012. SHRI AMEERDEEN, WHO IS THE MANAGING PARTNER OF THE SAID FIRM, HAD ADMITTED IN HIS SWORN STATEMENT THAT THE LAND A T NEELANKARAI WAS SOLD TO M/S. KANNAMMAL EDUCATIONAL TRUST BY 13 CO-OWNERS. ALL THE CO-OWNERS HAD FILED THE RETURN OF INCOME FO R AY 2010-11 CLAIMING THE SAID LAND AS AGRICULTURE LAND AND CLAI MED EXEMPTION U/S 548 OF THE ACT. HOWEVER, AS ASCERTAINED DURING THE COURSE OF THE SURVEY OPERATIONS AND FROM THE SWORN STATEMENT SH. AMEERDEEN, THE LAND AT NEELANKARAI WAS AN URBAN LAN D AND NO AGRICULTURAL ACTIVITY WAS BEING CARRIED OUT ON THE SAID LAND. THE PRESENT ASSESSEE, SHRI S.S.M. AHMED HUSSAIN, IS ALS O ONE OF THE PARTNERS IN THE FIRM M/S ALPHA COMMERCIALS AND HE IS ALSO ONE OF THE 13 CO-OWNERS OF THE IMPUGNED LAND AT NEE LANKARAI WHICH WAS SOLD TO M/S KANNANMMAL EDUCATIONAL TRUST. 11.2 CONSEQUENT TO THE SURVEY U/S 133A, THE RETURN OF INCOME FILED BY THE ASSESSEE VIDE ACKNOWLEDGEMENT NO. 0015 24 WAS PERUSED BY THE AO AND IT WAS NOTICED THAT THE ASSES SEE HAD CLAIMED THE IMPUGNED LAND AS AGRICULTURAL LAND AND CLAIMED - - ITA 237, 248, 253/16 ETC. 24 EXEMPTION FROM CAPITAL GAINS U/S 54B OF THE ACT. HE NCE, THERE WAS A REASON TO BELIEVE THAT THE RESULTANT CAPITAL GAIN ON SALE OF THE URBAN LAND AT NEELANKARAI FOR A SALE CONSIDERAT ION OF ` 2,19,69,043/- HAD ESCAPED ASSESSMENT WITHIN THE MEA NING OF SECTION 147 OF THE ACT. ACCORDINGLY, A NOTICE U/S 1 48 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 25/10/2012 AND IN RES PONSE TO THIS NOTICE, THE ASSESSEE FILED THE RETURN OF INCOM E ON 27/12/2012 ADMITTING A TOTAL INCOME OF ` 7,31,554/-. HOWEVER, AS PER THE COMPUTATION OF INCOME ENCLOSED WITH THE RETURN OF INCOME, THE ASSESSEE HAD DISCLOSED THE CAPITAL GAIN SEPARATELY AMOUNTING TO ` 1,90,27,203/-AND PAID TAXES THERE ON. 11.3 FURTHER, THE CIT(APPEALS) OBSERVED THAT THE INCOME FOR THE A.Y 2010-11 WAS ASSESSED AT ` 1,96,98,7601-. THE PENALTY PROCEEDINGS U/S 271(1)(C) WERE ALSO INITIATED SEPAR ATELY FOR CONCEALMENT OF PARTICULARS OF INCOME AND FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. THE CIT(APPEALS ) FURTHER OBSERVED THAT DURING THE PENALTY PROCEEDINGS U/S 27 1(1)(C), THE AO NOTICED THAT THE ASSESSEE HAD NEITHER INVESTED T HE SALE CONSIDERATION FROM THE IMPUGNED LAND IN THE PURCHAS E OF AGRICULTURAL LAND AS REQUIRED U/S 54B OF THE ACT NO R DID HE DEPOSIT - - ITA 237, 248, 253/16 ETC. 25 THE SAME IN THE CAPITAL GAINS ACCOUNT SCHEME WITHIN THE STIPULATED PERIOD AS PROVIDED IN THE ACT. THE ID. A R PLEADED THAT THE SAID AMOUNT OF SALE CONSIDERATION WAS UTILISED BY THE FIRM M/S ALPHA COMMERCIALS FOR THE BUSINESS PURPOSES AND HAD NOT PAID THE MONEY TO THE SELLER OF THE AGRICULTURAL LA ND. 11.4 THE