Shri Balmukunddas Ranchhoddas Jariwala,HUF, Surat V. The Income tax Officer,Ward-3(3), Surat

ITA 2592/AHD/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6210 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-04-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Assessee Lawyers: J P SHAH
• Keywords: Business income
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2592/AHD/2011 (ASSESSMENT YEAR: 2001-02) BALMUKUNDDAS RANCHHODDAS JARIWALA HUF 3, PATWA COLONY ESTATE, OLD UMARA JAKAT NAKA, ATHWALINES, SURAT- 395007 V/S INCOME TAX OFFICER, WARD- 3 (3), SURAT (APPELLANT) (RESPONDENT) PAN: AABHB5074N APPELLANT BY : SHRI J.P. SHAH, AR RESPONDENT BY : SHRI RAJESH MEENA, SR. D.R. ( )/ ORDER DATE OF HEARING : 06 -04-201 7 DATE OF PRONOUNCEMENT : 12 -04-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A)-II, SURAT DATED 09.08.2011 PERTAINING TO A.Y. 2001-02, THE ASSESSEE HAS PREFER RED THIS APPEAL BEFORE US. ITA NO. 2592 /AHD/2011 . A.Y. 2001-02 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE L EVY OF PENALTY OF RS. 2,22,080/- BY THE A.O. U/S. 271(1)(C) OF THE ACT WH ICH HAS BEEN UPHELD BY THE LD. CIT(A). 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 29.12.2003 MADE U/S. 143(3) OF THE ACT. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SOLD ONE PLOT SITUATED AT GHO D-DOD ROAD, SURAT. THE A.O. NOTICED THAT AFTER CLAIMING INDEXATION, THE AS SESSEE HAS OFFERED CAPITAL GAINS TAX. THE A.O. TREATED THE CAPITAL GAINS SO OF FERED BY THE ASSESSEE AS BUSINESS INCOME OF THE ASSESSEE. 5. PENALTY PROCEEDINGS WERE SIMULTANEOUSLY INITIATED. 6. DURING THE COURSE OF THE PENALTY PROCEEDINGS, THE A SSESSEE WAS ASKED TO SHOW CAUSE WHY PENALTY SHOULD NOT BE LEVIED U/S. 27 1(1)(C) OF THE ACT IN RESPECT OF CONCEALMENT OF INCOME. THE ASSESSEE STRO NGLY OBJECTED TO THE LEVY OF PENALTY. THE OBJECTION OF THE ASSESSEE DISM ISSED BY THE A.O. WHO WAS OF THE OPINION THAT THE ASSESSEE HAS FAILED TO OFFER HIS TRUE INCOME AS PER THE PROVISIONS OF THE I.T. ACT AND, THEREFORE, IS LIABLE FOR THE LEVY OF PENALTY OF RS. 2,22,080/-. 7. ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 2592 /AHD/2011 . A.Y. 2001-02 3 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THERE IS NO FILING OF ANY INACCURATE PARTICULAR. IT IS THE S AY OF THE LD. COUNSEL THAT THE ASSESSEE COULD NOT HAVE ANTICIPATED WHAT COULD BE T HE OPINION OF THE ASSESSING OFFICER. THE LD. COUNSEL CONCLUDED BY SAY ING THAT THE ASSESSEE HAS OFFERED THE INCOME UNDER THE HEAD CAPITAL GAINS A ND THE A.O. HAS TREATED THE SAME AS BUSINESS INCOME OF THE ASSESSEE. THEREF ORE, THERE IS NO OCCASION FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 9. PER CONTRA, THE LD. D.R. SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE ASSESSEE HAS SHOWN THE G AINS FROM THE SALE OF PLOT UNDER THE HEAD CAPITAL GAINS. IT IS EQUALLY TRUE THAT THE ASSESSING OFFICER HAS TREATED THE SAME AS BUSINESS INCOME OF THE ASSE SSEE. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE H AD DISCLOSED THE PROFITS FROM THE SALE OF THE LAND AS CAPITAL GAINS. MERELY, BECAUSE THE ASSESSING OFFICER HAS TAXED THE SAME UNDER THE DIFFERENT HEAD OF INCOME WOULD NOT JUSTIFY THE LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT. 11. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBL E HIGH COURT OF BOMBAY GIVEN IN THE CASE OF BENNETT COLEMAN & CO. LTD. IN TAX APPEAL NO. 2117 OF 2012 REPORTED IN 33 TAXMANN.COM 227 WHEREIN THE HON BLE COURT WAS, INTERALIA, SEIZED WITH THE FOLLOWING QUESTION OF LA W:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED OF R S.35,64,000/- U/S.271(L)(C) IN ITA NO. 2592 /AHD/2011 . A.Y. 2001-02 4 RESPECT OF ADDITION MADE ON ACCOUNT OF TREATING PRE MIUM RECEIVED ON REDEMPTION OF DEBENTURES AS INCOME FROM OTHER SOURC ES AGAINST CLAIM OF ASSESSEE AS CAPITAL GAIN ? 12. AND THE HONBLE HIGH COURT ANSWERED AS UNDER:- 3. SO FAR AS QUESTION (II) IS CONCERNED, THE RESPON DENT-ASSESSEE HAD CLAIMED PREMIUM ON REDEMPTION OF DEBENTURES AS INCOME FROM CAPITAL GAINS. WHEREAS THE ASSESSING OFFICER HELD THAT THE REDEMPTION OF D EBENTURES IS REVENUE RECEIPT ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE R ESPONDENT-ASSESSEE DID NOT FILE ANY FURTHER APPEAL ON THE QUANTUM PROCEEDINGS. THER EAFTER, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(L)(C) OF THE ACT O N THE RESPONDENT-ASSESSEE. THE CIT(A) ALSO CONFIRMED THE LEVY OF PENALTY UPON THE RESPONDENT-ASSESSEE. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE RESPONDENT-ASSESSEE HAD DISCLOSED THAT THE AMOUNT RECEIVED AS PREMIUM ON REDEMPTION OF DEBENTURES IN ITS COMPUTAT ION OF INCOME. FURTHER, THE TRIBUNAL RECORDS THAT IT IS NOT THE CASE OF THE DEP ARTMENT THAT THE RESPONDENT- ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME BY STATING INCORRECT FACTS. T HE ASSESSING OFFICER CONSIDERED THE SAID PREMIUM RECEIVED ON REDEMPTION OF DEBENTUR ES TO BE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES WHILE THE RESPONDENT -ASSESSEE CONSIDERED THE SAME TO BE TAXABLE UNDER THE HEAD CAPITAL GAINS. IN VIEW OF THE FACT THAT THERE IS ONLY A CHANGE OF HEAD OF INCOME AND IN THE ABSENCE OF ANY FACTS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE, THE TRIBUNAL DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS NOT B EEN ABLE TO POINT OUT THAT THE FINDING OF THE TRIBUNAL IS PERVERSE. IN THESE CIRCU MSTANCES, WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION (II). ITA NO. 2592 /AHD/2011 . A.Y. 2001-02 5 13. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE ABOVE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY, WE SET ASIDE THE FIND INGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY OF RS. 2, 22,080/-. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12 - 04- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 12 /04/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD