SHRI RAMANAND AGRAWAL, Nagpur V. ITO, WARD-4(1), Nagpur

ITA 250/NAG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3152 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

1 ITA NO. 250/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. ITA NO. 250/NAG/2013 ASSESSMENT YEAR : 2007 - 08. RAMANAND AGRAWAL, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 4(1), NAGPUR. PAN ADLPA7326N APPELLANT. RESPON DENT. APPELLANT BY : NONE. RESPONDENT BY : SHRI RAJESH G AWALI . DATE OF HEARING : 08 - 12 - 2015. DATE OF PRONOUNCEMENT : 15 TH JAN., 2016. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 02 - 01 - 2013 AND PERTAINS TO ASSESSMENT YEAR 200 7 - 08 . THE ISSUE RAISED IS THAT LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) AMOUNTING TO RS.4,80,000/ - . 2. IN THIS CASE THE APPELLANT IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.96,387/ - . THE APPELLANT HAS SHOWN INCOME FROM OTHER SOURCES ONLY. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, SUBSEQUENT TO THE DETAILED ENQUIRIES MADE BY THE AO, THE APPELLANT SUBMITTED THAT HE WAS THE BENAMI OWNER OF ONE PROPERTY BEARING PLOT NO. 611, EASTERN INDUSTRIAL AREA SCHEME, NIT KHASRA NO. 63, MOUZA CHIKHALI (DEO.), WARD NO. 22, DIVI SION EAST ADMEASURING 1080 SQ. METER. THE APPELLANT FURTHER INFORMED THE AO THAT 2 ITA NO. 250/NAG/2013 THE SAID PROPERTY HAD BEEN PURCHASED BY HIS RELATIVE SHRI NAGARMAL AGRAWAL IN THE APPELLANTS NAME AND THAT THE SAID PROPERTY HAD BEEN PURCHASED IN 1991 AND SUBSEQUENTLY SOLD IN 2006. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT ALSO OFFERED THE RESULTANT LONG TERM CAPITAL GAIN OF R S. 22,08,038/ - AS ITS TAXABLE INCOME AND PAID THE TAX THEREON. THE ASSESSMENT WAS FINALIZED AND PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED. 3. IN THE PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED AS UNDER : THAT WHILE FILING THE RETURN OF INCOME THE LONG TERM CAPITAL GAIN ON SALE OF PLOT WAS NOT INCLUDED IN COMPUTATION OF TOTAL INCOME. THAT THE ASSESSEE WAS BENAMI OWNER OF THAT LOT, AND HE WAS NOT AWARE OF THE LEGAL AND CORRECT POSITION OF LAW THAT EVEN THOUGH HE IS BENAMI OWNER OF THE PLOT, HE WILL HAVE TO PAY INCOME TAX ON THAT. THAT DURING THE COURSE OF ASSESSMENT WHEN HE CAME TO KNOW THE CORRECT LEGAL POSITION, HE HAD OFFERED LONG TERM CAPITAL GAIN AND PAID INCOME TAX AND INTEREST THEREON EVEN BEFORE COMPLETION OF ASSESSMENT. THE ASSESSEE HAD NOT DELIBERATELY CONCEALED THE (PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. OMISSION OF INCOME WAS DUE TO LACK OF EX PERT AND DEEP KNOWLEDGE OF INCOME TAX ACT, 1961. THE AO CONSIDERED THE REPLY OF THE APPELLANT AND CONCLUDED THAT PENALTY WAS IMPOSABLE U/S 271(1)(C) FOR CONCEALING THE INCOME TO THE EXTENT OF LONG TERM CAPITAL GAIN NOT OFFERED FOR TAX. THE AO ALSO NOTED T HAT NEITHER THE APPELLANT NOR THE ACTUAL OWNER OF THE PROPERTY HAD OFFERED THE SAID LONG TERM CAPITAL GAIN IN THE RESPECTIVE RETURNS OF INCOME AND IT WAS ONLY AFTER PERSISTENT ENQUIRIES THAT THE APPELLANT EVENTUALLY OFFERED THE SAID AMOUNT FOR TAX AND THAT HAD THE CASE NOT BEEN SELECTED FOR SCRUTINY THE APPELLANT AS WELL AS THE ACTUAL OWNER OF THE PROPERTY WOULD HAVE GET AWAY WITHOUT PAYING THE TAX ON THE SAID TRANSACTION. CONSIDERING THESE FACTS, THE AO CONCLUDED THAT THE APPELLANT DELIBERATELY CONCEALED T HE PARTICULARS OF ITS INCOME AND LEVIED A PENALTY OF RS.4,64,764/ - U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961. 3 ITA NO. 250/NAG/2013 4. UPON ASSESSEES APPEAL IN THIS REGARD, LEARNED CIT(APPEALS) HELD AS UNDER : 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF T HE APPELLANT. IT IS CLEAR THAT THE LONG TERM CAPITAL GAIN WAS NOT OFFERED FOR TAX EITHER BY THE APPELLANT OR THE ACTUAL OWNER AND THE SAME WAS BROUGHT TO TAX ONLY ON ACCOUNT OF PERSISTENT ENQUIRIES MADE BY THE LD. AO. THE ONLY EXPLANATION PUT FORW2ARD BY T HE APPELLANT IS THAT THE SAID CONSIDERATION OF THE PROPERTY WAS NOT RECEIVED BY THE APPELLANT BUT BY THE REAL OWNER OF THE PLOT AND IT IS ONLY TO AVOID LITIGATION THAT THE APPELLANT WAS DECIDED TO PAY THE TAXES DURING THE COURSE OF ASSESSMENT. 5.1 IN THIS CONTEXT IT IS WORTH REFERRING TO THE RELEVANT PROVISIONS CONTAINED IN THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 WHICH SEEKS TO PROHIBIT ALL PERSONS FROM ENTERING INTO BENAMI TRANSACTIONS. SECTIONS 3 & 4 OF THE SAID ACT ARE AS FOLLOWS: - SECTION 3: - PROHIBITION OF BENAMI TRANSACTIONS. 1) NO PERSON SHALL ENTER INTO ANY BENAMI TRANSACTION. 2).... 3) WHOEVER ENTERS INTO ANY BENAMI TRANSACTION SHALL BE PUNISHABLE WITH IMPRISONMENT FOR A TERM WHICH MAY EXTEND TO THREE YEARS OR WITH FINE OR WITH BOTH. 4) NOTWITHSTANDING ANYTHING CONTAINED IN THE CODE OF CRIMINAL PROCEDURE, 1973 (2 OF 1974) AN OFFENCE UNDER THIS SECTION SHALL BE NON - COGNIZABLE AND BAILABLE. SECTION 4: - PROHIBITION OF THE RIGHT TO RECOVER PROPERLY HELD BENAMI. 1) NO SUIT CLAIM OR ACTION TO ENFORCE ANY RIGHT IN RESPECT OF ANY PROPERTY HELD BENAMI AGAINST THE PERSON IN WHOSE NAME THE PROPERTY IS HELD OR AGAINST ANY OTHER PERSON SHALL LIE BY OR ON BEHALF OF A PENSION CLAIMING TO BE THE REAL OWNER OF SUCH PROPERTY. 5.2 THE P LAIN READING OF THE ABOVE SECTIONS OF THE BENAMI TRANSACTIONS PROHIBITION ACT CLEARLY SHOWS THAT THE OWNERSHIP RIGHTS IN THE SAID PROPERTY ARE VESTED IN THE BENAMIDAR AS AGAINST THE REAL OWNER AND THE ACT CLEARLY RESTRICTS THE RIGHT OF ANY PERSON WHO IS CL AIMING TO BE THE REAL OWNER TO RECOVER SUCH PROPERTY. FURTHER AS PER THE ACT, NO PERSON CAN RE - TRANSFER SUCH PROPERTY TO THE BENEFICIAL OWNER. AS A MATTER OF FACT THE ACT 4 ITA NO. 250/NAG/2013 PROHIBITS ALL PERSONS FROM ENTERING INTO BENAMI TRANSACTIONS AND ANY PROPERTY HELD IN BENAMI SHALL BE CONFISCATED BY THE CENTRAL GOVERNMENT. ALSO, FROM THE TITLE OF THE ACT ITSELF IT IS CLEAR THAT THIS ENACTMENT IS IN FORCE FROM THE YEAR 1988 WHILE THE BENAMI TRANSACTION WAS ENTERED INTO BY THE APPELLANT IN THE YEAR 1991. 