CIT(APPEALS) IS ALSO NOTICED FROM THE ABO VE THAT THE CAPITAL GAINS ARISING OUT OF THE SALE PROCEEDS OF T HE IMPUGNED LAND AT NEELANKARAI CAME TO THE NOTICE OF THE DEPAR TMENT FROM THE SWORN STATEMENT OF SHRI AMEERDEEN RECORDED DURI NG THE COURSE OF SURVEY OPERATION U/S 133A IN THE CASE OF M/S ALPHA COMMERCIALS. THEREFORE, THE CONTENTION OF THE ASSES SEE THAT HE HAD VOLUNTARILY DISCLOSED THE CAPITAL GAINS IN THE REVISED RETURN OF INCOME, WAS FACTUALLY INCORRECT. FIRSTLY, THE RETUR N OF INCOME COULD NOT BE REVISED SINCE THE ORIGINAL RETURN WAS NOT FILED U/S 139 (1). SECONDLY, THE SUBSEQUENT RETURN FILED BY T HE ASSESSEE WAS ONLY IN RESPONSE TO THE NOTICE U/S 148 OF THE A CT WHICH WAS ISSUED TO HIM AFTER THE DETECTION OF THE DISCREPANC IES NOTICED DURING THE SURVEY OPERATION. THIRDLY, IN THE ORIGIN AL RETURN OF INCOME, THE ASSESSEE HAD TREATED THE IMPUGNED LAND AS AGRICULTURAL LAND KNOWING FULLY THE FACT THAT THE S AME WAS NOT AN - - ITA 237, 248, 253/16 ETC. 26 AGRICULTURAL LAND AND NEITHER ANY AGRICULTURE ACTIV ITIES WERE BEING CARRIED OUT ON THE SAID LAND. HAD THERE NOT BEEN A SURVEY IN THE BUSINESS PREMISES OF M/S ALPHA COMMERCIALS, THIS TR UE FACT WOULD NEVER HAVE BEEN DETECTED. THEREFORE, THE ELEM ENT OF VOLUNTARY DISCLOSURE, AS CLAIMED BY THE ASSESSEE, I S MISSING IN THIS ENTIRE PROCESS WHICH WOULD COME TO THE RESCUE OF THE ASSESSE. 11.5 ACCORDING TO THE CIT(APPEALS), THE ASSESSEE H AS ALSO RAISED ANOTHER ISSUE BEFORE THE AO, DURING THE PENA LTY PROCEEDINGS AND ALSO DURING THE APPELLATE PROCEEDIN GS IS THAT HE HAD PREFERRED AN APPEAL AGAINST THE REASSESSMENT OR DER DATED 8/3/2014 BEFORE THE CIT (A) AND THE SAME HAS NOT RE ACHED THE FINALITY. THEREFORE, IT WAS PLEADED THAT THE PENALT Y PROCEEDINGS INITIATED BY THE AO WAS NOT WARRANTED AT THIS POINT OF TIME. THE CIT(APPEALS), FURTHER OBSERVED THAT THE INSTANT PEN ALTY ORDER WAS PASSED ON 2619/2014 AND THE LETTER FROM THE ASSESSE E TO THE AO PLEADING FOR DROPPING OF THE PENALTY PROCEEDINGS ON THE GROUNDS THAT HE HAS PREFERRED APPEAL BEFORE THE CIT (A) IS ALSO DATED 26/9/2014. THE APPEAL AGAINST THE REASSESSMENT ORDE R DATED 08/03/2014 IN THE INSTANT CASE BEFORE THE CIT (A) I S ALSO DATED - - ITA 237, 248, 253/16 ETC. 27 26/912014 WHICH IS DELAYED BY 175 DAYS. FROM THE PE RUSAL OF THE SEQUENCE OF EVENTS IT IS NOTICED THAT THE APPEA L AGAINST THE RE- ASSESSMENT ORDER DATED 08/03/2014 WAS FILED ONL Y WHEN IT BECAME DEFINITE TO THE ASSESSEE THAT THE A.O WAS IM POSING PENALTY. THEREFORE, THE FILING OF THE APPEAL AGAINS T THE RE- ASSESSMENT ORDER WAS NOT A BONA FIDE AND SPONTANEOU S RESPONSE FROM THE ASSESSEE. THE PETITION FOR CONDON ATION OF DELAY OF 175 DAYS IN FILING THE APPEAL AGAINST THAT THE RE- ASSESSMENT ORDER FOR THE AY 2010-11 FILED BY THE AS SESSEE BEFORE THE CIT(APPEALS) WAS CONSIDERED AND AFTER TA KING INTO ACCOUNT ALL THE RELEVANT FACTS AND CIRCUMSTANCES, I T WAS FINALLY REJECTED BEING DEVOID OF ANY MERIT AND BONA FIDE CH ARACTER. MOREOVER, THE APPEAL OF THE ASSESSEE AGAINST THE RE -ASSESSMENT ORDER DATED 08/03/2014 FOR AY 2010-11 ALSO STANDS D ISMISSED ON THE MERITS OF THE CASE AS WELL. 11.6 ACCORDING TO THE CIT(APPEALS), THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE FOUND TO BE DEVOI D OF ANY MERITS AND HE HAS NOT FIND ANY FORCE IN THE SUBMISS IONS OF THE ASSESSEE THAT THE A.O HAS ERRED IN NOT APPRECIATING THE FACTS OF THE CASE AND THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY - - ITA 237, 248, 253/16 ETC. 28 OF BEING HEARD. FURTHER, THE CITA(APPEALS) OBSER VED THAT ALL THE RELEVANT GROUNDS OF APPEAL WERE PROPERLY AND TH OROUGH DEALT WITH BY THE A.O DURING THE RE-ASSESSMENT PROCEEDING S AND ALSO DURING THE PENALTY PROCEEDINGS. MOREOVER, THESE ISS UES HAVE BEEN THOROUGHLY ANALYZED DURING THE APPELLATE PROCE EDINGS AS WELL. ACCORDINGLY, HE OBSERVED THAT THE ACT OF WIT HDRAWAL OF EXEMPTION BY THE ASSESSEE IN THE RETURN OF INCOME F ILED IN RESPONSE TO THE NOTICE U/S 148 WAS NOT A VOLUNTARY ONE AND HAS BEEN UNDERTAKEN ONLY AFTER THE DEPARTMENT'S ACTION U/S 133 A IN THE CASE OF M/S ALPHA COMMERCIALS. IN SUPPORT OF HI S FINDINGS, THE CIT(APPEALS) RELIED ON THE RATIO OF THE JUDGMEN TS OF THE DIFFERENT COURTS WHICH ARE SQUARELY APPLICABLE TO T HE PRESENT CASE OF THE ASSESSEE. AGAINST THIS, THE ASSESSEE I S IN APPEAL BEFORE US. 12. THE LD. AR SUBMITTED THAT T HE A.O ERRED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT AFTER FRAMING THE REASSESSMENT U/S 143 (3) R. W. S 147 OF THE ACT WITHOUT ASSIGNIN G PROPER REASONS AND JUSTIFICATIONS. ACCORDING TO HIM, THE AO ERRED TO APPRECIATE THAT THE PROVISIONS OF SECTION 271 (1)( C) OF THE ACT HAD NO APPLICATION TO THE FACTS OF THE CASE AND OUG HT TO HAVE - - ITA 237, 248, 253/16 ETC. 29 APPRECIATED THAT REJECTION OF CLAIM U/S 54B OF THE ACT IN THE COMPUTATION OF LONG TERM CAPITAL GAINS WHICH FORMED PART OF THE ORIGINAL RETURN OF INCOME BUT NOT AUTOMATICALLY LEA D TO THE CONCLUSION ON THE CONCEALMENT OF INCOME FOR FURNISH ING INACCURATE PARTICULARS OF INCOME, THEREBY VITIATING THE ACTION IN IMPOSING SUCH PENALTY. 12.1 THE LD. AR, FURTHER SUBMITTED THAT THE AO FAI LED TO APPRECIATE THAT THE EXPLANATION BELOW THE SECTION 2 71(1)( C) OF THE ACT WAS NOT CONSIDERED AS WELL AS TOTALLY IGNOR ED IN THE IMPUGNED ORDER AND OUGHT TO HAVE APPRECIATED THAT T HE REJECTION OF THE SAID CLAIM OF TAX EXEMPTION U/S 54B OF THE A CT WAS NOT CONSIDERED AS MALAFIDE, THEREBY VITIATING THE ACTIO N IN RELATION THERETO. ACCORDING TO THE LD. AR, THE AO FAILED TO APPRECIATE THAT THE CLAIM OF DEDUCTION U/S 54B OF THE ACT ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE WAS CORRECT AND PROPER AN D OUGHT TO HAVE APPRECIATED THAT THE SURRENDER OF SUCH CLAIM I N THE SURVEY WAS NOT SACROSANCT AND NOT THE RELEVANT FOR THE PUR POSE OF THE PROVISIONS GOVERNING THE LEVY OF PENALTY UNDER CONS IDERATION. - - ITA 237, 248, 253/16 ETC. 30 12.2 THE LD. AR, FURTHER SUBMITTED THAT THE AO F AILED TO APPRECIATE THAT THE DETAILS OF OBJECTIONS FILED ON 26/9/2014 WAS NOT TAKEN INTO CONSIDERATION BEFORE PASSING THE IMP UGNED ORDER AND OUGHT TO HAVE APPRECIATED THAT THE ISSUE RAISED BY THE ASSESSEE BEING DEBATABLE IN NATURE, THE LEVY OF PE NALTY IN SUCH CIRCUMSTANCES WAS WRONG, ERRONEOUS, UNJUSTIFIED, IN CORRECT AND NOT SUSTAINABLE IN LAW. 12.3 THE LD. AR ALSO SUBMITTED THAT THE AO FAILED TO APPRECIATE THAT THERE-WAS FULL DISCLOSURE OF THE TR ANSACTION OF THE SALE OF AGRICULTURAL LAND AT NEELANKARAI, CHENNAI I N THE ORIGINAL RETURN OF INCOME FILED AND OUGHT TO HAVE APPRECIATE D THAT IN THE ABSENCE OF SUPPRESSION OF THE MATERIAL FACTS RELATI NG TO THE TRANSACTION, THE LEVY OF PENALTY IN RELATION THERET O WAS WRONG, ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINAB LE IN LAW AND THE ORDER OF THE ASSESSMENT HAS NOT REACHED FINALIT Y AND OUGHT TO HAVE APPRECIATED THAT THE APPEAL AGAINST THE REASSE SSMENT ORDER IS PENDING FOR DECISION BEFORE THE FIRST APPE LLATE AUTHORITY. THE AO FAILED TO APPRECIATE THAT THE ORDER IMPOSIN G PENALTY U/S 271(1)(C) OF THE ACT WAS PASSED OUT OF TIME, INVALI D, PASSED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON FA CTS AND IN LAW. - - ITA 237, 248, 253/16 ETC. 31 12.4 ACCORDING TO THE LD. AR, THERE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JU STICE WOULD BE NULLITY IN LAW. FURTHER, THE LD. AR SUBMITTED THA T DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED FURTH ER WRITTEN SUBMISSIONS ON 22/12/2015 REITERATING THE EARLIER S TAND TAKEN BEFORE THE AO DURING THE PENALTY PROCEEDINGS. THE A SSESSEE HAS REITERATED THAT HE HAD VOLUNTARILY AND TRULY OF FERED THE FULL AMOUNT RECEIVED AS SALE CONSIDERATION AS PER SALE A GREEMENT AS INCOME FOR CAPITAL GAIN PURPOSES IN THE AY 2010-11 AND, THEREFORE, HIS INTENTION WAS TRUE AND HONEST. THE A SSESSEE HAS ALSO PLEADED THAT EVEN THOUGH THE CAPITAL GAIN WAS ASSESSABLE ONLY IN THE AY 2013-14, HOWEVER, IN ORDER TO SETTLE THE MATTER AMICABLY WITH THE DEPARTMENT THE HE HAD OFFERED THE CAPITAL GAINS IN AY 2010-11 ITSELF BY OFFERING VOLUNTARILY IN THE REVISED RETURN FILED ON MUTUALLY AGREED BASIS WITH THE