Shri Prakash J.Intwala, Surat V. The Income tax Officer,Ward-3(1), Surat

ITA 2524/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6625 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 01-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M CHAUHAN
• Assessee Lawyers: SAPNESH SHETH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 04/05/2011 DRAFTED ON: 10 /05/2011 ITA NO.2524/AHD/2009 ASSESSMENT YEAR : 2001-02 PRAKASH J.INTWALA 9, JEEVAN PRAKASH SOCIETY NR.GOKULAM DIARY ATHWALINES, SURAT VS. THE INCOME TAX OFFICER WARD-3(1) SURAT PAN/GIR NO. : AACPI 8980 M ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI SAPNESH SHETH RESPONDENT BY: SHRI G.M. CHAUHAN, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -II, SURAT DATED 11/06/2009 PASSED FOR ASSESSMENT YEAR 2001-02. TH E ONLY SUBSTANTIVE GROUND PERTAINS TO THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT OF RS.1,48,455/- . 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG PENALTY ORDER PASSED U/S.271(1)(C)OF THE I.T.ACT DATED 12/03/20 08 AND THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE I.T. ACT, 1961 DAT ED 20/03/2006 WERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY HAS DISCLO SED A LONG-TERM CAPITAL GAIN OF RS.1,55,840/-. HOWEVER, ON SCRUTINY IT W AS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SOLD PLOTS OF LAND WHICH WERE ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 2 - PURCHASED BY HIM DURING THE YEARS 1980-81 TO 1983-9 4. THE ALLEGATION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS WRONGLY DISCLOSED ONLY 1/5 TH SHARE OF CAPITAL GAIN IN HIS HANDS THOUGH ACTUALLY THE ENTIRE LAND WAS PURCHASED BY HIMSELF ALONE, THEREFORE TOTAL CAPITAL GAIN WAS TO BE ASSESSED IN HIS HANDS. THE ALLEGATION OF THE ASSES SING OFFICER WAS THAT THE ASSESSEE HAS WRONGLY INTRODUCED HIS WIFE, SON A ND TWO DAUGHTERS AS JOINT-OWNERS. A NOTICE U/S.148 OF THE I.T.ACT WAS ISSUED WITH A VIEW THAT THE ENTIRE CAPITAL GAIN OUGHT TO BE TAXED IN THE HA NDS OF THE ASSESSEE. FACTS OF THE CASE HAVE ALSO REVEALED THAT THE OTHER CO-OWNERS HAVE SIMULTANEOUSLY FILED THEIR RESPECTIVE RETURNS, DISC LOSING THEIR SHARES IN CAPITAL GAIN AND PAID CAPITAL GAIN TAX ACCORDING LY IN EACH HANDS. THE ASSESSING OFFICER HAS REJECTED THOSE SUBMISSION S AND FIRSTLY HELD THAT THE ENTIRE CAPITAL GAIN TAX WAS SUBJECT TO TAX IN A SSESSEES HAND ONLY. THE ASSESSING OFFICER HAS ALSO TAKEN THE STEP OF CALCUL ATING THE INDEX COST ON THE BASIS OF THE DIFFERENT YEARS OF PURCHASES FOLLO WING WITHIN THE PERIOD OF 1980-1981 TO 1983-84 AS AGAINST THE CLAIM OF IND EXED COST AS PER ASSESSEE OF THE YEAR 1981-82. AS FAR AS THE FIRST APPEAL IN QUANTUM ADDITION WAS CONCERNED, THE ACTION OF THE ASSESSING OFFICER WAS AFFIRMED. WHEN THE MATTER WAS CARRIED BEFORE THE R ESPECTED CO-ORDINATE BENCH C ITAT AHMEDABAD IN ITA NO.2692/AHD/2006 FO R A.Y. 2001- 02, VIDE ORDER DATED 23/04/2010, THE ASSESSEES APP EAL TITLED AS PRAKASH J.INTWALA VS. ITO WAS DISMISSED AND HELD THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN TAXING THE ENTIRE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. 3. WITH THIS BACKGROUND, LEARNED AUTHORISED REPRESE NTATIVE OF THE ASSESSEE MR.SAPNESH SHETH HAS CONTESTED THAT THE PE NALTY PROCEEDINGS ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 3 - BEING INDEPENDENT PROCEEDINGS SHOULD BE CONSIDERED ON DIFFERENT CRITERIA. IT WAS ARGUED BEFORE US THAT ALL THE MATERIAL FACTS WERE REVEALED BY THE ASSESSEE HIMSELF AND THERE WAS NO ALLEGATION BY THE REVENUE DEPARTMENT THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE FA CTS OF THE CASE OR DID NOT BRING ON RECORD ALL THE MATERIAL FACTS. HE HAS STRESSED UPON THE POINT THAT THE VERY GENESIS OF THE ENQUIRY AND THE BASIS OF ISSUANCE OF NOTICE U/S.148 OF THE I.T.ACT WAS THE DISCLOSURE OF INFORM ATION BY THE ASSESSEE HIMSELF. LD. A.R. HAS REFERRED PARAGRAPH NO.2 AND O THER OBSERVATION OF LIKE NATURE IN THE ASSESSMENT ORDER TO DEMONSTRATE THAT THE ENTIRE CAPITAL GAIN WAS DISCLOSED, BUT IT WAS DIVIDED INTO FIVE PA RTS. ON THE BASIS OF THAT INFORMATION, PRIMA-FACIE IT WAS CONCEIVED BY THE AS SESSING OFFICER THAT THE ENTIRE CAPITAL GAIN COULD BE TAXED IN ONE HAND, I.E. IN THE HANDS OF THE ASSESSEE, THEREFORE, THE SAID NOTICE U/S.148 WAS IS SUED. HIS NEXT PLANK OF ARGUMENT WAS THAT THE ADMITTED FACTUAL POSITION WAS THAT THE OTHER CO- OWNERS HAVE ALSO FILED THEIR RESPECTIVE INCOME TAX RETURNS DISCLOSING CAPITAL GAIN AND OTHER INCOME, HENCE ONCE THE TOTAL TAX PAID INDIVIDUALLY BY ALL THE PERSONS WAS MORE THAN THE TAX ASSESSED I N THE HANDS OF THE ASSESSEE, THEREFORE, IT WAS WRONG ON THE PART OF TH E ASSESSING OFFICER TO ALLEGE THAT THE ENTIRE EXERCISE OF THE ASSESSEE WAS TO GET THE UNDUE BENEFIT OF SAVING THE TAX. IN SUPPORT, A COMPARATIVE CHART OF TAXES PAID BY THE INDIVIDUALS AND THE TOTAL TAX IN THE HANDS OF THE A SSESSEE WAS FURNISHED. RELIANCE WAS ALSO PLACED ON TWO JUDGEMENTS, WHICH W ERE DISCUSSED BY THE LEARNED CIT(APPEALS), VIZ. CIT VS. B.L. BALAKRI SHNAN REPORTED AT (1981) 130 ITR 138 (MAD.) AND CIT VS. TEK RAM (HU F) REPORTED AT (2008) 300 ITR 354 (P&H). ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 4 - 3.1) FROM THE SIDE OF THE REVENUE, LEARNED DEP ARTMENTAL REPRESENTATIVE MR. G.M.CHAUHAN APPEARED AND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HE HAS ALSO ARGUE D THAT THE ASSESSEES CONTENTIONS HAVE ALREADY BEEN REJECTED BY THE RESPE CTED TRIBUNAL AND THEREUPON THE ENTIRE CAPITAL GAIN WAS FINALLY ASSES SED IN THE HANDS OF THE ASSESSEE. THE ENTIRE EXERCISE OF THE ASSESSEE WAS NOTHING BUT TO CONCEAL THE INCOME. HE HAS PLEADED THAT THE LEVY OF PENALT Y SHOULD BE CONFIRMED. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED T HE ORDERS OF AUTHORITIES BELOW AS ALSO THE ORDER OF THE RESPECTE D CO-ORDINATE BENCH IN THE LIGHT OF THE COMPILATION FILED BEFORE US. FRO M THE ORDERS AS PLACED BEFORE US THE ADMITTED FACTUAL POSITION IS THAT THO UGH INITIALLY THE PROPERTIES IN QUESTION WERE PURCHASED BY THE ASSESS EE BUT LATER ON THE NAMES OF OTHER CO-OWNERS HAVE BEEN ENTERED INTO THE REVENUE RECORD. THE RESPECTED CO-ORDINATE BENCH HAS ALSO CONSIDER ED THAT ASPECT. IT WAS MENTIONED THAT THE ASSESSEE HAD FUR NISHED COPIES OF THE DOCUMENTS THROUGH WHICH IT WAS DEMONSTRATED THAT TH E NAMES OF THE OTHER CO-OWNERS HAVE BEEN ENTERED IN THE REVENUE RECORD. IT HAS ALSO BEEN MENTIONED THAT THE ENGLISH TRANSLATION WAS ALSO FUR NISHED TO SHOW THAT THE ASSESSEE HAD WRITTEN ONE LETTER TO THE REVENUE AUTH ORITY TO ENTER THE NAMES OF HIS FAMILY MEMBERS IN REVENUE RECORD ALONG WITH HIS NAME. ON THE BASIS OF THIS ADMITTED FACTUAL POSITION THE VEHEMENT CONTENTION BEFORE US IS THAT THOUGH AT THE TIME OF PURCHASE TH E LAND WAS IN ONE NAME BUT AT THE TIME OF SALE, THE LAND WAS IN THE NAMES OF OTHER CO-OWNERS ALONGWITH THE NAME OF THE ASSESSEE. ONCE IN THE REV ENUE RECORDS THE NAMES OF OTHER FAMILY MEMBERS WAS ENTERED THEN ON A CCEPTANCE OF THE ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 5 - CLAIM OF JOINT OWNERSHIP BY ONE AUTHORITY IT WAS PR ESUMED THAT THE CAPITAL GAIN SHOULD ALSO BE DISCLOSED ACCORDINGLY. IT HAS ALSO BEEN CONTESTED THAT SINCE THE NAMES OF THE OTHER CO-OWNE RS WAS DULY INCORPORATED AS PER THE HAKKA PATRAK AND ALSO IN THE LEDGER OF LAND ON REGISTER NO.6-A, REFERRED PAGER-BOOK ON PAGE NOS.10 & 11, ENGLISH TRANSLATION ON PAGE NOS.12 & 13, THE OUTCOME WAS TH AT AT THE TIME OF SALE THE OTHER CO-OWNERS WERE ALSO THE VENDORS HENC E CAPITAL GAIN TAX WAS DISCLOSED IN THEIR RESPECTIVE HANDS. THROUGH THESE DOCUMENTS THE ASSESSEE HAS THUS TRIED TO DEMONSTRATE THAT THERE W AS A BASIS AND A BONA FIDE BELIEF THAT ONCE AT THE TIME OF SALE THE NAMES OF THE OTHER PERSONS WERE IN THE REVENUE RECORD AND BECAUSE OF T HAT REASON THEY ALL HAVE BECOME PARTY TO SELL THE PROPERTY, THEREFO RE, THE DISTRIBUTION OF CAPITAL GAIN AS PER THEIR SHARES WAS NOT ALTOGET HER EITHER BASELESS OR ILLOGICAL. THE OUTCOME OF THE ABOVE DISCUSSION IS THAT THE D ISCLOSURE OF CAPITAL GAIN IN THE HANDS OF THE OTHER CO-OWNERS WAS NOT AB INITIO MALA FIDE. THERE IS ONE MORE ASPECT WHICH IS IN RESPECT OF THE QUESTION OF EVASION OF TAX. AS PER THE COMPARATIVE CHART PLACE D BEFORE US THE TOTAL TAXES PAID BY THE OTHER CO-OWNERS WAS APPEARED TO BE HIGHER THAN THE TAX WHICH OUGHT TO HAVE BEEN PAID BY THE ASSESSEE BY DI SCLOSING THE ENTIRE CAPITAL GAIN IN HIS OWN HAND. THE THIRD ASPECT TO DEAL WITH THE QUESTION OF LEVY OF CONCEALMENT PENALTY IS ABOUT THE DISCLOS URE OF FACTS AT THE TIME OF FILING OF THE RETURN. UNDISPUTEDLY, THE ASSESSE E HAS DISCLOSED ALL THOSE FACTS IN RESPECT OF THE TOTAL CAPITAL GAIN WHICH WA S EARNED, BUT DIVIDED IN THE HANDS OF THE OTHER CO-OWNERS. IT IS CORRECT TH AT THE START POINT OR THE GENESIS OF THE ENQUIRY WAS THE INFORMATION GIVEN BY THE ASSESSEE HIMSELF AS PER THE INCOME-TAX RETURN. THE AMOUNT OF THE CA PITAL GAIN, THE AMOUNT ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 6 - OF THE INVESTMENT AND THE DOCUMENTS RELATED TO THE CAPITAL GAIN, ALL WERE PLACED BEFORE THE REVENUE AUTHORITIES, WERE NOT FOU ND TO BE FALSE OR UNTRUE. IT IS NOT THE ALLEGATION OF THE REVENUE DEPARTMENT THAT THE ASSESSEE HAS FURNISHED ANY FALSE INFORMATION. PART ICULARS OF INCOME WERE VERY MUCH BEFORE THE REVENUE AUTHORITIES BUT THE AS SESSEES CLAIM WAS THAT THE CAPITAL GAIN WAS TO BE DIVIDED AMONG OTHER CO-OWNERS WHICH WAS REJECTED BY THE AUTHORITIES BUT THAT REJECTION BY I TSELF DO NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAD FAILED TO PROVE TH AT HIS EXPLANATION WAS NOT BONA FIDE . WE, THEREFORE, HOLD THAT AS FAR AS THE LEVY OF CONCEALMENT PENALTY IS CONCERNED, THE ASSESSEES CASE DO NOT FA LL WITHIN THE CLUTCHES OF THE PROVISIONS OF SECTION 271(1)(C) READ WITH EXPL ANATION-1 OF THE I.T.ACT, 1961. WE HEREBY DIRECT TO DELETE THE PENALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 13 TH MAY, 2011. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 13/ 05 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE D EPARTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT (APPEALS)-II, SURAT 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO.2524/AHD /2009 PRAKASH J.INTWALA VS. ITO ASST.YEAR - 2001-02 - 7 - 1DATE OF DICTATION..09/05/2011 1. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/05/2011 OTHER MEMBER 2. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 3. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 4. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S13.5.2011 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.5.2011 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER