Surjitsingh Sevaksingh Bagga, Pune V. Income-tax Officer, Ward - 6(1), Pune

ITA 2566/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7632 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Difference of opinion; Capital Gains
• Section: 271(1)(c); 143(3); 54

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2566/PUN/2017 / ASSESSMENT YEAR : 2013-14 SURJITSINGH SEVAKSINGH BAGGA, 24/25 SOMWAR PETH, PUNE 411 011. PAN : ACMPB9487E. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD-6(1), PUNE. . / RESPONDENT ASSESSEE BY : SHRI BHARAT SHAH. REVENUE BY : SHRI PRASHANT GADEKAR. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A)-4, PUNE, DATED 30.06.2016 FO R THE ASSESSMENT YEAR 2013-14. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND IS HAVING INCOME FROM HOUSE PROPERTY, BUSINESS, CAPITAL GAINS AND OTHER SOURCES. ASSE SSEE FILED HIS RETURN OF INCOME FOR A.Y. 2013-14 ON 30.11.2013 DECLARING TOTAL INCOME OF RS.14,26,073/-. THE CASE WAS SELECTED FOR SCRUT INY AND / DATE OF HEARING : 17.07.2019 / DATE OF PRONOUNCEMENT: 16.10.2019 2 THEREAFTER, ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.28.03.2016 DETERMINING THE TOTAL INCOME AT RS.85,05,116/- INTER- ALIA BY MAKING ADDITION OF RS.70,79,043/- ON ACCOUNT OF LON G TERM CAPITAL GAINS AND RS.91,153/- ON ACCOUNT OF CAPITAL GAINS. ON THE AFORESAID ADDITIONS, AO VIDE ORDER DT.30.09.2016 LEVIED PENALT Y OF RS.14,58,282/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.30.06.2016 (IN APPEAL NO.PN/CIT(A)-4/DCIT, CIRCLE- 6, PUNE/595/2016-17) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING A PE NALTY U/S 271 (1)(C) OF THE INCOME ACT, 1961 WITHOUT RECORDING ANY SATIS FACTION REGARDING FURNISHING OF ACCURATE PARTICULARS OF INCOME OR CON CEALMENT OF INCOME IN THE SHOW USE NOTICE, RATHER PENALTY IS LEVIED FOR B OTH THE ALLEGED DEFAULTS. 2. WITHOUT PREJUDICE TO GROUND NO.1 THE AUTHORITIES BELOW ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN CONCLUDING THA T THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HENC E IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) THEREBY LEVYING AND C ONFIRMING PENALTY OF RS. 145& . 282/-. AGAIN THE ADDITION MADE IN THE ASSESSMENT ORDER IN ITSELF IS FOR WRONG ASSESSMENT YEAR. HENCE PENALTY SO LEVIED BE CANCELLED AND JUST AND PROPER RELIEF BE GRANTED TO THE ASSESSEE IN THIS RESPECT . 3. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDER ED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS WITH RESPECT TO TWO PROPERTIES. ONE SITUATED AT MANGALVAR PETH AT FLAT NO.40 7 AND THE OTHER AT KUMAR CORNER CO-OPERATIVE HOUSING SOCIETY. WIT H RESPECT TO SALE OF PROPERTY AT MANGALVAR PETH, IT WAS NOTICED THAT T HE PROPERTY 3 WAS BEQUEATHED BY THE ASSESSEE ON THE DEMISE OF HIS FAT HER AND IT WAS SOLD FOR RS.90 LAKHS ON 05.02.2013. ASSESSEE HAD CLAIMED E XPENSES OF RS.1,80,000/- AND THE NET SALE CONSIDERATION WAS SHOWN AT RS.88,20,000/-. ASSESSEE HAD INDEXED THE COST AND COST OF IMPROVEMENT AND WORKED OUT THE CAPITAL GAINS AT RS.70,79 ,043/-. ASSESSEE HAD CLAIMED AMOUNT OF RS.49,68,975/- AS EXEMPT INCOME ON ACCOUNT OF RE-INVESTMENT FOR PURCHASE OF RESIDENTIAL PROPE RTY FOR RS.61,91,000/-. ASSESSEE HAD ALSO CLAIMED DEDUCTION OF RS.21,10,068/- ON ACCOUNT OF DEPOSITS OF RS.26,50,000/- IN A SPECIFIED BANK ACCOUNT. THE ASSESSEE WAS ASKED TO PROV E THE CLAIM OF CONSTRUCTION OF RESIDENTIAL HOUSE. ASSESSEE FURNISHED NECE SSARY DETAILS AND ON ITS PERUSAL, AO NOTICED THAT THE CLAIM OF CONSTRUCTION OF RESIDENTIAL HOUSE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES OF PMC FOR LOCAL AUTHORITY. AO CONCLUDED THAT ASSESSEE HAD PURCHASED AN OPEN PLOT BUT HAD NOT CONSTRUCTED ANY RESIDENTIAL HO USE AND CLAIMED TO HAVE RENOVATE THE OLD STRUCTURE. ACCORDING T O AO, THE CLAIM OF ASSESSEE WAS NOT JUSTIFIABLE AS ONLY A COMPOUND WALL W AS CONSTRUCTED AND ONE SMALL WATCHMENS CABIN WAS SITUAT ED ON THE SAID PLOT. AO THEREFORE CONCLUDED THAT ASSESSEE HAD NOT INV ESTED THE CAPITAL GAINS AND THEREFORE REJECTED THE CLAIM. ON ACCOUN T OF THE AFORESAID REJECTION OF CLAIM, AO LEVIED PENALTY U/S 271(1)(C) O F RS.14,58,282/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 4 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAS N OT FURNISHED ANY INACCURATE PARTICULARS WHICH IS INCORRECT OR INACCURA TE IN THE RETURN OF INCOME AND THE ADDITIONS HAVE BEEN MADE ONLY ON ACCOUNT OF DIFFERENCE OF OPINION AND IT IS NOT A CASE OF CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. LD.A.R. FURTHER SUBMITTED THAT ASSESSEE HAS MADE A BONAFIDE CLAIM U/S 54 OF THE ACT AS ASSESSEE HAD PURCHASED PLOT FOR CONSTRUCTION OF THE RESIDENTIAL HOUSE PROPERTY. ASSESSEE HAS INVESTED RS.26,50,000/- B Y ASSESSMENT YEAR OF KAMADHENU DEPOSITS WITH CANARA BANK AND IT WAS UTILIZED BY THE ASSESSEE FOR CONSTRUCTION ACTIVITY AS AND WHEN REQU IRED. HE FURTHER SUBMITTED THAT EVEN IF THE ASSESSEE COULD NOT SU BSTANTIATE THE DEPOSITS MADE BY HIM FOR THE CONSTRUCTION ACTIVITY, THE LO NG TERM CAPITAL GAINS COULD HAVE BEEN TAXED IN A.Y. 2016-17 AND NO T IN A.Y. 2013-14. HE THEREFORE SUBMITTED THAT AO HAD MADE ADD ITION IN THE WRONG ASSESSMENT YEAR AND HAD LEVIED THE PENALTY. HOWE VER, ON MERITS, HE SUBMITTED THAT ALL THE REQUIRED DETAILS WERE FURNISHED BY TH E ASSESSEE AND MERELY BECAUSE THE ADDITIONS HAVE BEEN UPHELD, IT IS NOT NECESSARY PENALTY ON SUCH AMOUNTS BE LEVIED AND IN VIEW OF THE FACT THAT PENALTY AND ASSESSMENT PROCEEDINGS ARE DISTINCT AN D SEPARATE. HE THEREFORE SUBMITTED THAT THE PENALTY LEVIED BE DELETED . LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESP ECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THE DENIAL OF CLAIM OF DEDU CTION U/S 54 OF THE ACT. BEFORE US, ASSESSEE HAS SUBMITTED THAT HE HAD 5 PURCHASED LAND FOR CONSTRUCTION OF THE HOUSE AND ALSO U TILIZED THE CAPITAL GAINS WHICH WAS DEPOSITED IN THE BANK ACCOUNT FOR THE PURPOSE OF CONSTRUCTION. IT IS ASSESSEES SUBMISSION THAT HE HAD FURNISHED ALL THE REQUIRED DETAILS IN THE RETURN OF INCOME AND NO INFORMA TION GIVEN IN THE RETURN OF INCOME IS INCORRECT OR INACCURATE. THE A FORESAID CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN FOUND TO BE FALSE. HE THEREFORE SUBMITTED THAT THE PENALTY BE DELETED. LD. D.R. O N THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 7. THE NECESSARY INGREDIENTS FOR ATTRACTING EXPLANATION-1 TO SECTION 271(1)(C) ARE THAT: (I) THE PERSON FAILS TO OFFER THE EXP LANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO OR THE LD.CIT(A) OR THE LD.CIT TO BE FALSE, OR (III) THE PERSON OFFERS E XPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE TH AT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, THEN ACCORDING TO THE DEEMING PROVISION PROVIDED IN EXPLANATION-1 TO SECTION 271(1)(C) THE AMOUNT ADDED OR DISA LLOWED IN COMPUTING THE TOTAL INCOME SHALL BE CONSIDERED AS THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1), AND THE PENALTY FOLLOWS. ON THE OT HER HAND, IF THE ASSESSEE IS ABLE TO OFFER AN EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN AB LE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATIN G TO THE SAME HAVE BEEN DISCLOSED BY HIM, THEN IN THAT CASE PENALT Y SHALL NOT BE IMPOSED. 6 8. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HA S TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 TO SECTIO N 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSME NT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITIONS MA DE WOULD AMOUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MAD E IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM THE PEN ALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PAR TICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY B E MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT O N THE PREPONDERANCE OF PROBABILITIES AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WA S INFLATED TO REDUCE ITS TAX LIABILITY. FURTHER MERELY BECAUSE ADDITIONS H AVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE HAS CONCEALED ANY INCOME. BEFO RE US, LD.A.R. HAS GIVEN THE REASONS AND THE FACTS WHICH HAD RE SULTED INTO ADDITIONS. HE HAS ALSO SUBMITTED THAT THE ADDITION IF AT A LL WAS TO BE MADE, IT WOULD HAVE BEEN MADE IN A.Y. 2016-17 AND NOT IN A.Y. 2013- 14. THESE SUBMISSIONS HAVE NOT BEEN CONTROVERTED BY T HE REVENUE. FURTHER, THERE IS NOTHING ON RECORD TO DEMONSTRATE THA T ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED THE PARTICULARS OF INCOME. WE FURTHER FIND THAT HONBLE SUPREME COURT IN TH E CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED AT (2 010) 322 ITR 7 158 (SC) HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCU RATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH C LAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 9. CONSIDERING THE AFORESAID FACTS AND RELYING ON THE FORE SAID JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT V S. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA), WE ARE OF THE VIEW THA T IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT HA S BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)(C) OF T HE ACT. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2019. YAMINI !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-4, PUNE. PR.CIT-3, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.