DEPA RTMENT. THIS FACT, ARGUED THE ASSESSEE, WAS ALSO MENTIONED IN TH E REVISED RETURN FILED BY HIM. HENCE, THE LD. AR SUBMITTED T HAT THE WITHDRAWAL OF THE EXEMPTION CLAIMED WAS BASED ON TH E MUTUAL AGREEMENT TO MAINTAIN GOOD RELATIONSHIP WITH THE DE PARTMENT - - ITA 237, 248, 253/16 ETC. 32 AND TO PURCHASE PEACE AND TO SETTLE THE MATTER AMIC ABLY. THEREFORE, IT WAS SUBMITTED BY THE ASSESSEES COUNS EL THAT THERE WAS NO CONCEALMENT OF ANY PARTICULARS OF INCOME WHI CH ATTRACTED THE PENALTY PROCEEDINGS U/S 271 (1)( C ) OF THE ACT . 12.5 FURTHER, THE LD. AR, RELIED ON THE FOLLOWING JUDGMENTS : I) CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (322 IT R 158)[SC] II) CIT V. CHOLAMANDALAM INVESTMENT & FINANCE CO. L TD. (364 ITR 680)[MAD.] III) CIT V. TUBE INVESTMENTS OF INDIA LTD. (93 CCH 234)(MAD.) IV) DR. T. SURAYANARAYANA RAO V. ITO (31 CCH 135)(H YD.) V) ACIT V. M. RAVINDER (33 CCH 676)[HYD.] VI) HOE LEATHER GARMENTS LTD. V. DCIT (29 CCH 321)[ HYD.) VII) TC(APPEAL) NOS. 906 TO 908 OF 2013 - CIT V. M/S. BALAHA CHEMICALS AGENCIES DATED 16.12.2015. 13. THE LD. DR, RELIED ON THE ORDER OF THE CIT(APPE ALS). 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDER THE PROVISIONS OF SEC.271(1)(C) OF THE ACT, THE ITO CAN EXERCISE HIS JURISDICTION TO MAKE AN ORDER BY WAY OF PENALTY; HE HAS TO BE SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHING OF INAC CURATE - - ITA 237, 248, 253/16 ETC. 33 PARTICULARS OF SUCH INCOME. IN THE PRESENT CASE, T HE CHARGE AGAINST THE ASSESSEE IS THAT HE HAD CONCEALED THE PARTICULARS OF INCOME THAT HE HAS RECEIVED INCOME BY WAY OF SALE O F AGRICULTURAL LAND AND THE INCOME EARNED FROM SALE O F LAND IS LIABLE TO BE TAXED AND THE ASSESSEE HAS NOT ENTITLE D FOR DEDUCTION U/S.54B OF THE ACT. IT IS NO DOUBT THAT THERE IS A DISPUTE REGARDING THE TAXABILITY OF INCOME FROM SALE OF LAND. HOWEVE R, THERE IS A DISPUTE REGARDING THE ALLOWABILITY OF DEDUCTION U/S .54B AND THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S.54B O F THE ACT IS REMITTED BY US TO THE AO FOR FRESH CONSIDERATION IN EARLIER PARA WHILE ADJUDICATING THE QUANTUM ADDITION. THE FINDI NGS IN THOSE PROCEEDINGS ARE NOT BINDING THE PROCEEDINGS RELATIN G TO PENALTY. THE PENALTY PROCEEDINGS ARE INDEPENDENT FROM THE AS SESSMENT PROCEEDINGS AND IT IS NOT CONTINUATION OF ASSESSMEN T PROCEEDINGS. IN THE PENALTY PROCEEDINGS, THE AO HA S TO BE SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN OTHER WORDS, IT MUST BE, AT THE OUTSET, ESTABLISHED BY THE REVENUE THAT THE AMOUNT WHICH IS SAID TO HAVE BEEN CONCEALED OR NOT DISCLOSED BY THE ASSESSEE IN HIS RETURN OF I NCOME, - - ITA 237, 248, 253/16 ETC. 34 CONSTITUTE THE INCOME OF THE ASSESSEE. IT IS ONLY THEN FURTHER QUESTION, AS TO WHETHER THE INCOME HAS BEEN CONCEAL ED OR WHETHER THE ASSESSEE CAN GIVE SATISFACTORY EXPLANAT ION AS TO WHY, HE HAS NOT DISCLOSED A PARTICULAR AMOUNT, WILL ARISE WHICH WAS HIS INCOME. 