5.3 THUS CLEARLY THE LEGAL OWNERSHIP OF THE SAID PROPERTY WAS ALWAYS VESTED WITH THE APPELLANT. THE PROPERTY NEVER BELONGED TO THE REAL OWNER AS SUCH A CLAIM WOULD BE VOID AB INITIO. THE APPELLANT WAS ALWAYS LIABLE TO PAY ANY LONG TERM CAPITAL GAIN ARISING ON THE SALE OF THE SAID PROPERTY. THE APPELLANT WAS ALWAYS AWARE OF THIS LEGAL POSITION AND HENCE READILY OFFERED THE INCOME FOR TAX WHEN THE CONCEALMENT WAS DETECTED. HENCE IT IS NOT THE CASE OF THE APPELLANT THAT THE REAL OWNER HAS OFFERED THE LONG TERM CAPITAL GAIN ARISING ON SALE OF PROPERTY IN HIS OWN HAND AND THAT THE APPELLANT IS AGAIN BEING TAXED ON THE SAME INCOME. 5. THEREAFTER THE LEARNED CIT(APPEALS) REFERRED TO THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. 40 D TR 249 AND CONCLUDED AS UNDER : JUST BECAUSE APPELLANT HAS AN EXPLANATION WHATEVER BE ITS WORTH AND CREDIBILITY, IT DOES NOT CEASE TO BE A CASE IN WHICH CONCEALMENT PENALTY IS NOT TO BE LEVIED. AS STATED ABOVE, THE APPELLANT WAS ALWAYS LIABLE TO PAY AN Y LONG TERM CAPITAL GAIN ARISING ON THE SALE OF THE SAID PROPERTY. THE APPELLANT WAS ALWAYS AWARE OF THIS LEGAL POSITION AND HENCE READILY OFFERED THE INCOME FOR TAX WHEN THE CONCEALMENT WAS DETECTED. IN MY CONSIDERED VIEW, ANY BEARING INTO MIND ENTIRETY O F THE CASE, THE EXPLANATION OF THE ASSESSEE DOES NOT MERIT ACCEPTANCE. THE PENALTY LEVIED BY THE LD.AO IS ACCORDINGLY CONFIRMED. 6. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, A LETTER FROM THE ASSESSEE IS ON RECORD IN WHICH IT WAS REQUESTED TO DECIDE THE CASE ON MERITS CONSIDERING THE SUBMISSIONS MADE IN THE EARLIER HEARING ON 4 TH JUNE, 2015 . UPON CAREFUL CONSIDERATION IN THIS CASE WE NOTE THAT THE ASSESSEE H AS ACCEPTED IN THIS CASE AFTER DETAILED ENQUIR Y BY THE AO THAT HE WAS THE BENAMI DAR OF ONE PROPERTY AND THE PROPERTY WAS PURCHASED IN THE NAME OF A RELATIVE IN 1991, NOW SUBSEQUENTLY SOLD IN 2006. THE ASSESSEE ALSO AGREED TO OFFER THE RESULTANT LONG TER M CAPITAL GAIN OF RS.22,08,038/ - AS ITS TAXABLE 5 ITA NO. 250/NAG/2013 INCOME. THE BENAMI TRANSACTION PROHIBITION ACT, 1988 SEEKS PROHIBITION OF PERSONS ENTER ING INTO BENAMI TRANSACTIONS. THE SAID ACT PROVIDES THAT THE OWNERSHIP RIGHT OF THE SAID PROPERTY ARE VESTED IN THE BENA MIDAR AS AGAINST THE REAL OWNER. HENCE THE ASSESSEE CANNOT SEEK IGNORANCE AS A PLEA FOR AVOIDING PENALTY. THE ASSESSEE HAS CHOSEN TO ENTER INTO LEGALLY PROHIBITED A CT AND NOW HE IS TRYING TO SHOW HIS IGNORANCE IN GETTING AWAY FROM THE PENAL PROVISIONS. IN OUR CONSIDERED OPINION , THE CONCEALMENT IS QUITE CLEAR AND P A LPABLE IN THIS CASE. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY, WE AFFIRM THE SAME. 8. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JAN., 2016. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 15 TH JANUARY, 2016. COPY FORWARDED TO : 1. SHRI RAMANAND AGRAWAL, C/O KAILASH JOGANI, C.A., 299/5, SHANTI VIHAR, CIVIL LINES, OPP. HISLOP COLLEGE LANE, NAGPUR. 2. I.T.O., WARD - 4(1), NAGPUR. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER WAKODE. ASSISTANT REGISTRAR, ITAT, NAGPUR