15. IN THE PENALTY PROCEEDINGS, THE AO REQUIRES TO PERFECTLY ESTABLISH THAT THE RECEIPT CONSTITUTED AS AN INCOME IN THE HANDS OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR AND THE ASSESSEE DELIBERATELY CONCEALED AND FURNISHED INACC URATE PARTICULARS OF INCOME. FURTHER, IN THE PENALTY PRO CEEDINGS, IN CASES, IF THE ASSESSEE ABLE TO PLACE ANY OTHER EVID ENCE, WHICH WAS NOT PLACED BEFORE THE AO AT THE TIME OF ASSESSM ENT, IT IS OPEN TO THE AO TO COME TO A DIFFERENT CONCLUSION. IT IS ALSO OPEN TO THE TRIBUNAL TO COME TO A DIFFERENT CONCLUSION I N THE PENALTY PROCEEDINGS TO THAT OF ONE RELATING TO QUANTUM ADDI TION. THUS, IT IS OPEN TO THE TRIBUNAL TO TAKE UP PENALTY PROCEEDI NGS AND GO INTO THE QUESTION, WHETHER THE ASSESSEE IS LIABLE F OR PENALTY U/S.271(1)(C) OF THE ACT, OR NOT, THOUGH WE HAVE RE MITTED THE ISSUE RELATING TO QUANTUM ADDITION TO THE FILE OF T HE AO FOR FRESH ADJUDICATION. IN OTHER WORDS, THE FINDINGS IN QUAN TUM - - ITA 237, 248, 253/16 ETC. 35 PROCEEDINGS ARE NOT BINDING IN PENALTY PROCEEDINGS AND THE TRIBUNAL, ON CONSIDERATION OF FACTS AND CIRCUMSTANC ES OF THE CASE, REGARDING THE CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME CAN ADJUDICATE THE PENALTY PROCEEDINGS INDEPENDENTLY, AS HELD BY THE BOMBAY HI GH COURT IN THE CASE OF CIT V. BALRAJ SAHANI (119 ITR 36). 16. NOW, COMING TO THE ISSUE OF LEVY OF PENALTY U/S .271(1)(C) OF THE ACT, IT IS TO BE SEEN THAT THE ASSESSEE FILE D HIS ORIGINAL RETURN OF INCOME FOR THE A.Y 2010-11 ON 29/3/2012 WHEREIN THE ASSESSEE HAD ADMITTED THE SALE OF AGRICULTURAL LAND AT NEELANKARAI AND ALSO CLAIMED AN EXEMPTION U/S.54B O F THE ACT AS RE-INVESTMENT IN THE PURCHASE OF PROPERTY . THERE WAS A SURVEY U/S 133A IN THE CASE OF SHRI AME ERDEEN OF M/S. ALPHA COMMERCIALS AND THE GROUP OF CASES ON 13/9/2012. IN THE SWORN STATEMENT RECORDED, SHRI AMEERDEEN STA TED THAT HE HIMSELF AND HIS FAMILY MEMBERS (13 CO-OWNERS) TOGETHER HAD SOLD A LAND SITUATED NEELKANKARAI TO M/S. KANNAMMAL EDUCATIONAL TRUST AND ADMITTED THAT THE LAND SOLD W AS AN URBAN LAND ONLY AND NO AGRICULTURAL ACTIVITIES WERE CARRI ED OUT ON THE SAID LAND AND THE ASSESSEE, HEREIN IS ONE SUCH CO-O WNER OF THE - - ITA 237, 248, 253/16 ETC. 36 PROPERTY. LATER, A NOTICE U/S.148 WAS ISSUED ON 27 .11.2012. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED A REVISE D RETURN ON 27.12.2012 DECLARING AN INCOME OF ` 11,64,684/- WHAT IS DECLARED IN THE ORIGINAL RETURN AND ALSO DISCLOSED CAPITAL GAINS OF ` 75,25,896/-, AFTER WITHDRAWING THE DEDUCTION U/S.5 4B OF THE ACT AT ` 80,00,000/- AND PAID TAX THEREON. ACCORDING TO TH E AO, THE ASSESSEE HAD INTENTIONALLY AND WILFULLY CLAIMED THE EXEMPTION U/S.54B OF THE ACT TO EVADE TAX AFTER KNOWING THE F ACT THAT NO SUCH TRANSACTION HAS ACTUALLY TAKEN PLACE. ACCORDI NGLY, THE AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT AT 100% OF TAX SOUGHT TO BE EVADED. 17. NOW, THE ISSUE FOR OUR CONSIDERATION IS, WHETHE R THE ASSESSEE WILLFULLY CLAIMED WRONG DEDUCTION U/S.54B OF THE ACT. BEFORE THE AO, IT WAS GIVEN AN EXPLANATION REGARDIN G THIS CLAIM THAT OUT OF THE SALE CONSIDERATION, THE ASSESSEE HA S INSTRUCTED M/S. ALPHA COMMERCIALS TO PAY THE MONEY TO THE SELL ER OF THE RESIDENTIAL PROPERTY. HENCE, THE ASSESSEE HAS CLAI MED EXEMPTION U/S.54F OF THE ACT BEING PART PERFORMANCE OF THE CONTRACT AND THE SAID ALPHA COMMERCIALS HAS USED TH E MONEY FOR THE BUSINESS PURPOSES AND HAS NOT PAID THE MONE Y AS PER THE - - ITA 237, 248, 253/16 ETC. 37 AGREEMENT. ACCORDING TO THE AO, THE ASSESSEE HAS N OT ACTUALLY INVESTED CAPITAL GAINS ARISING OUT OF SALE PROCEEDI NGS IN PURCHASE OF ANY RESIDENTIAL PROPERTY OR DEPOSITED I N CAPITAL GAINS ACCOUNT SCHEME. IN THE PENALTY ORDER, THE ASSESSIN G OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE W AS OF THE OPINION THAT THE ASSESSEE HAS TO OFFER THE ABOVE AM OUNT IN THE ORIGINAL RETURN FILED AND NOT AT THE STAGE OF REVIS ED ASSESSMENT PROCEEDINGS. THEREFORE, THE EXPLANATION OF THE ASS ESSEE WAS NOT ACCEPTED BY THE AO AS WELL AS BY THE COMMISSION ER OF INCOME-TAX(APPEALS). WE FIND THAT THE ASSESSING OF FICER FAILED TO UNDERSTAND THAT THE ASSESSEE HAS ORIGINALLY DISC LOSED THE DETAILS OF RECEIPTS FROM SALE OF PROPERTY AT NEELAN KARAI AND ALSO CLAIMED DEDUCTION U/S.54F/54B OF THE ACT, AND IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAS PAID THE MONEY TO M/ S. ALPHA COMMERCIALS, WHERE ONE OF THE CO-OWNERS OF THE PROP ERTY WAS A PARTNER THEREIN. THE ASSESSEE HAD A BONA FIDE BELI EF THAT M/S. ALPHA COMMERCIALS, ACCORDING TO THE MUTUAL AGREEMEN T, INVESTED THE MONEY IN RESIDENTIAL PROPERTY SO AS TO FACILITATE THE ASSESSEE TO HAVE A BENEFIT U/S.54F/54B OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE EXPLANATIO N OFFERED BY - - ITA 237, 248, 253/16 ETC. 38 THE ASSESSEE AS BONA FIDE AND HE SIMPLY REJECTED TH E EXPLANATION BY SAYING THAT THE ASSESSEE HAS MADE A WRONG CLAIM IN THE ORIGINAL RETURN OF INCOME AND FAILED T O DISCLOSE ALL MATERIAL FACTS TRULY AND WHOLLY. ACCORDING TO THE AO, HAD IT BEEN THERE IS NO SURVEY, THE ASSESSEES CLAIM WOULD HAVE BEEN GONE UN-NOTICED. HOWEVER, IT IS NOT THE CASE OF THE AO THAT THE ASSESSEES CLAIM WAS FALSE OR BOGUS. NEITHER THE A O NOR THE COMMISSIONER OF INCOME-TAX(APPEALS) EXAMINED THE CL AIM OF THE ASSESSEE THAT WHETHER THE ASSESSEE HAS GIVEN MONEY TO M/S. ALPHA COMMERCIALS FOR THE PURPOSE OF INVESTMENT IN RESIDENTIAL PROPERTY. THE AO OBSERVED THAT JUST BECAUSE THE AS SESSEE HAS REMITTED THE DEMAND RAISED BY THE DEPARTMENT, IT CA NNOT BE A REASON FOR LEVYING THE PENALTY. HOWEVER, HE HAS NO T FOUND THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAS HANDED OVER THE MONEY TO M/S. ALPHA COMMERCIAL FOR INVESTMENT IN RE SIDENTIAL PROPERTY. FURTHER, WHEN THE ASSESSEE HAS GIVEN AN EXPLANATION THAT HE HAS GIVEN MONEY TO ALPHA COMMERCIALS FOR TH E PURPOSE OF INVESTMENT IN RESIDENTIAL HOUSE, IT IS THE DUTY OF THE AO TO EXAMINE THE RECORDS OF M/S. ALPHA COMMERCIALS TO FI ND OUT WHETHER, THE CLAIM OF THE ASSESSEE IS GENUINE OR NO T. THE AO - - ITA 237, 248, 253/16 ETC. 39 WITHOUT MAKING INVESTIGATION, CANNOT PRESUME THAT T HE EXPLANATION GIVEN BY THE ASSESSEE IS FALSE OR BOGUS . IN THE PRESENT CASE, THE ASSESSEE SUBMITTED A DETAILED EXP LANATION BEFORE THE AO. THEREAFTER, IT IS THE DUTY OF THE A O TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE AO HAS ACCEPTED THE AMOUNT OFFERED BY THE ASSESSEE AS HIS INCOME AN D LEVIED PENALTY WITHOUT MAKING ANY ENQUIRES AND INVESTIGATI ON TO DISPROVE THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS EITHER FALSE OR BONA FIDE. THEREFORE, IN OUR OPINION, THE PENALTY CANNOT BE LEVIED IN THE PRESENT CASE. THE ABOVE VIEW OF O URS IS FORTIFIED BY THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. CHENNUPATI TYRE & RUBBER PRODUCTS (90 CCH 18 1) AND THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF SRI BALAJI EDUCATIONAL AND CHARITABLE PUBLIC TRU ST V. ACIT [44 CCH 402] (WHEREIN AUTHOR IS A CO-AUTHOR). IN VIEW OF THE ABOVE, WE ARE INCLINED TO DELETE THE PENALTY LEVIED IN THI S CASE. ACCORDINGLY, APPLYING THE SAME RATIO, WE ARE INCLIN ED TO DELETE THE PENALTY LEVIED IN ALL THE APPEALS AND ALLOW THE APPEALS IN ITA NOS. 237, 238, 239, 240, 241, 242, 243, 244 & 251/M DS/2016. - - ITA 237, 248, 253/16 ETC. 40 18. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS. 253, 248, 249, 246, 255, 245, 247, 250/MDS/2016 ARE ALLOWED FOR STATISTICAL PURPOSES AND ITA NOS. 237, 238, 239, 240, 241, 242, 243, 244 & 251/MDS/2016 ARE ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 4 TH OF MAY, 2016 AT CHENNAI. SD/- SD/- ( ) ( !' # ) $%&'(')*+,'-.$/0')1-'&223'-4. 5678 /JUDICIAL MEMBER 789:;;2+)<')<=>,?>- 5 /CHENNAI, @7! /DATED, THE 4 TH MAY, 2016. MPO* A7B 6CDED /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. A A F$. /CIT(A) 4. A A F /CIT 5. DGH 66IJ /DR 6. HKLM /GF.